U.S. Dollar stays firm as traders look to U.S. data for policy cues | Canada News Media
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U.S. Dollar stays firm as traders look to U.S. data for policy cues

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By Tom Westbrook

SINGAPORE (Reuters) – The dollar clung to a recent bounce on Monday as investors made a cautious start to a week crammed with central bank meetings and big-ticket U.S. economic data, waiting for clues on the outlook for global inflation and for policymakers’ responses.

Trade was thinned by holidays in Japan and China, which kept a lid on volatility, leaving the greenback to trade where it settled after a Friday leap. It held at $1.2020 per euro and crept to a three-week high of 109.58 yen.

The dollar index, measured against six major currencies, held at 91.322.

The index dropped 2% through April as a positive view of global recovery prospects lifted trade-exposed currencies at the dollar’s expense, but bounced with upbeat U.S. consumption data on Friday.

“We expect the dollar to trend lower because of the improving global economic outlook,” said Commonwealth Bank of Australia analyst Kim Mundy in an emailed note.

“Nevertheless,” she said “the risk of short bouts of dollar strength remain if solid data push U.S. Treasury yields materially higher.”

The Australian and New Zealand dollars were marginally firmer on Monday, though not enough to recoup a dip suffered on Friday. [AUD/]

The Aussie rose 0.1% $0.7718 to trade around its 20-day moving average, while the kiwi edged 0.2% higher to $0.7171, also just above its 20-day moving average. Sterling steadied at $1.3825. [GBP/]

Elsewhere in Asia China’s yuan drifted lower to 6.4781 per dollar in offshore trade following hawkish remarks from U.S. Secretary of State Antony Blinken.

The South Korean won hit a one-week low after North Korea vowed it would respond to what it regards as hostile U.S. policy, while pressure for a national lockdown in India pushed the rupee a little lower.

In crypto markets, ethereum broke past $3,000 to post a fresh record peak of $3,061.17.

DATA DELUGE

Purchasing Managers Index figures for manufacturers were positive in Asia on Monday and those due later on Monday are expected to show growth picking up speed in Europe and the United States. However the week’s major focus will be on U.S. manufacturing surveys due Wednesday and April labour market numbers on Friday.

Forecasts are that 978,000 jobs were created in the month. However analysts say the market response to a surprise either way may be hard to guess, as investors have begun to fret that strong data may prompt central bankers to taper their support.

“The risk is for a hotter number,” said Chris Weston, head of research at broker Pepperstone in Melbourne.

“But will good numbers lead to a broad risk-off vibe, as traders’ price in higher rate expectations, and the dollar rallies,” he added. “I suspect we’re getting to a point where really good data could start to become bad for markets.”

Dallas Fed President Robert Kaplan caused a stir on Friday by calling for beginning the conversation about tapering, although Federal Reserve Chair Jerome Powell has been clear that he is likely to be patient.

Powell is due to speak later on Monday and will be followed by a raft of Fed officials this week. Central bank policy meetings are also scheduled this week in Australia, Britain and Norway.

In Australia, no policy changes are expected on Tuesday although traders will look to a speech by deputy Reserve Bank of Australia governor Guy Debelle on Thursday for insight into the bank’s thinking around its bond purchases outlook.

Asset purchases are likewise the focus when the Bank of England meets on Thursday, as well as perhaps an upgrade of its economic outlook, while Norges Bank – which projects hiking rates this year – is expected to stick with its hawkish tone.

 

(Reporting by Tom Westbrook; Editing by Shri Navaratnam)

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Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

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