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Economy

U.S. Dollar broadly weaker after U.S. jobs data disappoint

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By John McCrank

NEW YORK (Reuters) -The dollar fell to its lowest in more than two months on Friday after U.S. jobs data for April came in well below expectations, putting a damper on hopes that a roaring economic recovery would spur higher rates and light a fire under the greenback.

Nonfarm payrolls increased by only 266,000 jobs last month after rising by 770,000 in March, the Labor Department said in its closely watched employment report. Economists polled by Reuters had forecast a rise of 978,000 jobs.

“The number was so out of consensus, that I think the market expectation of super-high rates and a squeeze on inflation is going to go down by the wayside, and that obviously means more liquidity from the Fed,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

It also means U.S. interest rates will stay at ultra-low levels for quite a while and that is going to keep the pressure on the dollar, Schlossberg added.

The dollar was down 0.63% at 90.297 against a basket of major currencies, having dropped as low as 90.209, its lowest since Feb. 26, following the payrolls data.

The euro was up 0.75% against the greenback at $1.21555 and the British pound was up 0.73% at $1.3993.

“This is only one report, but this is changing many traders’ thinking on how this recovery is unfolding,” said Edward Moya, senior market analyst at FX broker OANDA, in New York.

Elsewhere, China’s exports unexpectedly accelerated in April and import growth hit a decade high, helping to push the yuan and Asian stocks higher.

China’s yuan rose to a more than two-month high versus the dollar and was set for its longest weekly winning streak since September, helped by the strong trade data and softer dollar.

The MSCI emerging market currency index hit a record high of 1741.34 on Friday, lifted by gains in the Chinese yuan and the weaker greenback.

Emerging market currencies were also benefiting from the “commodity supercycle”, said Simon Harvey, FX analyst at Monex Europe.

Commodity-linked currencies were higher, with the exception of the Canadian dollar, which was near flat at 1.21505 to the U.S. dollar, following a worse-than-expected Canada jobs report for April due to a third wave of COVID-19 lockdowns. The loonie had surged on Thursday to its strongest in more than three years.

The Australian dollar was up 0.72% versus the U.S. dollar, at 0.7841. The Aussie has been supported by a strong rally in the prices of Australia’s top export earner, iron ore.

“We expect the likes of AUD, CAD and NOK to remain well supported with the backdrop for positive optimism over global growth still quite favourable”, MUFG head of research Derek Halpenny wrote in a note, referring to the Australian and Canadian dollars and Norwegian crown.

In cryptocurrencies, ether rose 1.35% to $3,537.29, after hitting an all-time high on Thursday.

Bitcoin was up 2.98%, at $58,128.86.

Meme-based virtual currency Dogecoin, which began as a satirical critique of 2013’s cryptocurrency frenzy, was up 4.49% at $0.6107, ahead of an appearance by Tesla Inc Chief Executive Officer, Elon Musk on Saturday Night Live this weekend.

Musk’s tweets about Dogecoin in the past have helped send the digital currency, which is up more than 14,000% this year alone, skyward.

“Post-SNL, some crypto traders could abandon short-term Dogecoin bets once it becomes clear that it is not skyrocketing to the moon or at the heavily eyed $1 level,” said OANDA’s Moya.

(Reporting by John McCrank in New York; additional reporting by Elizabeth Howcroft in London; Editing by Steve Orlofsky and Emelia Sithole-Matarise)

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Economy

Canadian retail sales slide in April, May as COVID-19 shutdown bites

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december retail sales

Canadian retail sales plunged in April and May, as shops and other businesses were shuttered amid a third wave of COVID-19 infections, Statistics Canada data showed on Wednesday.

Retail trade fell 5.7% in April, the sharpest decline in a year, missing analyst forecasts of a 5.0% drop. In a preliminary estimate, Statscan said May retail sales likely fell by 3.2% as store closures dragged on.

“April showers brought no May flowers for Canadian retailers this year,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note.

Statscan said that 5.0% of retailers were closed at some point in April. The average length of the closure was one day, it said, citing respondent feedback.

Sales decreased in nine of the 11 subsectors, while core sales, which exclude gasoline stations and motor vehicles, were down 7.6% in April.

Clothing and accessory store sales fell 28.6%, with sales at building material and garden equipment stores falling for the first time in nine months, by 10.4%.

“These results continue to suggest that the Bank of Canada is too optimistic on the growth outlook for the second quarter, even if there is a solid rebound occurring now in June,” Mendes said.

The central bank said in April that it expects Canada’s economy to grow 6.5% in 2021 and signaled interest rates could begin to rise in the second half of 2022.

The Canadian dollar held on to earlier gains after the data, trading up 0.3% at 1.2271 to the greenback, or 81.49 U.S. cents.

(Reporting by Julie Gordon in Ottawa, additional reporting by Fergal Smith in Toronto, editing by Alexander Smith)

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Economy

Canadian dollar notches a 6-day high

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Canadian dollar

The Canadian dollar strengthened for a third day against its U.S. counterpart on Wednesday, as oil prices rose and Federal Reserve Chair Jerome Powell reassured markets that the central bank is not rushing to hike rates.

Markets were rattled last week when the Fed shifted to more hawkish guidance. But Powell on Tuesday said the economic recovery required more time before any tapering of stimulus and higher borrowing costs are appropriate, helping Wall Street recoup last week’s decline.

Canada is a major producer of commodities, including oil, so its economy is highly geared to the economic cycle.

Brent crude rose above $75 a barrel, reaching its highest since late 2018, after an industry report on U.S. crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.

The Canadian dollar was trading 0.3% higher at 1.2271 to the greenback, or 81.49 U.S. cents, after touching its strongest level since last Thursday at 1.2265.

The currency also gained ground on Monday and Tuesday, clawing back some of its decline from last week.

Canadian retail sales fell by 5.7% in April from March as provincial governments put in place restrictions to tackle a third wave of the COVID-19 pandemic, Statistics Canada said. A flash estimate showed sales down 3.2% in May.

Still, the Bank of Canada expects consumer spending to lead a strong rebound in the domestic economy as vaccinations climb and containment measures ease.

Canadian government bond yields were mixed across a steeper curve, with the 10-year up nearly 1 basis point at 1.416%. Last Friday, it touched a 3-1/2-month low at 1.364%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)

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Economy

Toronto Stock Exchange higher at open as energy stocks gain

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Toronto Stock Exchange edged higher at open on Wednesday as heavyweight energy stocks advanced, while data showing a plunge in domestic retail sales in April and May capped the gains.

* At 9:30 a.m. ET (13:30 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 16.77 points, or 0.08%, at 20,217.42.

(Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila)

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