2024-12-18 05:33

A look at the day ahead in European and global markets from Vidya Ranganathan As a host of major central banks hold policy meetings over the next 24 hours, the U.S. Federal Reserve hogs the spotlight but it could be the Bank of Japan that surprises markets. The Bank of England (BoE), Bank of Japan (BOJ), Norges Bank and Sweden's Riksbank announce rate decisions on Thursday, hours after the Fed's announcement on Wednesday. Pricing in Japan implies a 20% chance of a rate hike - but that higher rates are a matter of time with more than 40 bps of hikes priced in by the end of 2025. Ahead of the Fed comes UK inflation data, which could cement expectations for the BoE to maintain its Bank Rate at 4.75%. British pay rose more than expected in the three months to October, prompting investors to further rein in bets on BoE rate cuts next year, despite warning signs of a slowdown in the economy. The unexpectedly big surge in British wages drove a wave of selling in gilts, a reduction in expectations for rate cuts and a lift for sterling , which at $1.2710 is flat for the year and the best performing G10 currency against the dollar. Money markets show traders expect the BoE to cut rates by around 70 basis points next year, compared with expectations for roughly the same scale of cuts from the Fed and around 120 bps in cuts from the European Central Bank (ECB). Europe also gets November inflation data on Wednesday. As per a Reuters poll, the harmonised data on November consumer prices (HICP) in the 19-nation euro zone is expected to be unchanged from October at 2.3%. The ECB expects to cut interest rates further if inflation settles at its 2% target as it expects, and as ECB President Christine Lagarde and the bank's most influential policy hawk, Isabel Schnabel, reiterated this week. The Fed looms larger, however. Asian shares were down on Wednesday, extending Tuesday's risk-off mode in global stocks. Wall Street posted chunky losses, the dollar held its ground, and the 10-year U.S. Treasury yield hit a one-month high of 4.44% before easing back. The Dow Jones index (.DJI) , opens new tab clocked its ninth consecutive daily loss, its longest losing streak since 1978. Later in the day, the Fed is expected to move the Fed funds rate window 25 basis points lower - from its current 4.5-4.75% range - but to offer a cautious outlook and probably lift its long-run interest rate projections. Surprisingly strong U.S. retail sales figures didn't derail near-certain expectations of a quarter-point U.S. rate cut on Wednesday. But it's another solid top-tier economic indicator that will strengthen the perception of "U.S. exceptionalism" and a relatively hawkish Fed going into next year. Indeed, assuming the Fed cuts rates by 25 basis points on Wednesday, another quarter-point move isn't fully priced into rates futures markets until June. The 2025 curve barely implies 50 bps of easing all year. In corporate news, Japanese auto shares leapt on headlines Honda (7267.T) , opens new tab and Nissan (7201.T) , opens new tab - Japan's second and third-biggest automakers - are in talks to set up a holding company, according to a person with knowledge of the matter, a move that would allow them to share more resources. Key developments that could influence markets on Wednesday: UK and euro zone inflation U.S. Fed interest rate decision U.S. Housing Starts data Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-12-18/

2024-12-18 05:15

Trump decisions on Russian sanctions may see supply diversion Kuwaiti VLSFO could remain in the Mideast, crimp exports to Asia New regulations in Europe to spur demand for bio-blended marine fuels SINGAPORE, Dec 18 (Reuters) - Asia's fuel oil premiums and refining margins will be capped by ample supply in early 2025, but cleaner shipping fuel mandates in Europe and potential changes in Russian and Iranian oil flows under the incoming Trump administration could jolt markets. Here are key factors to watch in the fuel oil and bunker markets in 2025, based on traders and analysts: TRUMP POLICIES ON RUSSIAN, IRANIAN OIL Traders are eyeing U.S. President-elect Donald Trump's decisions on sanctions on Russian oil after he promised to end the Ukraine war. Russian fuel oil exports have been diverted to Asia and the Middle East since Western countries imposed sanctions and price caps on Russian refined products. Should sanctions be eased, traders expect some Russian fuel oil to remain in Europe with a reduction in exports to the East, which could tighten supply in Asia. Trump is also expected to ramp up sanctions on Iran's oil and shadow fleet, which could squeeze supply of Iranian crude and straight-run fuel oil to Chinese refiners. MIDDLE EASTERN EXPORTS Shipments from Kuwait's Al Zour refinery, a major very low sulphur fuel oil (VLSFO) exporter, could stay within the Middle East, capping exports to Asia in 2025, industry sources said. "We anticipate that Al Zour's LSFO exports to Fujairah will remain elevated next year, primarily driven by year-on-year growth in the UAE's (United Arab Emirates') bunker fuel demand," said Palash Jain, FGE's Middle East oil market consultant. He added that the UAE's domestic output is constrained due to ongoing challenges at the Montfort refinery. Meanwhile, Iraq's fuel oil exports, which reached all-time highs in 2024, could climb further as it is expected to receive natural gas from Turkmenistan from the second quarter to replace oil at Iraqi power plants, said FGE's Jain. SHIPPING FUEL MANDATES Regulations to curb emissions from ships in the European Union and the Mediterranean Sea are expected to alter marine fuel demand in Europe and Asia in 2025, industry sources said. The FuelEU Maritime regulation, which aims to cut greenhouse gas intensity of marine fuels by 2% from January, is expected to spur demand for bio-blended marine fuel. Marine biofuel demand at key bunker hubs is likely to extend gains, with shipping firms such as CMA CGM seeking more supply. Meanwhile, the Mediterranean Sea will become an Emission Control Area (ECA) for sulphur oxides from May 2025, based on International Maritime Organization regulations. Ships operating in the region will need to use ultra low sulphur fuel oil (ULSFO), with maximum 0.1% sulphur content, except for vessels running on lower-carbon fuels. "The upcoming Mediterranean ECA will likely tighten ULSFO supplies in the region and free up VLSFO supplies for the East," said Vortexa analyst Xavier Tang. ROBUST HSFO BUNKER DEMAND High-sulphur fuel oil (HSFO) bunker in Singapore, which hit multi-year highs this year, could see strong demand into 2025, traders said, as more ships come equipped with scrubbers designed to remove air pollutants. Singapore's hi-5 spread, which reflects VLSFO's price premium over 380-cst HSFO, has narrowed to less than $100 a metric ton in recent sessions compared to over $140 at the start of 2024. It is expected to remain narrow in early 2025, analysts said. Sign up here. https://www.reuters.com/business/energy/asia-fuel-oil-prices-capped-early-2025-supply-risks-loom-2024-12-18/

2024-12-18 02:58

MUMBAI, Dec 18 (Reuters) - The Indian rupee is likely to hold near lifetime lows on Wednesday, with traders awaiting the Federal Reserve's projections on how many times it will cut interest rates next year. The one-month non-deliverable forward indicated that the rupee will mostly unchanged from 84.8950 in the previous session. The dollar index was little changed on Wednesday, just below 107. Asian currencies were mixed and rangebound. "Today's FOMC (Federal Open Market Committee) could spark another bout of dollar strength if the Fed ups U.S. inflation projections amid Trump policy uncertainty," Srinivas Puni, managing director at QuantArt Market Solutions, said. The USD/INR is biased higher unless the Fed unexpectedly provides relief in the form of dovish commentary, he said. The dollar/rupee pair - boosted by worries over India's growth outlook, the possibility of the Reserve Bank of India (RBI) cutting rates sooner than expected and choppy capital flows - has been on the uptrend in the last several weeks. With a 25-basis-point (bp) rate cut by the U.S. central bank fully priced in, investor attention will squarely be on the new projections for inflation, the unemployment rate, GDP and interest rates. In September, the median based on the Fed's dot plot indicated 100 bps of rate cuts in 2025. In the latest projections, economists reckon policymakers may indicate a more cautious approach to rate reductions amid stickier inflation and President-elect Donald Trump's policies that are likely to boost both growth and inflation. "The risk of slightly stronger near-term growth with the threat of higher inflation.. means that we expect them to signal only three rate cuts in 2025," ING Bank said. Nomura said that the dot plot and Fed Chair Jerome Powell’s press conference later in the day "are likely to be hawkish, emphasizing that the pace of rate cuts is likely to slow in 2025". KEY INDICATORS: ** One-month non-deliverable rupee forward at 85.10; onshore one-month forward premium at 19.50 paise ** Dollar index at 106.94 ** Brent crude futures up 0.2% at $73.3 per barrel ** Ten-year U.S. note yield at 4.39% ** As per NSDL data, foreign investors bought a net $22.3 million worth of Indian shares on Dec. 16 ** NSDL data shows foreign investors bought a net $107.5 million worth of Indian bonds on Dec. 16 Sign up here. https://www.reuters.com/markets/currencies/rupee-linger-near-all-time-low-before-fed-rate-forecasts-2024-12-18/

2024-12-18 02:54

Dec 18 (Reuters) - Australia's corporate watchdog said on Wednesday that it has sued the local derivatives business of cryptocurrency exchange Binance, alleging that its retail customers were denied consumer protections after being misclassified as wholesale clients. The Australian Securities and Investment Commission (ASIC) alleged that the unit offered crypto derivative products to 505 retail investors, about 83% of its local clientele, who were misclassified as wholesale clients between July 2022 and April 2023. In April 2023, the ASIC had cancelled the financial services license of the unit, Binance Australia Derivatives, after conducting a "targeted review" of the cryptocurrency exchange. In November 2023, the regulator oversaw compensation , opens new tab of about A$13.1 million ($8.29 million) to 435 retails clients, who had been incorrectly classified as wholesale. "Crypto derivative products are inherently risky and complex, so it is critical that retail clients are classified correctly. Those classifications ensure they receive the required consumer protections," ASIC Deputy Chair Sarah Court said. The regulator said it will be seeking penalties, declarations and adverse publicity orders. Binance did not immediately respond to a request for comment. Earlier this month, Australia's federal court had fined crypto exchange Kraken's local operator to pay an A$8 million fine following the ASIC's civil proceedings. ($1 = 1.5810 Australian dollars) Sign up here. https://www.reuters.com/business/finance/australia-sues-binance-australia-derivatives-over-consumer-protection-failures-2024-12-18/

2024-12-18 02:23

Dollar index hits highest since Nov 2022 Euro drops to three-week low Swiss franc jumps to highest since July Bitcoin drops by 5% NEW YORK, Dec 18 (Reuters) - The U.S. dollar advanced against its peers on Wednesday, hitting its highest level in two years, after the Federal Reserve delivered a widely expected interest rate cut while also indicating it would slow the pace of its monetary policy easing cycle. The Fed lowered its benchmark policy rate by 25 basis points to the 4.25% to 4.50% range, with officials signaling they would likely pause future rate cuts next year given a stable labor market and inflation. The yield on benchmark U.S. 10-year notes rose 6.1 basis points to 4.446%, hitting a four-week high. "The Fed increased its core inflation forecast and adjusted the dot plot; so rate cuts are being priced out and I think we have one more rate cut priced in for next year and that's less than it was before," said Axel Merk, president and chief investment officer at Merk Hard Currency Fund in Palo Alto, California. "So the initial take by the market is it's hawkish and that it's dollar-positive." The dollar strengthened 0.89% to 0.90020 against the Swiss franc , after reaching as high as 0.90150 - its highest level since July. The euro was down 1.17% at $1.03695, dropping to a three-week low. The U.S. dollar index , which measures the greenback against six rivals, rose to as high as 108.260, hitting its highest level since November 2022. It was last up 1.08% at 108.08. Fed Chair Jerome Powell said in his press conference that it was "appropriate to move forward cautiously and look for progress on inflation", adding that the labor market is softening. The greenback jumped to a 15-1/2-year high versus the South Korean won , hitting 1,454.41 - the highest since March 2009. It was last up 1.03% at 1,452.19 per dollar. The dollar strengthened 0.78% to 154.63 against the Japanese yen , hitting a three-week high. The Bank of Japan is expected to leave rates unchanged on Thursday. The Bank of England is also expected to hold rates steady on Thursday. Sterling edged lower versus the euro and against the dollar following the Fed's decision. The currency weakened 0.98% to $1.25860, dropping to a three-week low. Sweden's Riksbank is widely expected to cut rates by as much as half a point, while the Norges Bank is set to leave rates unchanged. The Norwegian crown dropped 1.54% to $11.3677 , while the Swedish crown weakened 1.38% versus the dollar to 11.1087. The Australian dollar slid to $0.62225, its lowest since October 2022. New Zealand's kiwi touched a fresh two-year low of $0.56540. The offshore yuan traded at 7.321 per dollar on Tuesday, holding steady near a 13-month low against the dollar. Bitcoin fell as much as 5% after Powell said the Fed has no desire to be involved in any government effort to hold large amounts of the world's largest cryptocurrency. It fell 5.34% to $100,734. Sign up here. https://www.reuters.com/markets/currencies/dollar-steady-against-peers-fed-rate-cut-looms-2024-12-18/

2024-12-18 00:12

BRASILIA, Dec 17 (Reuters) - Lawmakers in Brazil's lower house of Congress approved on Tuesday a bill that includes regulations needed to implement a constitutional tax reform, following a Senate vote to approve the bill. The proposal will now head to President Luiz Inacio Lula da Silva for his signature. The bill sets rules needed to consolidate five existing taxes into a single consumption levy, also known as a value-added tax (VAT), with separate federal and regional rates. It also provide details on a new tax on products considered harmful to human health or the environment, such as cigarettes and alcoholic beverages. Lawmakers in the lower house added sweetened beverages back to the list after the senators removed it. Lawmaker Reginaldo Lopes, bill rapporteur in the lower house, said the changes approved by the house will set the overall consumption tax rate at 26.5%. The eagerly anticipated tax reform was approved by lawmakers last year and is a central pillar of Lula's plans to boost productivity and economic growth in Latin America's largest economy. Previous governments have attempted and failed to implement a tax reform of their own. Lula's government has also sent to lawmakers a separate bill, which still requires Senate approval, regulating how the VAT would be managed at the state level. Sign up here. https://www.reuters.com/world/americas/brazil-lawmakers-pass-key-regulations-enact-tax-reform-2024-12-17/