By Michael O’Neill

“Coo roo coo coo, Coo roo coo coo.” Many older Canadians will recognize the opening lyrics to Bob and Doug McKenzie’s Great White North sketch, played by Rick Moranis and Dave Thomas. Today’s YouTubers and podcasters are delivering a reinvention of Bob and Doug’s shtick.

Prime Minister Mark Carney is attempting the same thing, but on a vastly larger scale.

If You Build It, They Will Come

Mr. Carney doesn’t just have a Field of Dreams; he has a whole country. On Monday, his government introduced Bill C-39, the Building Canada Strong Act. Although the title sounds like something cooked up by a committee that has never encountered a shovel, the objective is straightforward: get Canada building. It is ambitious.

The legislation proposes a one-year federal timeline for major project approvals, a single project authority for some developments, fewer duplicated reviews and a more coordinated system for getting infrastructure, energy and resource projects from the application stage to actual construction. It also proposes national trade corridors and changes aimed at making Canada’s ports more competitive.

Canadian banks and institutional investors are putting serious money behind the investment push. TD, Scotiabank and BMO committed nearly $325 billion in new financing for Canadian businesses and infrastructure. Pension funds, insurers and other institutional investors pledged close to another $100 billion to Canadian assets. The icing on the cake was the government’s new tax measure that lets businesses write off the entire cost of most capital investments in the year they are made. Carney is hoping his United Nations visit is just as successful.

New York, New York

Carney arrived at the UN this week, still basking in the glow of his January 20 Davos speech. That’s the one where he told the delegates that the U.S.-led, rules-based international order is gone and it is not coming back. Few leaders besides Carney and China’s Xi Jinping pushed back against US demands, and the leaders of the other major trading nations are realizing that acquiescing to Trump is a failed strategy.

To that end, Canada, Australia, Brazil, India, the European Union and others signed a declaration that warned about the growing use of protectionism, coercion and economic interdependence as a source of leverage. It called for more resilient and diversified supply chains and stronger international economic cooperation.

On September 20, Carney met with French President Emmanuel Macron in Saint-Pierre-et-Miquelon. They discussed deeper cooperation in defence, aerospace, energy, AI and trade. The two leaders also backed greater economic diversification between Canada and France.

Carney’s actions are commendable, and even if all the plans bear fruit, most Canadians won’t see any benefits for years.

Tariffs Are Starting to Bite

Bank of Canada Governor Tiff Macklem pointed out the obvious earlier this week: the geography hasn’t changed and America will remain Canada’s largest trading partner, but the latest tariffs are an issue.

The failure of the latest US-Canada trade talks meant previously announced 50% tariffs on about $28 billion of goods took effect on August 22. Canada responded with dollar-for-dollar counter-tariffs. A second round of 50% US levies followed on September 15.

Macklem warned that if they remain in place, fourth-quarter growth could be roughly halved to below 1%. Businesses that had moved from reassessing the tariff shock to actually adapting to it could once again find themselves putting investment and hiring decisions on hold. And that’s a dilemma for policymakers.

The BoC is caught between weaker growth and a less comfortable inflation outlook. Macklem noted that the economy still has excess supply, which argues against higher rates, but oil and energy costs are pushing inflation higher and raising the risk that those pressures become more persistent. And the Fed is complicating the equation.

Loonie Yields to Fed

Governor Macklem explicitly stated that Governing Council decisions are based on domestic economic realities and not the Fed. That statement may be put to the test at the end of October.

The Fed’s inflation problem is worse than it thought if today’s flash PMI data is to be believed. American business activity accelerated to its strongest pace in more than five years but rising backlogs, supply-chain bottlenecks and the fastest increase in input costs in four years pointed to renewed inflation pressure.

The US 10-year yield responded by jumping from 4.927% to 5.075%, while the odds of a Fed rate hike surged to 71% from 55% yesterday.

That combination may prove toxic for the loonie. USDCAD is flirting with 1.4100, while the latest CFTC (Commitments of Traders) report shows speculators have pared back their short CAD positions, leaving room to rebuild them if the Fed stays hawkish.

With US rate-hike odds surging, the Canadian economy struggling and oil prices holding steady, the fundamental and positioning set-up favours a move higher. Against that backdrop, USDCAD may trade with an upside bias, in a 1.3950-1.4250 range over the next couple of weeks.

The reinvention of the Great White North may suggest that the loonie needs to be reinvented as well.