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Dollar buoyed by signs of solid U.S. economy, pound ticks up – TheChronicleHerald.ca

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By Hideyuki Sano

TOKYO (Reuters) – The dollar held firm at the start of a holiday-thinned week on Monday, as U.S. data pointed to solid economic growth while the British pound bounced slightly after having suffered its biggest weekly fall in three years.

A batch of economic data published on Friday showed the U.S. economy, already in its longest expansion in history, appears to have maintained the moderate pace of growth as the year ended, supported by a strong labor market.

Gross domestic product increased at a 2.1% annualized rate, the Commerce Department said in its third estimate of third-quarter GDP. That was unrevised from November’s estimate.

“The U.S. economy appears to have stopped slowing. There is no indication it will be hitting a recession,” said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.

Earlier this year, investors were spooked by fears over the possibility of a U.S. recession when the U.S. yield curve inverted, which has been historically one of the most reliable signs of a U.S. downturn.

Separate data showed consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.4% last month as households stepped up purchases of motor vehicles and spent more on healthcare.

That contrasted with an unexpected deterioration in German consumer sentiment.

The euro stood at $1.10778 , little changed on the day but in retreat since it hit a four-month high of $1.12 on Dec. 13.

The dollar index =USD> was at 97.659, flat on the day but maintaining its recovery trend since hitting a five-month low of 96.605 on Dec. 12.

The dollar has been supported by optimism over the global economy since Washington and Beijing came to an interim trade agreement earlier this month.

China said on Monday it would lower tariffs on products ranging from frozen pork to some type of semiconductors next year, as Beijing looks to boost imports amid a slowing economy and a trade war with the United States.

U.S. President Donald Trump said on Saturday the United States and China would “very shortly” sign their so-called Phase 1 trade pact.

Against the yen, the dollar changed hands at 109.41 yen , little changed on the day and not far from a six-month high of 109.73 touched earlier this month.

“One thing to look at is whether market players cut their (yen-short) positions ahead of the holiday period on concerns there could be a flash crash like a year ago,” said Minori Uchida, chief currency analyst at MUFG Bank.

The dollar tumbled as much as 4.4% on the second trading day of this year as a lack of yen liquidity, due to a Japanese market holiday, amplified the dollar/yen’s fall sparked by a rare revenue warning from Apple Inc .

Currency speculators have cut their net short positions in the yen slightly in the week that ended last Tuesday after having increased bets against the currency constantly for a few months, data from the U.S. financial watchdog showed on Friday.

Some noted concerns over increasing tensions between North Korea and the United States.

North Korean leader Kim Jong Un held a meeting of top military officials to discuss boosting the country’s military capability, the state news agency reported on Sunday amid heightened concerns the North may be about to return to confrontation with Washington.

Sterling traded at $1.3011 , up slightly as it regained some stability after hitting a 2-1/2-week low of $1.2979 on Friday.

It fell 2.6% last week, the biggest weekly fall since October 2016, after UK Prime Minister Boris Johnson set December 2020 as a hard deadline to reach a trade agreement.

Graphic: World FX rates in 2019 http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html

(Editing by Lincoln Feast and Jacqueline Wong)

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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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Toronto Stock Exchange rises 1.21% to 19,366.69

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Toronto Stock Exchange

* The Toronto Stock Exchange‘s TSX rises 1.21 percent to 19,366.69

* Leading the index were SNC-Lavalin Group Inc <SNC.TO​>, up 16.0%, Village Farms International Inc​, up 9.8%, and Denison Mines Corp​, higher by 9.4%.

* Lagging shares were Aurora Cannabis Inc​​, down 7.2%, Centerra Gold Inc​, down 3.8%, and Canadian National Railway Co​, lower by 3.7%.

* On the TSX 194 issues rose and 35 fell as a 5.5-to-1 ratio favored advancers. There were 25 new highs and no new lows, with total volume of 225.7 million shares.

* The most heavily traded shares by volume were Enbridge Inc, Manulife Financial Corp and Cenovus Energy Inc.

* The TSX’s energy group rose 3.32 points, or 2.7%, while the financials sector climbed 4.80 points, or 1.3%.

* West Texas Intermediate crude futures rose 2.65%, or $1.69, to $65.51 a barrel. Brent crude  rose 2.68%, or $1.8, to $68.85 [O/R]

* The TSX is up 11.1% for the year.

This summary was machine generated May 14 at 21:03 GMT.

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Economy

U.S., Mexico, Canada to hold ‘robust’ talks on trade deal

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The United States, Mexico and Canada will next week hold their first formal talks on their continental trade deal, with particular focus on labor and environmental obligations, the U.S. government said on Friday.

Trade ministers from the three nations are set to meet virtually on Monday and Tuesday to discuss the U.S.-Mexico-Canada (USMCA) deal, which took effect in July 2020.

“The ministers will receive updates about work already underway to advance cooperation … and will hold robust discussions about USMCA’s landmark labor and environmental obligations,” the office of U.S. Trade Representative Katherine Tai said in a statement.

The United States is also reviewing tariffs which may be leading to inflation in the country, economic adviser Cecilia Rouse told reporters at the White House on Friday, a move that could affect hundreds of billions of dollars in trade.

The United States, testing provisions in the new deal aimed at strengthening Mexican unions, this week asked Mexico to investigate alleged abuses at a General Motors Co factory.

(Reporting by David Ljunggren; Editing by Hugh Lawson and Jonathan Oatis)

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