2025-09-02 05:44

MUMBAI, Sept 2 (Reuters) - The Indian rupee strengthened to 88 per U.S. dollar on Tuesday, lifted by offshore position trimming and a recovery in local shares. The currency was last at 88.0050, up 0.2% from Monday's close. It hit an intraday high of 87.9550 on the interbank order-matching system. Sign up here. The 87.95 level is seen an important support for the dollar/rupee pair since it was the previous record high before being breached last Friday. "I will be very surprised if we break below 87.95 and hold," said a currency trader at a private bank. "That would nullify the immediate upside bias, which doesn’t make sense considering the current news flow." The dollar/rupee had slipped in the non-deliverable forward market before domestic trading began, and the "markets here followed through", he added. An FX salesperson at the same bank said the recovery in Indian equities was helping the rupee "at the margin" and "maybe there is a one-off inflow via foreign banks." India equities rose on Tuesday, adding to Monday's rally. Bankers said equity moves have recently played a smaller role in driving the rupee. However, when the currency trades at record or near-record levels its sensitivity to stock market swings increases, adding to intraday volatility. Meanwhile, Asian currencies were steady on Tuesday with investors awaiting U.S. data that could shape expectations for Federal Reserve rate cuts this year. The focus is on two key releases — the August jobs report and the inflation print — both due before the September 16–17 policy meet. https://www.reuters.com/world/india/rupee-back-88usd-offshore-cleanup-equity-rebound-2025-09-02/

2025-09-02 05:36

MOSCOW, Sept 2 (Reuters) - Russia's Gazprom (GAZP.MM) , opens new tab and China National Petroleum Corporation signed an agreement to increase annual gas supplies to China via the Power of Siberia pipeline as well as via the Far Eastern Route, Russia's RIA agency reported on Tuesday. Reuters reported last month that China was seeking to buy more Russian gas through an existing pipeline as talks between the two countries have failed to make progress on building a second link. Sign up here. The agreements were signed during Russian President Vladimir Putin's visit to China where he is due to attend a military parade on Tiananmen Square on Wednesday marking the end of World War Two after Japan's formal surrender. RIA, citing Gazprom's CEO Alexei Miller, said that Gazprom and CNPC have agreed to increase supplies to 44 billion cubic metres (bcm) a year from 38 bcm a year. Additionally, the two have agreed to increase gas supplies via the Far Eastern route to 12 bcm from the 10 bcm. Miller also said that a legally binding memorandum has been signed for the construction of the Power of Siberia 2 pipeline to China and the Soyuz Vostok transit gas pipeline through Mongolia. "Gazprom and CNPC also signed today a new memorandum on strategic cooperation, which reflects a new stage in our work with CNPC on new projects," Miller said. (This story has been corrected to say 38 bcm, not 33 bcm, in paragraph 4) https://www.reuters.com/business/energy/gazprom-cnpc-sign-agreement-increase-gas-supplies-china-ria-reports-2025-09-02/

2025-09-02 05:36

Dollar bounces off 5-week low Gold hits all-time high of $3,508.50 per ounce U.S. August economic data in focus later this week SINGAPORE, Sept 2 (Reuters) - The U.S. dollar clawed back some ground in Asian trading on Tuesday following five days of selling, ahead of the return of U.S. traders from the Labor Day holiday. The dollar index was last up 0.2% at 97.873, having touched its lowest since July 28 on Monday. Gold hit an all-time high. Sign up here. "Capital markets across equities and credit are still optimistic on the U.S., which suggests that foreign holders of U.S. assets are not in retreat," analysts from DBS wrote in a client note. Traders have sold the greenback as U.S. President Donald Trump's attacks on the Federal Reserve, including his decision to remove Governor Lisa Cook, raise fear that the White House is undermining the central bank's independence at a time when the case to begin cutting interest rates is far from clear. "The Fed could be ominously poised to start its rate-cutting cycle," said Chris Weston, head of research at Pepperstone Group in Melbourne. "People see the attraction of being in gold." Bullion reached a record high of $3,508.50 after notching up a sixth day of gain on Tuesday. It was last up 0.5% at $3,494 per ounce . Silver advanced 0.2% to within reach of a 14-year high set on Monday. Trump's appointments to the Fed are likely to further weigh on the dollar, according to DBS. "Already, the labour market is softening, and Chair Powell has signalled the possibility of rate cuts at Jackson Hole," the analysts wrote. "This means that the overvalued USD could ease again as markets anticipate coming Fed rate cuts." Against the yen, the dollar was 0.4% stronger at 147.81 yen , after Bank of Japan Deputy Governor Ryozo Himino struck a dovish tone on Tuesday, saying the central bank should keep raising interest rates but also warning that global economic uncertainty remained high, suggesting it was in no rush to push up still-low borrowing costs. An auction of 10-year Japanese government bonds (JGBs) on Tuesday also drew the strongest demand in almost two years. U.S. economic data for August will be in focus later this week as market watchers try to ascertain the extent to which Trump's policies are affecting industrial activity and the labour market. Data due include ISM's manufacturing and services purchasing managers' indices and the non-farm payrolls report. The euro slipped, last off 0.2% at $1.1690 so far in Asia, after data released on Monday showed the HCOB euro zone manufacturing PMI expanded in August for the first time in three years. Consumer price data for the same month is due later on Tuesday. The Australian dollar paused for breath after five days of gain, last trading down 0.3% at $0.6538 , near its highest in more than two weeks. The kiwi traded 0.3% lower at $0.5884 to snap a three-day winning streak, which had pushed the currency to a two-week high. Sterling traded at $1.3526 , down 0.1% so far on the day, retreating from a two-week high reached on Monday. https://www.reuters.com/world/africa/dollar-inches-up-gold-hovers-near-record-high-2025-09-02/

2025-09-02 05:35

Undermining central bank independence raises long-term borrowing costs, says Schnabel Schnabel: End of Fed independence would disrupt global financial system World not yet ready for end of dollar supremacy, she says FRANKFURT, Sept 2 (Reuters) - Curtailing the U.S. Federal Reserve's independence could backfire and push up borrowing costs rather than lower them while disrupting the entire global financial system, European Central Bank board member Isabel Schnabel said. U.S. President Donald Trump has been exerting relentless pressure on the Fed to cut interest rates and publicly discussed firing Fed Chair Jerome Powell, whom he called a 'numbskull' and a 'moron', for not giving in to his demands. Sign up here. Upping this battle, Trump last month attempted to fire Fed Governor Lisa Cook, setting off a critical legal test over the Fed's ability to function without political interference, the cornerstone of modern central banking. "Any attempt to undermine central bank independence is going to lead to an increase in medium and long-term interest rates," Schnabel told Reuters in an interview. "History is very clear about the benefits of central bank independence: it lowers risk premia and it eases financing conditions for households, firms and governments," Schnabel, an academic who runs the ECB's market operations, said. Trump is demanding lower rates to boost investment and give mortgage borrowers relief over some of the highest interest rates in the developed world. But politically motivated rate cuts would signal that the Fed is willing to tolerate higher inflation, eroding trust among investors, who hold trillions of dollars of U.S. assets, banking on policy certainty from the Fed. "If the loss of Fed independence happened – and I very much hope that it doesn’t – this would be very disruptive for the global financial system and it also would have an impact on the ECB," Schnabel said. Such a loss of confidence could then push up longer-term borrowing costs, which are more relevant than short-term central bank rates for mortgages and business loans, potentially undoing any Fed effort to ease the financing burden. The U.S. could also export higher inflation as the pandemic's key lesson was that countries struggle to fight off global inflationary developments, Schnabel said. While such a loss of trust could also threaten the dollar's supremacy in the global financial system, there was no alternative to the greenback for now, Schnabel said. Some European officials have argued that distrust in U.S. policy could create an opportunity for the euro to gain market share, Schnabel said the world was not yet ready to live without the dollar's supremacy. "The big question is whether the U.S. dollar can maintain its current status," Schnabel said. "I’m inclined to think that it can." "But if it weren’t able to, then it’s not clear what would happen in the global financial system because there is no clear alternative," Schnabel said. "The global financial system is not in a situation where it could easily live without the U.S. dollar as the key currency." https://www.reuters.com/business/finance/loss-fed-independence-would-push-up-borrowing-costs-set-off-turmoil-ecbs-2025-09-02/

2025-09-02 05:35

Schnabel says rates 'mildly accommodative' Sees U.S. tariffs as inflationary Inflation risks tilted to upside - Schnabel Says global rate hikes may come earlier than thought FRANKFURT, Sept 2 (Reuters) - The European Central Bank should keep interest rates steady as the euro zone economy is holding its own in the face of U.S. tariffs and inflation may still come in higher than expected, ECB policymaker Isabel Schnabel told Reuters. The central bank for the 20 countries that share the euro snapped a year-long easing cycle in July and policymakers are now waiting to see the full impact of U.S. duties agreed in July before deciding if borrowing costs need to fall further. Sign up here. Schnabel -- the most influential among the ECB's hawks, as policymakers who favour higher rates are known -- said she didn't see the need for more cuts and the current, 2% policy rate may be "mildly" stimulating an already buoyant economy. "I believe that we may be already mildly accommodative and therefore I do not see a reason for a further rate cut in the current situation," the German economist said in an interview. The ECB is expected to keep interest rates on hold at its next meeting on September 11 but investors see a good chance it will cut rates again by June, money market data shows. Sources also told Reuters discussions about further easing were likely to resume in the autumn. The U.S. Federal Reserve, under pressure from U.S. President Donald Trump, is expected to cut rates this month. But Schnabel said the euro zone's economy had fared better than expected thanks to "robust growth in domestic demand" and that it was now in for a "significant fiscal impulse" from Germany's investment on infrastructure and the military. Contrary to many of her colleagues and the ECB's own projections, Schnabel argued global trade tariffs imposed by Trump's administration would push up inflation, even without retaliation from the European Union. "I continue to believe that tariffs are on net inflationary," Schnabel said. "If you have an increase in input prices globally due to tariffs, and these propagate through global production networks, this will increase inflationary pressures everywhere." She also said tariffs would disrupt supply chains, citing Chinese restrictions on the export of several rare earths and a U.S. decision to tax even small-value parcels as examples. This, together with fast-growing food prices, meant Schnabel saw "the balance of risk as being tilted to the upside", meaning inflation may surpass the ECB's projections for 1.6% next year and 2% in 2027. While Schnabel was not advocating for rate hikes at present, she thought the time for tightening may come, for central banks across the globe, sooner than thought due to trade curbs, fiscal largesse and an older population. "A more fragmented world with a less elastic global supply, higher fiscal spending and ageing societies is a world with higher inflation," she said. "So I think the point where central banks around the world start to hike interest rates again may come earlier than many people currently think." Schnabel saw no evidence of Chinese companies dumping cheap goods on the euro zone as an alternative to the United States, noting China's overall export prices had recovered and the cost of Chinese imports to the bloc was low but stable. She also played down the impact of a stronger euro, saying its pass-through to prices will be smaller if it is driven by improving growth prospects in the euro zone. "Therefore, I am less concerned about exchange rate developments," Schnabel said. She remained open to change her views on policy if there were "material and persistent deviations" from the ECB's 2% target that destabilised inflation expectations but she deemed this unlikely. "I find it highly unlikely that there’s going to be a de-anchoring of inflation expectations to the downside, especially after these many years of too high inflation," Schnabel said. "When you look at firms’ selling prices, you don’t see any indication of disinflationary pressures, neither in the manufacturing nor in the services sector." https://www.reuters.com/business/finance/ecbs-schnabel-calls-steady-rates-economy-holds-up-face-tariffs-2025-09-02/

2025-09-02 05:29

Stocks struggle for direction ahead of economic data Dollar soft on rate cut wagers, gold soars to new peak U.S. labour market in focus before Fed's policy meeting Worries about Fed's independence linger SINGAPORE, Sept 2 (Reuters) - Stocks were muted, the dollar steadied near five-week lows and gold climbed to record highs on Tuesday, as investors awaited economic data this week that could reinforce expectations for a Federal Reserve rate cut in September. Markets widely expect the Fed to lower interest rates later this month, pricing in an 89% chance of a 25 basis point cut, but data this week will help investors gauge whether the central bank could perhaps lean toward a jumbo cut. Sign up here. The focus will be on Friday's U.S. nonfarm payrolls report, which will be preceded by data on job openings and private payrolls, providing investors and the Fed a clearer picture of the labour market that has become the centre of policy debate. "While an outsized 50 bps cut in September is not the base case expectation currently, it cannot be ruled out altogether if the August jobs data shows exceptional weakness," said Vasu Menon, managing director of investment strategy at OCBC Bank. The U.S. inflation report for August, scheduled to be released on September 11, a week before the Fed's policy meeting, will play a crucial role in determining the central bank's next steps. The prospect of lower borrowing costs has kept Wall Street near record highs, while stocks in other regions have also gained in recent weeks. On Tuesday, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab was flat. Nasdaq futures fell 0.1% while European futures eased 0.07%. U.S. markets were closed on Monday for a holiday leaving few cues for Asian markets. "It is all about gauging whether the Fed remains ahead of a possible slowdown in the U.S. economy, or if it's behind the curve," said Kyle Rodda, a senior financial market analyst at Capital.com in Melbourne. "If it seems like the U.S. economy is accelerating off the cliff, it's going to raise fears that the Fed has been too slow to cut rates. If the deterioration is modest, it will support the case for rate cuts while also easing fears of a rapid deterioration in economic activity." China stocks have been on a tear recently buoyed by AI enthusiasm but fell on Tuesday as investors locked in profits following the sharp rally. The blue-chip CSI300 index (.CSI300) , opens new tab fell 0.9% after hitting a three-year high for the third straight session earlier on Tuesday. Hong Kong's Hang Seng index (.HSI) , opens new tab eased 0.6% after surging 2% on Monday. In currencies, the dollar clawed back some of its losses ahead of the European open. The euro fell 0.16% at $1.16925, while sterling was at $1.35264, down 0.17%. The yen weakened 0.3% to 147.70 per dollar after Bank of Japan Deputy Governor Ryozo Himino said the central bank should keep raising interest rates but warned that global economic uncertainty remains high, suggesting it was in no rush to push up still-low borrowing costs. The dollar index , which measures the U.S. currency against six others, was 0.2% higher at 97.847, but still near the five-week low it hit on Monday. The yield on benchmark U.S. 10-year notes was 2.4 basis points higher at 4.249%. FED INDEPENDENCE Efforts by President Donald Trump to fire Fed Governor Lisa Cook have raised the prospect that Trump could make more dovish appointments to the U.S. central bank that would result in easier policy. Cook is set to file fresh arguments against her firing on Tuesday. Trump has criticised the Fed and its chair, Jerome Powell, for months for not lowering rates, and recently took aim at Powell over a costly renovation of the central bank's Washington headquarters. U.S. Treasury Secretary Scott Bessent said on Monday the Fed is and should be independent but said it had "made a lot of mistakes". In commodity markets, gold gained from the dollar's softness and the outlook for lower U.S. rates. The metal rose to a record high of $3,508.5. Oil prices rose on Tuesday as concerns about supply disruptions grew amid an escalation of the conflict between Russia and Ukraine. Brent crude rose 0.4% to $68.44 a barrel, while U.S. West Texas Intermediate crude was up 1.42% at $64.92 a barrel. https://www.reuters.com/world/china/global-markets-wrapup-2-2025-09-02/