• The Canadian dollar rose to its highest level in more than five weeks against the greenback on Monday, as data showed Canada's current account surplus turning positive ahead of an expected interest rate hike this week by the Bank of Canada. 
• Canada's current account surplus was C$5.0 billion in the first quarter, swinging from a revised C$137 million deficit in the fourth quarter. It was the widest surplus since the second quarter of 2008. 
• "We expect the ongoing strength in commodities to support the current account in Q2 (second quarter), though offset by a deeper services deficit as travel recovers more fully," said Shelly Kaushik, an economist at BMO Capital Markets.
• The Canadian dollar was trading 0.5% higher at 1.2657 to the greenback, or 79.01 U.S. cents, after touching its strongest since April 22 at 1.2651. Gains for the loonie came as world share markets rose and the U.S. dollar lost ground against a basket of major currencies, with investors betting on a possible slowdown in U.S. monetary tightening.

(Source: Reuters)

• GraceKennedy (GK) has announced that the investment and advisory arm of its GraceKennedy Financial Group (GKFG), GK Capital Management Limited (GK Capital), has signed a joint venture agreement with the Trinidad and Tobago Unit Trust Corporation (TTUTC). The new venture, which remains subject to the requisite regulatory approvals, will allow GK and TTUTC to partner in the distribution of mutual funds in Jamaica. 
• TTUTC is the largest operator and manager of mutual funds in the Caribbean, and currently manages US$3.7Bn for over 625,000 investors. Speaking at the signing of the agreement which took place on May 20, 2022, at GK’s Headquarters in downtown Kingston, GK Group CEO Don Wehby explained that the vision is for GraceKennedy to grow as a global consumer group. This will include leveraging relationships with its international partners. 
• Locally, the unit trust and mutual funds markets are growing.  This partnership will likely benefit investors as it will provide them with more options.  Additionally, the inclusion of GK into the market could possibly fuel efforts to improve the performance of funds governed by other operators which could potentially benefit investors. 
• Furthermore, GK’s management highlighted that though the company is entering a competitive space, it believes that the design of the funds will deliver a unique customer experience and drive client acquisition.

(Source: JSE)

• MFS Acquisition Limited (MFS) has announced that it has completed the acquisition of 79% of the shares in SSL Venture Capital Limited (SSLVC). The transaction which was completed on May 25, 2022, saw the company paying out J$30Mn to purchase the majority shareholding of SSLVC. 
• MFS is a private company that offers short-term funding solutions to both individuals and micro, small and medium-sized companies (MSMEs). The Director of MFS, believes that the addition of SSLVC will assist in the company’s long-term strategy of becoming the premier private equity outfit in the Caribbean. 
• This acquisition is likely to bring many changes to SSLVC as MFS management highlighted that a new board of directors will be announced shortly. As such, we can expect to see new initiatives from the company in the coming months. Furthermore, MFS has a client base from which SSLVC can leverage and upsell its private equity services, which could have a positive impact on its financial performance.

(Source: JSE)

• Mexico’s economy grew 1% in the first three months of the year, accelerating somewhat after registering a meager 0.2% growth in the previous quarter, according to seasonally adjusted data released by the government on May 25. Furthermore, when compared to the first quarter of last year, the economy grew 1.8%, according to the National Institute of Statistics and Geography. 
• Notably, Mexico faced some challenges during the quarter, including a spike in COVID-19 infections at the start of the year, rising inflation, disruptions caused by Russia’s invasion of Ukraine, and continuing global supply shortages. As such, “given the prolonged domestic weakness, the ongoing monetary tightening and the risk of a global slowdown, the economy’s performance will remain limited along 2022,” according to Moody’s Analytics Director Alfredo Coutiño. 
• Demand for Mexican imports, however, continued to increase, buoyed by demand in the United States, and Mexicans living abroad continued to support their families back home with remittances. Consequently, as these factors continue to support performance, the IMF forecasts economic growth of about 2% for the year, down from last year’s 4.8% rebound.

(Sources: AP News & IMF)

• The Federal Reserve could pause its monetary policy tightening in September if there is an economic deterioration and inflation subsides, according to Bank of America (BofA) strategists. This news comes one day after the U.S. central bank released the minutes from its May policy meeting. 
• All of the Fed's policymakers agreed to hike interest rates by half a percentage point at the May 3-4 policy meeting to counter rampant inflation and most participants said further hikes of that magnitude in June and July could be appropriate. 
• But the minutes also showed the Fed grappling with how best to reduce inflation without causing a recession or pushing the unemployment rate substantially higher - a task that several participants said would prove challenging. 
• The central bank would likely pause its tightening in September, leaving its benchmark overnight interest rate in a range of 1.75% to 2% if financial conditions worsened. As such, a pause in tightening could lead to lower rates across the U.S. Treasury yield curve.

(Sources: Reuters)

• Global liquefied natural gas (LNG) buyers and sellers are bracing for more uncertainty over Russian supplies and an unclear demand outlook from Europe and top importer China in the run-up to the peak winter season, industry executives said. 
• Western sanctions on Russia due to the invasion of Ukraine have disrupted Russian gas supply to Europe, sending global gas prices to all-time highs earlier this year and raising energy security concerns. Moscow calls its action a special military operation. 
• In addition to unpredictable weather, it remains unclear whether there will be further cuts in Russian supplies to Europe, the executives said. Also uncertain is whether Europe can build new LNG import infrastructure in time to replace massive Russian volumes. 
• One more question is when China will lift its COVID restrictions, which have slashed imports in the first five months of this year. 
• Buyers are increasing stockpiles ahead of winter, underpinning Asian spot LNG prices at nearly three times their May 2021 levels, unusually high for low-demand season in the second quarter.

(Source: Reuters)

• Inflation over the June 2022 to March 2024 quarter (next eight quarters) is projected to average within the range of 8.0% to 9.0%, which is above the previous projection of 6.0% to 7.0%. Inflation is projected to peak in the range of 12.0% to 15.0% by June 2022 and to fall within the target range by the June 2023 quarter. 
• The main factors underpinning the inflation forecast are:  elevated inflation, domestic demand, agricultural food price inflation, oil prices, and inflation in the US economy. Elevated inflation expectations are also expected to persist. In the most recent inflation expectations survey, respondents expected inflation to accelerate over the 12-month horizon to 12.1%, which is above the Bank’s target range. 
• Domestic demand is forecasted to continue to recover, albeit at a slightly stronger pace than previously anticipated. Agricultural food price inflation is projected to accelerate moderately in the context of increases in input prices (in particular fertilizer) and as demand conditions improve.  Oil prices are projected to average US$100.20 per barrel for the next eight quarters compared to the previous average of US$72.50. 
• Additionally, US inflation is forecasted to average 5.2% over the next eight quarters, higher than the previous forecast of 4.3%.

(Source: BOJ Quarterly Monetary Policy Report)

• Real GDP is projected to trend upwards at an average rate in the range 2.0% to 4.0% over the June 2022 to March 2024 quarters, but remain below potential output over the forecast horizon. The projected growth in the economy largely reflects the normalization of economic activity, partly offset by weaker external demand. 
• From the perspective of aggregate supply, growth is anticipated in Hotels & Restaurants, Other Services, Agriculture, Forestry & Fishing, Transport, Storage & Communication, Manufacture, Electricity & Water and Construction. 
• The projected growth in Hotels & Restaurants and Other Services reflects the continued improvement from the travel industry as the number of flights coming into the Island continues to increase, given the low COVID-19 positivity rate. 
• Improvement in Agriculture, Forestry & Fishing is anticipated, given the forecasted demand from tourism, increased investments in traditional crop production, and various initiatives by the Government to assist the industry. This growth may, however, be constrained by the negative effect of higher input cost on production and productivity. 
• In addition, the growth of Manufacture is largely predicated on increased food and beverage production, reflecting the anticipated further improvement in education, entertainment, and tourism, relative to the previous year. For Electricity & Water, growth is premised on the increased electricity and water consumption given the normalization in business activities, particularly in the tourism industry as well as recreational and sporting activities. With regard to Construction, growth, though moderating relative to prior periods, is premised on a projected increase in spending on residential and commercial construction.

(Source: BOJ Quarterly Monetary Policy Report)

• The European Union (EU) is providing funding for the Digital Response Connecting Citizens (DIRECCT) program aimed at strengthening the resilience of the health, education, and small business sectors in the Caribbean to cope with current and future crises. 
• Executive Director of the Trinidad-based Caribbean Public Health Agency (CARPHA), Dr. Joy St. John, said the Caribbean region will benefit from this program through strengthened health information systems and increased capacity for early detection, response, monitoring, and reporting of public health threats and emerging diseases. 
• Likewise, Executive Director of the Barbados-based Caribbean Export Development Agency, Deodat Maharaj, affirmed the agency’s commitment to working with relevant stakeholders to ultimately help Caribbean businesses and entrepreneurs take advantage of digital technologies to build their resilience and sustainability. 
• Digital transformation and innovation are key priorities in the EU’s engagement with the Caribbean. The EU plans to step up its digital engagement with Latin America and the Caribbean through a Digital Alliance. The aim is to combine both regions’ interests, strengths, and capacities, to jointly address the digital divide and achieve inclusive digital transformation.

(Source: Caribbean National Weekly)

• The government of Guyana continues to invest heavily in the agriculture sector, in areas like large-scale vegetable and livestock production, coconut, and drainage systems, all of which contribute to the country’s rapidly growing food production system. 
• Minister of Agriculture, Zulfikar Mustapha, M.P. said recently, that the vast land space in Upper Takutu-Upper Essequibo (Region Nine) is enough for the region to produce agricultural products to feed Caribbean countries. 
• Mustapha stated that “This region for us is a very important region that can be the food capital of CARICOM. With the potential and the vast land space of almost 57, 000 square kilometers of savannah and with the rich potential of this area, it has the potential to feed the Caribbean.” 
• Against this backdrop, local farmers and producers are now charged to lead the agri-food production agenda in the Caribbean to allow CARICOM countries to attain food security, and reduce the food import bill by 25% by 2025.

(Source: Caribbean News Global)