The safe-haven yen rallied and the South African rand tumbled on Friday as investors turned cautious after Britain raised the alarm over a newly identified coronavirus variant spreading in the African nation.
The yen leapt as much as 0.56% to 114.68 per dollar, while the rand slumped to a more than one-year trough at 16.17 per dollar as concern flared about the B.1.1.529 variant, which might make vaccines less effective.
The risk-sensitive Australian dollar slid as much as 0.33% to a three-month low of $0.71265, ignoring a much-better-than-expected climb in retail sales.
“COVID worries are definitely playing a role in increasing demand for safe havens including the yen, and because South Africa is the location of this new variant, that’s an obvious reason to avoid the rand,” said Shinichiro Kadota, senior FX strategist at Barclays in Tokyo.
The British pound slipped to a new 11-month low of $1.3305.
Meanwhile, the euro rose 0.12% to $1.12185, stabilising after hitting its lowest level in nearly 17 months earlier in the week at $1.1186. Germany is considering following Austria’s lead and reimposing a COVID-19 lockdown with the continent once again the epicentre of the pandemic.
The dollar index – which measures the greenback against six peers, including the yen, euro and pound sterling – edged further away from Wednesday’s 96.938 – its highest level in nearly 17 months. It last traded at 96.715.
However, it was up 0.73% on the week, still headed for its fifth straight weekly gain.
Traders have ramped up bets that an increasingly hawkish Federal Reserve will lift rates by the middle of next year, while central banks in Europe, Japan and elsewhere stick to more dovish stances.
“If the COVID situation worsens, then dollar-yen could go down further, but otherwise the monetary policy divergence is definitely going to be weighing on the yen in the medium term,” said Kadota, who predicts dollar-yen will strengthen to 116 and beyond by the middle of next year.
On the flip side, 114 should provide a floor for the currency pair in the near term, “unless the world really changes for the worse,” he said.
Last week, Bank of Japan governor Haruhiko Kuroda reiterated his commitment to massive monetary stimulus, adding that the central bank stands ready to ramp it up further if necessary.
Overnight, minutes from the European Central Bank‘s October meeting showed most policymakers leaning toward continued stimulus and a cautious approach to any policy changes, despite the pressure from heated inflation.
By contrast, money markets are pricing for a Fed rate hike by July, with good odds it could come in June.
A potentially crucial signpost for U.S. policy direction is due next Friday, with the release of monthly payrolls figures.
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.
