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Canadian dollar strengthens as economy grows at a record pace – The Globe and Mail

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The Canadian dollar strengthened against its U.S. counterpart on Tuesday as the greenback broadly declined and domestic data showed the economy growing at a record pace in the third quarter.

Canada’s economy grew by 40.5 per cent on an annualized basis in the third quarter, rebounding from a historic plunge in the second quarter, as businesses and stores reopened from COVID-19 lockdowns, Statistics Canada said.

Separate data, from IHS Markit, showed that Canadian manufacturing activity expanded for the fifth straight month in November as output and new orders climbed.

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The U.S. dollar fell against a basket of major currencies on growing speculation that the Federal Reserve will act to support the economy through a tough winter as coronavirus cases rise.

Canada is also seeing a surge in infections. On Monday, Ottawa projected the budget deficit would hit a historic C$381.6 billion on COVID-19 emergency aid.

The Canadian dollar was trading 0.4 per cent higher at 1.2953 to the greenback, or 77.20 U.S. cents, having traded in a range of 1.2942 to 1.3006.

On Monday, the loonie notched its strongest intraday level in over two years at 1.2919. It ended November up 2.4 per cent.

The price of oil, one of Canada’s major exports, fell on Tuesday as investors awaited direction from OPEC and its allies after the producers postponed a formal meeting to decide whether to lift output from January. U.S. crude prices were down 0.8 per cent at $44.99 a barrel.

Canadian government bond yields were higher across a steeper curve in sympathy with U.S. Treasuries as Wall Street rallied. The 10-year was up 2.9 basis points at 0.709 per cent.

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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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Economy

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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Economy

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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