Canada’s Telesat Takes on Musk and Bezos in Space Race to Provide Fast Broadband

By Steve Scherer

Musk, the Tesla Inc CEO who was only a year old when Telesat launched its first satellite, is putting the so-called Starlink LEO into orbit with his company SpaceX, and Amazon.com Inc, which Bezos founded, is planning a LEO called Project Kuiper. Bezos also owns Blue Origin, which builds rockets.

Despite the competition, Dan Goldberg, Telesat’s chief executive officer, voices confidence when he calls Telesat’s LEO constellation “the Holy Grail” for his shareholders – “a sustainable competitive advantage in global broadband delivery.”

Telesat’s LEO has a much lighter price tag than SpaceX and Amazon’s, and the company has been in satellite services decades longer. In addition, instead of focusing on the consumer market like SpaceX and Amazon, Telesat seeks deep-pocketed business clients.

Goldberg said he was literally losing sleep six years ago when he realized the company’s business model was in peril as Netflix and video streaming took off and fiber optics guaranteed lightning-fast internet connectivity.

Telesat’s 15 geostationary (GEO) satellites provide services mainly to TV broadcasters, internet service providers and government networks, all of whom were growing increasingly worried about the latency, or time delay, of bouncing signals off orbiters more than 35,000 km (22,200 miles) above earth.

Then in 2015 on a flight home from a Paris industry conference where latency was a constant theme, Goldberg wrote down his initial ideas for a LEO constellation on an Air Canada napkin.

Those ideas eventually led to Telesat’s LEO constellation, dubbed Lightspeed, which will orbit about 35 times closer to earth than GEO satellites, and will provide internet connectivity at a speed akin to fiber optics.

Telesat’s first launch is planned in early 2023, while there are already some 1,200 of Musk’s Starlink satellites in orbit.

“Starlink is going to be in service much sooner … and that gives SpaceX the opportunity to win customers,” said Caleb Henry, a senior analyst at Quilty Analytics.

Starlink’s “first mover” advantage is at most 24 months and “no one’s going to lock this whole market up in that amount of time,” Goldberg said.

Telesat in 2019 signed a launch deal with Bezos’ aerospace company Blue Origin. Discussions are ongoing with three others, said David Wendling, Telesat’s chief technical officer.

They are Japan’s Mitsubishi Heavy Industries Ltd, Europe’s ArianeGroup , and Musk’s SpaceX, which launches the Starlink satellites. Wendling said a decision would be taken in a matter of months.

Telesat aims to launch its first batch of 298 satellites being built by Thales Alenia Space in early 2023, with partial service in higher latitudes later that same year, and full global service in 2024.

‘SWEET SPOT’

The Lightspeed constellation is estimated to cost half as much as the $10 billion SpaceX and Amazon projects.

“We think we’re in the sweet spot,” Goldberg said. “When we look at some of these other constellations, we don’t get it.”

Analyst Henry said Telesat’s focus on business clients is the right one.

“You have two heavyweight players, SpaceX and Amazon, that are already pledging to spend $10 billion on satellite constellations optimized for the consumer market,” he said. “If Telesat can spend half that amount creating a high-performance system for businesses, then yeah, they stand to be very competitive.”

Telesat’s industry experience may also provide an edge.

“We’ve worked with many of these customers for decades … That’s going to give us a real advantage,” Goldberg said.

Telesat “is a satellite operator, has been a satellite operator, and has both the advantage of expertise and experience in that business,” said Carissa Christensen, chief executive officer of the research firm BryceTech, adding, however, that she sees only two to three LEO constellations surviving.

Telesat is nailing down financing – one-third equity and two-thirds debt – and will become publicly traded on the Nasdaq sometime this summer, and it could also list on the Toronto exchange after that. Currently, Canada’s Public Sector Pension Investment Board and Loral Space & Communications Inc are the company’s main shareholders.

France and Canada’s export credit agencies, BPI and EDC respectively, are expected to be the main lenders, Goldberg said. Quebec’s provincial government is lending C$400 million ($317 million), and Canada’s federal government has promised C$600 million to be a preferred customer. The company also posted C$246 million in net income in 2020.

Executing the LEO plan is what keeps Goldberg up at night now, he said.

“When we decided to go down this path, the two richest people in the universe weren’t focused on their own LEO constellations.”

(Reporting by Steve Scherer in Ottawa; Editing by Matthew Lewis)

ECB Must Accept No Further Delay in Lifting Inflation: Panetta

The ECB has already undershot its nearly 2% target for eight years and its projections indicate that it will continue to miss for years to come as bloc struggles to absorb the slack left behind a pandemic-induced recession.

With stimulus already near its limits, some policymakers argue that the ECB must simply accept a slower rise in price pressures instead of trying to do even more but Panetta rejected this argument, warning that the costs outweigh the benefits.

“The argument that we could extend the horizon to meet the aim is not a convincing one,” El Pais quoted him on Sunday as saying. “The ECB has failed to reach its aim for too many years already.”

“Waiting will be even more costly,” Panetta argued. “It would make it more difficult to re-anchor inflation expectations and we would risk a permanent reduction of economic potential.”

The ECB ramped up stimulus last month but still only sees inflation rising to 1.4% by 2023, a level Panetta called unsatisfactory.

With vaccinations picking up pace, some policymakers are already making the case for curbing emergency bond purchases from the third quarter onwards but Panetta cautioned, arguing that a prudent approach in such a crisis is injecting too much stimulus rather than too little.

Indeed, Panetta even called on European governments to ramp up fiscal support warning that the bloc’s economy likely suffered more damage from the pandemic than currently visible.

(Reporting by Balazs Koranyi; Editing by Toby Chopra)

Bitcoin Above $60,000 Again on Talk of Reduced Supply

The world’s biggest and best-known cryptocurrency hit $61,222.22 on Saturday, its highest in nearly a month. It was slightly lower at $59,907 at 0500 GMT on Sunday.

Bitcoin (BTC) is up 116% from the year’s low of $27,734 on Jan. 4. It crossed the $60,000 mark for the first time on March 13, hitting a record $61,781.83 on Bitstamp exchange, just after U.S. President Joe Biden signed his $1.9 trillion fiscal stimulus package into law.

Justin d’Anethan, sales manager at digital asset company Diginex in Hong Kong, said investors had turned their attention to stock markets and other cryptocurrencies in the past couple of weeks, leaving Bitcoin idling in the upper 50-thousand dollar levels.

“That changed just yesterday when we pierced through 60K. With miners not selling recently minted coins, on-exchange reserves hitting multi-year lows and an incessant stream of corporates, funds, large and small investors piling into BTC, we punched through,” he said.

Bitcoin’s stunning gains this year have been driven by its mainstream acceptance as an investment and a means of payment, accompanied by the rush of retail cash into stocks, exchange-traded funds and other risky assets.

It soared this year as major firms, such as BNY Mellon, asset manager BlackRock Inc, credit card giant Mastercard Inc, backed cryptocurrencies, while those such as Tesla Inc Square Inc and MicroStrategy Inc invested in bitcoin.

Big U.S. banks such as Morgan Stanley are also seeking to offer wealth management clients access to bitcoin funds.

(Reporting by Aakriti Bhalla in Bengaluru and Vidya Ranganathan in Singapore; Editing by William Mallard)

Global Supply Lines Struggle to Clear Container Backlog After Suez Chaos

By Jonathan Saul and Timothy Aeppel

Dozens of container ships were stuck when the 400-metre-long (430-yard) Ever Given ran aground in the canal on March 23, with specialist rescue teams taking almost a week to free the vessel.

The suspension of sailings through the waterway left shipping companies – including container lines – with millions of dollars in extra costs, which were not covered by insurance.

“The blockage of the Suez Canal will increase the negative impact on global supply chains in the coming weeks, as the availability of empty equipment, particularly in Asia and Europe, will be affected,” Reiner Heiken, chief executive of U.S. headquartered Hellmann Worldwide Logistics, told Reuters.

Container shipping companies, carrying products ranging from mobile phones to designer goods, have been contending for months with disruptions caused by the coronavirus pandemic and a surge in demand for retail goods that led to wider logistical bottlenecks including in top consumer market the United States.

While some transporters of goods have turned to rail, that option has barely made a dent as about 90% of world trade is transported by sea.

European and U.S. retailers have warned about potential supply snags due to the impact from Suez.

Port officials in Europe’s leading gateways say the impact will be felt in coming days, adding to already stretched supply lines.

Barbara Janssens, with the Port of Antwerp, said the port and terminal operators were “already preparing for what’s ahead”.

“The impact on global supply chains is expected to last for several months. There is simply not enough spare capacity across the worldwide container ship fleet to help counter the worst effects of the Suez incident,” Janssens said.

Leon Willems, with the port of Rotterdam, said it expected its container traffic to be around 10% higher than normal every day in the coming weeks.

“Both the port and container terminals are doing everything they can to minimise disruptions,” Willems said.

Maersk, the world’s number 1 container line, said in a customer note that vessels held up in Suez would be delayed for a number of days before they reached U.S. East Coast ports.

In an unusual step, the company urged the ports “to take this opportunity to clear cargo from terminals which will allow them to operate more efficiently”.

The East Coast Port of Newark did not immediately respond to a request for comment.

A source at the southern U.S. port of Savannah said they expected to clear a backlog of ships in the coming days.

LONG WAITING TIMES

While ports on the U.S. East Coast are more exposed to any disruptions in the Suez Canal, the surge in demand for retail goods has overwhelmed West Coast terminals in recent months.

Container ships face longer waiting and discharging times at West Coast ports than in many other ports around the world, analysis from logistics platform project44 showed.

Eugene Seroka, executive director of the Port of Los Angeles, said they were making progress whittling down the backlog, which could be cleared by the end of May or early June.

Mario Cordero, executive director of neighbouring Long Beach port, also expected their backlog to be reduced by summer.

“But for at least the next couple of months, we expect a continuing surge on the volume that we’re seeing.” Cordero said.

Analysts Sea-Intelligence expected a ripple effect in the coming weeks between Asia and Europe and disruption of container trade.

Hong Kong’s Transport and Housing Bureau said the government was monitoring the situation although the disruption had not had a significant impact on shipping operations between Europe and Hong Kong.

Transporters elsewhere have been turning to a rail links between China and Europe to get critical supplies through, although users stressed volumes were still small.

Journey times via the rail routes, which run from China through Kazakhstan or Mongolia to Russia and then on to freight centres across Europe, typically take between 16-18 days compared with four weeks by sea and just under a week by air.

Danish freight forwarder DSV, Dutch freight management company GVT and Maersk all said they were seeing a surge in interest for rail freight between Europe and Asia.

“Land transport between Asia and Europe will always be able to cover only a small share of the total transport volume,” Hellmann’s Heiken said.

(Additional reporting by Nikolaj Skydsgaard in Copenhagen, Bart Meijer in Amsterdam and Donny Kwok in Hong Kong; Editing by Veronica Brown and David Evans)

Apple to argue it faces competition in video game market in Epic lawsuit

By Stephen Nellis

(Reuters) – Apple Inc said it plans to argue that it faces abundant competition in the market for video game transactions to defend itself against antitrust allegations by “Fortnite” maker Epic Games, the iPhone maker said on Thursday.

Epic sued Apple last year in federal court in California, alleging the 15% to 30% commissions that Apple charges for the use of its in-app payment systems and Apple’s longstanding practice of exercising control over which apps can be installed on its devices amount to anticompetitive behavior. The dispute arose after Epic tried to implement its own in-app payment system in the popular “Fortnite” game and Apple subsequently banned the game from its App Store.

The case is to be heard in May in Oakland, California, by U.S. District Judge Yvonne Gonzalez Rogers, who will have to rule on which notion of a “market” is the correct one for analyzing Apple’s moves for signs of anticompetitive conduct.

Epic has framed its case around the idea that Apple’s iPhones, with an installed base of more than 1 billion users, represent their own distinct market for software developers. Epic has argued that Apple has monopoly power over that market because it decides how users can install software on the devices and says it abuses that power by forcing developers to deliver their software through the App Store, where developers are subject to fees on some transactions.

In a filing that Apple planned to make Thursday, the company rejected that notion and said the proper market to analyze the case is the video game transaction market, which includes platforms such as Nintendo Co Ltd and Microsoft Corp’s Xbox gaming consoles, which also limit the software that can run on their hardware and charge fees to developers.

Apple said it plans to argue that consumers have many choices on how to carry out video game transactions, including purchasing virtual tokens from game developers on other platforms such as Windows PCs and using the tokens on iPhones with no fees to the game developer.

(Reporting by Stephen Nellis in San Francisco; Editing by Leslie Adler)

U.S. Weekly Jobless Claims Unexpectedly Rise, but Labor Market Improving

By Lucia Mutikani

The second straight weekly increase in claims reported by the Labor Department on Thursday was at odds with reports this month showing the economy created 916,000 jobs in March, the most in seven months, and job openings increased to a two-year high in February.

“Our belief is that continued moves to reopen the economy will result in a solid further advance in payrolls in the April jobs report and that the claims data are likely not capturing the pace of improvement in the labor market,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.

Initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 744,000 for the week ended April 3 compared to 728,000 in the prior week. Data for the prior week was revised to show 9,000 more applications received than previously reported.

Economists polled by Reuters had forecast 680,000 applications for the latest week. Though claims have dropped from a record 6.149 million in early April of 2020, they remain more than double their pre-pandemic level. In a healthy labor market, claims are normally in a range of 200,000 to 250,000.

Part of the elevation in claims is because of fraud, multiple filings and backlogs following the enhancement of the unemployment benefit programs.

The government is paying a weekly $300 unemployment supplement, as well as funding benefits for the self-employed, gig workers and others who do not qualify for the regular state unemployment insurance programs.

The weekly subsidy and the Pandemic Unemployment Assistance (PUA) program will run through Sept. 6.

Including the PUA program, 892,539 people filed claims last week, remaining below one million for a third straight week.

The increase in applications was led by California and New York. There were big drops in Alabama and Texas, as well as Ohio, which has been beset by fraudulent applications.

“The total number of filings for all unemployment insurance programs has remained stubbornly steady over the last few months despite net re-hiring in monthly employment reports,” said Veronica Clark, an economist at Citigroup in New York.

“This could partly be a reflection of more workers wanting to stay on unemployment benefits even if some return to work part-time given the greater size of payments.”

U.S. stocks opened largely higher. The dollar fell against a basket of currencies. U.S. Treasury prices gained.

COMPANIES HIRING

The labor market has regained its footing after stumbling in December, thanks to the White House’s massive $1.9 trillion pandemic rescue package and an acceleration in the pace of COVID-19 vaccinations, which are allowing more services businesses to resume operations.

In the minutes of the Federal Reserve’s March 16-17 policy meeting released on Wednesday, U.S. central bank officials acknowledged the improvement in labor market conditions and “expected strong job gains to continue over coming months and into the medium term.”

Several Fed officials suggested the latest relief package “could hasten the recovery, which could help limit longer-term damage in labor markets caused by the pandemic.”

Anecdotal evidence suggests companies are recalling workers laid off during the pandemic and hiring new employees. An Institute for Supply Management survey on Monday showed services businesses reporting they “have recalled everyone put on waivers and made new hires” and had “additional employees added to service the needs of new customers at new locations.”

Still, the labor market recovery has a long way to go. Employment is 8.4 million jobs below its peak in February 2020.

The claims report also showed the number of people receiving benefits after an initial week of aid decreased 16,000 to 3.734 million in the week ended March 27. That was the lowest reading since March 2020 when mandatory closures of non-essential businesses were being enforced across many states to slow the first wave of COVID-19 infections.

The 12th straight weekly decline in the so-called continuing claims in likely due to people finding work and exhausting their eligibility for benefits, limited to 26 weeks in most states. About 5.634 million people were on extended benefits during the week ended March 20, up 117,108 from the prior week.

Another 786,962 were on a state program for those who have exhausted their initial six months of aid, down 230,780 from the week before. There were 18.2 million receiving benefits under all programs during the week ended March 20.

(Reporting by Lucia MutikaniEditing by Chizu Nomiyama and Paul Simao)

S&P 500 hits record high on gains in tech-related stocks

(Reuters) – The benchmark S&P 500 hit a record high on Thursday, helped by gains in tech-related stocks, a day after the Federal Reserve reiterated its pledge to keep interest rates low until the economic recovery is more secure.

The Dow Jones Industrial Average rose 23.6 points, or 0.07%, at the open to 33,469.89. The S&P 500 rose 10.0 points, or 0.25%, at the open to 4,089.95​, while the Nasdaq Composite rose 108.0 points, or 0.79%, to 13,796.892 at the opening bell.

(Reporting by Shivani Kumaresan in Bengaluru; Editing by Arun Koyyur)

SoftBank, Franklin Invest $210 Million in OneTrust at Over $5 Billion Valuation

Including the investment, the total capital raised by OneTrust in it latest Series C round was $510 million. The firm, which counts Insight Partners, Coatue and TCV among its existing investors, has raised $920 million since it was founded.

Funding from SoftBank Vision Fund 2 opens up a strategic geographical position for OneTrust in Japan, the company said, as market demand accelerates in Asia Pacific and across the globe.

Japan’s SoftBank has made serial investments in multiple tech companies in the past few weeks, such as U.S. genetic diagnostics company Invitae Corp and Facebook-backed Indian social commerce startup Meesho.

On Wednesday, SoftBank made investments in Israeli cloud analytics firm Redis Labs and image recognition technology firm Trax.

Atlanta and London-based OneTrust’s platform, used by more than 8,000 companies to operationalize privacy, security and data governance, is backed by 140 patents and powered by OneTrust Athena, an artificial intelligence and robotic automation engine.

(Reporting by Sohini Podder in Bengaluru; Editing by Shinjini Ganguli)

Oil Falls on Surge in U.S. Gasoline Stocks

By Shadia Nasralla

LONDON (Reuters) -Crude oil prices fell on Thursday after official data showed a big increase in U.S. gasoline stocks on the back of higher refinery runs while demand remained subdued compared with pre-pandemic levels.

Brent crude fell 15 cents, or 0.2%, to $63.01 a barrel by 1154 GMT. U.S. oil fell 28 cents, or 0.5%, to $59.49.

While crude oil stocks in the United States fell more than forecast by analysts, gasoline inventories jumped sharply, the U.S. Department of Energy said on Wednesday. [EIA/S]

“A huge build in road fuel stocks is not what the market was expecting and concerns over the speed of the oil demand recovery resurfaced, leaving traders wondering how stable road fuel usage actually is,” said Rystad Energy analyst Bjornar Tonhaugen.

U.S. crude oil inventories dropped by 3.5 million barrels last week to nearly 502 million barrels while gasoline stocks increased by 4 million barrels to a little more than 230 million barrels as refiners ramped up output before the summer driving season.

“The increase in oil product stocks is probably not due to weaker demand … but to high refinery utilisation,” Commerzbank analysts said.

Still, demand remains weakened by the impact of the coronavirus.

At the same time, Russian oil output increased from average March levels in the first few days of April, traders said.

Iran and the United States held talks with other powers on reviving a nuclear deal that almost stopped Iranian oil from coming to market, reviving tentative hopes Tehran might see some sanctions lifted and add to global supplies.

However, the International Monetary Fund said this week that the massive public spending deployed to combat the COVID-19 pandemic could increase global growth to 6% this year, a rate not achieved since the 1970s.

Higher economic growth would boost demand for oil and its products.

ANZ Research said it expects Brent crude to reach about $75 a barrel in the third quarter.

(Additional reporting by Aaron Sheldrick in TokyoEditing by David Evans and David Goodman)

ASOS Wary on Outlook as Finances of 20-Somethings Face Pandemic Hit

By James Davey

ASOS, which sells fashion aimed at 20-somethings, said its expectations for full 2020-21 year profit had increased in line with the first-half performance, but its outlook for the second half had not changed.

CEO Nick Beighton said the group was well positioned to capture demand for products bought for social events and holidays when lifestyles normalised.

However, it was retaining caution on the near-term consumer outlook due to uncertainty over the financial prospects of its youthful customer base, the timing of global restrictions lifting and possible further COVID-19 spikes.

“Anything that affects 20-something lives and economics, we are mindful of and concerned,” Beighton told Reuters.

“We are still in the midst of the pandemic and we think the economic consequences are still to play out.”

Shares in the group were down 1.6% at 0915 GMT.

ASOS has traded through coronavirus lockdowns while store-based rivals have had to close shops. It also benefited from fewer products being returned by shoppers, as well as investment in products, pricing and marketing.

The group made an adjusted pretax profit of 112.9 million pounds ($155.3 million) for the six months to Feb. 28, up from 30.1 million pounds in the first half of its 2019-20 year.

Sales rose 25% at constant exchange rates to 1.98 billion pounds as its active customer base increased by 1.5 million to 24.9 million.

Beighton said he expected the consensus of analysts’ full year forecasts to rise from about 170 million pounds to 190-200 million pounds.

“The steer we will be giving is effectively, bank the overperformance in the first half and hold it flat for the second half,” he said.

In February, ASOS bought the Topshop, Topman, Miss Selfridge and HIIT brands from the administrators of Philip Green’s collapsed Arcadia group for 265 million pounds, aiming to accelerate its multi-brand strategy.

Beighton said the integration was progressing to plan and the group was “highly likely” to make more acquisitions.

($1 = 0.7268 pounds)

(Reporting by James Davey; Editing by Costas Pitas and Pravin Char)

Tesla Lashes Out at German Red Tape Ahead of Planned Site Opening

Tesla plans to have the factory up and running by July 1, 2021 to start building its electric crossover, the Model Y but the process has been slow and complicated by environmental disputes.

In December, Tesla was told by a court to suspend clearing of a forest at the site of the proposed factory after environmentalists said cutting down more trees could endanger hibernating snakes.

“The German approval framework for industrial and infrastructure projects as well as spatial planning directly contradicts the urgency to plan and realise such projects that is necessary to battle climate change,” Tesla said in a letter to a local court seen by Reuters.

Tesla, in the letter dated April 7, said it was “particularly irritating” that there was still no timetable for the final approval of the plant, located in Gruenheide outside Berlin, 16 months after the carmaker applied for it.

The letter, first reported by newspaper Frankfurter Allgemeine Zeitung, urges authorities to speed up processes to ensure investors have more transparency about when their investments in climate-friendly technologies pay off.

Red tape in Germany has also been a problem in the area of wind energy expansion, with some projects taking several years from application to realisation.

(Reporting by Nadine Schimroszik; Writing by Christoph Steitz; Editing by Bernadette Baum)

GameStop to Elect Cohen as Chairman Following Annual Meeting

Shares of GameStop were up about 3% in premarket trading.

The company also said it was nominating six people to stand for election to its board at the annual meeting of stockholders on June 9.

Since billionaire Cohen joined GameStop’s board in January, he has been pushing towards transformation of the brick-and-mortar retailer into an e-commerce firm that can take on big-box retailers such as Target Corp and Walmart Inc and technology firms such as Microsoft Corp and Sony Corp.

(Reporting by Akanksha Rana in Bengaluru; Editing by Maju Samuel)

Cut the Debt of Poor Countries, Pope Tells IMF, World Bank

In a letter to the participants of the International Monetary Fund and World Bank’s annual spring meeting, the pope said the pandemic had forced the world to come to terms with interrelated socio-economic, ecological, and political crises.

“The notion of recovery cannot be content to a return to an unequal and unsustainable model of economic and social life, where a tiny minority of the world’s population owns half of its wealth,” the pontiff said in the letter dated April 4.

He said a spirit of global solidarity “demands at the least a significant reduction in the debt burden of the poorest nations, which has been exacerbated by the pandemic”.

(Reporting by Gavin Jones; Edited by Crispian Balmer)

Sterling Stems Losses Versus Dollar, After Hard Profit-Taking Knock

By Tom Wilson

The pound slumped 0.6% to a one-week low against the dollar and around 1% against the euro on Wednesday as investors took cash off the table after a strong first quarter for the British currency.

But by 0847 GMT on Thursday, sterling was flat against the dollar at $1.3725, according to Yahoo! Finance, having touched its lowest this month a day earlier.

Against the euro, it traded down slightly at 86.42 pence per euro, according to Yahoo! Finance, after its worst day against the single currency in five weeks.

ING analysts wrote that sterling’s pullback was “exaggerated,” adding that they “remain constructive on the currency”, citing Britain’s relatively fast coronavirus vaccine programme.

Expectations of an economic rebound in Britain, spurred by rapid COVID-19 vaccinations, helped sterling to record its best quarter since 2015 versus the euro.

Diminishing expectations that the Bank of England will push interest rates to negative territory have also helped.

Britain has surged ahead of the rest of Europe in the race to inoculate its population, with almost half of its citizens receiving a first dose. But supply issues from its main Oxford-AstraZeneca vaccine have slowed progress in recent days.

(Reporting by Tom Wilson; Editing by Mark Heinrich)

Dollar Near Two-Week Lows as Investors Await Fed Minutes

By Elizabeth Howcroft

The previous quarter saw a spike in U.S. Treasury yields and the dollar’s strongest rally in years, on rising expectations that accelerating U.S. economic growth and inflation could force the Fed to abandon its pledge to keep interest rates near zero until 2024.

The International Monetary Fund said on Tuesday that unprecedented public spending to fight the pandemic would push global growth to 6% this year.

But the bond market has stabilized this week, with the 10-year U.S. Treasury yield at 1.6579%, down from its peak of 1.776% at the end of March.

“We have seen USD supported by rising bond yields most of Q1…. now that Q2 has begun, yields are coming off slightly which has softened the dollar in the last couple of days,” said Joe Tuckey, FX analyst at Argentex.

At 1100 GMT, the dollar was down 0.1% on the day at 92.21 against a basket of currencies, close to a two-week low, having fallen from a high of 93.439 that it hit on March 30.

“I suspect that we are dealing with broad-based profit taking on market USD longs,” said Valentin Marinov, head of G10 FX research at Credit Agricole.

Marinov said that in the near-term U.S. Treasury yields and global risk appetite would drive the currency market. As long as yields stay within recent ranges, risk appetite could stay strong, keeping the dollar on the back foot and supporting riskier currencies, he said.

Market participants awaiting the release of Fed meeting minutes later in the session for hints about the Fed policymakers’ views on rising yields.

“Investors will be scanning the minutes in search of any ‘discomfort’ among policymakers about rising inflation prospects and in parallel any hint that the discussion is migrating towards defining a timeline for tapering asset purchases,” ING strategists wrote in a note.

“Any (even mild) hawkish signal surely bears the risk of hitting Treasuries, and providing some support to the dollar.”

U.S. money markets are pricing in a 25 basis point hike in December 2022.

Euro-dollar was up 0.1% at $1.18905. So far in 2021, the euro has fallen, with the euro-dollar pair driven by prospects of the economic recovery from COVID-19 in Europe lagging that of the United States and Britain.

Europe’s benchmark equity index, the STOXX 600, closed at a record high on Tuesday, recovering all of its pandemic-driven losses.

Euro zone business activity bounced back to growth last month, underpinned by a record expansion in manufacturing, PMI data showed.

“Optimism is growing in Europe that the pace of its Covid vaccination programme will be faster than thought previously, which has seen the EUR/USD claw back a chunk of the ground lost since last March,” said Stuart Cole, chief macro strategist at Equiti Capital.

The Australian dollar fell against the dollar, down 0.5% at 0.7627, while the New Zealand dollar was down 0.3%, both pausing their upward trajectory of the last two weeks.

The Canadian dollar also fell, hurt by a third wave of the COVID-19 pandemic in the country.

Elsewhere, finance officials from the Group of 20 major economies are poised to back a $650 billion boost in the IMF’s emergency reserves and extend a freeze on debt payments as part of an effort to help developing countries still struggling to combat the COVID-19 pandemic.

(Reporting by Elizabeth Howcroft; Additional reporting by Ritvik Carvalho and Joice Alves; Editing by Kirsten Donovan, Timothy Heritage and Barbara Lewis)

France Will Continue Massive Support for Air Transport Sector: Finance Minister

“We will continue to support massively and durably the French air transport sector, the small- and medium-sized companies that work in the industry, the aerospace industry, Airbus, and the entire French industry ” Le Maire told the French Senate.

On Tuesday, France announced plans to contribute to a 4 billion euro ($4.8 billion) recapitalisation of Air France-KLM and more than double its stake in the airline to nearly 30%.

Under the EU-approved terms, Air France will give up 18 Paris-Orly take-off and landing slots to competitors, amounting to 4% of its current portfolio at the airport.

Le Maire said the government would make sure that no company practicing “social dumping” – cutting staff pay and benefits as much as possible – would get access to these slots.

He also said the government will support the industry while trying to decarbonise air travel, notably by supporting projects for a zero-carbon hydrogen-fueled airplane.

He added that the government wants to reduce the use of airplanes when possible and said Air France has been asked to scrap all connections to cities where there is an alternative by train that takes less than 2-1/2 hours.

Le Maire also said Air France will not take a stake in Reunion island’s Air Austral but he said the state will defend Air Austral with a 30 million euro state-guaranteed loan.

(Reporting by GV De Clercq and Dominique Vidalon; editing by Jonathan Oatis)

Sterling Sinks to 5-Week Low vs. Euro, One-Week Low vs Dollar

By Ritvik Carvalho

LONDON (Reuters) -Sterling sank on Wednesday as profit-taking by traders after a strong first quarter for the British currency pulled it to a week’s low against the dollar and its lowest in two weeks against the euro.

The pound fell on Tuesday, losing 0.6% against the dollar and over 1% against the euro – its worst day against the single currency in five weeks as investors took cash off the table.

By 1305 GMT on Wednesday, the pound was down 0.43% against the dollar at 1.3761, having hit a one-week low of $1.3756. It traded 0.5% lower to the euro at 86.38 pence.

“The recent FX price action seems to suggest that many positives are in the price of the GBP by now and that the pound is looking quite overbought (especially in the case of EUR/GBP),” said Valentin Marinov, head of G10 FX research at Credit Agricole.

“Moreover, the GBP has recently lost its crown of a ‘G10 vaccine champion’ and, more broadly, the slowing pace of the COVID vaccinations in the UK could ultimately delay the government’s plans to reopen the economy despite the recent proclamations of PM Johnson.”

Marinov added that according to the latest polls, the upcoming local elections in Scotland could give a supermajority to the pro-independence parties – the Scottish National Party, the Greens and the newly formed Alba party.

“Given all these downside risks, we maintain our cautious medium-term outlook for the pound.”

Expectations of an economic rebound in Britain, spurred by rapid COVID-19 vaccinations, helped sterling to record its best quarter since 2015 versus the euro.

Britain began using Moderna’s COVID-19 vaccine on Wednesday in Wales just as its rollout of other shots fell to their lowest level this year due to a supply crunch caused by manufacturing problems at AstraZeneca.

Britain has surged ahead of the rest of Europe in the race to vaccinate its population, with almost half of its citizens receiving a first dose. But supply issues from its main Oxford-AstraZeneca shot have slowed progress in recent days.

Prime Minister Boris Johnson confirmed on Monday a planned reopening of the economy would take place next week.

Shops, gyms, hairdressers and outdoor hospitality areas in England will reopen. The government is also looking at a COVID-status certification system, or vaccine passport, to help reopen larger events.

(Reporting by Ritvik Carvalho; editing by Larry King and Bernadette Baum)

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Oil Prices Slip Despite Stronger Economic Outlook

By Ahmad Ghaddar

LONDON (Reuters) -Oil prices were lifted on Wednesday by prospects for stronger global economic growth, though gains were capped as talks to revive a nuclear deal with Iran raised the possibility of an easing of sanctions on its oil exports.

Brent crude futures gained 54 cents, or 0.9%, to $63.28 a barrel by 1053 GMT while U.S. West Texas Intermediate crude was rose 46 cents, or 0.8%, to $59.79.

“Optimism on the global economic outlook boosted sentiment in the crude oil market,” analysts from ANZ bank said.

The International Monetary Fund on Tuesday said that unprecedented public spending to fight COVID-19 would push global growth to 6% this year, a rate not achieved since the 1970s.

However, a possible jump in U.S. fuel inventories and the Iran talks weighed.

U.S. crude stocks were down by 2.6 million barrels in the week ended April 2, while gasoline inventories rose by 4.6 million barrels and distillate stocks up by 2.8 million barrels, said three market sources, citing the American Petroleum Institute (API).

Official data is due to be released later on Wednesday.

Iran and world powers held what they described as “constructive” talks on Tuesday and agreed to form working groups to discuss the possibility of reviving the 2015 nuclear deal that could lead to Washington lifting sanctions on Iran’s energy sector and increasing oil supply.

“Iran is the single largest upside supply risk for the oil market,” said Stephen Brennock of oil brokerage PVM.

Oil prices dropped earlier this week after the Organization of the Petroleum Exporting Countries (OPEC) and allies, a group known as OPEC+, agreed to gradually ease oil output cuts from May.

But analysts say the size of the increase is unlikely to have a major impact on market rebalancing.

“The OPEC+ decision … is not expected to jeopardise the oil rebalancing and hence the elevated price backdrop,” Brennock said.

(Additional reporting by Jessica Jaganathan in SingaporeEditing by David Goodman)

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U.S. Trade Deficit Hits Record High in February

By Lucia Mutikani

The economy is roaring as increased COVID-19 vaccinations and the White House’s $1.9 trillion pandemic rescue package boost domestic demand, a chunk of which is being satiated with imports. The aggressive government intervention and the Federal Reserve’s ultra-easy monetary policy have charted a robust growth path for the economy.

The trade deficit jumped 4.8% to a record $71.1 billion in February, the Commerce Department said on Wednesday. Economists polled by Reuters had forecast a $70.5 billion deficit. The goods trade gap was also the highest on record.

Imports slipped 0.7% to $258.3 billion. Goods imports fell 0.9% to $219.1 billion. The drop likely reflected supply-chain constraints, rather than weak domestic demand. Indeed, imports of capital goods hit a record high, while those of industrial supplies and materials were the highest since October 2018.

“Cargo ships have been forced to anchor outside the Los Angeles and Long Beach ports, where about a third of goods imports come through, as the ports struggle to unload the incoming ships,” said Jay Bryson, chief economist at Wells Fargo Securities in Charlotte, North Carolina.

The United States in February recorded its first petroleum deficit since December 2019, likely because of higher crude prices.

Exports dropped 2.6% to $187.3 billion. Exports of goods tumbled 3.5% to $131.1 billion, likely hurt by unseasonably cold weather across large parts of the country.

When adjusted for inflation, the goods trade deficit shot up to a record $99.1 billion in February from $96.1 billion in January. The so-called real trade deficit is running well above the average for the October-December period.

That suggests trade could subtract from GDP growth in the first quarter, which would be the third straight quarterly drag. But that is unlikely to have an impact on first-quarter GDP growth estimates, currently as high as a 10% annualized rate. The economy grew at a 4.3% pace in the fourth quarter.

Economists expect growth this year could top 7%, which would be the fastest since 1984. The economy contracted 3.5% in 2020, the worst performance in 74 years. The International Monetary Fund is forecasting the global economy to expand 6% this year, driven primarily by the U.S. economy, which the fund estimated would grow by 6.4%.

From the labor market to manufacturing and the hard-hit services industries, activity accelerated sharply in March.

(Reporting by Lucia MutikaniEditing by David Goodman and Paul Simao)

Ryanair Says Slow EU Vaccine Rollout to Hit Passenger Forecast

The Irish company said it now expected passenger traffic in the year to March 31, 2022, to be towards the lower end of its previously estimate of 80-120 million people.

“Easter travel restrictions/lockdowns and a delayed traffic recovery into the peak Summer 21 season, due to the slow rollout in the EU of COVID-19 vaccines, means that FY22 traffic is likely to be towards the lower end of our previously guided range,” it said in a statement.

Ryanair flew 27.5 million passengers in the last 12 months, down from 149 million passengers in the year to March 2020, before the pandemic had a significant impact.

The airline, one of the harshest critics of European politicians’ handling of the COVID-19 crisis, said that while it was too soon to make meaningful profit guidance for the new financial year, it expected to be “close to breakeven.”

Goodbody Stockbrokers said in a note it expected “some adjustment down” from its current 252 million euro ($299 million) profit forecast for the year to end-March 2022.

Ryanair, which is due to publish its annual results on May 17, said it expected to announce a net loss of 800-850 million euros compared with 850-950 million previously.

The airline had 3.15 billion euros of cash at the end of March, down from 3.5 billion at the end of December.

Its shares were unchanged at 16.95 euros at 0844 GMT.

(Reporting by Conor Humphries. Editing by Jason Neely and Mark Potter)