Forex News

Employment in Canada rose by 90.4K in April 2024, the most in 15 months, following a 2.2K decrease in March and surpassing forecasts of 18K. Full-time positions increased by 40.1K while part-time jobs rose by 50.3K. Employment gains were widespread across various industries within the services-producing sector, particularly in professional, scientific and technical services (+26,000; +1.3%), accommodation and food services (+24,000; +2.2%), health care and social assistance (+17,000; +0.6%) and natural resources (+7,700; +2.3%). However, there were declines in the goods-producing sector, notably utilities (-5,000; -3.1%). Across Canadian provinces, employment increased in Ontario (+25,000; +0.3%), British Columbia (+23,000; +0.8%), Quebec (+19,000 +0.4%) and New Brunswick (+7,800; +2.0%).

The unemployment rate in Canada was at 6.1% in April of 2024, remaining unchanged from the two-year high from the earlier month, and slightly below market expectations of 6.2%. The relatively elevated rate, combined with a slowdown in average wages (4.8% vs 5%), aligned with the Bank of Canada’s rhetoric that higher interest rates are having a larger impact on the Canadian labor market, strengthening the argument for doves in the BoC’s Governing Council that a rate cut may be due in this quarter. Unemployment rose by 13,000 from the previous month to 1.3 million in the period, as a sharper increase in joblessness for the older population, offset a slight decrease among the core working age. In the meantime, net employment jumped by 90,400 to 20,491,000, sharply above market estimates of 18,000.

Mexico's industrial production shrank 3 percent from a year earlier in March of 2024, reversing from a 3.3 percent increase in the previous month and compared with market expectations of a 1.2 percent fall. It marked the first decline since February 2021, as production fell for manufacturing (-5 percent vs 2.3 percent in February) and mining (-5.5 percent vs -0.9 percent). At the same time, the output increased at a slower pace for utilities (0.1 percent vs 2.2 percent) and construction (5.7 percent vs 10.4 percent). On a seasonally adjusted monthly basis, industrial production rose 0.6 percent, rebounding from a 0.1 percent decrease in February and in line with market estimates.

The annual inflation rate in Brazil edged lower to 3.69% in April of 2024, the lowest in 10 months, from 3.93% in the previous month, loosely in line with market expectations of 3.66%. The seventh consecutive drop in the Brazilian inflation rate has driven price growth closer to the central bank’s target of 3.5%, favoring the doves in the BCB’s divided policy committee and increasing the likelihood of more rate cuts in the current cycle. Inflation slowed for housing and utilities (3.49% vs 4% in March), transportation (3.27% vs 3.7%), despite the sharp increase in fuel prices (4.91% vs 2.66%), and healthcare (5.88% vs 6.24%). In the meantime, household articles prices deflated faster (-0.59% vs -0.16%), while inflation for food and beverages was broadly unchanged 3.08% vs 3.1%). From the prior month, the CPI rose by 0.38%.

The annual inflation rate in Ukraine remained unchanged at 3.2 percent in Apil 2024. Consumer prices grew at a softer pace primarily for restaurants & hotels (10.9 percent vs 11.7 percent), alcoholic beverages & tobacco (8 percent vs 8.4 percent), and miscellaneous goods & services (8.7 percent vs 10.1 percent). Additionally, the cost declined for footwear & clothing (-6.2 percent vs -6.7 percent), recreation & culture (-2.3 percent vs -2.3 percent), and food & non-alcoholic beverages (-0.5 percent vs 0.2 percent). On the other hand, it accelerated for housing & utilities (12.9 percent vs 12.8 percent), health (9.5 percent vs 9.1 percent), and transport (9 percent vs 6 percent). On a monthly basis, inflation slowed to 0.2 percent from 0.5 percent in March.

Stock futures in the US were higher on Friday, with the three major averages rising nearly 0.3%, with the major averages up nearly 0.3%, building on gains from the previous day. Traders are optimistic about potential interest rate cuts by the Fed this year, especially after yesterday's higher-than-expected claims data. On the week, the S&P 500 gained 1.7% so far, the Dow Jones added 1.8% and the Nasdaq rose 1.2%. Today, comments from Fed officials will be closely watched, along with next week's key inflation data. On the corporate front, megacap stocks including Microsoft (0.3%), Apple (0.2%), Nvidia (1.3%), Amazon (0.3%) and Meta (0.5%) were higher before the opening bell. Meanwhile, Novavax shares soared more than 110% in premarket trading after the vaccine maker announced a multi-billion dollar deal with Sanofi to co-commercialize its Covid vaccine starting next year.

ECB officials are increasingly considering the possibility of rate cuts, as revealed in the minutes of the latest ECB meeting. While awaiting further data, they noted a strengthening argument for such action, particularly as inflation is projected to continue its downward trajectory. The updated staff projections, indicating a swifter return of inflation to the 2% target, were welcomed, largely driven by falling energy prices. Yet, officials remained cautious, highlighting concerns about persistent domestic price pressures, including robust wage growth and sluggish labor productivity. They emphasized the fragility of the disinflationary process, contingent upon favorable developments in wages, profits, and productivity, underscoring the need for more comprehensive insights by the June meeting.

Uranium prices were above $93 per pound in May, hovering close to their highest level in two months, as tight near-term supply magnified speculative buying from physical trusts. The US Senate approved a bill to ban selected imports of nuclear fuel from Russia, the world’s top producer. Should President Biden pass the bill, Western converters and enrichers would fall under added capacity strains as trade restrictions and voluntary shuns of Russian fuel drive utilities to compete for long-term contracts. Such a scenario would be magnified by Russian retaliation in banning exports to the US. This added to supply downgrades of uranium ores from Canada and Kazakhstan, compounding the rally for uranium prices due to its bullish long-term demand. Most recently, the US and 20 other countries announced plans to triple their nuclear power by 2050. China leads the nuclear energy bets, currently building 22 of 58 global reactors, while Japan restarted projects to build nuclear reactors.

Latvia recorded a deficit of EUR 262.1 million in March 2024 compared to EUR 275.4 million deficit in the corresponding month of the previous year. Exports dropped by 18.8% to EUR 1,522 million, led by lower sales of wood, articles of wood & wood charcoal (-14.1%), electrical machinery & equipment (-20.6%) and mineral fuels, mineral oils & products of their distillation (-47%). Most exports were to Lithuania (18.2%) of total exports, followed by Estonia (12.8%) and Germany (6.9%). Moreover, imports also fell by -17% to EUR 1,784 million as purchases decreased for electrical machinery & equipment (-18.2%), vehicles & their parts (-32.4%) and machinery & mechanical appliances (-23%). The main importing partners for the period were Lithuania, accounting for (19.6%) of total imports, followed by Poland (11.6%) and Germany (11.2%).

Prices for iron ore cargoes with a 62% iron ore content were at the $117 per tonne mark, trading in a relatively tight range since hitting the two-month high of $120 on May 6th amid strong demand for input materials from Chinese steel mills. Despite the pessimistic outlook for domestic construction, foreign demand for cheap Chinese steel allowed mills to allocate their metal to foreign markets and keep production elevated. The developments extended calls from foreign governments that overcapacity in China’s steel production leads to dumping and anti-competitive export practices, underscoring the elevated steel output out of the world’s top producer. Recent data showed that Chinese steel export volumes surged by nearly 30% for the second straight month in April, underpinning demand for iron ore input. On the supply front, Fortescue noted that shipments for the year should be at the lower range of its guidance due to problems in key mines, limiting supply out of Australia.

Portugal's trade deficit narrowed to €1.621 billion in March 2024 from €2.092 billion in the same month last year. Exports tumbled by 13.6% year-on-year to €6.768 billion, driven by lower sales of capital goods (-20.4%); transport equipment (-18.8%); processed industrial supplies (-15.7%); and processed fuels & lubricants except motor spirit (-14.8%). Among major trade partners, exports fell to the UK (-18.3%), France (-16.2%), Spain (-15.8%), the US (-15.8%), and the Netherlands (-15.1%). Imports went down at a steeper 15.5% to €8.389 billion, mainly due to lower purchases of primary fuels & lubricants (-38.9%), processed industrial supplies (-27.2%), and capital goods (-13%). Imports fell from Spain (-16.2%), the Netherlands (-15.9%), and Italy (-11.8%).

The National Bank of Serbia maintained its benchmark interest rate at 6.5% in May 2024in line with expectations. The deposit and lending rates were also kept at 5.25% and 7.75%, respectively. The lender cited the following factors contributing to its decision: the medium-term inflation projection, elevated global price pressures, and uncertainty regarding the movements in the cost of energy and other primary products. In Serbia, inflation continued to slow down faster than expected to 5% in March. It is anticipated to reach the target range in May 2024 and the target itself by the end of the year. Meanwhile, the country's growth is estimated to have reached 4.6% year-on-year in Q1 of 2024. Its future decisions the central bank will base on the speed of disinflation processes.

Industrial sales in Italy increased by 2 percent from the previous month in February 2024, the most since August 2022, reversing a downwardly revised 3.2 percent fall in the prior month. Demand for industrial goods rose both in the foreign market (4 percent) and the domestic market (1.1 percent). Sales increased for capital goods (4.9 percent), intermediate goods (1.3 percent), energy (0.6 percent), and consumer goods (0.2 percent). On a yearly basis, industrial sales fell by 1.7 percent, following a 3.9 percent decline in January.

Producer prices in Macedonia fell for the tenth consecutive month by 1.5% year-on-year in March 2024, after a 2.2% decline in February, mainly due to continued price reductions in mining & quarrying (-8.4% vs -12.2% in February) and manufacturing (-1.3% vs -1.6%). In contrast, prices increased for electricity, gas, steam & air conditioning supply (0.1% vs -6.3%) and maintained the same increase pace for water supply, sewerage, waste management & remediation services (1.6%). On a monthly basis, prices increased by 0.5% compared to February.

FR40 increased to an all-time high of 8258.00 Index Points. Over the past 4 weeks, France Stock Market Index (FR40) gained 2.9%, and in the last 12 months, it increased 11.85%.

Annual inflation rate in Latvia accelerated to 1.1% in April 2024 from 0.9% in March, driven by a higher cost of goods & services related to transport (3.2% vs 2.1%) and alcoholic beverages & tobacco (5.9% vs 4.7%). Also, prices fell less for housing & utilities (-6.1% vs -6.9%). On the other hand, inflation softened for food & non-alcoholic beverages (0.6% vs 0.7%) and health (6.4% vs 6.5%). On a monthly basis, consumer prices rose by 0.5%, slowing from a 1.2% gain in March.

Government bond yields are trading lower on Friday. Top losers are Greece 10Y (-4.40bps), Russia 10Y (-3.50bps) and Italy 10Y (-3.30bps). Gains are led by Switzerland 10Y (2.15bps).

The trade deficit in Cyprus decreased to EUR 549 million in March 2024 from EUR 640 million in the same month of the previous year, preliminary estimates showed. Imports fell by 20.1% to EUR 810 million, with arrivals from the EU dropping by 13.7% to EUR 549 million and from third countries by 30.9% to EUR 261 million. Meanwhile, exports plunged by 30.4% to EUR 261 million as sales to outside the EU plummeted by 50.3% to EUR 147 million, while those from the EU increased by 44.4% to EUR 114 million.

Industrial production in Greece shrank by 0.6% year-on-year in March 2024 from an increase of 1.6% in the previous month. It marks the first contraction after 6 consecutive months of expanding. Output declined for mining & quarrying (-2.5%) and manufacturing (-2.3%) and in contrast, output grew for water supply (+1.6%) and electricity (+8.2%). On a seasonally adjusted monthly basis, industrial activity fell by 1.3%, after a 1.7% decline in the previous month.

Greece’s trade deficit narrowed to EUR 2.4 billion in March of 2024 from EUR 2.6 billion in the corresponding month from the previous year. Imports fell by 10.1% from the previous year to EUR 6.7 billion in the period. In the meantime, exports declined by 11.7% to EUR 4.3 billion. Both categories fell sharply due to the gradual stabilization of shipping and energy prices. Considering the first three months of the year, the country's trade shortfall widened to EUR 8 billion from EUR 7.3 billion in the same period of 2023. Exports declined 11% to EUR 12.3 billion, while imports fell by a slower 4.2% to EUR 20.3 billion.