2025-08-27 05:15

Dollar weighed down by concerns over Fed independence Fed Governor Cook to file lawsuit to prevent Trump from firing her Two-year U.S. Treasury yield falls to nearly four-month low SINGAPORE, Aug 27 (Reuters) - The dollar staged a shaky recovery on Wednesday, with gains capped by renewed investor worries about the Federal Reserve's independence following U.S. President Donald Trump's latest attempt to extend his power over the central bank. Trump had on Monday said he would fire Fed Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, though Cook's lawyer later said she would file a lawsuit to prevent her ouster, kicking off what could be a protracted legal fight. Sign up here. The dollar initially weakened on the developments though later regained some ground on Wednesday, rising 0.33% against the yen to 147.93 and leaving the euro trading 0.24% lower at $1.1614. Sterling fell 0.23% to $1.3448, while the dollar index rose 0.2% to 98.47. Still, gains in the greenback were limited as Trump's push to gain more influence over U.S. institutions and the path of monetary policy further eroded investors' trust in the dollar's dominance. "It's the latest salvo in the Fed wars and shows how increasingly politicised the central bank is becoming," said Neil Wilson, UK investor strategist at Saxo, referring to Trump's attempt to fire Cook. "It's going to be virtually impossible for the next chair to do anything other than Trump's bidding. This should be negative for the dollar. The question for markets right now is about the September meeting but be in no doubt that we are witnessing a regime shift like we have not seen in decades." Also weighing on the dollar were expectations of faster and deeper U.S. rate cuts, particularly if Cook - should she be removed from her position - gets replaced by someone dovish. Trump has repeatedly called for the Fed to lower interest rates and has threatened to fire Fed Chair Jerome Powell, although he recently backed down from that. Cook's departure would allow Trump to pick a majority of the Fed's seven-member board, including two incumbents and the pending nomination of White House economist Stephen Miran. "Trump has essentially usurped the Fed's forward guidance function for the time being and telling markets lower rates are coming, which is being manifest in a steeper yield curve," said Jamie Cox, managing partner for Harris Financial Group. The two-year U.S. Treasury yield , which typically reflects near-term rate expectations, bottomed at 3.6540% on Wednesday, its lowest since May 1, as traders ramped up bets of imminent Fed cuts. Yields on the longer end of the curve have meanwhile risen on concerns that forced easing of monetary conditions in the near term will lead to a resurgence in inflation. The 30-year yield was last a touch higher at 4.9223%. In other currencies, the Australian dollar was last down 0.16% at $0.6484, while the New Zealand dollar eased 0.27% to $0.5845. The Aussie got a brief lift earlier in the session after domestic data showed consumer prices jumped far more than forecast in July, while core inflation also rose in a blow to hopes of a rate cut from the Reserve Bank of Australia as soon as next month. https://www.reuters.com/world/middle-east/dollar-makes-feeble-recovery-worries-about-fed-independence-linger-2025-08-27/

2025-08-27 04:39

A look at the day ahead in European and global markets from Ankur Banerjee Markets have decided to nervously look away from the brewing Trump v Fed saga for now, putting the spotlight on the political crisis gripping France that has triggered a sharp selloff in stocks and bonds of the euro zone's second-biggest economy. Sign up here. French Prime Minister Francois Bayrou's gamble to win backing for his deeply unpopular debt-reduction plan backfired on Tuesday, plunging the country deeper into political and financial instability. FRENCH WORRIES Investors will keep an eye on France's blue-chip CAC40 index (.FCHI) , opens new tab, which is down more than 3% this week as well as the banking stocks that have borne the worst of the beating so far. The bond market reaction will also be crucial after the gap between French and German 10-year yields, a gauge of the premium investors require to hold French debt, widened on Tuesday to around 79 basis points - its largest since April. We have been here before as France lost its last prime minister, Michel Barnier, to a no-confidence vote over the budget in late 2024, after just three months in office following another snap election in July that year. Stock futures and currencies have been fairly calm in Asian hours but with the economic calendar light, political and fiscal worries may take centre-stage. Bond-market ruction is being felt across the globe again with the U.S. Treasuries curve steepening after President Donald Trump on Monday ordered the firing of Federal Reserve Governor Lisa Cook, an unprecedented move that could lead to a legal tussle. Cook intends to file a lawsuit to prevent her firing. Markets appear to be nervous but have broadly shrugged off the attack on the Fed's independence, with the yield on the 30-year Treasury note not even threatening to breach 5% as would reasonably be expected. Perhaps investors are being complacent or they are waiting for big institutional money to make a shift in moving away from the U.S. assets. As history tells us, it's OK until it's not. Just look at Turkey. NVIDIA Wednesday's main event no doubt will be the earnings report from Nvidia that will set the tone for near-term risk appetite and whether the sky-high valuation for AI darlings is justified. Caught in the crossfire of Washington and Beijing's ongoing trade war, the fate of Nvidia's China business hangs on where the world's two largest economies land on tariff talks and chip trade curbs. That is where investor attention will be. Overall, the $4.4 trillion AI chipmaker is set to report a 53% rise in second-quarter revenue to $46 billion, LSEG data showed, and yet it may not be enough to satiate investors as that jump is still a far cry from the triple-digit growth it witnessed for many recent quarters. Therein lies the challenge for a stock that has risen 35% this year and sways the broader market on its every movement. Options traders are pricing in a swing of about $260 billion in the firm's market capitalisation after the result. Key developments that could influence markets on Wednesday: https://www.reuters.com/world/china/global-markets-view-europe-2025-08-27/

2025-08-27 03:11

Australia CPI +2.8% y/y in July, vs 1.9% in June Power bills jump as some households did not get rebates Core inflation also picks up, July data not complete CPI SYDNEY, Aug 27 (Reuters) - Australian consumer prices jumped by far more than forecast in July as electricity costs spiked due to the timing of government rebates, while core inflation also jumped in a blow to hopes of a rate cut as soon as next month. Investors pared the chance for an easing from the Reserve Bank of Australia next month to just 22% from about 30% before the data, although they are still confident of a move in November. Sign up here. Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index (CPI) rose 2.8% in July compared to a year earlier, up from 1.9% in June and well above median forecasts of 2.3%. The Australian dollar got a brief lift from the data but was last flat at $0.6494, while three-year government bond futures clawed back earlier losses to be down just 2 ticks at 96.57. "We don’t anticipate today's surprise increase in inflation will have a material impact on markets and the broader economy," said Russel Chesler, head of investments and capital markets at VanEck. "This inflation spike, combined with the recency of the last rate cut and continued strength of the labour market, reinforce our expectation that another rate cut is unlikely before November." The trimmed mean measure of core inflation ran at an annual 2.7% in July, up from 2.1% in June. A measure excluding volatile items and holiday travel climbed to 3.2%, from 2.5%. In the month, CPI rose 0.9% from June as electricity prices jumped 13% and holiday travel and accommodation rose 5% thanks to robust demand over school holidays. The bureau said the spike in electricity prices was in part due to the end of federal government electricity rebates for households in the state of New South Wales and Australian Capital Territory. "This means that those households had higher out-of-pocket costs for electricity in July. In addition to this, prices rose due to annual electricity price reviews coming into effect," said Michelle Marquardt, head of prices statistics. New rebates will be reflected in August data, she said. That suggests the spike in electricity will partially unwind in August and seasonal travel pressures typically fade once school holidays end, said Sunny Kim Nguyen, head of Australian economics at Moody’s Analytics. "Even so, the core measure, which strips out the noisy stuff, reminds us that service prices haven't fully cooled and that inflation is still hovering a little above the comfort zone." The RBA cut interest rates this month for the third time and opened the door to more policy easing as inflation cooled. The board said the pace of easing over the next year could be gradual or quicker depending on the flow of economic data. The RBA forecast headline inflation - which ran at 2.1% last quarter - to pick up to 3.1% by mid-next year as electricity rebates fade, but core inflation is expected to stay anchored around 2.6% over the coming years. Much focus is now on the labour market, which has eased from full employment levels albeit at a gradual pace. The inflation update for the first month of the quarter only covers a portion of the full CPI basket and is concentrated on goods rather than services. The statistics bureau will have the full monthly inflation data from November onwards. Wednesday's report showed rents rose 3.9% in the 12 months to July, the lowest annual growth since late 2022, while clothing and footwear rose a chunky 1.7% in the month. "Our base remains that the RBA will continue to deliver three more rate cuts but the risks are tilted towards less easing," said Marcel Thieliant, head of Asia-Pacific at Capital Economics. https://www.reuters.com/sustainability/boards-policy-regulation/australias-inflation-tops-forecasts-electricity-prices-surge-2025-08-27/

2025-08-26 23:44

Aug 26 (Reuters) - The Senate Banking Committee will hold a hearing next week to consider U.S. President Donald Trump's nomination of White House economic adviser Stephen Miran as a Federal Reserve governor, Bloomberg News reported on Tuesday, citing a person familiar with the matter. Reuters could not immediately verify the report. Sign up here. https://www.reuters.com/world/us/senate-panel-prepares-hold-hearing-trumps-fed-pick-bloomberg-news-reports-2025-08-26/

2025-08-26 23:20

Aug 26 (Reuters) - Jamaica will use drones donated by Canada to boost its disaster response services, state information service JIS said on Tuesday, as the Caribbean braces for stronger hurricanes in the coming years fueled by warmer oceans resulting from climate change. WHY IT'S IMPORTANT U.S. government forecasters predict an "above-normal" 2025 Atlantic hurricane season, with storms fueled by warmer ocean temperatures and whose development could be boosted by softer westerly winds. Sign up here. Despite their small greenhouse gas emissions, small island states are particularly vulnerable to effects of climate change. The Caribbean lies in a region where tropical waves that develop off the West African coast can strengthen into powerful storms. KEY QUOTE Jamaica's Geographic Information System (GIS) project manager, Okieno Samuels, said in a statement the drones would play a critical role by doing post-disaster risk assessments instead of relying on people who could be placed in dangerous situations. "We could have an automated response to (disasters); instead of having a person physically go or putting themselves at risk, we could have the drone do a flyover," he said. Samuels said his office was also training an artificial intelligence model to assess building damages. The statement did not say how many drones were being donated by Canada. CONTEXT Erin is the only storm of the 2025 season so far to reach hurricane status. It was one of the fastest storms on record to hit Category 5, in little over 27 hours, but the storm steered clear of land. The hurricane season typically peaks in September. Last year's Atlantic season was extremely active, with two Category 5 storms among five major hurricanes. These included Beryl, the earliest such storm on record for the season. The Caribbean nation of Grenada said its small islands battered by the storm could take decades to fully recover from the damage. BY THE NUMBERS The U.S. National Oceanic and Atmospheric Administration predicts the current season, which lasts through the end of November, will bring six to 10 hurricanes, including three to five of major strength, reaching 111 mph (178 kmh) or higher. Last year's season saw 11 Atlantic hurricanes. https://www.reuters.com/sustainability/climate-energy/jamaica-brings-canadian-drones-fly-over-disaster-zones-2025-08-26/

2025-08-26 23:05

EchoStar jumps after AT&T says it will buy licenses for $23 billion AMD gains on Truist Securities' bullish upgrade Eli Lilly up as drug cuts weight by 10.5% in diabetes patients S&P 500 +0.41%, Nasdaq +0.44%, Dow +0.30% Aug 26 (Reuters) - The S&P 500 ended higher on Tuesday, lifted by Nvidia and Eli Lilly, while U.S. President Donald Trump's decision to fire a central bank governor deepened concerns about the Federal Reserve's independence. Nvidia (NVDA.O) , opens new tab rose 1.1% ahead of its quarterly report late on Wednesday, which will show how the world's most valuable company is faring in the crossfire of Washington and Beijing's ongoing trade war. The chipmaker's report could also fuel - or dampen - Wall Street's rally in AI-related stocks. Sign up here. Trump late on Monday said he was removing Fed Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, adding to concerns about the central bank's independence from politics. S&P 500 futures briefly sank before the stock market recovered as investors focused on unchanged expectations that the central bank will begin cutting interest rates in September. "The financial market community is increasingly concerned about that independence. That is a real concern over the long run. But over the short run, how much does it change the trajectory of interest rate policy in the next six to 12 months? I think the writing has already been on the wall that we get easier monetary policy in the next six to 12 months," said Bill Merz, head of Capital Market Research at U.S. Bank Wealth Management, Minneapolis. Despite lingering inflation pressures, traders have been pricing in a 25-basis-point interest rate cut for the Fed's September policy meeting, encouraged by dovish signals from Fed Chair Jerome Powell, data pointing to labor market weakness and a shakeup at the central bank. Morgan Stanley became the latest brokerage to forecast an interest-rate cut in September, but key upcoming inflation and jobs reports could prompt investors to reassess expectations. Eli Lilly (LLY.N) , opens new tab jumped almost 6% after the drugmaker said its experimental pill cuts body weight by 10.5% in diabetes patients. The S&P 500 is trading at about 23 times expected earnings, a four-year high, heightening the risk of a selloff if Nvidia's results dent Wall Street's enthusiasm for AI-related stocks. The S&P 500 climbed 0.41% to end the session at 6,465.94 points, just short of its August 14 record-high close. The Nasdaq gained 0.44% to 21,544.27 points, while the Dow Jones Industrial Average rose 0.30% to 45,418.07 points. Seven of the 11 S&P 500 sector indexes rose, led by industrials (.SPLRCI) , opens new tab, up 1.03%, followed by a 0.76% gain in financials (.SPSY) , opens new tab. Advanced Micro Devices (AMD.O) , opens new tab gained 2% after Truist Securities upgraded the chip stock to "buy" from "hold." EchoStar (SATS.O) , opens new tab surged 70% to a record high after telecom giant AT&T (T.N) , opens new tab said it has agreed to buy certain wireless spectrum licenses from the satellite communications firm for about $23 billion. Advancing issues outnumbered falling ones within the S&P 500 (.AD.SPX) , opens new tab by a 1.1-to-one ratio. The S&P 500 posted 21 new highs and 2 new lows; the Nasdaq recorded 120 new highs and 59 new lows. Volume on U.S. exchanges was relatively light, with 15.7 billion shares traded, compared with an average of 16.9 billion shares over the previous 20 sessions. https://www.reuters.com/business/sp-500-ends-higher-after-trump-attacks-fed-nvidia-climbs-2025-08-26/