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Canadian dollar drops, posts weekly decline on greenback short-covering

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Friday as a decline in risk appetite led to broader gains for the safe-haven greenback, with the loonie giving back this week’s gains despite data showing record home sales.

The Canadian dollar was trading 0.8% lower at 1.2732 to the greenback, or 78.54 U.S. cents, pulling back from a near three-year high on Thursday at 1.2621. For the week, the loonie was down 0.4%.

“It has primarily been some covering of short U.S. dollar positions,” said Bipan Rai, North America head of FX Strategy at CIBC Capital Markets. “It’s a move in line with what we have seen in other currencies … So it’s not the Canadian dollar on its own.”

Higher U.S. Treasury yields in anticipation of additional fiscal spending, have been supportive of the greenback since earlier this month.

President-elect Joe Biden proposed on Thursday a stimulus package of $1.9 trillion, but investor sentiment wavered as China reported the highest number of daily COVID-19 cases in more than 10 months.

Investors have also been grappling with the slower than expected rollout of vaccines. Pfizer Inc said it would slow production of its vaccine due to changes to manufacturing processes aimed at boosting production.

Global shares fell and U.S. crude oil futures settled 2.3% lower at $52.36 a barrel. Oil is one of Canada‘s major exports.

Canadian home sales rose 7.2% in December from November, setting a new record, the Canadian Real Estate Association said.

The housing market has benefited from record-low interest rates set by the Bank of Canada. The central bank is due to make an interest rate decision next week.

Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries. The 10-year was down 4.6 basis points at 0.810%.

 

(Reporting by Fergal Smith; Editing by Andrea Ricci and David Gregorio)

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Canadian dollar retreats from three-year high as U.S. bond yields soar

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar weakened on Thursday by the most in four weeks against the greenback, as surging U.S. bond yields pressured global equity markets, with the loonie pulling back from a three-year high.

The loonie was trading 0.7% lower at 1.2596 to the greenback, or 79.39 U.S. cents, its biggest decline since Jan. 27. During the session, the loonie touched its strongest intraday level since February 2018 at 1.2468.

“The U.S. 10-year (yield) has just run away with it this afternoon and is placing substantial pressure on high-beta currencies,” such as the Canadian dollar, said Simon Harvey, senior FX market analyst for Monex Europe and Monex Canada.

High-beta currencies tend to be more sensitive to risk sentiment than the broader market. Canada runs a current account deficit and is a major exporter of commodities, including oil.

A jump in benchmark U.S. Treasury yields led a gauge of global equity markets to retreat as investors sold the high-flying tech stocks that fueled Wall Street’s rally to record highs and took precautions against the threat of inflation.

The price of oil, one of Canada‘s major exports, edged up to its highest close since 2019 as Texas refineries restarted production after last week’s freeze. U.S. crude oil futures settled 0.5% higher at $63.53 a barrel.

Canadian payroll employment rose by 44,200 in December after decreasing by 64,500 in November, Statistics Canada said.

Canadian government bond yields were higher across a steeper curve in sympathy with U.S. Treasuries. The 10-year touched its highest level since January last year at 1.486% before dipping to 1.457%, up 14.2 basis points on the day.

 

(Reporting by Fergal Smith; Editing by Kirsten Donovan)

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India's economy probably resumed growing last quarter: poll – TheChronicleHerald.ca

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By Manoj Kumar

NEW DELHI (Reuters) – India’s economy probably returned to growth in its fiscal third quarter after a recession earlier in 2020, economists said, and the recovery is expected to gather pace as consumer demand and investments shake off the effects of the pandemic.

The median forecast from a survey of 58 economists this week predicted gross domestic product in Asia’s third-largest economy grew 0.5% year-on-year in the December quarter, after shrinking 23.9% and 7.5% in the April-June and July-September periods, respectively.

The forecasts ranged from a contraction of 4.7% to growth of 2.6%. India is set to announce GDP data for the December period on Friday at 1200 GMT.

Economists have raised their forecasts for the current and next fiscal year, expecting a pick-up in government spending, consumer demand and resumption of most of economic activities were helping the economic recovery.

“Improving consumption, government reforms to boost domestic manufacturing and low interest rates will propel corporate India’s post pandemic recovery,” Moody’s said in a statement on Thursday.

Moody’s revised its forecast to a 7% contraction for the current fiscal year, ending in March, from an earlier estimate of a 10% contraction. It predicted 13.7% growth for next fiscal year, helped by resumption of economic activities.

Prime Minister Narendra Modi’s government earlier this month rolled out plans to fund a huge vaccination drive, while outlining a slew of tax incentives to boost manufacturing.

The Reserve Bank of India (RBI), which has slashed its repo rate by a total of 115 basis points since March 2020 to cushion the shock from the pandemic, has projected growth of 10.5% for the fiscal year starting April.

“We will continue to support the recovery process through the provision of ample liquidity in the system,” RBI Governor Shaktikanta Das told industrialists at an event on Thursday.

However, some analysts warn that a recent rise in crude oil prices and a surge of COVID-19 cases in parts of the country may pose risks to the nascent recovery. Moreover, some sectors, such as retail, airlines, hotels and hospitality, are still reeling from the impact of pandemic.

“Growth remains on an uptrend, although the recent rise in pandemic cases is a risk to monitor,” Sonal Varma, chief economist at Nomura, said in a note on Thursday.

(Reporting by Manoj Kumar; editing by Euan Rocha, Larry King)

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Blue economy – The ocean… land of innovation – Investors' Corner – Investors' Corner BNP Paribas

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The seas and oceans are fertile ground for innovation and experimentation, with new technologies including:

  • Maritime operations at ever-greater depths
  • Robotics
  • Video surveillance
  • Submersible technologies.

Technological progress has been spectacular. In general, the open location of ports and coastal communities is conducive to the emergence of new ideas. Achieving environmental goals is a constant source of innovation.

Biotechnologies

The oceans are a goldmine for biotechnologies. Maritime resources can be used

  • In cosmetics (creams, seawater therapy, etc.)
  • For the agri-foods industry (food supplements, fertilisers, etc.)
  • In the energy sector (notably biofuels)
  • In pharmacology.

It is possible to create substances derived from algae for food and cosmetics uses. In addition, scientists have discovered that ingredients from oysters can slow skin ageing. The production of biofuels from the triglycerides contained in algae is another potential area of interest.

Lithium

Seawater is a virtually unlimited source of lithium, with the seas and oceans containing some 230 billion tonnes of it.[1] However, lithium is highly diluted in seawater.

Researchers have been working for years to extract it using evaporation or filtering membranes. They have already managed to do so in small quantities. Lithium is used in the glass and ceramics industries, to produce lubricant greases and in aluminium production. It is also essential in making electric batteries.

Energy

The enormous energy in tides, swells and waves is already being tapped. However, this is just the beginning. Innovative technologies will complement the systems already developed.

Source: https://ec.europa.eu/jrc/en/news/new-technologies-ocean-energy-sector

The most favourable coasts are those between the latitudes of 30° and 60°

  • In the southern hemisphere due to the wave heights
  • In the northern hemisphere due to the length of the coasts in question.

The Bay of Fundy’s tidal power station between Nova Scotia and New Brunswick in Canada and the one in the bay of Mont Saint-Michel in France were pioneers in the field. In addition to tidal power stations, systems using energy from waves and tidal currents (underwater turbines and wave power systems) are also being developed.

The European Union, already quite advanced in the field of ocean power technology, should be producing 35% of its electricity from ocean sources by 2050.[2] Reducing the cost of technologies generating wind power is one of the main projects on which the most innovative blue economy players are working.

Pharmaceuticals

The ability of marine organisms other than fish and shellfish to contribute to the blue economy is beginning to be acknowledged thanks to the new gene sequencing technologies for living organisms. Tests of antiviral medicines obtained from nucleotides isolated from Caribbean sponges are already under way. That’s how high the stakes are!

The oceans are a gigantic pharmacy. Marine species are providing the pharmaceutical industry with a wide range of new compounds that have already led to major applications in the antiviral field, but also in cancer and pain treatment medicines.

The animal, plant and bacterial species living in the oceans contain impressive numbers of compounds with unexpected properties that are of interest from a medical standpoint. Some are already known such as those from ‘cone snails’ – gastropod molluscs.

These cousins of land snails secrete neurotoxins. Researchers have been working with them since the 1960s. Cone snails have enabled the development of a compound used in a powerful pain medicine that is stronger than morphine. Researchers are currently working on developing new medicines from cone snail compounds.

Anti-cancer agents are being produced from marine organisms. An anti-tumour medicine has been developed from small marine invertebrates. The most promising medicines already come from the oceans. They have been on pharmacy shelves and have been improving our health for several years now. The research on marine organisms being conducted around the world should continue to unveil new therapeutic properties.

A flourishing sustainable blue economy

Innovation is an essential factor in ensuring that a sustainable blue economy can flourish. Blue technologies hold great promise for established and start-up companies researching and developing solutions that have a positive impact on the oceans.

As a global sustainability theme, investing in the blue economy is fully aligned with BNP Paris Asset Management’s sustainable investment priorities. These are focused on the energy transition, environmental protection and equality & inclusive growth.

We believe investing in the blue economy will help advance the fight against climate change and ensure that the oceans can continue to function as a sink for carbon emissions from human activity. Such investments are suited for investors with a long-term perspective, an interest in contributing to a greener future and making a positive impact.

In our view, finance can play a major role in pushing companies linked to the blue economy to improve their practices. Those investors who consider the preservation of marine resources as an absolute priority are set to see investment opportunities in companies that develop marine and ocean projects opening up as awareness of the blue economy’s appeal grows.


[1] According to Agence internationale de l’Énergie in futura-sciences.com 21/07/2020

[2] See energiesdelamer.eu 12/06/2020


Read more about sustainable investing


Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice.

The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.

Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).

Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

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