Connect with us

Economy

Canadian dollar nears three-year high

Published

 on

Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar rose against its U.S. counterpart on Monday, approaching a three-year high, supported by domestic data showing factory activity growing in April and the Federal Reserve’s message that it is too early to dial back stimulus.

The U.S. economy is poised to grow at the fastest rate in decades but conditions are still not nearly strong enough for the Fed to consider pulling back its support, New York Fed Bank President John Williams said.

“The dovish comments really produce a lot of market confidence,” said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc. “That free money gives the market room to expand, so that’s going to help commodity currencies like the Canadian dollar.”

The Fed’s benchmark interest rate is currently set at near zero, as is the Bank of Canada‘s.

Last month’s signal from Canada‘s central bank that it may begin raising interest rates before the Fed has lit a fire under the Canadian dollar, but past tightening cycles show faster liftoff may not be sustained, particularly if the loonie overshoots.

The Canadian dollar was trading 0.1% higher at 1.2272 to the greenback, or 81.49 U.S. cents, having traded in a range of 1.2266 to 1.2317. On Friday, it touched its strongest intraday level since February 2018 at 1.2262.

Canadian manufacturing activity grew for the 10th straight month in April as production and new orders climbed, with the pace easing only slightly from the previous month’s record level, data showed.

Global equity markets were not far from a record

and the price of oil, one of Canada‘s major exports, settled 1.4% higher at $64.49 a barrel.

The U.S. dollar fell against a basket of currencies as Treasury yields retreated. Canada‘s 10-year yield fell 1.6 basis points to 1.530%.

 

(Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter Cooney)

Continue Reading

Economy

Canada posts hefty job losses in April as third wave bites

Published

 on

By Julie Gordon

OTTAWA (Reuters) –Canada lost more jobs than expected in April as fresh restrictions to contain a variant-driven third wave of COVID-19 weighed on employers, Statistics Canada data showed on Friday.

Some 207,100 jobs were lost in April, more than the average analyst prediction for a loss of 175,000. The unemployment rate climbed to 8.1%, missing analyst expectations of 7.8%. Employment is now 2.6% below pre-pandemic levels.

“This episode seemed to be a little more impactful in that it led to a big decline in full-time jobs and specifically in private-sector employment,” said Doug Porter, chief economist at BMO Capital Markets.

“There were some heavy hits in education and culture and recreation. So it seems like the third wave bit into other sectors a little bit more deeply than the second wave.”

Full-time employment was down by 129,400 while part-time employment fell by 77,800 positions.

With many retailers shuttered in April and the restrictions also hitting hotels, food services and entertainment, service sector employment plunged by 195,400 jobs. Employment in the goods sector fell by 11,800.

As COVID-19 infections surged in April, a number of Canadian provinces imposed fresh restrictions, including shuttering or limiting non-essential businesses and closing schools. Cases are beginning to decline, but reopening is still weeks away and economists expect further job losses in May.

Canada has so far fully vaccinated just over 3% of its nearly 38 million residents, while more than 36% have received a first dose. By the end of June, Canada expects to have received 40 million doses.

Long-term unemployment increased by 4.6% to 486,000 people, which suggests some labor market scarring is beginning to show, said Leah Nord, a senior director at the Canadian Chamber of Commerce.

“The job prospects for displaced workers grow slimmer with every month in lockdown as more businesses throw in the towel,” she said in a statement.

Total hours worked fell 2.7% in April, while the number of people working less than half their usual hours jumped 27.2% to 288,000.

“The hours worked numbers were I think weaker than had been expected,” said Andrew Kelvin, chief Canada strategists at TD Securities. “I think it suggests a weaker April than the Bank of Canada would have had penciled in.”

The Bank of Canada in April sharply boosted its outlook for the Canadian economy and signaled interest rates could start to rise in 2022.

The Canadian dollar was trading 0.3% lower at 1.2187 to the greenback, or 82.05 U.S. cents, after touching on Thursday its strongest level in 3-1/2 years at 1.2141.

(Reporting by Julie Gordon in Ottawa; additional reporting by Steve Scherer, Fergal Smith and Nichola Saminather, Editing by Hugh Lawson, Mark Heinrich and Nick Zieminski)

Continue Reading

Economy

Ivey PMI shows activity expanding at a slower pace in April

Published

 on

TORONTO (Reuters) – Canadian economic activity expanded in April but the pace slowed from a 10-year high the previous month, Ivey Purchasing Managers Index (PMI) data showed on Friday.

The seasonally adjusted index fell to 60.6 from 72.9 in March. The March reading was the highest since March 2011 and the second highest since the PMI was launched in 2000.

Economic restrictions were tightened in some Canadian provinces in April to tackle a third wave of the coronavirus pandemic.

The Ivey PMI measures the month-to-month variation in economic activity as indicated by a panel of purchasing managers in the public and private sectors from across Canada. A reading above 50 indicates an increase in activity.

The gauge of employment fell to an adjusted 58.0 from 62.7 in March, while the supplier deliveries index was at 37.8, down from 39.6, indicating companies are having greater difficulty meeting increased demand.

The unadjusted PMI fell to 59.9 from 67.3.

 

(Reporting by Fergal Smith; Editing by Chizu Nomiyama)

Continue Reading

Economy

Canadian dollar rises for sixth straight week despite jobs decline

Published

 on

Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar was little changed against the greenback on Friday as jobs data for both Canada and the United States fell short of estimates, with the loonie holding near its strongest level in 3-1/2 years and extending a weekly win streak.

Canada lost 207,100 jobs in April as fresh restrictions to contain a variant-driven third wave of COVID-19 weighed on employers, Statistics Canada data showed. Analysts had forecast a decline of 175,000.

In the United States, data for the same month showed employers hiring far fewer workers than expected, likely frustrated by labor shortages.

“You have this unhealthy environment where growth goals are struggling to be met but unfortunately inflation is picking up everywhere,” said Avi Hooper, a senior portfolio manager at Invesco.

Supportive of the loonie, one cause of inflation has been a surge in the prices of some of the commodities that Canada produces.

Copper surged to a record peak on Friday, fueled by speculators and industrial buyers as Western economies recover from the pandemic, while oil settled 0.3% higher at $64.90 a barrel.

“A higher oil price from current levels, we think, will be the catalyst for the next leg of Canadian dollar strength,” Hooper said.

The loonie was nearly unchanged at 1.2145 to the greenback, or 82.34 U.S. cents, having touched its strongest intraday level since September 2017 at 1.2125. For the week, it was up 1.2%, its sixth straight weekly advance.

The currency has been on a tear since the Bank of Canada last month signaled it could begin hiking interest rates in late 2022 and cut the pace of its bond purchases.

Canadian government bond yields fell across the curve. The 5-year touched its lowest since March 5 at 0.841% before bouncing to 0.878%, down 3.8 basis points on the day.

 

(Reporting by Fergal Smith; editing by Jonathan Oatis)

Continue Reading

Trending