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Charting Global Economy: US Retail Sales Surge to Begin Year – BNN

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(Bloomberg) — The American consumer got back in the spending groove last month and factory output rose more than forecast, setting the stage for what could be the best year of economic growth in nearly four decades.

Employment in the euro area improved in final quarter of 2020, though the workforce in Europe and the rest of the world faces structural changes from the pandemic.

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

U.S.

The U.S. economy started 2021 with a bang as retail sales accelerated and expectations continued to build for another jolt of government stimulus.

Production at manufacturers rose in January for a fourth-straight month, showing factories continue to recover from pandemic-related disruptions last year.

Europe

About 2.6 million people in the U.K., or 8% of workers, expect to lose their jobs in the next three months, according to a survey that suggests long-lasting damage to the economy from the coronavirus.

The euro area added jobs at the end of last year, suggesting businesses are looking beyond the latest economic woes caused by coronavirus lockdowns.

Asia

Prime Minister Narendra Modi’s plan to boost capital expenditures to help India regain the fastest-growing major economy title risks being derailed by the nation’s cash-strapped states, which are cutting back on such spending.

One important aspect of Asia’s rebound from the virus shock is how fast consumers spring back after declines last year that were deeper than overall gross domestic product contractions in many economies across the region. Analysis by Bloomberg Economics suggests it won’t be an easy recovery.

Emerging Markets

The central banks of Zambia and Zimbabwe increased their benchmark interest rates this week. Together with neighboring Mozambique, which hiked last month, they are the only monetary policy authorities globally to raise borrowing costs in 2021.

Other emerging-market central banks may follow Africa’s example: Turkey already switched from substantial easing to aggressive tightening midway through 2020 — Argentina, Brazil and Nigeria are also set to take hawkish turns this year, according to Bloomberg Economics.

World

Over 100 million workers in eight of the world’s largest economies may need to switch occupation by 2030 as the Covid-19 pandemic accelerates changes to the labor force, according to research by McKinsey.

Mounting concern about a global chip shortage flags the possibility that industry faces a supply-chain crunch. With automakers particularly at risk, countries like Germany and Mexico stand out as most exposed among major economies, according to calculations by Bloomberg Economics.

©2021 Bloomberg L.P.

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Canadian dollar forecasts boosted as vaccine rollout accelerates: Reuters poll

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) – Canadian dollar forecasts for the coming months have been raised by strategists, reflecting recent gains for the currency but also expectations commodity prices will benefit from the reopening of the global economy, a Reuters poll showed.

Canada is a major producer of commodities, including oil, which has soared about 80% since November, helped by supply cuts from major producers and the prospect of stronger global economic growth this year as COVID-19 vaccines roll out.

The United States expects to have enough vaccine for every American adult by the end of May. Canada‘s vaccination campaign is also ramping up after earlier supply disruptions. Its target for full rollout is September.

“I think the economy is going to open up quickly and oil prices are going to stay firm,” said Ronald Simpson, managing director, global currency analysis at Action Economics. “Rising activity in Canada is going to probably help the Canadian dollar as well.”

Canada‘s economy grew at an annualized rate of 9.6% in the fourth quarter. It probably expanded again in January despite lockdowns in some provinces to contain the pandemic.

Evidence of economic resilience has raised speculation the Bank of Canada will reduce its bond purchases as soon as April. The central bank is due to make an interest rate decision on March 10.

The median forecast of nearly 40 analysts in the March 1-3 poll was for the Canadian dollar to edge 0.4% higher to 1.26 per U.S. dollar, or 79.37 U.S. cents, in three months, compared with a 1.27 forecast in February’s poll. It was then expected to advance to 1.25 in one year.

The loonie has rallied about 16% since last March, helped by declines for the safe-haven U.S. dollar. Last Thursday, it touched a three-year high at 1.2464 but has since been buffeted by global market volatility as bond yields surged.

For some analysts, the loonie’s move higher was too far, too fast. That could leave it vulnerable to a pullback in the near term even if the longer-term outlook remains bright.

“While we maintain our cautiously bullish view on the Canadian dollar over the coming twelve months, headwinds to this view over the next quarter are plentiful,” analysts at Monex Europe and Monex Canada, including Simon Harvey, said in a note.

Potential headwinds include an earlier timeline for OPEC to raise output, the analysts said.

(For other stories from the March Reuters foreign exchange poll:)

 

(Reporting by Fergal Smith; polling by Swathi Nair and Nagamani Lingappa; editing by Larry King)

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South Korea economy shrank in 2020 for 1st time in 22 years – Yahoo Canada Finance

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SEOUL, Korea, Republic Of — South Korea’s central bank says the country’s economy shrank for the first time in 22 years in 2020 as the coronavirus pandemic destroyed service industry jobs and depressed consumer spending.

Preliminary data released by the Bank of Korea on Thursday showed the country’s gross domestic product last year contracted 1% from 2019. It was the first annual contraction since 1998, when South Korea was in the midst of a crippling financial crisis.

The economy would have been even worse if not for the country’s technology exports, which saw increased demand driven by personal computers and servers as the pandemic forced millions around the world to work at home.

The bank expects South Korea’s economy to manage a modest recovery this year driven by exports. But it says it would take a longer time for the job market to recover from the damage to services industries such as restaurants and transportation.

The bank since March last year has maintained its policy rate at an all-time low of 0.5% to help pump money into the economy. But experts say traditional financial tools aimed at lowering borrowing costs have had only limited effect during the pandemic that has damaged both supply and demand.

The country reported another new 424 cases of the coronavirus on Thursday, bringing its national caseload to 91,240, including 1,619 deaths.

The Associated Press

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Canadian dollar clings to this week’s gains as oil climbs

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar was little changed against its broadly stronger U.S. counterpart on Wednesday, holding on to this week’s gains as oil prices rose and domestic data showed the value of building permits scaling a record high in January.

The loonie was trading nearly unchanged at 1.2629 to the greenback, or 79.18 U.S. cents. Since the start of the week, it has advanced 0.9%.

Canada‘s “strong” GDP data and the rally in oil prices have helped underpin the Canadian dollar, said George Davis, chief technical strategist at RBC Capital Markets.

The price of oil, one of Canada‘s major exports, settled 2.6% higher at $61.28 a barrel, boosted by a huge drop in U.S. fuel inventories and expectations that OPEC+ producers might decide against increasing output when they meet this week.

Canadian building permits rose 8.2% in January from December to C$9.9 billion, surpassing the previous record set in April 2019, Statistics Canada said.

On Tuesday, data showed that Canada‘s economy grew at an annualized rate of 9.6% in the fourth quarter and likely rose again in January, boosting speculation the Bank of Canada will reduce its bond purchases soon.

The central bank is due to make an interest rate decision next Wednesday.

A break of 1.2587 would add “to positive CAD momentum,” while the currency could find buyers at 1.2655, Davis said.

The U.S. dollar rose against a basket of major currencies as investors priced for strong U.S. growth relative to other regions.

Canadian government bond yields were higher across a steeper curve in tandem with U.S. Treasury yields. The 10-year rose 7.6 basis points to 1.401% but was trading well below Friday’s 13-month high at 1.501%.

 

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

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