2024-04-24 19:40
Canadian dollar weakens 0.3% against the greenback Trades in a range of 1.3656 to 1.3728 Price of U.S. oil settles 0.7% lower 10-year yield hits a 5-month high at 3.834% TORONTO, April 24 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday as domestic data showed a surprise decline in retail sales, bolstering expectations the Bank of Canada would begin cutting interest rates in the coming months. Canadian retail sales decreased 0.1% in February, led by a drop in sales at gasoline stations and fuel vendors. It was the second consecutive month of declining sales and compared with expectations for an increase of 0.1%. Preliminary estimates for March showed that retail sales were flat and manufacturing sales declined 2.8%. "It does support the prevailing view right now that the Bank of Canada is getting closer and closer to easing rates," said Bipan Rai, global head of FX strategy at CIBC Capital Markets. "As the divergence with the U.S. comes into sharp relief, there could be some additional upside for dollar-Canada," he said. Money markets are betting that the Canadian central bank will begin easing interest rates before the Federal Reserve, with the first cut coming in June or July . The Canadian dollar was trading 0.3% lower at 1.37 to the U.S. dollar, or 72.99 U.S. cents, after moving in a range of 1.3656 to 1.3728. The decline for the loonie followed five straight days of gains, and came as the U.S. dollar (.DOXY) New Tab, opens new tab advanced against a basket of major currencies and the price of oil , one of Canada's major exports, settled 0.7% lower at $82.81 a barrel. Canadian government bond yields moved higher across a steeper curve, tracking moves in U.S. Treasuries. The 10-year was up 4.7 basis points at 3.807%, after earlier touching its highest level since Nov. 14 at 3.834%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-weakens-soft-data-supports-rate-cut-bets-2024-04-24/
2024-04-24 19:10
April 24 (Reuters) - A new lawsuit by U.S. hedge fund Appaloosa LP accuses the former Credit Suisse of misleading investors about its health before $17 billion of its bonds were written down to zero in a government-orchestrated rescue by Swiss rival UBS (UBSG.S) New Tab, opens new tab. In a complaint filed on Tuesday in the Newark, New Jersey federal court, Appaloosa said two investors it advised suffered significant losses when their Additional Tier 1 bonds were wiped out in March 2023, just 1-1/2 weeks after they began purchases. Appaloosa said Credit Suisse Chief Executive Ulrich Koerner falsely proclaimed that liquidity was "very strong" and "getting stronger" though the bank was suffering a deposit run, mirroring a run that led to Silicon Valley Bank's collapse that month. The lawsuit accuses Credit Suisse, Koerner and former Chairman Axel Lehmann of "lying to the market about Credit Suisse's deteriorating liquidity," and seeks unspecified damages under U.S. securities laws and a New Jersey racketeering law. UBS declined to comment. A lawyer for Appaloosa and the investors, Azteca Partners LLC and Palomino Master Ltd, did not immediately respond to a request for comment. The plaintiffs are based in Short Hills, New Jersey. Bloomberg reported the lawsuit on Tuesday. Additional Tier 1 bonds, or AT1 bonds, are a capital cushion that can support banks during market turmoil. Though they rank above shares in banks' capital structures, Switzerland's financial regulator FINMA had no obligation to pay holders of Credit Suisse's AT1 bonds. Its decision to seize the bonds while allowing UBS to buy Credit Suisse for $3 billion shocked investors, and has prompted many lawsuits in the United States and Europe. UBS raised $3.5 billion in November in its first AT1 bond sale since buying Credit Suisse. The case is Palomino Master Ltd et al v Credit Suisse Group AG et al, U.S. District Court, District of New Jersey, No. 24-05539. Sign up here. https://www.reuters.com/legal/ubs-faces-new-lawsuit-by-appaloosa-over-credit-suisse-17-bln-bond-wipeout-2024-04-24/
2024-04-24 18:45
April 24 (Reuters) - Alberta introduced more fire restrictions on Wednesday, as officials said the 2024 wildfire season had started earlier than usual due to ongoing drought and warned that the western Canadian province was entering a critical phase for fire risk. Around 30 people were forced to leave their homes in the Peace River region in the north of the province due to a fast-spreading wildfire on Tuesday, and local media reported inmates from the Peace River Correctional Facility were also evacuated. Earlier in the week, around 20 people were told to evacuate the Cold Lake First Nation due to a separate fire, although that order has since lifted. The evacuation orders mark what is expected to be another severe year for wildfires in western Canada, which is dealing with widespread drought and warmer-than-normal spring temperatures. There have been 205 wildfires in Alberta so far this year burning about 755 hectares, Alberta Wildfire spokesperson Josee St-Onge told a news conference, well above the five-year average of 120 wildfires and 230 hectares burned. "This is a critical time for wildfire in Alberta, snow has melted and exposed dead and dry vegetation which is extremely flammable," St-Onge said. "Until vegetation green-up happens wildfires will easily ignite and spread very quickly." In 2023, Canada endured its worst-ever year for wildfires, with more than 6,600 blazes burning 15 million hectares, an area roughly seven times the annual average. Eight firefighters died and 230,000 people were evacuated from their homes. Alberta forestry minister Todd Loewen said 200 wildfires have already been fully extinguished this year. "While the elevated number of new wildfire starts in 2024 points to concerning levels of wildfire danger, it also means our response tactics are working," Loewen said. "We will be introducing fire bans today," he added, referring to restrictions governing when people can light campfires and bonfires. Loewen said Alberta is training additional wildfire fighters and that hiring numbers were about 39% higher than last year. Sign up here. https://www.reuters.com/world/americas/alberta-warns-critical-time-wildfire-risk-evacuations-start-2024-04-24/
2024-04-24 15:47
SAO PAULO, April 24 (Reuters) - Brazil's central bank director Gabriel Galipolo said on Wednesday that the monetary authority should not get spooked with "short-term" market fluctuations and will need time to understand how recent moves affect its mandates. Emerging market currencies, including Brazil's real, have slumped in recent days as the dollar soared on rising geopolitical tensions and fading hopes of an interest rate cut by the U.S. Federal Reserve. Galipolo acknowledged that countries that started lowering rates early as inflation receded, such as Brazil, were among the most hit by the recent repricing of the U.S. yield curve and the strengthening of the greenback. Yet, he called at an event in Sao Paulo for "parsimony and serenity" as policymakers react to those moves. "The risk that we face is waiting too much to react and getting behind," Galipolo said. "(But) we want to give it time to understand how the adjustment in the U.S. interest rate curve plays out in our inflation mandate." Brazil's central bank delivered 50-basis-point interest rate cuts at each of its last six meetings and last month signaled another cut of the same magnitude for its May meeting, while saying the June decision would be more data-dependent. Due to increasing global and local uncertainties, however, Governor Roberto Campos Neto has opened the door for that easing pace to be reduced and market players such as JPMorgan already foresee a 25-basis-point cut next month. Sign up here. https://www.reuters.com/world/americas/short-term-market-moves-must-not-spook-brazil-central-bank-director-says-2024-04-24/
2024-04-24 13:55
LONDON, April 24 (Reuters) - Stress scenarios from Russia's economy ministry envisage GDP and real income growth almost grinding to a halt next year and the rouble diving from around 93 per dollar now to 107 as investments and oil prices fall, according to documents seen by Reuters. The baseline scenario unveiled by Economy Minister Maxim Reshetnikov on Tuesday paints a rosier picture, with the ministry improving its GDP growth forecast for 2024 to 2.8%. But even in this, the most optimistic of three scenarios, the ministry worsened its inflation outlook and expects the rouble to steadily weaken. The economy ministry declined to comment on the stress scenario, the most pessimistic. Reshetnikov pointed to risks of a global economic slowdown, continued sanctions pressure and restrictions on Russia's labour market, which he said were factored into the ministry's mid-level, "conservative" forecast. The conservative and stress scenarios envisage lower volumes of Russian oil and gas production and exports. The stress scenario accounts for the export price of Russian oil falling to $58.5 per barrel as early as this year, and dropping to $51.8 per barrel in 2025. Russia's Urals crude currently trades at around $79 per barrel. Should export prices for oil and gas and other commodities decline to the extent forecast in the stress scenario, GDP growth is seen slowing to 1.5% this year and 0.2% in 2025, compared with 2.8% and 2.3% in the baseline forecast. In that case, fixed capital investment would rise only 0.5% this year and fall by 1.5% in 2025; real growth in disposable income - put at 5.4% last year - would drop to 1.9% this year and 0.9% next. Under the stress scenario, the ministry forecasts that the rouble would cross well beyond the 100 threshold by 2025, averaging 106.9 that year, and sink to 120 per dollar by 2027. Inflation this year, already set to exceed the central bank's 4% target at 5.1%, would be close to last year's level at 7%. In 2025, it would exceed the bank's target again. Below is a table with the economy ministry's forecasts for 2024-27 under the baseline, conservative and stress scenarios: Sign up here. https://www.reuters.com/markets/europe/russian-ministry-stress-scenario-has-growth-stalling-rouble-diving-document-2024-04-24/
2024-04-24 13:04
April 24 (Reuters) - Mexico's consumer prices unexpectedly rose in the first half of April, national statistics agency INEGI said on Wednesday, reinforcing bets that the country's central bank will hold its benchmark interest rate at its next policy meeting. Inflation for the period was 0.09%, while economists polled by Reuters expected a price decrease of 0.03%. The monthly reading took annual inflation in Latin America's second-largest economy to 4.63%, up from 4.48% a month earlier. It also came in above the expected 4.48% and the Bank of Mexico's target of 3%, plus or minus 1 percentage point. Mexico's central bank lowered its benchmark rate in March by 25 basis points to 11%, but its governing board will likely hold it there for longer than markets expect, Deputy Governor Jonathan Heath told Reuters last week. He called for "more persistent" monetary policy given sticky inflation, echoing other members of the board. The inflation data, Capital Economics economist Kimberley Sperrfechter said, put the "final nail in the coffin" for a May rate cut, coupled with the shift in monetary easing expectations in the U.S. and the recent fall in Mexico's peso currency. "If anything, the latest developments call into question whether it will cut at the bank's subsequent meeting in June," she added. The closely watched core price index, which strips out some volatile food and energy prices, climbed 0.16% in the first two weeks of April and 4.39% in the 12-month period, meeting market expectations. Annual core inflation declined from 4.69% in early March, a trend that Pantheon Macroeconomics economist Andres Abadia said would typically encourage rate cuts if it weren't for challenges such as relatively sticky services inflation and global uncertainties affecting the Mexican peso. "As a result, we expect policymakers to maintain the current interest rate next month," he said. Sign up here. https://www.reuters.com/world/americas/mexicos-consumer-prices-up-009-early-april-2024-04-24/
