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Wall Street Observer

Wall Street Observer

Global business jet deliveries decline 20% in 2020 due to COVID-19

(Reuters) – Global business jet deliveries declined 20.4% to 644 aircraft in 2020 due to the COVID-19 pandemic, the General Aviation Manufacturers Association (GAMA) said on Wednesday.

While business jet makers like General Dynamics Corp’s Gulfstream, Bombardier Inc and Textron saw a rebound in deliveries during the last three months of 2020, industry does not expect a full recovery to pre-pandemic levels this year.

(Reporting By Allison Lampert in Montreal)


Factbox: Winners and losers in energy sector from Texas cold snap

(Reuters) – A winter storm that hit parts of the southern United States over the past week led several energy companies to report stronger-than-expected results after they were called on to provide more power at higher prices, while others faced millions of dollars in losses.

Here is a look at the winners and losers in the energy sector from the storm:


Gas producers:

Comstock Resources said the last week was “like hitting the jackpot,” adding it was able to sell at “super-premium prices” a material amount of production at anywhere from $15 per million cubic feet of gas (mcf) to as much as around $179 per mcf.

EQT Corp said last week that it also benefited from high prices in regions affected by the cold snap. The company mainly produces gas out of the Marcellus and Utica shale regions in Pennsylvania and Ohio.

Australia’s Macquarie Group, the second biggest gas marketer in North America after oil major BP, lifted its profit guidance on Monday due to the effects of the extreme winter weather. It expects 2021 profit to rise by 10%, after earlier anticipating earnings to drop.

Other natural gas weighted production companies, including Cabot Oil & Gas, Southwestern Energy Co, Range Resources Corp and Antero Resources, may benefit from the freeze, Morgan Stanley analysts said in a note.

Refiners with limited exposure to Texas markets:

Shares of refiners such as HollyFrontier Corp and Valero Energy Corp rose after the freezing temperatures knocked a large swath of U.S. Gulf Coast refining offline, said Bob Yawger, director of energy futures at Mizuho. Eurozone refiners, including Shell and Total, are positioned to benefit as they ramp up their shipments of gasoline into New York Harbor, he said.



Just Energy on Monday raised doubt about its ability to continue as a going concern, after it forecast a $250 million loss from the Texas winter storms.

Innergex Renewable Energy Inc forecast a financial impact of up to C$60 million on its Texas wind farms.

Algonquin Power & Utilities Corp said on Friday it expects the potential hit to adjusted core earnings for this year to be between $45 million and $55 million after bad weather restricted production at its Renewable Energy Group’s Texas-based wind facilities.

Atmos Energy said on Friday it purchased natural gas for an extra $2.5 billion to $3.5 billion due to higher cost of the fuel, adding it was evaluating financing options to pay for the additional purchase cost.

Oilfield Services:

Solaris said on Monday last week’s weather would have an impact on first quarter financials, but did not quantify the hit.

Shale oil producers:

Shale oil producers in the southern United States could take at least two weeks to restart the more than 2 million barrels per day of crude output that shut down. Some production may never return, analysts said.

Diamondback Energy said it expects the weather to wipe off up to five days of production in the current quarter.

Cimarex Energy Inc said it expects an up to 7% hit to production volume in the quarter.

Occidental Petroleum forecast first-quarter Permian production of 450,000 barrels of oil equivalent per day to 460,000 boepd, including a 25,000 boepd hit from downtime related to the winter storm.

Laredo Petroleum said its Permian Basin operations were affected for the last 12 days and estimated the combined impact of shut-in production and completions delays to reduce first-quarter total output by about 8,000 boepd and oil production by about 3,000 bpd.

Gulf refiners:

Refiners with oil processing facilities along the Gulf Coast, the main U.S. refining hub, such as Phillips 66 and Exxon Mobil, were forced to halt operations. By Thursday last week, the historic sub-zero temperatures in Texas and Louisiana shut at least 3.5 million barrels per day, or about 19%, of U.S. refining capacity.

(Compiled by Arundhati Sarkar and Arathy S Nair in Bengaluru, Laila Kearney and Devika Krishnakumar in New York and Rod Nickel in Calgary; Editing by Sonya Hepinstall and Arun Koyyur)


Canadian banks set for earnings decline but investors optimistic about recovery

By Nichola Saminather

TORONTO (Reuters) – Canadian banks are set to post their fourth straight year-on-year quarterly profit drop when they report results next week, the longest decline streak since the financial crisis, on margin compression and declining commercial lending, but flattening loan loss provisions signal a turning point, investors said.

Banks’ profit margins are also expected to get a boost from rising 10-year bond yields in Canada and the United States in future quarters as short-term rates remain near zero. Banks often fund their lending with short-term borrowing or bank deposits.

Analysts estimate the nation’s six biggest lenders – Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia (Scotiabank), Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada – will post an average decline of 4.3% in first-quarter profit from the previous three months and 12% from a year earlier, according to Refinitiv data.

BMO and Scotiabank start reporting results for the three months through January on Tuesday.

Bank CEOs have turned optimistic about 2021, driven by the deployment of coronavirus vaccines, although Canada has seen a slower rollout than some other developed nations.

“Regardless of short-term issues, it’s comforting that we have multiple vaccines,” said Manulife Investment Management Senior Portfolio Manager Steve Belisle. “They’ve good reason to be optimistic versus the worst case scenarios last year.”

First-quarter profit declines will be driven by margin pressure and modest loan growth, Canaccord Genuity Analyst Scott Chan said in a note on Thursday. But profits are set to benefit from strong mortgage growth driven by booming housing demand, and gains in capital markets and wealth and asset management units, Chan said.

Chan said he’s revised earnings estimates up 3%, “supported by our assumption of better credit conditions and continued tailwinds from market sensitive businesses.”

Record provisions for loan losses (PCLs) taken in 2020 mean a significant increase in capital set aside is unlikely during the quarter, said Anthony Visano, managing director of Kingwest & Company, which holds shares in TD, Scotiabank and CIBC.

However, unlike U.S. banks that have already begun releasing some of their reserves back into earnings, Canadian lenders are likely to wait until later in the year to do so, he said.

“As the year unfolds, we should see the vaccine’s assist in terms of the loan growth books … sequentially, we should see improvements, especially when it comes to provisions normalizing,” Visano said.

($1 = 1.2716 Canadian dollars)

(Reporting By Nichola Saminather; Editing by Nick Zieminski)





Croatia has shown interest in F-35 jets – Lockheed executive

By Mike Stone

WASHINGTON (Reuters) – Lockheed Martin co, the United States’ largest weapons maker, has fielded interest from Croatia regarding the purchase of stealthy F-35 jets, a Lockheed executive said on Friday.

Greg Ulmer, the executive vice president of Lockheed’s Aeronautics unit, told reporters, “they’ve shown interest” in buying the jets, which are a big part of Lockheed’s revenue.

A representative from the Embassy of the Republic of Croatia in Washington said “we are evaluating an offer of the new U.S. F-16 Block 70/72 aircraft, together with some other responses to our tender for a multi-role fighter aircraft, new or used,” but did not address the F-35.

Croatia is evaluating U.S., French and Swedish offers for fighter jets as it looks to modernize its air force, which now flies Russian-made MiG-21 jets dating from its past within the former Yugoslavia.

Croatia wanted to buy 12 used F-16 fighter jets from Israel, but it fell through after Israel said https://www.reuters.com/article/us-croatia-israel-military/israel-says-u-s-blocks-its-sale-of-fighter-jets-to-croatia-idUSKCN1P42MN in 2019 it could not get approval from the United States for the sale.

Other international customers for the fifth-generation F-35 include Canada, Finland, and Switzerland, which are running competitions for a future jet purchase. Additional customer prospects for Lockheed’s F-35 include Greece, Spain, Eastern European and Middle Eastern countries, Ulmer said in a media conference call.

Lockheed has also seen international interest for as many as 300 of its fourth-generation F-16 fighter jets on top of the current production backlog of 128 jets, Ulmer said.

(Reporting by Mike Stone in Washington, D.C.; Editing by Dan Grebler and David Gregorio)


Texas oil refiners will take weeks to recover, boosting U.S. gasoline prices

By Laila Kearney

(Reuters) – Texas oil refineries shut by cold-weather disruptions may take several weeks to resume normal operations, industry experts said on Friday, helping to push up fuel prices.

About a fifth of oil processing was halted by power outages, shortages of natural gas and water this week.

Average retail gasoline prices rose 6 cents on the week and are up 9 cents in the last month, to $2.33 a gallon, the American Automobile Association said. It forecast inventories would fall, keeping prices higher through month’s end.

“We are 2-1/2 to three weeks away from restoring most operations” at affected refineries, said Andrew Lipow, president of Houston-based consultancy Lipow Oil Associates.

The refinery shutdowns will depress prices for U.S. crude oil and widen the spread between U.S. and Brent crude, Paul Sankey of independent energy researcher Sankey Research said in a note. He forecast “heavy pressure on US crude prices from returning supply into no demand from a major refining outage that will last 2-3 weeks.”

U.S. crude futures fell 1.5% on Friday, to $59.60 a barrel, as producers signaled plans to restart production. U.S. crude is up 22% year to date. U.S. gasoline futures on the New York exchange rose to $1.805 per gallon.

“The spreads tell me that crude oil will come back quicker” than refining margins, said Robert Yawger, director of energy futures at Mizuho Securities USA.

Refinery operators are assessing facilities and may need to repair any damage to pipelines, cooling towers and other equipment before slowly and carefully restarting, Lipow said.

Shortages and high prices for natural gas have also affected refiners. Texas officials this week asked natural gas suppliers to prioritize deliveries to electric utilities and residential customers, leaving less of the fuel to supply refinery operations, Lipow said.

Slowly resuming electricity and water needed to power the plants also is likely to cause delays at Texas Gulf Coast refineries beyond what is normal after business-pausing natural disasters such as hurricanes, he said.

(Reporting by Laila Kearney and Devika Krishna Kumar; editing by Jonathan Oatis)


Investors seed indoor farms as pandemic disrupts food supplies

By Rod Nickel

(Reuters) – Investors used to brush off Amin Jadavji’s pitch to buy Elevate Farms’ vertical growing technology and produce stacks of leafy greens indoors with artificial light.

“They would say, ‘This is great, but it sounds like a science experiment,'” said Jadavji, CEO of Toronto-based Elevate.

Now, indoor farms are positioning themselves as one of the solutions to pandemic-induced disruptions to the harvesting, shipping, and sale of food.

“It’s helped us change the narrative,” said Jadavji, whose company runs a vertical farm in Ontario, and is building others in New York and New Zealand.

Proponents, including the U.S. Department of Agriculture (USDA), say urban farming increases food security at a time of rising inflation and limited global supplies. North American produce output is concentrated in Mexico and the U.S. Southwest, including California, which is prone to wildfires and other severe weather.

Climate-change concerns are also accelerating investments, including by agribusiness giant Bayer AG, into multi-storey vertical farms or greenhouses the size of 50 football fields.

They are enabling small North American companies like Elevate to bolster indoor production and compete with established players BrightFarms, AeroFarms and Plenty, backed by Amazon.com Inc founder Jeff Bezos.

But critics question the environmental cost of indoor farms’ high power requirements.

Vertical farms grow leafy greens indoors in stacked layers or on walls of foliage inside of warehouses or shipping containers. They rely on artificial light, temperature control and growing systems with minimal soil that involve water or mist, instead of the vast tracts of land in traditional agriculture.

Greenhouses can harness the sun’s rays and have lower power requirements. Well-established in Asia and Europe, greenhouses are expanding in North America, using greater automation.

Investments in global indoor farms totaled a record-high $500 million in 2020, AgFunder research head Louisa Burwood-Taylor said.

The average investment last year rose sharply, as large players including BrightFarms and Plenty raised fresh capital, she said.

A big funding acceleration lies ahead, after pandemic food disruptions – such as infections among migrant workers that harvest North American produce – raised concerns about supply disruptions, said Joe Crotty, director of corporate finance at accounting firm KPMG, which advises vertical farms and provides investment banking services.

“The real ramp-up is the next three to five years,” Crotty said.

Vegetables grown in vertical farms or greenhouses are still just a fraction of overall production. U.S. sales of food crops grown under cover, including tomatoes, cucumbers and lettuce, amounted to 790 million pounds in 2019, up 50% from 2014, according to the USDA.

California’s outdoor head lettuce production alone was nearly four times larger, at 2.9 billion pounds.

USDA is seeking members for a new urban agriculture advisory committee to encourage indoor and other emerging farm practices.


Bayer, one of the world’s biggest seed developers, aims to provide the plant technology to expand vertical agriculture. In August, it teamed with Singapore sovereign fund Temasek to create Unfold, a California-based company, with $30 million in seed money.

Unfold says it is the first company focused on designing seeds for indoor lettuce, tomatoes, peppers, spinach and cucumbers, using Bayer germplasm, a plant’s genetic material, said Chief Executive John Purcell.

Their advances may include, for example, more compact plants and an increased breeding focus on quality, Purcell said.

Unfold hopes to make its first sales by early 2022, targeting existing farms, and start-ups in Singapore and the United Kingdom.

Greenhouses are also expanding, touting higher yields than open-field farming.

AppHarvest, which grows tomatoes in a 60-acre greenhouse in Morehead, Kentucky, broke ground on two more in the state last year. The company aims to operate 12 facilities by 2025.

Its greenhouses are positioned to reach 70% of the U.S. population within a day’s drive, giving them a transportation edge over the southwest produce industry, said Chief Executive Jonathan Webb.

“We’re looking to rip the produce industry out of California and Mexico and bring it over here,” Webb said.

Projected global population growth will require a large increase in food production, a tough proposition outdoors given frequent disasters and severe weather, he said.

New York-based BrightFarms, which runs four greenhouses, positions them near major U.S. cities, said Chief Executive Steve Platt. The company, whose customers include grocers Kroger and Walmart, plans to open its two largest farms this year, in North Carolina and Massachusetts.

Platt expects that within a decade, half of all leafy greens in the United States will come from indoor farms, up from less than 10% currently.

“It’s a whole wave moving in this direction because the system we have today isn’t set up to feed people across the country,” he said.


But Stan Cox, research scholar for non-profit The Land Institute, is skeptical of vertical farms. They depend on grocery store premiums to offset higher electricity costs for lighting and temperature control, he said.

“The whole reason we have agriculture is to harvest sunlight that’s hitting the earth every day,” he said. “We can get it for free.”

Bruce Bugbee, a professor of environmental plant physiology at Utah State University, has studied space farming for NASA. But he finds power-intensive vertical farming on Earth far-fetched.

“Venture capital goes into all kinds of crazy, crazy things and this is another thing on the list.”

Bugbee estimates that vertical farms use 10 times the energy to produce food as outdoor farms, even factoring in the fuel to truck conventional produce across country from California.

AeroFarms, operator of one of the world’s largest vertical farms, a former New Jersey steel mill, says comparing energy use with outdoor agriculture is not straightforward. Produce that ships long distances has a higher spoilage rate and many outdoor produce farms use irrigated water and pesticides, said Chief Executive Officer David Rosenberg.

Vertical farms tout other environmental benefits.

Elevate uses a closed loop system to water plants automatically, collect moisture plants emit and then re-water them with it. Such a system requires 2% of the water used on an outdoor romaine lettuce operation, Jadavji said. The company uses no pesticides.

“I think we’re solving a problem,” he said.

(Reporting by Rod Nickel in Winnipeg, Manitoba; additional reporting by Karl Plume in Chicago; Editing by Caroline Stauffer and Lisa Shumaker)






Traders rush to supply fuel to the U.S. as Texas freeze bites

By Ahmad Ghaddar, Stephanie Kelly and Laura Sanicola

LONDON (Reuters) – Massive refining outages in the U.S. state of Texas due to freezing weather has led to a flurry of fuel tanker bookings from Europe, while several carriers were diverting away from the U.S. Gulf Coast, traders and analysts said.

The cold snap has halted about one-fifth of the United States’ refining capacity and nearly all oil and natural gas production in west Texas.

Traders were looking to fill the gap in refinery supplies with bookings from elsewhere.

U.S. Atlantic coast imports of diesel and gasoil from other countries was seen at 380,000 barrels per day (bpd) in February, at the same level of a multi-year high reached in November, according to oil analytics firm Vortexa.

The rise is led largely by higher intake from northwest Europe, with 140,000 bpd of imports, a multi-year high, Vortexa said.

Imports on the route are also on track to remain firm in March, with around 2.5 million barrels currently forecast to arrive, Vortexa said. 

Gasoline exports from Europe to North America have also spiked.

Loadings of gasoline and blending components along the route were pegged at 417,000 bpd Feb. 1-18, according to Vortexa, the highest level since July 2020, and 27% higher than average for the prior three months.

At the same time, clean products exports from the U.S. Gulf Coast have fallen sharply.

Loadings are holding at 1.3 million bpd on a 10-day moving average basis, nearing levels last seen in May 2020, when coronavirus lockdowns greatly hampered demand, according to Reid l’Anson, senior commodity economist at Kpler. That compares with 2.5 million bpd last year, he added.

The disruptions are having a big impact on prices.

The U.S. crack spread, a key measure of refining margins, settled at $15.43 a barrel on Thursday, the highest since April 2020, Refinitiv Eikon data showed.

“The cargoes are going to follow the margins and with prices improving here in the U.S. that would signal more cargoes to the U.S.” said Phil Flynn, a senior analyst at Price Futures Group in Chicago.

Gasoline and diesel profit margins in Europe have also risen, with the northwest Eurpan barge crack spread hitting its highest since October around $4.50 a barrel on Thursday.

The disruptions also led to tankers that were due to load in the U.S. Gulf to divert away from the energy hub. Vortexa data shows four tankers, including the very large gas carrier (VLGC) Captain John NP.

“Everything is getting delayed or moving out of the Houston area and not coming back,” a shipbroker told Reuters.

(Reporting by Ahmad Ghaddar in London, Stephanie Kelly and Laura Sanicola in New York; Editing by Emelia Sithole-Matarise)


Ford recalling 153,000 vehicles in U.S., Canada that could have faulty inflators

By David Shepardson

WASHINGTON (Reuters) – Ford Motor Co is recalling 153,000 older trucks that may have had obsolete Takata air bag modules installed in collision and theft repairs after the Takata recall was completed, the automaker said on Thursday.

The second-largest U.S. automaker identified 144,340 U.S. 2004-06 Ford Ranger trucks and about 8,800 in Canada that could have obsolete Takata parts. Ford said it could not locate 45 inflators that could have been installed and was recalling all of the vehicles “at the request of the U.S. National Highway Traffic Safety Administration” (NHTSA).

Ford also said on Thursday it was separately recalling a group of 1,100 vehicles from the 2004-2011 model years that may also have had obsolete Takata service parts.

Last month, Ford said it would comply with an earlier NHTSA request to recall 3 million vehicles with potentially defective driver-side Takata air bags and would take a $610 million charge.

NHTSA rejected a formal petition from Ford to avoid a recall.

The defect, which leads in rare instances to air bag inflators rupturing and sending potentially deadly metal fragments flying, prompted the largest automotive recall in U.S. history of more than 67 million inflators. Worldwide, about 100 million inflators installed by 19 major automakers have been recalled.

Also last month, NHTSA said at least 17 million U.S. vehicles with Takata air bags remain unrepaired.

Takata inflators have resulted in the deaths of at least 27 people worldwide and 18 in the United States, and over 400 reported injuries.

Two people died in Takata air bag ruptures in previously recalled 2006 Ford Ranger vehicles, with the most recent death in 2017.

In November, NHTSA said it was rejecting a petition filed by General Motors to avoid recalling 5.9 million U.S. vehicles with Takata inflators. GM said later it was taking a $1.1 billion charge as a result of the recall.

(Reporting by David Shepardson in Washington; Editing by Leslie Adler and Matthew Lewis)


Texas energy crisis extends to sixth day, spills over to Mexico

By Jennifer Hiller and Arpan Varghese

HOUSTON (Reuters) – Texas’s energy outages caused by a deep freeze extended to a sixth day on Thursday, with the impact of reduced supplies from the biggest energy-producing state in the United States spilling over to Mexico.

The cold snap, which has killed at least 21 people and knocked out power to more than 4 million people in Texas, is not expected to let up until this weekend. It has halted about one-fifth of the nation’s refining capacity and halted nearly all oil and natural gas production in west Texas.

Oil production could fall more than 4 million barrels per day, representing almost 40% of U.S. production, and U.S. crude exports could average 1.1 million bpd on the week, according to estimates from researcher Kpler, compared with current levels of about 3.8 million bpd.

Texas’s outages also affected power generation in Mexico, with exports of natural gas via pipeline dropping off by about 75% over the last week, according to preliminary Refinitiv Eikon data.

Governor Greg Abbott directed the state’s natural gas providers not to ship outside Texas, but a regulator said it is unlikely that they have the right to interfere with existing contracts to buyers.

“I’m not sure we have authority to mess with that, nor do I really want to,” said Jim Wright, one of three members of the Texas Railroad Commission, the state’s oil and gas regulator.

The ban prompted a response from officials in Mexico, as U.S. gas pipeline exports to Mexico fell to 4.3 billion cubic feet (bcf) per day on Wednesday, down from a 30-day average of 5.7 bcf, according to data from Refinitiv.

The Mexican government called the top U.S. representative in Mexico on Wednesday to press for natural gas supplies as power cuts there have hit millions of residents. The White House said on Thursday it was in discussions with Mexican authorities and Texas officials over Abbott’s directive.

However, Mexican President Andres Manuel Lopez Obrador on Thursday said he understands the Texas governor’s request for natural gas export ban has not yet been approved and that Mexico is making diplomatic efforts so it is not carried out.

Lingering power outages are due to downed lines and not because of a lack of power generation, Abbott said during a press conference on Thursday.


Texas exports natural gas via pipeline to Mexico and via ships carrying liquefied natural gas (LNG) from terminals in Freeport and Corpus Christi. It also supplies numerous regions of the country, including the U.S. Midwest and Northeast.

The state’s electrical grid operator, Electric Reliability Council of Texas (ERCOT), was trying to restore power as thermal generators – those powered by natural gas, coal and other fuels – lost the capability to provide power as valves and pipes froze.

ERCOT said that while there is no additional power cutoffs at this time, a little over 40,000 megawatts of generation remained offline, including 23,500 MW of thermal and the rest wind and solar.

“Energy emergency conditions remain as the grid operator and transmission owners work to restore the remaining customers that are without power,” it said.

Abbott said he has asked the legislature to mandate the winterization of generators in the power system and has called for funding needed to ensure winterization and modernization occurs.

Blackouts could continue through at least Friday, said Rebecca Miller, senior analyst at consultants Wood Mackenzie.

While the storm has moved away, freezing temperatures remain and oil refining might take days, if not weeks, to full resume operations.

“The oil and gas industry is finally getting some power into these fields,” Christi Craddick, chair of the Texas Railroad Commission, said Wednesday night.

Industrial facilities and manufacturing plants are unable to operate without power. Auto companies, including Ford Motor Co, have shut some plants because of a lack of natural gas and power.

U.S. crude futures fell about 1% on profit-taking following days of buying spurred by fears of supply disruptions that sent prices to the highest since Jan. 8, 2020.

Natural gas futures also eased from near a three-month peak as warmer weather was forecast. Next-day prices at Waha hub in the Permian basin in West Texas eased from all-time peak of $209.75 per mmBtu to $77 per mmBtu.


Texas is the nation’s biggest fossil fuel energy producer, but its operators, unlike those in North Dakota or Alaska, are not used to frigid temperatures.

The state produces almost a quarter of U.S. natural gas production and consumes about 15%. Most of the gas it ships domestically goes to neighboring Oklahoma and Louisiana.

LNG plants in Texas – Cheniere Energy Inc’s Corpus Christi and Freeport LNG’s Freeport – were basically taking no gas from the Texas grid Thursday morning, according to preliminary data from Refinitiv.

The Houston Ship Channel, a key export waterway, had reopened on Thursday, but there was hardly any vessel traffic. With temperatures expected to drop overnight, the port may need to be shut again, said J.J. Plunkett, chief operating officer for Houston Pilots.

“The hydrocarbon water lines are frozen and the cargo cannot be loaded,” he said. “This time of the year, we generally have 60 ships in and out the channel; last night we had only nine.”

Next-day power for Thursday at the ERCOT North hub, which includes the cities of Dallas and Fort Worth, were near a record high of $8,800 per MWh hit the previous day. Prices were below $50 per MWh before the cold blast.

Graphic-U.S. natural gas production slumps – https://fingfx.thomsonreuters.com/gfx/ce/gjnvwzalmpw/Pasted%20image%201613575433245.png

(Reporting by Jennifer Hiller and Gary McWilliams in Houston, Arpan Varghese in Bengaluru; additional reporting by Marianna Parraga and Diego Ore in Mexico City and Devika Krishna Kumar, Stephanie Kelly and Scott DiSavino in New York, Swati Verma and Diptenu Lahiri in Bengaluru; Editing by Marguerita Choy and Jonathan Oatis)


Dollar slips in risk-off session, cryptocurrencies scale new heights

By Stephen Culp

NEW YORK (Reuters) – The dollar lost ground on Thursday, ending a two-day winning streak as hopes for a speedy economic recovery from the global heath crisis was dampened by disappointing labor market data, which put market participants in a risk-off mood.

“It’s hard to reconcile what’s pulling the dollar lower today,” said Mazen Issa, senior currency analyst at TD Securities in New York. “But since the start of this year, around the Georgia (senatorial election) runoff, the relative U.S. equity performance has been positively correlated to the dollar.”

Bitcoin backed away from its record high of $52,640 reached overnight. The cryptocurrency has surged roughly 79% so far this year as institutional interest gains momentum, prompting some analysts to warn that the rally could be unsustainable.

Ethereum, the second largest cryptocurrency in terms of volume and market capitalization, hit a record high of $1,939, having soared by nearly 1,400% so far this year.

Last week the Chicago Mercantile Exchange launched futures on ether, the digital currency or token that facilitates transactions on the ethereum blockchain. It was last up 4.00% at $1,925.30.

“For now it’s a speculative trade, but there’s certainly a place for it in tomorrow’s economy,” Issa added. “It’s not going to go away but there’s a great deal of speculation taking place, and the FOMO aspect is a major component.”

An unexpected increase in weekly jobless claims dampened enthusiasm over otherwise upbeat data this week, the day after minutes from the U.S. Federal Reserve’s most recent monetary policy meeting showed the central bank was determined to continue supporting the economic recovery.

The dollar index was off 0.33% at 90.601 following two straight days of gains.

The euro gained 0.38% to $1.2086 after sliding 0.5% overnight, the most in two weeks.

The yen gained some ground against the greenback and was last almost flat at 105.685, but still below its 200-day moving average.

Sterling advanced 0.77% against the dollar and was last at 1.397, and hit a high against the euro of 86.525 pence. The pound is the best-performing G10 currency against the dollar this year.[GBP/]

(Reporting by Stephen Culp; additional reporting by Ritvik Carvalho; Editing by Marguerita Choy)