NEW YORK (Reuters) – The dollar recovered from a nine-week low on Thursday, lifted by a rise in U.S. Treasury yields after the government reported strong economic growth for the first quarter and an improvement in new jobless claims in the latest week.
U.S. benchmark 10-year Treasury yields rose 2 basis points on Thursday, to 1.639%, boosted by the upbeat economic reports.
Gross domestic product increased at a 6.4% annualized rate in the first quarter, the data showed, the second-fastest growth since the third quarter of 2003. First-quarter growth was powered by consumer spending, which increased at a 10.7% rate versus a 2.3% pace in the fourth quarter.
A separate report on Thursday showed U.S. initial claims for state unemployment benefits fell 13,000 to a seasonally adjusted 553,000 during the week ended April 24.
“Certainly a big part of the dollar’s move is the rise in yields today. There has been a pretty tight correlation between FX and rates,” said Erik Nelson, macro strategist at Wells Fargo Securities in New York.
“Everyone got complacent with the move lower in rates and the dollar got crushed in April. Now that yields are coming up and stabilizing a little bit, we are going to see some dollar strength,” he added.
Strong economic growth typically raises the value of the dollar: higher growth drives more spending, which in turn boosts prices. As prices rise, the Federal Reserve has historically intervened by raising interest rates to prevent inflation.
In afternoon trading, the dollar index, a gauge of the greenback’s value against six currencies, rose 0.1% to 90.596. Earlier, the index hit its lowest level since Feb. 26. The earlier dip in the dollar also drove the euro to a nine-week high, though the single currency has since stabilized to around $1.2116, down 0.1%.
The dollar on Wednesday fell after Fed Chair Jerome Powell dampened speculation about an early tapering of the U.S. central bank’s bond-buying program, saying employment was still far short of target.
The Fed’s dovishness was in marked contrast to the Bank of Canada, which has already begun to taper its asset purchases, sending the U.S. dollar sliding to a three-year trough against the loonie. The greenback was last down 0.2% against the Canadian currency at C$1.2281.
The U.S. dollar also struggled overnight after President Joe Biden’s push for another $1.8 trillion in spending risked expanding the U.S. budget and trade deficits, a perennial Achilles heel for the greenback.
The yen, however, struggled against the dollar, still reeling after the Bank of Japan earlier this week said inflation will fail to reach its key 2% target through early 2023.
The dollar was last up 0.3% versus the yen at 108.88 yen.
In the cryptocurrency market, ethereum, the second largest digital currency in terms of market capitalization, hit another record high on Thursday of $2,800.89. It was last down 0.7% at $2,732.09
Ethereum continues to garner institutional interest, especially with the explosion of decentralized finance, or DeFi, which are crypto platforms that facilitate lending outside of traditional banking institutions. These platforms are built on the ethereum blockchain.
(Reporting by Kate Duguid and Gertrude Chavez-Dreyfuss; Editing by Marguerita Choy and Paul Simao)
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
