Canadian dollar recovers from Friday's 4-week low as oil rises - Reuters News
Canadian dollar recovers from Friday's 4-week low as oil rises - Reuters News
- Canadian dollar strengthens 0.2% against greenback
- Canadian factory sales decrease by 2.1% in April
- Price of U.S. oil rises 0.9%
- Canadian 10-year yield rises 1.3 basis points to 1.381%
By Fergal Smith
TORONTO, June 14 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Monday as oil prices climbed and investors looked past domestic data showing factory sales falling in April, with the loonie clawing back some of Friday's decline.
Canadian factory sales decreased by 2.1% in April from March, Statistics Canada said. Still, sales were up 1.1% after excluding vehicles and parts. (Full Story)
"Zooming out from the disruptions seen in the auto industry, the outlook for manufacturing sales is not all that bad," Omar Abdelrahman, an economist at TD Economics, said in a note.
"The reopening of provincial economies and strength in Canada's largest export market (the U.S.) should provide a lift to demand," Abdelrahman added.
The price of oil, one of Canada's major exports, was supported by economic recovery. (Full Story)
U.S. crude CLc1 prices rose 0.9% to $71.56 a barrel, while the Canadian dollar CAD= was trading 0.2% higher at 1.2143 to the greenback, or 82.35 U.S. cents. On Friday, it fell to its weakest since May 14 at 1.2177.
Speculators have cut their bullish bets on the Canadian dollar, the strongest G10 currency this year, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of June 8, net long positions had fallen to 45,281 contracts from 48,772 in the prior week.
A stronger Canadian dollar is usually seen hurting exporters, but the nature of the global economic recovery could help firms pass on their higher costs from the currency to customers, leaving exporters in less pain than in previous cycles. (Full Story)
Investors were awaiting a Federal Reserve policy announcement on Wednesday. Expectations that the Fed would stick to its dovish course have helped cap U.S. and Canadian bond yields. (Full Story)
Canada's 10-year yield CA10YT=RR touched its lowest level since March 3 at 1.365% before recovering to 1.381%, up 1.3 basis points on the day.
Canada April factory sales down 2.1% on autos - Reuters News
June 14 (Reuters) - Canadian factory sales decreased by 2.1% in April from March on transportation equipment, as well as the petroleum and coal products sector, Statistics Canada said on Monday. The auto sector had to ramp down production because of the global shortage of semiconductor chips.
Excluding vehicles and parts, manufacturing sales were up 1.1%.
Month/month change (%)
April Mar(rev) Mar(prev)
Sales -2.1 +4.0 +3.5
Sales ex-autos +1.1 +3.4 +2.9
Inventories +0.8 0.0 -0.4
Unfilled orders -0.1 +0.1 0.0
New orders -2.5 +5.5 +5.2
Apr Mar(rev) Mar(prev)
Inv/sales ratio 1.56 1.52 1.53
NOTE: All figures are seasonally adjusted. Analysts in a Reuters poll had predicted factory sales would decline by 1.1% in April from March.
Yields rise from three-month lows before Fed meeting - Reuters News
By Karen Brettell
NEW YORK, June 14 (Reuters) - U.S. Treasury yields rose from three-month lows on Monday as investors waited on the Federal Reserve’s meeting statement on Wednesday for new indications on when the U.S. central bank is likely to begin paring back its unprecedented monetary stimulus.
The Fed is not expected to announce any plans to pare its bond purchases until its August Jackson Hole economic symposium, though it may start dropping hints that it has started to talk about a taper.
Policymakers will also update their economic projections and markets will be focused on whether they upgrade their inflation projections and see a rate hike as likely in 2023.
Treasury yields tumbled last week after data showed a sharp increase in inflation for May, which some analysts interpreted as the market capitulating to the Fed’s view that recent price pressures will be temporary.
Subadra Rajappa, head of U.S. rates strategy at Societe Generale, said that the recent move was more likely driven by positioning as investors betting on further yield rises covered their trades.
“This rally in rates seems very counterintuitive. I still haven’t found a very strong case besides perhaps the offset of positioning, people are getting out of trades ahead of the FOMC,” Rajappa said.
Benchmark 10-year yields US10YT=RR rose one basis point on Monday to 1.47%, after falling to a three-month low of 1.43% on Friday. They have dropped from a one-year high of 1.78% in March.
The risk heading into Wednesday’s meeting statement is that the Fed could sound more hawkish than markets are currently pricing for, as the economy reopens and inflation posts strong increases, Rajappa said.
“It seems like too much of a lull given the risks associated with a taper communication,” she said.
Another key focus at this week’s meeting will be whether the Fed raises the interest its pays on excess reserves (IOER) as money market investors struggle with a lack of high-quality short-term assets.
The Fed’s reverse repo facility, which offers approved money managers the option to lend money to the Fed overnight in return for Treasury collateral, set a record $548 billion on Friday. Demand is expected to continue to grow as the Treasury continues to pare issuance of Treasury bills.
By raising the IOER the Fed can ease some downward pressure on short-term rates. Borrowing rates in the overnight repurchase agreement market USONRP= were at one basis point on Monday.
Some analysts say that the Fed is unlikely to make any adjustments unless the fed funds rate falls below 5 basis points, which it has so far held above. The rate USONFFE= was at 6 basis points on Friday.
Euro zone production stronger than expected in April - Reuters News
BRUSSELS, June 14 (Reuters) - Euro zone industrial production was stronger than expected in April, driven by a more than doubling of durable consumer goods output from a year earlier as economies steadily reopened after COVID-19 pandemic lockdowns, data showed on Monday.
The European Union's statistics office Eurostat said industrial output in the 19 countries sharing the euro rose 0.8% month-on-month for a 39.3% year-on-year surge.
Economists polled by Reuters had expected a 0.4% monthly and a 37.4% annual jump.
The biggest production gain in April against March was in durable consumer goods, where output rose 3.4% after 1.2% monthly declines in both February and March.
In year-on-year terms, the gain in durable consumer goods output was a spectacular 117.3% after a 34.5% annual rise in March, with capital goods also surging 65.4% year-on-year and intermediate goods up 38.7%.
UK shopper numbers dip 6.7% last week after strong previous week - Reuters News
LONDON, June 14 (Reuters) - Shopper numbers across Britain fell 6.7% in the week to June 12 compared with the previous week, which had been boosted by a school holiday and improved weather, researcher Springboard said on Monday.
It said shopper numbers, or footfall, fell 9.0% on high streets week-on-week, by 7.5% in shopping centres and by 0.9% in retail parks.
"UK retail destinations suffered post Bank Holiday blues last week, with footfall dropping back by around half of the uplift recorded in the week before, when the school half-term holiday coincided with the Spring bank holiday and amazing weather," said Diane Wehrle, Springboard's insights director.
Overall UK footfall increased 11.6% in the week to June 5.
Springboard said week to June 12 footfall was down 18.4% compared with the same week in 2019, before the pandemic started to disrupt traffic.
Non-essential stores reopened in England and Wales on April 12 after more than three months of COVID-19 lockdowns. They reopened in Scotland on April 26 and Northern Ireland on April 30. Indoor hospitality was allowed from May 17.
However, British Prime Minister Boris Johnson is expected to announce on Monday that the end of further restrictions will be delayed by several weeks following concerns about a rapid rise of Delta variant infections. (Full Story)
Springboard said that with the removal of restrictions set to be delayed by as much as a month, footfall is not likely to strengthen significantly over the next four weeks.
"However, it should receive a huge boost in the second half of July, particularly as this coincides with the start of the school summer break," said Wehrle.
