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.
========================================================
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)
Economy
PM: Millennials and Gen Z drive Canadian economy – CTV News
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PM: Millennials and Gen Z drive Canadian economy CTV News
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Economy
Federal budget is about ensuring fair economy for ‘everyone’: Trudeau – Global News
Delivering remarks to his Liberal cabinet during a caucus meeting on Wednesday, Prime Minister Justin Trudeau emphasized that the newly-announced federal government is intended to help create a fair economy for “everyone” in Canada, particularly those from Millennials and Gen Z.
Economy
Russia to grow faster than all advanced economies says IMF – BBC.com
An influential global body has forecast Russia’s economy will grow faster than all of the world’s advanced economies, including the US, this year.
The International Monetary Fund (IMF) expects Russia to grow 3.2% this year, significantly more than the UK, France and Germany.
Oil exports have “held steady” and government spending has “remained high” contributing to growth, the IMF said.
Overall, it said the world economy had been “remarkably resilient”
“Despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops,” the IMF said.
The IMF is an international organisation with 190 member countries. They are used by businesses to help plan where to invest, and by central banks, such as the Bank of England to guide its decisions on interest rates.
The group says that the forecasts it makes for growth the following year in most advanced economies, more often than not, have been within about 1.5 percentage points of what actually happens.
Despite the Kremlin being sanctioned over its invasion of Ukraine, the IMF upgraded its January predictions for the Russian economy this year, and said while growth would be lower in 2025, it would be still be higher than previously expected at 1.8%.
Investments from corporate and state owned enterprises and “robustness in private consumption” within Russia had promoted growth alongside strong exports of oil, according to Petya Koeva Brooks, deputy director at the IMF.
Russia is one of the world’s biggest oil exporters and in February, the BBC revealed millions of barrels of fuel made from Russian oil were still being imported to the UK despite sanctions.
Away from Russia, the IMF downgraded its forecasts across Europe and for the UK this year, predicting 0.5% growth this year, making the UK the second weakest performer across the G7 group of advanced economies, behind Germany.
The G7 also includes France, Italy, Japan, Canada and the US.
Growth is set to improve to 1.5% in 2025, putting the UK among the top three best performers in the G7, according to the IMF.
However, the IMF said that interest rates in the UK will remain higher than other advanced nations, close to 4% until 2029.
The group expects the UK to have the highest inflation of any G7 economy in 2023 and 2024.
Chancellor Jeremy Hunt said the IMF’s figures showed that the UK economy was turning a corner.
“Inflation in 2024 is predicted to be 1.2% lower than before, and over the next six years we are projected to grow faster than large European economies such as Germany or France – both of which have had significantly larger downgrades to short-term growth than the UK,” he said.
Conflict in the Middle East
Economists at the IMF warned that if the Israel-Hamas conflict escalates further in the Middle East it could lead to rising food and energy prices around the world.
Continued attacks on ships in the Red Sea and the ongoing war in Ukraine could also affect the so far “remarkably resilient” global economy, it said.
A potential spike in food, energy and transport costs would see lower-income countries hardest hit, it added.
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