Canadian dollar pulls back ahead of Business Outlook Survey - Reuters News
Canadian dollar pulls back ahead of Business Outlook Survey - Reuters News
- Canadian dollar weakens 0.3% against greenback
- Loonie trades in range of 1.2311 to 1.2360
- Price of U.S. oil rises 0.2%
- Canadian bond yields rise across steeper curve
TORONTO, July 5 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday as attention turned to the release of the summer issue of the Bank of Canada's Business Outlook Survey, with the loonie giving back some of Friday's rally.
The loonie CAD= was trading 0.3% lower at 1.2354 to the greenback, or 80.95 U.S. cents, having traded in a range of 1.2311 to 1.2360.
On Friday, the currency notched its biggest gain in eight weeks, advancing nearly 1%, after some details of the U.S. nonfarm payrolls suggested space for the Federal Reserve to wait before tapering asset buying or hiking rates.
The Business Outlook Survey is due for release at 10:30 a.m. (1430 GMT) on Monday. It could offer clues on the Bank of Canada's policy outlook, with some analysts expecting the bank to cut bond purchases again at next week's policy announcement.
World stocks clung close to record highs, capped by worries about the Delta variant of COVID-19. Trading was thinner than usual with U.S. markets closed for the extended U.S. 4th of July weekend. (Full Story)
The price of oil, one of Canada's major exports, was driven higher by a disagreement inside OPEC+ about output policy. U.S. crude CLc1 prices were up 0.2% at $75.33 a barrel.
Canadian government bond yields were higher across a steeper curve. The 10-year CA10YT=RR rose 3.2 basis points to 1.406%, after earlier touching its lowest level since March 3 at 1.358%.
Growth in China's June services hits 14-month low - Caixin PMI - Reuters
BEIJING, July 5 (Reuters) - Growth in China's June services sector slowed sharply to a 14-month low, after a resurgence of COVID-19 in southern China, a private survey showed on Monday, adding to concerns the world's second-largest economy may be losing some momentum.
The Caixin/Markit services Purchasing Managers' Index (PMI) fell to 50.3 in June, the lowest since April 2020 and down significantly from 55.1 in May. It held just above the 50-mark, which separates growth from contraction on a monthly basis.
China's official services gauge had also shown a marked slowdown in June, though it remained well in expansion territory. The private survey typically focuses more on smaller companies. (Full Story)
Coupled with a slowdown in manufacturing, analysts say the PMI survey findings suggest that pent-up COVID demand may have peaked and China's robust economic rebound from the crisis is starting to moderate.
Though slower to recover from the pandemic than manufacturing, a gradual improvement in consumption in recent months had boosted the services sector.
But a COVID-19 outbreak of the more infectious Delta strain in the export and manufacturing hub of Guangdong in May-June and the subsequent imposition of anti-virus measures weighed on consumer and business activity.
A sub-index of new business stood at 50.5 in June, also the lowest since April 2020 when the sector was still paralysed by COVID-19 and lockdowns. Firms also cut staff in June for the first time in four months, as a result of slowing demand.
Karaoke outlets, restaurant owners and cinema operators in Guangdong province told Reuters that their business was adversely impacted by social distancing rules during the latest outbreak.
"Our cinema was closed from early June to early July due to the outbreak in Guangzhou. There were zero customers," said a receptionist surnamed Zhu at Zhongying International Cinema in Guangzhou, the provincial capital.
"But once we reopened on July 3, the customer flow actually increased, most likely because the pandemic is now under control or the summer holiday has begun," Zhu added.
ONE-OFF?
Some economists said the sharp slowdown was a one-off.
"Both official and Caixin services PMIs may rebound in July, driven by the release of pent-up demand for services following the containment of the latest wave of COVID-19 in Guangdong and a likely relaxation of some social distancing rules," said Lisheng Wang, China economist at Nomura.
While the government reacted quickly to contain the new wave of cases, and economic disruptions are easing, the private survey showed services providers' business outlook for the year ahead slipped to the lowest in nine months.
Air travel, accommodation and catering are especially susceptible to new COVID-19 outbreaks, analysts say.
Domestic airline capacity in June, measured by available seat kilometers (ASK), fell to the lowest in two years, according to aviation data provider Variflight. Flight capacity in Guangdong was particularly hit by local COVID-19 cases and summer thunderstorms, it added.
One bright spot in the survey was a marked easing in inflationary pressures, which have squeezed profit margins. Input costs rose at the slowest pace since September 2020, and services firms cut their prices charged for the first time in 11 months to win new business.
Caiman's June composite PMI, which includes both manufacturing and services activity, fell to a 14-month low of 50.6 from May' s 53.8.
Euro zone business activity soared in June as lockdowns lifted - Reuters News
By Jonathan Cable
LONDON, July 5 (Reuters) - Euro zone businesses expanded activity at the fastest rate in 15 years in June as the easing of more coronavirus restrictions brought life back to the bloc's dominant service industry, a survey showed on Monday.
But that surge in growth has come at a cost as inflationary pressures mounted due to labour shortages and disruptions to supply chains caused by the pandemic.
IHS Markit's final composite Purchasing Managers' Index (PMI), seen as a good gauge of economic health, jumped to 59.5 last month from May's 57.1, its highest level since June 2006.
That was ahead of the 59.2 "flash" estimate and well above the 50 mark separating growth from contraction.
"The index was at its 15-year high, confirming that the recovery in bloc's economy is well underway. At the same time, backlogs and producer price pressures show no signs of abating," said Mateusz Urban at Oxford Economics.
"The services PMI sub-index posted an increase. This indicated that the sector has benefited from easing of restrictions and increased consumer optimism on the back of advancing vaccination campaign.
An acceleration in vaccination programmes on the continent has meant governments have allowed more of the services industry to re-open and the sector's PMI soared to its highest reading since July 2007.
Activity in Germany's service industry grew in June at its fastest pace since March 2011 while in France the sector boomed following the easing of COVID-19 restrictions. (Full Story) ZRN002C4B
Meanwhile, in Britain - outside the euro zone and the European Union - the post-lockdown bounce-back for services firms eased only slightly in June but price pressures jumped by the most on record. GB/PMIS
World stocks clung close to record highs on Monday as worries about the Delta variant of COVID-19 offset the positive sentiment from surging euro zone business activity. MKTS/GLOB
PRICE RISE
A PMI covering euro zone manufacturers, released last week, showed factory activity expanded at its fastest pace on record in June but that they faced the steepest rise in raw materials costs in well over two decades.
Those inflationary pressures were also felt by the services industry and the composite input prices index bounced to the highest in nearly 21 years.
Although inflation risks are skewed to the upside the European Central Bank was expected to maintain its loose monetary policy and look through higher inflation expectations for a while before it acts, a Reuters poll found last month. ECILT/EU
With demand surging, and amid hopes of further easing of restrictions leading to a more normal way of life, optimism about the coming year improved. The services business expectations index climbed to 72.7 from 71.2, its highest since August 2000.
Investor morale in the euro zone rose for the fifth month in a row in July, its highest level since February 2018, lifted by reopening restaurants and retailers as well as tourism as coronavirus cases fall, another survey showed on Monday
Euro zone investor morale rises on upbeat services sector- Sentix - Reuters News
BERLIN, July 5 (Reuters) - Investor morale in the euro zone rose for the fifth month in a row in July, its highest level since February 2018, lifted by reopening restaurants and retailers as well as tourism as coronavirus cases fall, a survey showed on Monday.
Sentix's index for the euro zone climbed to 29.8 from 28.1 in June. A Reuters poll had pointed to a reading of 30.0.
A current conditions index surged to 29.8 from 21.3 . An expectations index eased to 29.8 from 35.3.
"The massive investments by member states, supported by a continuously expansive monetary policy by the European Central Bank, stabilised the euro zone economy during lockdowns," said Sentix Managing Director Manfred Huebner.
"This mainly helped manufacturing in the last 12 months," he added. "As restrictions are removed, services and trade are now also seeing an upward trend."
Sentix surveyed 1,114 investors from July 1 to July 3.
German service sector continues recovery as lockdown lifted- PMI - Reuters News
BERLIN, July 5 (Reuters) - Activity in Germany's service sector grew in June at its fastest pace since March 2011 as lockdown measures were lifted, particularly benefiting customer-facing businesses, a survey showed on Monday.
IHS Markit's final services PMI measuring activity in the sector rose to 57.5 from 52.8 in May. Yet the reading was lower than a flash value of 58.1.
The composite PMI index, which comprises both the services and manufacturing sectors, rose to 60.1 from 56.2 in the previous month, reflecting the continued recovery of the manufacturing sector. The reading was lower than a flash figure of 60.4.
"The surge in services activity in June was accompanied by a stronger expansion in manufacturing production, which puts the economy on course for a solid growth outturn in the second quarter and potentially an even better performance in the third quarter," said IHS Markit's Principle Economist Phil Smith.
"However, alongside a strong rebound in demand we're seeing costs continuing to soar, with the two factors combining to drive a rise in prices charged by services firms that's unprecedented in more than two decades of data collection."
Business is soaring for UK services firms, and so are prices - PMI - Reuters News
LONDON, July 5 (Reuters) - The post-lockdown bounce-back for British services firms eased only slightly in June but price pressures jumped by the most on record, adding to signs of a further rise in inflation ahead, a survey showed on Monday.
The IHS Markit/CIPS Purchasing Managers' Index for the sector edged down to 62.4 from 62.9 in May but was slightly higher than a preliminary June reading of 61.7.
Job creation was the fastest for seven years but even so staff shortages contributed to the highest level of backlogs since the survey began in 1996. That in turn helped to push up prices by the most on record for inputs and prices charged.
Britain's economy slumped by nearly 10% last year as the country suffered one of the world's highest COVID-19 death tolls.
But this year it is expected to grow faster than the United States and other advanced economies, helped by its early COVID-19 vaccination rollout and huge monetary and fiscal stimulus.
Despite the growth spurt and inflation running above its 2% target, the Bank of England has signalled it is in no rush to ease off on its support. It is waiting to see if unemployment rises as the government winds down its job subsidies over the next three months.
IHS Markit said there was a small fall in exports due to travel restrictions and uncertainty about quarantine policies. Some firms also said Brexit-related issues had dampened export orders to the European Union.
The composite PMI, including previously released manufacturing data, also eased back, slipping to 62.2 from May's 62.9 which was the highest reading since the series began in January 1998.
