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Canadian dollar notches near three-year high as commodities rally

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar was little changed against its U.S. counterpart on Monday, holding near its strongest level in nearly three years as oil rallied and the greenback broadly lost ground.

The loonie was trading nearly unchanged at 1.2606 to the greenback, or 79.33 U.S. cents, having touched its strongest intraday level since April 2018 at 1.2580.

“Commodity-linked currencies have had a stellar performance in recent days thanks to widespread and sharp gains in the prices of a wide variety of commodities,” said Erik Nelson, a currency strategist at Wells Fargo.

U.S. crude oil futures settled 3.8% higher at $61.49 a barrel, driven by the expected slow return of U.S. crude output after last week’s deep freeze in Texas shut in production. Copper rose 1.6%, while gold was up 1.4%.

Canada‘s yields have been able to keep up with and in fact outpace gains in U.S. yields, which has further bolstered the Canadian currency,” Nelson said.

The gap between Canadian and U.S. 2-year yields has climbed 11 basis points since January to 13 basis points in favor of the Canadian bond.

The U.S. dollar resumed its slide against major currencies on Monday as traders focused on whether coronavirus vaccinations, economic growth expectations and higher inflation could push bond yields higher.

Canadian government bond yields rose across a steeper curve in sympathy with U.S. Treasuries. The 10-year touched its highest since February last year at 1.256% before pulling back to 1.238%, up 2.5 basis points on the day.

Bank of Canada Governor Tiff Macklem is due to speak on Tuesday on the impact of the coronavirus crisis on the labor market. The central bank has projected that Canada‘s economy would contract in the first quarter after lockdowns were implemented by a number of provinces to curb the spread of the pandemic.

 

(Reporting by Fergal Smith; Editing by Steve Orlofsky and Alistair Bell)

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India's economy expands 0.4% in Oct.-Dec., ending recession – The Tri-City News

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NEW DELHI — India’s economy expanded by a weaker-than-expected 0.4% in the October-December quarter, which still allowed it to escape recession following large contractions in the two previous quarters during the coronavirus pandemic, the government said Friday.

The National Statistical Office projected an 8% contraction for the 2020-21 financial year, which ends in March. In January, it had projected a contraction of 7.7% for the fiscal year, following 4% growth in 2019-20.

It said fertilizer production rose by 2.7% in January, steel by 2.6% and electricity generation by 5.1%. Coal production declined by 1.8%, crude oil by 4.8% and natural gas by 2%, it said in a statement.

India’s economy contracted by 7.5% in the July-September quarter following a record plunge of 23.9% in the previous three months. The government had imposed a strict two-month lockdown across the country in March after the outbreak of the pandemic.

A country enters a technical recession if its economy contracts in two successive quarters. India’s recovery is expected to improve with a rise in consumer demand and investment.

India’s central bank, the Reserve Bank of India, is projecting gross domestic product growth of 10.5% in financial year 2021-22. The International Monetary Fund has projected 11.5% growth in calendar 2021.

The IMF estimated that the Indian economy contracted 8% in 2020.

The Associated Press

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Charting Global Economy: US Income Growth Primes Spending Pump – BNN

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(Bloomberg) — U.S. consumer spending, personal income and business investment gathered pace at the start of the year, helped in part by government spending that’s dwarfing the price tag of such support in European countries.

In Japan, excess household savings have the potential of propelling spending once pandemic-related uncertainty begins to lift in earnest.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

U.S.

Personal incomes soared in January as Americans received another round of pandemic-relief checks, helping to re-charge the economy with the strongest spending advance in seven months.

Businesses are also spending. Shipments of non-defense capital goods minus aircraft, a figure used to calculate equipment investment in the government’s gross domestic product report, jumped in January.

Europe

The European Central Bank’s balance sheet has expanded more under 15 months of Christine Lagarde’s presidency than it did during Mario Draghi’s eight-year term.

While the U.S. rushes toward a blockbuster fiscal stimulus package to accelerate its recovery from the coronavirus crisis, much of Europe is pootling along in the slow lane. JPMorgan Chase & Co. estimates the “fiscal thrust” — the boost from discretionary government spending minus the drag of expiring tax breaks and support measures — will add 1.8% to U.S. output this year. For the euro zone, it’ll subtract 0.1%.

Millennial Londoners are leaving the capital for good as Covid-19 changes lifestyles and working patterns. Almost one in four of those age 18-44 surveyed by the Future Strategy Club said that they had permanently moved away due to the pandemic, rising to 30% of 25-34 year olds.

Asia

Japanese households are sitting on an unusually large pile of savings that could fuel spending once uncertainty from the Covid crisis starts to abate.

Emerging Markets

After an epic collapse last year, oil prices have tripled since April, raising inflationary pressures in emerging markets. Some central banks will have to respond, but analysis by Bloomberg Economics finds that most economies will be spared: Still, Brazil and Nigeria could increase borrowing costs to stem the oil-fueled price gains, while India, Mexico and Turkey face a higher likelihood of delayed rate cuts.

Thousands of striking truck drivers in Myanmar protesting the military coup have slowed delivery of imports, trapping cargo containers at ports and prompting at least one international shipping line to halt new orders.

World

After a drop in January amid high infection rates and stricter containment measures, economic activity in major economies has picked up in February, according to Bloomberg Economics gauges that integrate data such as mobility, energy consumption and public transport usage. Still, it remains some way below end-2020 levels in a number of countries.

The Philippines, Thailand, Mexico, Spain and Italy faced the biggest net losses in the world when airports and hotels closed because of the coronavirus, according to calculations by Bloomberg Economics of the world’s largest 40 economies. That means those countries can look forward to the biggest recouped gains when the Covid crisis finally ends.

Government borrowing from markets in the world’s richest economies surged by a record 60% in 2020, with an increasing reliance on short-term funding that intensifies refinancing risks, the Organization for Economic Cooperation and Development said.

©2021 Bloomberg L.P.

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India's economy expands 0.4% in Oct.-Dec., ending recession – North Shore News

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NEW DELHI — India’s economy expanded by a weaker-than-expected 0.4% in the October-December quarter, which still allowed it to escape recession following large contractions in the two previous quarters during the coronavirus pandemic, the government said Friday.

The National Statistical Office projected an 8% contraction for the 2020-21 financial year, which ends in March. In January, it had projected a contraction of 7.7% for the fiscal year, following 4% growth in 2019-20.

It said fertilizer production rose by 2.7% in January, steel by 2.6% and electricity generation by 5.1%. Coal production declined by 1.8%, crude oil by 4.8% and natural gas by 2%, it said in a statement.

India’s economy contracted by 7.5% in the July-September quarter following a record plunge of 23.9% in the previous three months. The government had imposed a strict two-month lockdown across the country in March after the outbreak of the pandemic.

A country enters a technical recession if its economy contracts in two successive quarters. India’s recovery is expected to improve with a rise in consumer demand and investment.

India’s central bank, the Reserve Bank of India, is projecting gross domestic product growth of 10.5% in financial year 2021-22. The International Monetary Fund has projected 11.5% growth in calendar 2021.

The IMF estimated that the Indian economy contracted 8% in 2020.

The Associated Press

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