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Bank of Canada sees economy strengthening as inoculations pick up – Reuters

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OTTAWA (Reuters) – Canada’s economy will see a solid rebound in coming months as COVID-19 restrictions are loosened, and an expected ramp-up in vaccination is boosting confidence in sustained strong growth into 2022, Bank of Canada Governor Tiff Macklem said on Tuesday.

FILE PHOTO: Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa, Ontario, Canada June 22, 2020. REUTERS/Blair Gable

Macklem said that as more Canadians are inoculated, the hardest-hit segments of the service industry will be able to begin resuming operations, resulting in strong job growth.

“We expect a solid rebound in the immediate months ahead … with vaccinations expected to ramp up, we can be more confident in sustained strong growth through the second half of the year and into next year,” he told an Alberta business audience.

But Macklem said it would be “some time” before Canada saw a full recovery, noting the pandemic had accelerated a trend toward automation, with many low-wage jobs at high risk of being affected.

He also pointed to a “likely permanent” trend toward e-commerce, predicting the economy may need “significantly fewer” retail workers.

“We are not returning to the same economy we had before the pandemic. Even as it recovers, the economy is adapting to structural changes, and some workers will need to shift to jobs in faster-growing sectors,” he said.

Macklem said that while the forces of digitization and automation will ultimately be positive for the labor market, in the near term they will do little to help those most affected by the pandemic.

“We all have a shared responsibility to get Canadians back to work,” he said, urging workers to consider their own skills and training needs.

Macklem reiterated interest rates would remain at their effective lower bound until economic slack is fully absorbed, which the bank says should occur in 2023.

The Canadian dollar steadied at about 1.2595 per U.S. dollar, or 79.40 U.S. cents, after the speech, near a three-year high.

Additional reporting by Fergal Smith in Toronto; editing by Jonathan Oatis

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Economy

Toronto Stock Exchange futures point to lower open as crude weakens

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Toronto Stock Exchange

Futures for Canada‘s main stock index fell on Monday, tracking weakness in crude prices, while sentiment across global markets was subdued on inflation pressures.

Brent crude and U.S. West Texas Intermediate (WTI) crude were both down 0.17%. [O/R]

June-quarter futures on the S&P/TSX index were down 0.48% at 7:00 a.m. ET.

Securities Foreign data for March is due at 8:30 a.m. ET.

The Toronto Stock Exchange’s S&P/TSX composite index ended 1.21% higher at 19,366.69 on Friday.

Dow Jones Industrial Average e-mini futures were down 0.39% at 7:00 a.m. ET, while S&P 500 e-mini futures had lost 0.34% and Nasdaq 100 e-mini futures were down 0.38%.

TOP STORIES [TOP/CAN]

Canada‘s Centerra Gold said on Sunday it had initiated binding arbitration against Kyrgyzstan government, after the parliament passed a law allowing the state to temporarily take over the country’s biggest industrial enterprise, the Kumtor gold mine operated by Centerra.

ANALYST RESEARCH HIGHLIGHTS [RCH/CA]

Bombardier: ATB Capital Markets raises to “speculative buy” from “sector perform”

Pan American Silver: National Bank of Canada raises to “outperform” from “sector perform”

SNC-Lavalin Group Inc: RBC raises target price to C$40 from C$33

COMMODITIES AT 7:00 a.m. ET

Gold futures: $1,850.4; +0.67% [GOL/]

US crude: $65.27; -0.17% [O/R]

Brent crude: $68.59; -0.16% [O/R]

U.S. ECONOMIC DATA DUE ON MONDAY

0830 NY Fed Manufacturing for May: Expected 23.90; prior 26.30

1000 NAHB Housing Market Index for May: Expected 83; prior 83

FOR CANADIAN MARKETS NEWS, CLICK ON CODES:

TSX market report [.TO]

Canadian dollar and bonds report [CAD/] [CA/]

Reuters global stocks poll for Canada

Canadian markets directory

($1= C$1.21)

 

(Reporting by Amal S in Bengaluru; Editing by Vinay Dwivedi)

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Britain’s pension fund USS invests 225 million euros in Spanish renewables

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British private pension fund Universities Superannuation Scheme (USS) said on Monday it has invested 225 million euros ($273 million) to take a 50% stake in Bruc Energy, which develops renewable energy projects in Spain and Portugal.

The inflow of cash into renewables in the Iberian peninsula is an encouraging sign for the industry after recent setbacks.

Renewable power group Opdenergy shelved an initial public offering two weeks ago citing “unstable conditions in markets” and shares of rival Econener plummeted 15% on their first day of trading a few days earlier.

Bruc Energy, which was created in Spain by Canadian pension fund OPTrust and Spanish businessman Juan Bejar, is planning to develop solar projects in Spain and Portugal for a total potential capacity of 4,000 megawatts.

“The long-term nature of solar and the steady returns make renewables attractive to a pension scheme needing to pay pensions for years to come”, Gavin Merchant, USS’s co-head of direct equity, said in a statement.

The transaction was advised by Royal Bank of Canada (RBC), Greenhill and Nomura.

($1 = 0.8229 euros)

 

(Reporting by Cristina Galán, editing by Inti Landauro and Emelia Sithole-Matarise)

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Canadian dollar moves to extend weekly win streak as oil rebounds

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Canadian dollar

The Canadian dollar strengthened against its U.S. counterpart on Friday and was on track for its seventh straight weekly gain as oil prices rose and domestic data added to evidence of robust economic growth in the first quarter.

Canadian factory sales rose 3.5% in March from February, led by the motor vehicle, petroleum and coal, and food product industries, while wholesale trade was up 2.8%, Statistics Canada said.

The price of oil, one of Canada‘s major exports, reversed some of the previous day’s sharp losses as stock markets strengthened, though gains were capped by the coronavirus situation in major oil consumer India and the restart of a fuel pipeline in the United States.

U.S. crude prices rose 1.2% to $64.61 a barrel, while the Canadian dollar was trading 0.6% higher at 1.2093 to the greenback, or 82.69 U.S. cents, moving back in reach of Wednesday’s 6-year peak at 1.2042.

For the week, the loonie was on track to gain 0.3%. It has climbed more than 5% since the start of the year, the biggest gain among G10 currencies, supported by surging commodity prices and a shift last month to a more hawkish stance by the Bank of Canada.

Still, BoC Governor Tiff Macklem said on Thursday if the currency continues to rise, it could create headwinds for exports and business investment as well as affecting monetary policy.

The U.S. dollar fell against a basket of major currencies, pressured by a recovery in risk appetite across markets after Federal Reserve officials helped calm concerns about a quick policy tightening in response to accelerating U.S. inflation.

Canadian government bond yields were lower across much of a flatter curve, with the 10-year down 2 basis points at 1.549%. On Thursday, it touched its highest intraday in eight weeks at 1.624%.

 

(Reporting by Fergal Smith; Editing by Nick Zieminski)

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