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Economy

US Dollar raise after U.S. data, but on track for largest monthly fall since July

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By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – The dollar rose on Friday, extending gains after upbeat data on U.S. personal income and spending as well as manufacturing in the U.S. Midwest, with market participants also taking profits on the currency’s short dollar positions this month.

The dollar index was down 2.4% for the month of April, its worst monthly performance since July 2020.

Data showing a 4.2% rebound in U.S. consumer spending in March, amid a 21.1% surge in income as households received additional COVID-19 relief money from the government, supported the dollar. That led to a 0.4% rise in the core personal consumption expenditures (PCE) index, compared with a gain of 0.3% the previous month.

“This will be the third time this year that the PCE reading has beaten expectations,” Adam Corbett, currency analyst, at Cambridge Global Payments, said in a research note after the data.

“Fed Chair Jerome Powell remained firm on the Fed’s interest rate path and QE (quantitative easing) program on Wednesday, leaving traders with the uncomfortable feeling inflation could run away – and run away quickly.”

Similarly, the dollar also gained after the Chicago Purchasing Management Index (PMI) showed a reading for April of 72.1, the highest in almost four decades.

In mid-morning trading, the dollar index was set to end the week flat, although still down 2.4% for the month as a whole. It was last up 0.4% at 91.007.

“This current strength in the dollar is likely a pivot to that seasonal trend that we tend to see in May and June,” said Mazen Issa, senior currency strategist at TD Securities in New York.

“Basically on the last day of Q1, we saw the dollar turn around to the softer side and continued unabated since, despite strong payrolls at the start of April. Seasonal trends suggest that April is one of the weaker months for the dollar.”

For a graphic on Dollar heads for fourth weekly loss:

https://fingfx.thomsonreuters.com/gfx/mkt/xegvbxrqovq/DXY.png

The Canadian dollar climbed to a more-than three-year high of C$1.2268 per greenback on Friday, on track for a 1.6% weekly gain that would be its biggest since the start of November. The U.S. dollar was last flat at C$1.2280.

After the Fed’s policy meeting on Wednesday, Powell acknowledged the U.S. economy’s growth, but said there was not yet enough evidence of “substantial further progress” toward recovery to warrant a change to its ultra-loose monetary settings.

The Fed’s dovishness was in marked contrast to the Bank of Canada, which has already begun to taper its asset purchases. Canada’s commodity-linked loonie got additional support from a surge in oil to a six-week peak, along with higher lumber prices.

Rising commodity prices earlier supported the Australian dollar, but in New York session it was down 0.3% at US$0.7740 because of broad dollar strength.

The euro traded 0.4% lower at $1.2071. It was up nearly 3% for the month versus the dollar and down 0.2% on the week.

The dollar also rose against the yen, up 0.1% at 109.05 <JPY=EBS>, rising 1% for the week.

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Currency bid prices at 10:48AM (1448 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 90.9450 90.6200 +0.37% 1.071% +91.0450 +90.5880

Euro/Dollar $1.2075 $1.2122 -0.38% -1.17% +$1.2127 +$1.2061

Dollar/Yen 109.0750 108.9150 +0.15% +5.57% +109.1200 +108.7100

Euro/Yen 131.71 131.99 -0.21% +3.77% +132.1900 +131.4600

Dollar/Swiss 0.9105 0.9089 +0.19% +2.93% +0.9118 +0.9082

Sterling/Dollar $1.3867 $1.3946 -0.56% +1.50% +$1.3958 +$1.3845

Dollar/Canadian 1.2284 1.2278 +0.05% -3.53% +1.2294 +1.2266

Aussie/Dollar $0.7739 $0.7766 -0.34% +0.60% +$0.7784 +$0.7731

Euro/Swiss 1.0994 1.1013 -0.17% +1.73% +1.1022 +1.0985

Euro/Sterling 0.8706 0.8691 +0.17% -2.58% +0.8717 +0.8682

NZ $0.7196 $0.7243 -0.60% +0.25% +$0.7254 +$0.7192

Dollar/Dollar

Dollar/Norway 8.2715 8.1895 +1.12% -3.56% +8.2815 +8.1820

Euro/Norway 9.9880 9.9355 +0.53% -4.58% +9.9915 +9.9215

Dollar/Sweden 8.4203 8.3705 +0.21% +2.73% +8.4257 +8.3620

Euro/Sweden 10.1677 10.1460 +0.21% +0.91% +10.1746 +10.1385

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Ritvik Carvalho, Editing by Hugh Lawson and Mark Heinrich)

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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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Economy

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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