2024-12-27 06:53

Japanese yen rises from 5-month low Some BOJ policymakers more confident in rate hike Fed expected to slow rate cuts next year NEW YORK, Dec 27 (Reuters) - The Japanese yen rose off a five-month low against the dollar on Friday after a summary of opinions from the Bank of Japan’s December policy meeting showed some policymakers gaining confidence in an imminent rate increase, while the Japanese central bank also cut its monthly bond purchases. Some Bank of Japan policymakers saw conditions falling into place for an imminent rate hike, with one predicting a move in the near future, keeping alive the chance of a January hike. The BOJ held interest rates steady at 0.25% at this month's meeting, a move governor Kazuo Ueda explained as aimed at scrutinizing more data on next year's wage momentum and clarity on the incoming U.S. administration's economic policies. The Bank of Japan will cut monthly Japanese government bond purchases by another 410 billion yen per month ($2.6 billion), lowering the total to about 4.5 trillion yen per month from January. The Japanese currency has weakened in recent weeks as U.S. Treasury yields rise despite the Federal Reserve cutting rates by 100 basis points since September. Traders are pricing in the likelihood that the U.S. central bank will make fewer cuts next year as inflation remains elevated. Analysts say the policies of the new Trump administration next year are also expected to boost growth and inflation, making traders wary of betting against the greenback. But some see the Japanese currency staging a comeback against the dollar eventually, with Treasury yields likely to decline. “The prospect of (a) BoJ rate hike in the first quarter of next year … and a drift lower in Treasury yields in H2 2025, suggest the USD/JPY fair value is peaking around now and will be in the mid-130s by the end of next year,” Societe Generale analyst Kit Juckes said in a recent report. Traders are also on watch for any potential intervention by Japanese officials to shore up the currency if it continues to weaken, as they have done multiple times this year. Japan Finance Minister Katsunobu Kato on Friday reiterated concerns over a sliding yen, repeating his warning to take action against excessive currency moves. The dollar was last down 0.09% at 157.85 Japanese yen. It reached 158.09 on Thursday, the highest since July 17, and is on track for a 12% yearly gain against the yen. The U.S. dollar index fell 0.06% to 108.02. It reached a two-year high last Friday of 108.54 and is on pace for a yearly increase of 6.6%. The euro gained 0.04% to $1.0426, but is heading for a yearly decline of 5.6%. Sterling rose 0.34% to $1.2568 and is on track for a yearly loss of 1.2%. The Chinese yuan was near a 13-month low, trading at 7.2950 per dollar in the onshore market . The currency has suffered under the threat of additional U.S. tariffs on Chinese goods under Trump. South Korea's won dropped to a 16-year low of 1,486.7 per dollar after parliament impeached acting President Han Duck-soo, plunging the country deeper into political chaos. Cryptocurrency bitcoin fell 1.56% to $94,196. It has surged about 122% this year. Sign up here. https://www.reuters.com/markets/currencies/yen-hovers-near-5-month-low-bojs-cautious-stance-weighs-2024-12-27/

2024-12-27 06:48

Gold down 0.1% this week US Treasury yields hover near 8-month high hit on Thursday Dollar set for fourth-straight weekly gain Dec 27 (Reuters) - Gold prices slipped on Friday as elevated U.S. Treasury yields dimmed non-yielding bullion's allure in a holiday-thinned week, with markets focused on President-elect Donald Trump’s return to office and the potential impact of his inflationary policies on the Fed’s 2025 outlook. Spot gold fell 0.6% to $2,619.33 per ounce, as of 1:41 p.m. ET (1841 GMT). Bullion has lost 0.1% this week. U.S. gold futures settled 0.8% lower at $2,631.90. "Treasury yields are a little bit higher here, and gold will remain under pressure through the end of today ... we are here in a thin holiday market," said Bob Haberkorn, senior market strategist at RJO Futures. The dollar index (.DXY) , opens new tab headed for a fourth straight week of gains, reducing gold's appeal for holders of other currencies, while the benchmark U.S. 10-year yields were trading near their highest level since May 2, which they hit on Thursday. So far this year, gold has surged 28%, hitting a record high of $2,790.15 on Oct. 31. The rally was fuelled by the Federal Reserve rate-easing cycle and heightened global tensions. Most analysts remain bullish for 2025, despite the Fed now projecting fewer rate cuts. They believe pockets of geopolitical tensions around the globe will remain elevated, central banks will continue their robust gold-buying spree, and political uncertainty will linger as Trump returns to the White House in January. His proposed tariffs and protectionist trade policies are also expected to spark potential trade wars, adding to gold’s allure as a safe-haven asset. "Next year with central-bank buying, I can see gold topping $3,000 at some point, probably by the summer, if gold continues on the pace that it's been on," Haberkorn said. Gold traditionally shines during periods of economic and geopolitical turmoil and thrives in a lower interest-rate environment. Spot silver fell 1.3% to $29.41 per ounce, platinum was down 2.1% at $916.30, palladium shed 1.2% to $913.71. Sign up here. https://www.reuters.com/markets/commodities/gold-set-weekly-rise-eyes-fed-trumps-2025-policies-2024-12-27/

2024-12-27 06:27

MUMBAI, Dec 27 (Reuters) - The Indian rupee weakened to an all-time low on Friday, hurt by persistently strong dollar demand in the non-deliverable forwards (NDF) market, while likely intervention by the Reserve Bank of India (RBI) capped the currency's losses. The rupee declined to 85.3950 to the dollar, eclipsing its previous all-time low of 85.2825 hit on Thursday. The currency was last quoted at 85.39 as of 09:40 a.m. IST. The local currency has hit record lows in every trading session this week, pressured by broad strength in the dollar alongside a bearish bias on the local currency amid the widening of India's trade deficit and concerns about slowing growth. "The pressure on the currency is likely to persist, driven by month-end dollar demand from local oil companies. Thus, we anticipate the USD/INR pair to trade within the range of 85 to 85.50 in the near term," said Amit Pabari, managing director at FX advisory firm CR Forex. State-run banks were spotted offering dollars, most likely on behalf of the RBI, traders said, which helped limit the local currency's losses. The dollar index was a tad higher at 108.1, while Asian currencies were down between 0.1% and 1%. The greenback has gained over 2% so far this month and is on course for its third monthly gain on the trot. Expectations about incoming U.S. President Donald Trump's policies have boosted the dollar and U.S. Treasury yields, which have hurt emerging market currencies across the board. However, the RBI's frequent dollar-selling interventions have supported the rupee, making it the least volatile among major Asian peers. The rupee is "quite likely to extend its decline to or slightly below 85.45 on Friday," a trader at a state-run bank said. While the bearish bias on the currency is likely to persist into 2025, it may "pause slightly," at 85.50, the trader added. Sign up here. https://www.reuters.com/markets/currencies/rupee-hits-record-low-pressured-by-strong-ndf-dollar-bids-rbi-likely-steps-2024-12-27/

2024-12-27 06:18

MUMBAI, Dec 27 (Reuters) - India's banking system liquidity deficit is set to widen further in the upcoming quarter, leading to more voices demanding durable liquidity injection. The banking system's liquidity shortfall has jumped to its highest level in nearly seven months due to tax outflows and central bank's regular foreign exchange intervention, market participants have said. CONTEXT Daily average banking system liquidity slipped into deficit for December and has widened in the month, despite the central bank cutting banks' cash reserve ratio by 50 basis points. This is the first time monthly liquidity has slipped into deficit since June, when the spending was curtailed due to general elections and the formation of the new government. As of Dec. 23, the liquidity deficit stood at 2.43 trillion rupees. WHY IT MATTERS A surplus in the banking system liquidity is a requisite for transmission of lower interest rates into overall economy, according to market participants. While the central bank is expected to cut the interest rate in February, traders have said that a rate cut without sufficient liquidity will not be an effective easing. GRAPHIC KEY QUOTES "The first thing should be allowing the rupee to move in line with fundamentals and to not waste your reserves and create a further hole in the liquidity situation. Then other steps could come in, because you shouldn't be digging a hole and trying to fill it in at same time. Now that the RBI has used the CRR tool once, the next step would be to announce open market bond purchases. OMO purchases would support a more flexible and calibrated approach to infuse liquidity," said A Prasanna, head of research at ICICI Securities Primary Dealership. Kanika Pasricha, chief economic advisor at Union Bank of India, feels the RBI may look at another cut in CRR. She also said OMOs and foreign exchange swaps could be other possible measures used. "Core liquidity has come down by around 3.2 trillion rupees, and only 1.2 trillion rupees has been replenished with a cut in CRR." WHAT'S NEXT Market participants expect the deficit to widen by about 1 trillion rupees through a rise in currency in circulation in January-March, in addition to other outflows. So far this year, currency in circulation rose by more than 500 billion rupees, reducing availability of funds in the banking system. ($1 = 85.3570 Indian rupees) Sign up here. https://www.reuters.com/world/india/indias-widening-bank-liquidity-deficit-warrants-more-measures-traders-say-2024-12-27/

2024-12-27 05:57

Wall Street indexes skid on year end profit taking, tax harvesting U.S. dollar set for 7% annual gain, yen faces fourth year of losses Thin markets exacerbate moves before another abbreviated week NEW YORK/LONDON/SINGAPORE Dec 27 (Reuters) - U.S. stocks wrapped up Christmas week on Friday with retracements of double-digit uptrends, and, alongside the dollar to a smaller degree, succumbed to profit taking in illiquid markets heading into the last weekend of 2024. Even with its slight loss on Friday, the U.S. dollar was headed for an almost 7% annual gain, as traders anticipated robust U.S. growth, as well as tax cuts, tariffs and deregulation by the incoming administration of President-elect Donald Trump, would make the Federal Reserve cautious on rate-cutting well into 2025. Selling in Wall Street's main indexes gathered steam through the morning, chilling the mood after the week started out showing the hallmarks of a classic year-end rally to crown what was already a stellar year. “The Santa Claus rally came a bit earlier this year, and I think this is profit taking ahead of another holiday-shortened week next week," said Jeff Schulze, head Of economic and market strategy at Clearbridge Investments. "That’s another reason I think this isn’t causing more apprehension heading into a weekend. It’s not uncommon for the market to hit air pockets when the volumes are light." Leading the decline were high-flying "Magnificent 7" stocks like Tesla which slid 4.9%, along with Amazon.com (AMZN.O) , opens new tab, Microsoft (MSFT.O) , opens new tab and Nvidia (NVDA.O) , opens new tab. The S&P 500 (.SPX) , opens new tab fell 1.11%, leaving Wall Street's benchmark with a 0.67% weekly gain. The Nasdaq Composite (.IXIC) , opens new tab ended down 1.49%, having been down more than 2% during the session. The Dow Jones Industrial Average (.DJI) , opens new tab fell 0.77%. For 2024, the Dow is up 14%, the S&P 500 is up 25% and the tech-heavy Nasdaq is up 31%. "I’ve heard anecdotes that pension funds are rebalancing ahead of year-end, selling stocks and buying bonds," said Steve Sosnick, chief market strategist at Interactive Brokers, who added he could not verify. "It would explain the sudden sell-off on no news. And of course, if large funds are selling stocks en masse, the megacap tech stocks would bear the brunt because of their heavy weighting in major indices." MSCI's broad global share index (.MIWO00000PUS) , opens new tab fell 0.59% on Friday, and was 1.45% higher for the week. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab eased 0.1%, marking a 1.5% weekly rise, while Tokyo's Nikkei (.N225) , opens new tab rose 1.8%. Europe's Stoxx 600 (.STOXX) , opens new tab rose 0.67% on Friday and was about 1% higher for the week. "There is some potential upside left for this bull market, but it is limited," said Luca Paolini, chief strategist at Pictet Asset Management "(Trump's) inauguration day is a potential inflection point and all the (prospective) good news will be in the price by then," Paolini added. The dollar index , which measures the currency against six other major currencies, eased 0.06%, with a 0.2% weekly gain, and showed a 6.6% 2024 gain. Dollar/yen was down 0.06%, but near Tuesday's 5-1/2 month high. The greenback was also showing a 5.4% gain this month against the beleaguered yen and a near 12% advance for 2024. The euro , was steady, not far from November's two-year low and showing a 5.6% loss year to date. The BoJ held back from a rate hike this month, which weighed on the yen. Governor Kazuo Ueda said he preferred to wait for clarity on Trump's policies, underscoring rising angst among central banks worldwide of U.S. tariffs hitting global trade. Fed Chair Jerome Powell said earlier this month that U.S. central bank officials "are going to be cautious about further cuts" after an as-expected quarter-point rate reduction. The U.S. economy also faces the impact of Donald Trump, who has proposed deregulation, tax cuts, tariff hikes and tighter immigration policies that economists view as both pro-growth and inflationary. Traders, meanwhile, anticipate the Bank of Japan will keep its monetary policy settings loose and the European Central Bank will deliver further rate cuts, neither positive for their currencies. Traders are pricing in 37 basis points of U.S. rate cuts in 2025, with no reduction fully priced into money markets until May, by which time the ECB is expected to have lowered its deposit rate by a full percentage point to 2% as the euro zone economy slows. Higher U.S. rate expectations pulled the 10-year Treasury yield , which rises as the price of the fixed income instrument falls, to its highest since early May early on Thursday, at 4.641%. It was last up 4.6 basis points at 4.625%. The two-year Treasury yield, which tracks interest rate forecasts, eased 0.4 bp to 4.328%. U.S. debt trends also sent euro zone yields higher, with Germany's benchmark 10-year bund yield rising 7.6 bp to 2.401% on Friday. Elsewhere in markets, gold prices dipped 0.74% to $2,615.54 per ounce, set for about a 27% rise for the year and the strongest yearly performance since 2011 as geopolitical and inflation concerns boosted the haven asset. Oil prices firmed as investors awaited news of economic stimulus efforts in China, the world's biggest crude importer. Brent crude futures rose 0.67% on the day to $73.75 a barrel, and was 1.14% higher for the week. In cryptocurrencies, bitcoin fell 1.26% to $94,485.00. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-12-27/

2024-12-27 05:55

US crude oil stocks fell 4.2 million barrels last week, EIA says Analysts polled by Reuters expected 1.9 million-barrel draw Stimulus measures lift optimism over Chinese economy Rising Russia-Ukraine tensions raise fears of supply shocks in 2025 NEW YORK, Dec 27 (Reuters) - Oil prices settled more than 1% higher on Friday and recorded a weekly gain in low trading volume ahead of year-end, buoyed by a larger-than-expected drawdown from U.S. crude inventories last week. Brent crude futures rose 91 cents, or 1.2%, to settle at $74.17 per barrel. U.S. West Texas Intermediate crude futures rose 98 cents, or 1.4%, to $70.60 per barrel. On a weekly basis, both Brent and WTI crude gained about 1.4%. U.S. crude oil inventories fell by 4.2 million barrels in the week ended Dec. 20 as refiners ramped up activity and the holiday season boosted fuel demand, data from the U.S. Energy Information Administration showed on Friday. Analysts polled by Reuters had expected a 1.9 million-barrel drawdown, whereas figures from the American Petroleum Institute released earlier in the week estimated a 3.2 million-barrel draw, according to market sources. Optimism over Chinese economic growth has also sparked hopes of higher demand next year from the top oil importing nation. The World Bank on Thursday raised its forecast for Chinese economic growth in 2024 and 2025. Meanwhile, Chinese authorities have agreed to issue special treasury bonds worth 3 trillion yuan ($411 billion) next year, sources told Reuters this week, as Beijing acts to revive the sluggish economy. The war between Russia and Ukraine, which had become an afterthought in energy markets due to stagnant global oil demand, seems to be returning to the forefront after numerous events this week that could impact supplies next year, fuel distributor TACenergy's trading desk wrote on Friday. NATO said on Friday it would boost its presence in the Baltic Sea, a day after Finland seized a ship carrying Russian oil on suspicion of causing internet and power cable outages. Meanwhile, Dutch and British wholesale natural gas prices rose amid fading hopes for a new deal to transit Russian gas through Ukraine. Tensions have flared in the Middle East too, after Israel raided a north Gaza hospital on Friday and struck targets linked to the Houthi movement in Yemen on Thursday, but these events are unlikely to affect oil prices much heading into next year, StoneX analyst Alex Hodes said. Instead, the largest risk in the Middle East is from sanctions enforcement that will likely occur with the incoming Donald Trump administration in the U.S., he said. Sign up here. https://www.reuters.com/markets/commodities/oil-prices-set-weekly-gain-china-stimulus-optimism-2024-12-27/