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Fall in Crude Oil Prices Puts USD/CAD on the Rise

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USD/CAD

A mid-October decline in crude oil prices produced a bleaker outlook for the immediate future of the Canadian dollar (CAD), which enabled the US dollar (USD) to get back on the front foot in the USD/CAD currency pair.

On October 15, crude oil prices shed over 3.5% of their value in a single day. The CAD is regarded as one of the world’s leading commodity currencies, such is the Canadian economy’s reliance on the money that it generates from exporting key goods.

Any decline in oil prices is liable to weaken the CAD, which thereby strengthens the USD’s position in comparison to the loonie. That was the case in March 2020, where oil prices plummeted to a four-year low and the USD/CAD rose to its highest level since May 2017.

Neither oil prices nor the USD/CAD currency pair behaved so dramatically in mid-October, but the general trends were the same. Experts have expressed their concerns about the future of oil prices in the coming months, so there may be more scope for the US dollar to make gains against its Canadian counterpart.

An otherwise strong year for CAD

While the USD’s position as a safe haven has proven reassuring to traders at several junctures throughout the year, the overarching narrative in 2020 for the USD/CAD currency pair is one of Canadian resilience.

USD/CAD rose by approximately 2% on June 12, with that single-day increase the consequence of the US Federal Reserve taking the investing community by surprise with its indication that interest rates would remain low for the next couple of years. That sent markets scrambling, with oil prices also falling to further weaken the CAD’s position.

Yet that was a fleeting moment of strength for the USD, with the CAD swiftly recovering its losses against the greenback. From June 12 to the start of September, the USD/CAD pair slumped by approximately 4.4%.

That saw its June mark of 1.3638 traded for prices in the region of 1.30 as September began. This is an indication of the strength of the CAD, as fewer Canadian dollars were required to purchase one US dollar.

USD/CAD

Source: Pixabay

 

That may not seem like a significant drop, given that the USD/EUR retracted by around 5.5% and the USD/GBP shrunk by around 5.9% in the same time period.

However, the USD/CAD currency pair is not one that is known for its volatility. This can be observed through the margin requirements put in place for forex brokers in Canada. Margin requirements contribute to Canada’s strict regulatory environment for currency trading. The margin requirement determines the percentage of their capital that a trader must put forward to open a new position on a market, with a higher margin percentage necessitating more funds upfront.

The reason that margin requirement is a good indication of a currency pair’s traditional volatility is that the pairs more prone to fluctuations have higher percentages. For example, the notoriously unpredictable pair of the South African rand and the Japanese yen (ZAR/JPY) usually comes with a margin requirement of around 29%, whereas the USD/CAD pair has a much more conservative 2% capital requirement for traders seeking to open up a position.

This makes the stretch between June and September for the USD/CAD currency pair particularly notable. The USD clawed back a small proportion of its losses in September, before almost retreating into the 1.31 region. The USD/CAD had not hovered around the 1.30/1.31 mark since January 2020, a testament to the CAD’s resurgence.

Oil concerns to dampen CAD optimism

The news of crude oil’s price decline gave the USD a platform to bounce back, with the USD/CAD ending October 16 at the 1.3225 level. Further gains are likely to be predicated on the long-term forecast for oil prices, with any bleak outlook for the commodity certain to be bad news for the Canadian dollar and the nation’s wider economy.

Other factors inevitably influence the USD/CAD currency pair, given the countries’ heavy trade links and geographical proximity. As demonstrated by that shift in momentum on June 12, the policies announced by either the Federal Reserve or the Bank of Canada can influence market sentiment.

General politics can also be significant. The last few months of 2020 for the USD/CAD are likely to be shaped by the outcome and immediate aftermath of the US presidential election, although this is not a phenomenon unique to the United States and the Canadian economy.

Markets all over the world will be affected by the victor’s presidential vision for the country, with their new social and fiscal policies having the potential to either instill confidence in the American economy or place the long-term future of the US dollar in jeopardy.

Given the US dollar’s prevalence all over the world, as a peg for some currencies and as the central part of dollarized economies, this promises to be an important close to the year. However, crude oil prices may still prove to be the dominant factor in shaping the USD/CAD currency pair.

USD/CAD

The International Energy Agency’s October report is grim reading for commodity currencies. The IEA calls the outlook ‘fragile’, raising serious concerns about the long-term prospects for growth in oil demand. The IEA anticipates a stock draw of 4 million barrels per day in the fourth quarter of the year, although this statistic should be caveated with the acknowledgement that these figures are coming off the back of record-high levels.

Yet the IEA ends its October report with the declaration that oil producers have little cause for optimism in the long term. At the start of 2020, some experts were predicting that oil prices would not drop below $50 per barrel (bbl) all year. Now, the IEA suggests that the projected curve for oil prices will not reach the $50bbl mark until 2023.

While markets will eventually adapt to these new oil price projections, Canada’s reliance on commodities makes it difficult to foresee any substantial immediate gains for the CAD against the USD. The USD/CAD currency pair may have moved in Canada’s favour for much of the year, but crude oil concerns may provoke momentum in the opposite direction.

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India Credit Downgrades Abate on Signs Economy Bouncing Back – Yahoo Canada Finance

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GlobeNewswire

Insights on the Contactless Biometrics Technology APAC Market to 2026 – Industry Analysis and Forecast

Dublin, Nov. 27, 2020 (GLOBE NEWSWIRE) — The “Asia Pacific Contactless Biometrics Technology Market By Component, By Application, By End User, By Country, Industry Analysis and Forecast, 2020 – 2026” report has been added to ResearchAndMarkets.com’s offering. The Asia Pacific Contactless Biometrics Technology Market is expected to witness market growth of 21% CAGR during the forecast period (2020-2026). Constant technological advances in enhanced experience are anticipated to provide positive opportunities for market growth over the coming years. The increase in disposable income worldwide is expected to drive the market. Brand and technology-sensitive buyers are anticipated to contribute to market demand. Smartphones are characterized by innovative features, technology and design, evolving product life cycles, extreme pricing, changing product imitation and technological advancements. The simplicity with which services, images, gallery and documentation are handled has intensified the reliance on smartphones. Growing demand and interest in music, gaming, travel navigation, entertainment; social and personalization are expected to be key drivers for the smartphone market. These are gradually becoming an alternative to PDAs, heavy laptops and space-consuming desktops. Various banks, fintech and financial services companies have established partners to provide bio-authentication for secure on-boarding and transactions, with facial, finger and voice recognition. Ubiquitous contactless payments have always been a long-term inevitability. All it took for them to become a smart short-term investment was for customers to avoid treating retail keypads as a luxury and more like a factor for disease. Based on Component, the market is segmented into Software, Hardware and Services. Based on Application, the market is segmented into Face, Voice, Fingerprint & Hand Geometry, Iris and Others. Based on End User, the market is segmented into Government, Transport & Logistics, Defense & Security, Consumer Electronics, Healthcare & Life Sciences, Banking & Finance and Others. Based on countries, the market is segmented into China, Japan, India, South Korea, Singapore, Malaysia, and Rest of Asia Pacific. The market research report covers theanalysis of key stake holders of the market. Key companies profiled in the report include Fujitsu Limited, Thales Group S.A. (Gemalto NV), Assa Abloy AB, NEC Corporation, Aware, Inc., Fingerprint Cards AB, IDEMIA SAS (Advent International, Inc.), Touchless Biometric Systems AG, M2SYS Technology, Inc., and nVIAsoft Corporation. Unique Offerings from the Publisher * Exhaustive coverage * Highest number of market tables and figures * Subscription based model available * Guaranteed best price * Assured post sales research support with 10% customization freeKey Topics Covered: Chapter 1. Market Scope & Methodology 1.1 Market Definition 1.2 Objectives 1.3 Market Scope 1.4 Segmentation 1.4.1 Asia Pacific Contactless Biometrics Technology Market, by Component 1.4.2 Asia Pacific Contactless Biometrics Technology Market, by Application 1.4.3 Asia Pacific Contactless Biometrics Technology Market, by End User 1.4.4 Asia Pacific Contactless Biometrics Technology Market, by Country 1.5 Methodology for the research Chapter 2. Market Overview 2.1 Introduction 2.1.1 Overview 2.1.2 EXECUTIVE SUMMARY 2.1.3 Market Composition and Scenario 2.2 Key Factors Impacting the Market 2.2.1 Market Drivers 2.2.2 Market Restraints Chapter 3. Competition Analysis – Global 3.1 Cardinal Matrix 3.2 Recent Industry Wide Strategic Developments 3.2.1 Partnerships, Collaborations and Agreements 3.2.2 Product Launches and Product Expansions 3.2.3 Mergers & Acquisitions 3.3 Top Winning Strategies 3.3.1 Key Leading Strategies: Percentage Distribution (2016-2020) 3.3.2 Key Strategic Move: (Partnerships, Collaborations, and Agreements : 2017, Nov – 2020,Apr) Leading Players Chapter 4. Asia Pacific Contactless Biometrics Technology Market by Component 4.1 Asia Pacific Contactless Biometrics Technology Software Market by Country 4.2 Asia Pacific Contactless Biometrics Technology Hardware Market by Country 4.3 Asia Pacific Contactless Biometrics Technology Services Market by Country Chapter 5. Asia Pacific Contactless Biometrics Technology Market by Application 5.1 Asia Pacific Face Contactless Biometrics Technology Market by Country 5.2 Asia Pacific Voice Contactless Biometrics Technology Market by Country 5.3 Asia Pacific Fingerprint & Hand Geometry Contactless Biometrics Technology Market by Country 5.4 Asia Pacific Iris Contactless Biometrics Technology Market by Country 5.5 Asia Pacific Other Application Contactless Biometrics Technology Market by Country Chapter 6. Asia Pacific Contactless Biometrics Technology Market by End User 6.1 Asia Pacific Government Contactless Biometrics Technology Market by Country 6.2 Asia Pacific Transport & Logistics Contactless Biometrics Technology Market by Country 6.3 Asia Pacific Defense & Security Contactless Biometrics Technology Market by Country 6.4 Asia Pacific Consumer Electronics Contactless Biometrics Technology Market by Country 6.5 Asia Pacific Healthcare & Life Sciences Contactless Biometrics Technology Market by Country 6.6 Asia Pacific Banking & Finance Contactless Biometrics Technology Market by Country 6.7 Asia Pacific Others Contactless Biometrics Technology Market by Country Chapter 7. Asia Pacific Contactless Biometrics Technology Market by Country 7.1 China Contactless Biometrics Technology Market 7.1.1 China Contactless Biometrics Technology Market by Component 7.1.2 China Contactless Biometrics Technology Market by Application 7.1.3 China Contactless Biometrics Technology Market by End User 7.2 Japan Contactless Biometrics Technology Market 7.2.1 Japan Contactless Biometrics Technology Market by Component 7.2.2 Japan Contactless Biometrics Technology Market by Application 7.2.3 Japan Contactless Biometrics Technology Market by End User 7.3 India Contactless Biometrics Technology Market 7.3.1 India Contactless Biometrics Technology Market by Component 7.3.2 India Contactless Biometrics Technology Market by Application 7.3.3 India Contactless Biometrics Technology Market by End User 7.4 South Korea Contactless Biometrics Technology Market 7.4.1 South Korea Contactless Biometrics Technology Market by Component 7.4.2 South Korea Contactless Biometrics Technology Market by Application 7.4.3 South Korea Contactless Biometrics Technology Market by End User 7.5 Singapore Contactless Biometrics Technology Market 7.5.1 Singapore Contactless Biometrics Technology Market by Component 7.5.2 Singapore Contactless Biometrics Technology Market by Application 7.5.3 Singapore Contactless Biometrics Technology Market by End User 7.6 Malaysia Contactless Biometrics Technology Market 7.6.1 Malaysia Contactless Biometrics Technology Market by Component 7.6.2 Malaysia Contactless Biometrics Technology Market by Application 7.6.3 Malaysia Contactless Biometrics Technology Market by End User 7.7 Rest of Asia Pacific Contactless Biometrics Technology Market 7.7.1 Rest of Asia Pacific Contactless Biometrics Technology Market by Component 7.7.2 Rest of Asia Pacific Contactless Biometrics Technology Market by Application 7.7.3 Rest of Asia Pacific Contactless Biometrics Technology Market by End User Chapter 8. Company Profiles 8.1 Fujitsu Limited 8.1.1 Company Overview 8.1.2 Financial Analysis 8.1.3 Recent strategies and developments: 8.1.3.1 Partnerships, Collaborations, and Agreements: 8.1.3.2 Product Launches and Product Expansions: 8.1.3.3 Acquisition and Mergers: 8.1.4 SWOT Analysis 8.2 Thales Group S.A. (Gemalto NV) 8.2.1 Company Overview 8.2.2 Financial Analysis 8.2.3 Segmental and Regional Analysis 8.2.4 Research and Development Expense 8.2.5 Recent strategies and developments: 8.2.5.1 Partnerships, Collaborations, and Agreements: 8.2.6 SWOT Analysis 8.3 Assa Abloy AB 8.3.1 Company Overview 8.3.2 Financial Analysis 8.3.3 Segment and Regional Analysis 8.3.4 Research & Development Expense 8.3.5 Recent strategies and developments: 8.3.5.1 Partnerships, Collaborations, and Agreements: 8.3.5.2 Acquisition and Mergers: 8.3.6 SWOT Analysis 8.4 NEC Corporation 8.4.1 Company Overview 8.4.2 Financial Analysis 8.4.3 Segmental and Regional Analysis 8.4.4 Research & Development Expenses 8.4.5 Recent strategies and developments: 8.4.5.1 Partnerships, Collaborations, and Agreements: 8.4.5.2 Product Launches and Product Expansions: 8.4.5.3 Acquisition and Mergers: 8.4.6 SWOT Analysis 8.5 Aware, Inc. 8.5.1 Company Overview 8.5.2 Financial Analysis 8.5.3 Regional Analysis 8.5.4 Research & Development Expense 8.5.5 Recent strategies and developments: 8.5.5.1 Product Launches and Product Expansions: 8.6 Fingerprint Cards AB 8.6.1 Company Overview 8.6.2 Financial Analysis 8.6.3 Research & Development Expense 8.6.4 Recent strategies and developments: 8.6.4.1 Partnerships, Collaborations, and Agreements: 8.6.4.2 Product Launches and Product Expansions: 8.7 IDEMIA SAS (Advent International, Inc.) 8.7.1 Company Overview 8.7.2 Recent strategies and developments: 8.7.2.1 Partnerships, Collaborations, and Agreements: 8.8 Touchless Biometric Systems AG 8.8.1 Company Overview 8.9 M2SYS Technology, Inc. 8.9.1 Company Overview 8.10 nVIAsoft Corporation 8.10.1 Company overview For more information about this report visit https://www.researchandmarkets.com/r/h2qip3Research and Markets also offers Custom Research services providing focused, comprehensive and tailored research. CONTACT: CONTACT: ResearchAndMarkets.com Laura Wood, Senior Press Manager press@researchandmarkets.com For E.S.T Office Hours Call 1-917-300-0470 For U.S./CAN Toll Free Call 1-800-526-8630 For GMT Office Hours Call +353-1-416-8900

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Robust economy ailing after bout with pandemic – Business in Vancouver

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The year 2019 seems like a distant memory in the COVID-19 era, but provincial economic accounts data confirmed that, heading into 2020, B.C.’s economy remained among the strongest in the country.

On an expenditure basis, real gross domestic product (GDP) expanded by 2.7% compared with 1.9% nationally and was on par with 2018’s performance.

B.C.’s solid gain last year was achieved despite weakness in most key segments. Household consumption growth decelerated sharply to 1.7% in 2019, down from 2.8% in 2018. This was the slowest expansion since a 0.3% gain in 2009.

Slower consumption growth was driven by fewer vehicle sales, weaker ancillary spending related to housing, and flat non-durable goods purchases.

Household consumption makes up about 60% of GDP. Overall consumption expenditures growth of 2.1% was propped up by stronger government spending, which rose 3.1%.

Housing was a drag on the economy. Investment in residential structures shrank by 1.5% during the year, following a 2.5% contraction in 2018.

Trade was also dismal. Real export growth slowed to 0.9% from 3.5% in 2018. This was partly offset by slowing imports, which decelerated to a gain of 2.7%, from 3.3% in 2018. 

Weaker growth across key segments was offset by a huge increase in investment spending. Private-sector investment jumped 22% from 2018 on a 35% increase in structure investment. Machinery and equipment was flat. Private investment contributed about 74% of headline growth. This surge reflected build-out of liquefied natural gas projects. Government investment, which gained 8.8%, also outperformed, reflecting investment in schools, hospitals and other infrastructure.

Nominal GDP came in at 4.3%, compared with 4.9% growth in 2018. Economic growth largely accrued to employees during the year. Aggregate wages and salaries were up 5.7%, as net operating surplus or profits fell 7%.

With mixed gains in 2019, headline growth marked a modest handoff to 2020 – but a short-lived one, as COVID-19 ravaged the economy this year. Economic output is forecast to contract by nearly 6% in 2020 due to the pandemic-driven shuttering of parts of the economy earlier in the year and the continuing effects of health measures. Rising COVID-19 cases in the fall and winter will pause the recovery phase observed since May, but growth is forecast to reach about 4% in 2021. •

Bryan Yu is deputy chief economist at Central 1 Credit Union.

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Economy

Robust economy ailing after bout with pandemic – Business in Vancouver

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The year 2019 seems like a distant memory in the COVID-19 era, but provincial economic accounts data confirmed that, heading into 2020, B.C.’s economy remained among the strongest in the country.

On an expenditure basis, real gross domestic product (GDP) expanded by 2.7% compared with 1.9% nationally and was on par with 2018’s performance.

B.C.’s solid gain last year was achieved despite weakness in most key segments. Household consumption growth decelerated sharply to 1.7% in 2019, down from 2.8% in 2018. This was the slowest expansion since a 0.3% gain in 2009.

Slower consumption growth was driven by fewer vehicle sales, weaker ancillary spending related to housing, and flat non-durable goods purchases.

Household consumption makes up about 60% of GDP. Overall consumption expenditures growth of 2.1% was propped up by stronger government spending, which rose 3.1%.

Housing was a drag on the economy. Investment in residential structures shrank by 1.5% during the year, following a 2.5% contraction in 2018.

Trade was also dismal. Real export growth slowed to 0.9% from 3.5% in 2018. This was partly offset by slowing imports, which decelerated to a gain of 2.7%, from 3.3% in 2018. 

Weaker growth across key segments was offset by a huge increase in investment spending. Private-sector investment jumped 22% from 2018 on a 35% increase in structure investment. Machinery and equipment was flat. Private investment contributed about 74% of headline growth. This surge reflected build-out of liquefied natural gas projects. Government investment, which gained 8.8%, also outperformed, reflecting investment in schools, hospitals and other infrastructure.

Nominal GDP came in at 4.3%, compared with 4.9% growth in 2018. Economic growth largely accrued to employees during the year. Aggregate wages and salaries were up 5.7%, as net operating surplus or profits fell 7%.

With mixed gains in 2019, headline growth marked a modest handoff to 2020 – but a short-lived one, as COVID-19 ravaged the economy this year. Economic output is forecast to contract by nearly 6% in 2020 due to the pandemic-driven shuttering of parts of the economy earlier in the year and the continuing effects of health measures. Rising COVID-19 cases in the fall and winter will pause the recovery phase observed since May, but growth is forecast to reach about 4% in 2021. •

Bryan Yu is deputy chief economist at Central 1 Credit Union.

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