By Fergal Smith
TORONTO (Reuters) – The Canadian dollar rose to a two-week high against its U.S. counterpart on Thursday, as calmer U.S. bond markets bolstered Wall Street and a Bank of Canada official said spending of excess savings could lead to a stronger economic recovery.
The loonie was trading 0.8% higher at 1.2522 to the greenback, or 79.86 U.S. cents, its biggest gain since Jan. 20. It touched its strongest intraday level since Feb. 25 at 1.2520.
“The third U.S. Treasury auction of the week calmed bond markets, allowing risk assets to rally,” said Michael Goshko, corporate risk manager at Western Union Business Solutions.
The safe-haven U.S. dollar fell and the S&P 500 index notched an all-time high as U.S. bond yields steadied. Helping to cap yields, worries about rising inflation have subsided after Wednesday’s U.S. consumer price report.
Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.
U.S. crude oil futures settled 2.5% higher at $66.02 a barrel, helped by a fall in U.S. fuel stocks.
“The Canadian dollar was also aided by a more upbeat Bank of Canada on Wednesday,” Goshko said.
On Wednesday, Canada‘s central bank said it now expected the economy to grow in the first quarter, an upgrade from its January forecast of a contraction, saying it was proving more resilient to a second wave of COVID-19 infections than expected.
Canadians have saved a massive nest egg through the pandemic and a rush to spend that money could “meaningfully affect” economic growth, Bank of Canada Deputy Governor Lawrence Schembri said on Thursday.
Canada‘s jobs report for February is due on Friday.
Canadian government bond yields rose across a steeper curve. The 10-year was up 2.7 basis points at 1.438% but holding well below Monday’s 14-month high of 1.545%.
(Reporting by Fergal Smith; Editing by Alexandra Hudson and Paul Simao)
Nobody seems to know what's going on with the economy – CNN
(CNN)If you’re confused by the US economy, which simultaneously shows signs of strength and cause for concern, you’re not alone.
- This is a particularly unusual environment. It is making predictions really difficult for economists. The labor shortage, supply chain crisis, energy crunch, inflation and Covid-19 situations all wrapped into one make for a delicate balancing act. We should cut economists a break.
- Right in the long run. Economists actually have been proven correct over the past several months when they initially were thought to be wrong. That’s because the reports keep getting revised higher in subsequent months as Labor Department economists get more data. It’s not only hard for economists at Goldman Sachs and JPMorgan to figure out — it’s hard for the government, too.
- Don’t focus on expectations. The forecasts aren’t the important thing here — it’s the actual data. And one month doesn’t a trend make. We’ve had some shockingly good jobs data in recent months, and November wasn’t all that bad — just not quite as good as we had expected.
Omicron Variant May Be Good For Economy – Forbes
The omicron variant of Covid-19 has sparked great fear. With time, we may find the fear to have been justified, but we may find the opposite: that this is good news for the economy.
It’s still early days for our knowledge of omicron. Waiting to learn more seems to make sense, but consider this: Business decisions are being made every day. Any person who waits for perfect certainty—about the economy, technology or Covid-19—will never make a single decision. In many areas decisions have to be made this week. So it’s worthwhile to consider how omicron may be good for the economy.
Omicron seems to be displacing the delta variant in South Africa. Ted Wenseleers showed that delta’s share of total Covid-19 cases in South Africa has plummeted while omicron has surged. Because the early indications show that omicron was highly transmissible, it could well displace the delta variant around the world.
So far omicron has triggered a surge in infections in South Africa, but not a comparable increase in deaths. There’s good reason for the virus to mutate to be less dangerous. Bugs that kill their hosts don’t replicate as much as bugs that allow their hosts to remain alive. Many viruses in the past have evolved to be milder. We cannot take this idea too far, however.
The omicron virus may have mutated so that it has greater ability to infect those who already had been exposed to earlier variants. That’s no surprise to South African scientists, who have observed a very high past infection rate in their population. The virus could not get ahead by finding people never exposed to any version of Covid-19, so it found a way to infect the previously ill, this theory goes.
BioNTech CEO Ugur Sahin said recently that current vaccines probably help protect against severe illness from the omicron variant, and that new vaccines are under development that would be more targeted against omicron. Given the speed with which our vaccines were developed, we may have new versions being tested in the lab right now. The question will be how long we have to wait for regulatory approval.
From an economic forecasting viewpoint, business leaders should consider the upside potential of omicron. Although it is way too early to be sure, we may find that the disease becomes dominated by a less dangerous mutation. Illness would continue if this happens, but with fewer deaths and hospitalizations. People would come to feel more comfortable dining out, traveling and seeking routine non-Covid healthcare tests and procedures. The rosy view is far from certain, but current evidence is not more pessimistic.
Companies that that are especially sensitive to the Covid pandemic should try to delay big decisions. We’ll have better information in the coming weeks. But decisions that cannot be delayed should probably consider the possibility of a stronger economy rather than greater Covid problems.
Can the global economy battle through another COVID-19 setback? – Aljazeera.com
Video Duration 26 minutes 00 seconds
A new coronavirus variant has forced governments to impose travel bans just as economies were starting to recover.
Last week, after scientists in South Africa identified a new coronavirus variant, borders were suddenly closed off to passenger travel from Southern African countries, oil prices fell more than 10 percent, and stock markets took a hit.
Markets and economies are expected to face weeks of uncertainty as investors closely watch for updates on Omicron. What comes next largely depends on what scientists discover and how quickly they do so.
Also, green hydrogen has been hailed as the energy of the future; can it help decarbonise economies?
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