Six largest Canadian banks downgraded
Whenever something is going badly, you can count on the ratings agencies to make it worse.
Moody's took a hatchet to Canadian banks late on Wednesday. They downgraded:
- Toronto-Dominion Bank
- Bank of Montreal
- Bank of Nova Scotia
- Canadian Imperial Bank of Canada
- National Bank of Canada
- and Royal Bank of Canada
Together, they control at least 90% of Canadian banking, if not 90% of the Canadian financial services industry.
They were all lowered one notch and with a negative outlook.
Today's downgrade of the Canadian banks reflects our ongoing concerns that expanding levels of private-sector debt could weaken asset quality in the future. Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past." said David Beattie, a Moody's Senior Vice President.
That sent USD/CAD 80 pips higher in Asia-Pacific trading. It retraced most of the move in Europe but is now heading back towards the highs.
So the market is on edge but what could spook it further is a weak new housing price index report at the top of the hour. In general, it's not a meaningful indicator and seasonality leads to swings but today it will have more impact than usual. The consensus is for a 0.2% m/m rise in March after a 0.4% increase in February.
