Aurelia Butler

TORONTO (Reuters) – The Canadian dollar is expected to rally against its U.S. counterpart in the coming year as lower borrowing costs boost the domestic economy but the result of the U.S. presidential election could unsettle the outlook, a Reuters poll found. According to the median forecast of 40 foreign exchange analysts in the Oct. 28–Nov. 1 poll the loonie will strengthen 2.4% to 1.36 per U.S. dollar, or 73.53 U.S. cents, by end-January compared to the 1.3514 expected in last month’s poll.In a year, the currency was predicted to advance 5.5% to 1.32, versus 1.3275 seen previously.”Our forecast for a stronger Canadian dollar is based on the fact the Fed should catch up in its interest rate cutting cycle and the Canadian economy should recover quite strongly as the Bank of Canada cuts rates,” said Kyle Chapman, FX markets analyst at Ballinger Group in London.On Tuesday, Bank of Canada Governor Tiff Macklem said the central bank is starting to see the impact on the economy of its easing. The BoC has cut its benchmark interest rate by one and a quarter percentage points since early June to 3.75%.Canada’s economy is particularly sensitive to interest rate levels due to a short mortgage cycle and high household debt. At 184% of net disposable income in 2023, household debt was the highest by far in the G7, according to OECD data. The Canadian dollar weakened around 3% in October, its biggest monthly decline since September 2022. On Thursday, it touched a near three-month low at 1.3945.One potential wild card for the currency is the outcome of the U.S. presidential election on Tuesday. Republican candidate Donald Trump has proposed sweeping tariffs on imported goods. Canada sends about 75% of its exports to the United States.”The election is a fork in the road … If we get a Trump presidency then perhaps the recovery wouldn’t be nearly as strong as we’re expecting right now,” Chapman said.(Other stories from the November Reuters foreign exchange poll) More

HOUSTON (Reuters) -Exxon Mobil on Friday beat Wall Street’s third quarter profit estimate, boosted by strong oil output in its first full quarter that includes volumes from U.S. shale producer Pioneer Natural Resources (NYSE:PXD). Oil industry earnings have been squeezed this year by slowing demand and weak margins on gasoline and diesel. But Exxon (NYSE:XOM)’s year-over-year profit fell 5%, a much smaller drop than at rivals BP (NYSE:BP) and TotalEnergies (EPA:TTEF), which posted sharply lower quarterly results.The top U.S. oil producer reported income of $8.61 billion, down from $9.07 billion a year ago. Its $1.92 per share profit topped Wall Street’s outlook of $1.88 per share, on higher oil and gas production and spending constraints.”We had a number of production records” in the quarter, said finance chief Kathryn Mikells, citing an increase of about 25% year-on-year in oil and gas output to 4.6 million barrels per day. Exxon shares rose about 1.3% in premarket trading to $118.25 per share.Exxon earlier this month flagged operating profit had likely decreased, leading Wall Street analysts to shave their quarterly per share earnings outlook by nearly a dime.The results included Exxon’s first full quarter of production following its acquisition in May of Pioneer Natural Resources. The $60 billion deal drove production in the top U.S. shale basin to nearly 1.4 million barrels per day of oil and gas, helping overcome a 17% decline in average oil prices in the quarter ended Sept. 30.The company expects full year output to average about 4.3 million barrels of oil equivalent per day (boepd), including eight months of Pioneer’s contributions.No. 2 U.S. oil producer Chevron (NYSE:CVX), whose plans to acquire Hess Corp (NYSE:HES) have locked the two rivals in a bitter arbitration battle over the prized Guyana asset, also beat Wall Street estimates despite lower year-over-year earnings. Chevron’s shares were up 2.2% premarket.Exxon said it plans to issue a revised production forecast next month. The company noted that scheduled well maintenance will lower oil and gas output by about 30,000 boepd in the fourth quarter.The market is worried about oil supply outrunning demand next year, with exporter group OPEC reviewing plans to add 180,000 barrels per day (bpd) of additional oil supply from December. Oil prices slumped over the summer and remain about 12% below June’s average.Exxon disclosed it raised its quarterly dividend by 4% after generating free cash flow of $11.3 billion, well above analysts’ estimates. Rivals Saudi Aramco (TADAWUL:2222) and Chevron have had to borrow this year to cover shareholder returns after boosting dividends and buybacks to attract investors. Exxon’s earnings from producing gasoline and diesel in the quarter were $1.31 billion, down from $2.44 billion year-on-year as weak margins and a nearly month-long outage at its 251,800-bpd Illinois refinery hit segment results.Lower planned maintenance at other plants, along with gains on derivatives, helped offset weak industry-wide refining margins and the impact of the Illinois outage, Exxon said.”Refining margins definitely came down in the quarter. If you look at overall results for the refining business, we feel pretty good,” said CFO Mikells. Per unit refining margins since 2019 have about doubled on a constant margin basis, she said. Profits from Exxon’s chemical business, which has been pressured by industry overcapacity for two years, rose in the quarter to $893 million, compared with $249 million a year ago, on a slight increase in margins.”We are in a much better position (in chemicals) because we have a strong Gulf Coast footprint that benefits from Gulf Coast (natural gas) prices,” said Mikells. More

Major North American carriers with international operations are cashing in on a booming demand for overseas travel and a resurgence in business bookings. Air Canada is increasing its daily flights to China, while also adding capacity to other Asia Pacific routes.The airline also announced the repurchase of up to 35.78 million shares, its first buyback authorization since the pandemic.The repurchase aims to address the dilution that occurred due to its financing needs during the pandemic, it said.Last month, Air Canada signed a new labor deal with its pilots, which would give the aviators a general four-year cumulative pay hike of about 42%, generating about C$1.9 billion in additional value.”The demand environment remains favourable. We have adjusted our full-year guidance and underlying assumptions to account for the evolution of the fuel price environment and for certain contract-related adjustments,” CEO Michael Rousseau said.The company lowered its expectation for average price of jet fuel to C$1 per litre for 2024, from the previous estimate of C$1.03.The carrier now expects its 2024 adjusted earnings before interest, taxes, depreciation and amortization of about C$3.5 billion ($2.51 billion), compared with its previous forecast of C$3.1 billion to C$3.4 billion.Montreal-based Air Canada posted an adjusted profit of C$2.57 per share in the third quarter, compared with analysts’ average estimate of C$1.58, according to data compiled by LSEG.It reported a quarterly operating revenue of C$6.12 billion in the three months ended Sept. 30, down 3.8% over the year earlier, but beat analysts’ expectations of C$6.06 billion.($1 = 1.3929 Canadian dollars) More

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TOKYO (Reuters) -The Bank of Japan should wait for at least six months before hiking interest rates, until there are signs of sustainable wage gains above inflation, the head of the opposition party that the ruling LDP is courting for support said.”There should be no significant changes to monetary policy, as we need to observe the wage growth trends from next year’s spring negotiations,” Yuichiro Tamaki, head of the opposition Democratic Party for the People (DPP), said in an interview with Reuters.Following Japan’s general election on Oct. 27, Tamaki’s party has gained influence over government policy as the ruling Liberal Democratic Party seeks its support to maintain power.The LDP and its coalition partner Komeito are 18 seats short of a majority in the 465-member lower house, while the DPP, which is advocating for higher wages and cuts to both the country’s sales tax and income tax, saw its seat count rise from seven to 28.The Bank of Japan ended negative interest rates in March and raised short-term rates to 0.25% in July on the view that Japan was making progress towards durably achieving its 2% inflation target.It held short-term rates at 0.25% at Thursday’s policy meeting but said risks around the U.S. economy were somewhat subsiding, signalling that conditions are falling into place to raise interest rates again.Still, Tamaki said that it is necessary to eventually normalise monetary policy and allow the market to function properly.Tamaki said maintaining easy monetary policy may push the yen down. “But it is the strength of the U.S. economy that keeps the gap between U.S. and Japanese interest rates wide and monetary policy should not be used to manipulate currency rates,” he said.He declined to comment on current currency levels but said currency interventions have only a short-term impact, although they could act as a deterrent to speculative moves. More

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