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Economy

US Fed sends US dollar to 4th weekly loss; loonie at 3-year high

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By Kevin Buckland

TOKYO (Reuters) – The U.S. dollar skidded toward a fourth straight weekly decline against a basket of major peers on Friday, as the Federal Reserve stuck to its message of ultra-low interest rates for longer.

The dollar index was on course to end the week 0.2% lower, bringing its losses for April to 2.7%. A four-week losing streak would be the longest since the six-week slide to the end of last July, and the monthly loss would also be the biggest since July’s 4% slump.

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.

At the conclusion of the Fed’s latest policy meeting on Wednesday, Chair Jerome 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.

That growth accelerated in the first quarter, buoyed by government stimulus cheques, setting the course for what is expected to be the strongest performance this year in nearly four decades.

Signs that a strengthening economy, particularly in the labour market, might force the Fed into an earlier tapering of its asset-purchase programme had pushed the dollar index, or DXY, to a five-month high at the end of March.

“DXY may attempt a rebound in coming days as expectations turn to a potentially blockbuster April payrolls next week, but gains will prove short-lived with Fed officials to underscore Powell’s resolutely dovish stance,” Westpac strategists wrote in a client note.

The gauge is likely to drop below 90 in the near term, from 90.6 currently, but the “DXY’s depreciation trend is likely more of an ongoing grind than a wholesale sharp setback,” they said.

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 also supported the Australian dollar, which gained 0.2% to $0.77785, climbing back toward the six-week high of $0.78180 touched Thursday.

The euro has largely flat at $1.21165, near the two-month high of $1.2150 set the previous session. The shared currency is up 0.2% for the week and 3.3% for the month.

The yen, a traditional haven, saw opposite fortunes, hurt by a recovery in U.S. Treasury yields and a rally to record highs for global stocks that sapped demand for the safest assets.

Japan’s currency changed hands at 108.81 per dollar, near the two-week low of 109.22 from Thursday, setting it up for a loss of about 0.9% for the week.

China’s yuan traded near its strongest since March 3 in the offshore market, last changing hands at 6.4635 per dollar, even as gauges of Chinese factory activity showed a loss of momentum in April.

The yuan has jumped some 1.5% this month from a four-month low of 6.5875 on April 1, but Mizuho strategist Ken Cheung wrote in a client note that a re-pricing of growth trajectories for China versus the United States will keep the rally in check from here.

In cryptocurrencies, ether hovered below a record high of $2,800.89 set on Thursday, after being lifted this week on media reports about the European Investment Bank’s plans to launch a “digital bond” sale on the ethereum blockchain network.

“The use case of ethereum has just grown exponentially,” particularly with wider use of non-fungible tokens (NFTs), said Tim Frost, the chief executive at fintech company YIELD App.

“All signs point to a continued bull market.”

Bigger rival bitcoin traded at $54,256.24, vacillating around that level this week after dipping as low as $47,004.20 on Sunday, following a sharp retreat from the record high of $64,895.22 marked in the middle of the month.

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Currency bid prices at 0526 GMT

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

Previous Change

Session

Euro/Dollar

$1.2117 $1.2122 -0.04% -0.83% +1.2127 +1.2116

 

Dollar/Yen

108.8170 108.9100 -0.01% +5.43% +109.0450 +108.7250

 

Euro/Yen

131.86 131.99 -0.10% +3.89% +132.1900 +131.7900

 

Dollar/Swiss

0.9089 0.9089 +0.02% +2.75% +0.9092 +0.9084

 

Sterling/Dollar

1.3938 1.3946 -0.05% +2.02% +1.3957 +1.3939

 

Dollar/Canadian

1.2274 1.2278 -0.02% -3.60% +1.2283 +1.2268

 

Aussie/Dollar

0.7775 0.7766 +0.14% +1.09% +0.7783 +0.7767

 

NZ

Dollar/Dollar 0.7244 0.7243 +0.03% +0.89% +0.7253 +0.7241

 

 

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

 

(Reporting by Kevin Buckland; Editing by Lincoln Feast)

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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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