Saturday, August 30, 2014

IMF Lagarde’s Legal Issues Continue

French authorities have formally opened a negligence investigation into Christine Lagarde, the head of the International Monetary Fund (IMF).

She has been questioned about her role in awarding 400m euro (318m; $527m) in compensation to businessman Bernard Tapie in 2008. She denies wrongdoing.

Ms Lagarde, 58, was finance minister in President Nicolas Sarkozy’s government at the time of the award.

Mr Tapie supported Mr Sarkozy in the 2007 presidential election.

He was once a majority shareholder in sports goods company Adidas but sold it in 1993 in order to become a cabinet minister in Francois Mitterrand’s Socialist government.

via BBC

Friday, August 29, 2014

Gold Falls on Positive US Data But Keeps and Eye on Ukraine

Gold fell in New York as investors weighed signs of an improving U.S. economy against tension over Ukraine.

The U.S. and European powers joined Ukraine in condemning what they said were incursions by Russia as the government in Kiev sought to counter an offensive by separatist rebels. U.S. President Barack Obama said Russia faces “more costs and consequences” and the European Union has called for threats of further sanctions on Russian President Vladimir Putin.

Gold added 0.4 percent this month, rebounding from a two-month low of $1,273.40 an ounce set Aug. 21, even as improving U.S. data supported the case for the Federal Reserve to raise borrowing costs sooner than forecast. Data released yesterday showed the U.S. economy expanded more than previously forecast in the second quarter. Other reports showed the outlook for home sales improved and consumer confidence climbed.

“For gold to move substantially higher, it has to see more turmoil in the Ukraine either in the way of a widening conflict, or barring that, additional sanctions being imposed,” Edward Meir, an analyst at INTL FCStone Inc. in New York, wrote in a note. Precious metals have “to grapple with a rapidly improving macro outlook out of the U.S., which carries with it the very real, and bearish, possibility that the Fed will have to move on rates sooner than it is saying.”

Gold for December delivery fell 0.3 percent to $1,286.60 by 7:29 a.m. on the Comex in New York. It reached $1,297.60 yesterday, the highest since Aug. 20. Bullion for immediate delivery lost 0.3 percent to $1,285.75 in London, according to Bloomberg generic pricing.

via Bloomberg

Canadian Economy Grew at 3.1% in Q2

Canada’s economy accelerated at its fastest pace in more than two years in the second quarter, fresh evidence the country could be emerging from a period of uninspiring growth.

Gross domestic product expanded at an annual rate of 3.1 per cent in the second quarter, led by exports and household spending, Statistics Canada reported Friday. GDP grew 0.3 per cent in June from May, Statscan said.

Both figures were stronger than most on Bay Street were expecting. The consensus forecast was for growth at a 2.5-per-cent rate in the quarter and a 0.2-per-cent gain in June from May. Revisions left the first quarter even more disappointing than the sluggish annual rate of 1.2 per cent that Statscan first reported. The agency now says GDP grew at annual rate of 0.9 per cent over the first three months of the year, reflecting a difficult winter that slowed trade and weighed on household spending.

Canada’s economy is getting a lift from demand in the United States, where GDP surged to an annual growth rate of 4.2 per cent in the second quarter. Exports, which the Bank of Canada says are central to the economy rediscovering its vigour, jumped 4.2 per cent from the first quarter, reversing a small decline over the first three months of the year. (At an annual rate, exports surged 17.8 per cent.) Household consumption increased 0.7 per cent from the first quarter.

via The Globe and Mail

Canadian Dollar Gets GDP Growth Boost

The Canadian dollar gained for a fourth day after economic growth rebounded to the fastest in almost three years in the second quarter, led by exports and household spending on big-ticket items.

The currency extended a weekly advance against its U.S. peer as Canada’s growth has picked up along with the American economy, which grew at a 4.2 percent annualized second-quarter pace, the Commerce Department said yesterday from Washington. Bank of Canada Governor Stephen Poloz has said it will take another two years to use up slack that built up in the world’s 11th largest economy.

“Even though the headline data came in stronger than the market was expecting, it wasn’t that much stronger that it’s going to cause the Canadian dollar to appreciate too much,” David Bradley, director of foreign exchange trading at Scotia Capital Inc., a unit of Bank of Nova Scotia, said by phone from Toronto. “We had a little bit of a move down to the lows we’ve seen recently” for the U.S. dollar, he said.

The loonie, nicknamed for the image of the aquatic bird on the C$1 coin, rose 0.2 percent to C$1.0844 per U.S. dollar at 9:04 a.m. in Toronto. It touched C$1.0831 after climbing to C$1.0829 on Aug. 27, the strongest since July 29.

The loonie’s weekly gain of 0.9 percent gave it a monthly advance to 0.6 percent. It’s still down 1.6 percent this quarter and 2 percent year-to-date.

The yield on Canada’s benchmark 10-year bond rose to 2.01 percent after touching 1.979 percent yesterday, the lowest since May 2013. It’s down from a 2014 high of 2.80 percent on Jan. 2.

via Bloomberg

Brazil Falls Into a Recession GDP Falls 0.6%

Brazil has fallen into recession, just a month before the general election, latest figures show.

Economic output, GDP, fell by 0.6% in the three months to June, worse than analysts had predicted, and revised figures for the first quarter of the year also showed a fall of 0.2%.

A recession is usually defined as two consecutive quarters of contraction.

The news will be damaging for the government of President Dilma Rousseff.

According to the most recent poll, Ms Rousseff would lose to a rival candidate, environmentalist Marina Silva, if October’s election went to a second round.

The World Cup, held in June and July, was not regarded as generally good for business, says the BBC’s Wyre Davies in Rio de Janeiro.

“There were more days off for employees and many traditional tourists stayed away,” he says.

“The problem is that, with elections due in early October, the economy is increasingly seen as President Dilma Rousseff’s weak point.”

via BBC

Eurozone Economic Confidence Drops

Eurozone economic confidence weakened more-than-expected in August to its lowest level in eight months, underscoring rising pessimism amid heightened geopolitical tensions and stagnating economic recovery.

The economic confidence index fell to 100.6 in August, the lowest score since December, from 102.1 in July, the European Commission said Thursday. The indicator was forecast to drop moderately to 101.5.

Worsened sentiment resulted from deterioration in retail trade, consumer, industry, and services confidence.

The industrial sentiment indicator declined to -5.3 in August from -3.8 in July. The expected score was -4.5. Weakened industry confidence was caused by managers’ more careful views on expected production, while assessments of the current level of overall order books and the stocks of finished products stayed broadly unchanged.

The indicator for services came in at 3.1, down from 3.6 last month. Services confidence slid somewhat owing to downward revisions of managers’ assessments of the past business situation and past demand, while their demand expectations remained virtually unchanged.

via RTT News