2024-10-16 17:58

Canadian dollar gains 0.1% against the greenback Extends its recovery from a 10-week low Chances of BoC 50-basis-point cut rise to 80% Ten-year yield touches nearly two-week low TORONTO, Oct 16 (Reuters) - The Canadian dollar rose against its U.S. counterpart on Wednesday as investors judged that much of the Bank of Canada's potential policy easing has been priced into the market and assessed the likely economic impact of the upcoming U.S. election. Chances of an unusually large 50-basis-point interest rate cut from the BoC on Oct. 23 have climbed to roughly 80% from 50% before the release of cooler-than-expected domestic inflation data on Tuesday. It would be the first move greater than 25 basis points since the central bank's easing campaign began in June. "I think we've probably seen most of the loonie weakness for now. A 50-basis-point cut is pretty much fully priced for next week," said Erik Nelson, a macro strategist at Wells Fargo Securities in London. The Canadian dollar was trading 0.1% higher at 1.3765 per U.S. dollar, or 72.65 U.S. cents, extending its recovery from a 10-week low of 1.3838 on Tuesday. It was the only G10 currency to strengthen against the greenback, which was benefiting from investors pricing out a hefty rate cut by the Federal Reserve in November and eyeing a potential victory by former President Donald Trump in the Nov. 5 U.S. presidential election. Trump's plan to raise tariffs would likely unsettle global trade but the United States-Mexico-Canada Agreement, the free trade deal between the three countries, and looser U.S. fiscal policy could shield Canada's economy, Nelson said, adding "I don't see USMCA being torn up." Domestic data showed factory sales falling 1.3% in August and housing starts increasing by less than expected in September, while the price of oil , one of Canada's major exports, was holding near a two-week low. The Canadian 10-year yield eased 4.2 basis points to 3.104%, after earlier touching its lowest level since Oct. 3 at 3.085%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-outperforms-g10-peers-amid-us-election-uncertainty-2024-10-16/

2024-10-16 15:01

Import prices drop 0.4% in September; dip 0.1% year/year Energy products account for much of the drop in prices Export prices fall 0.7%; decrease 2.1% year-on-year WASHINGTON, Oct 16 (Reuters) - U.S. import prices fell by the most in nine months in September amid a sharp decrease in the cost of energy products, pointing to a benign inflation outlook that keeps the Federal Reserve on course to continue cutting interest rates. The report from the Labor Department on Wednesday also showed import prices excluding fuel barely rising over the past three months. The report followed data last week showing slightly firmer consumer prices in September. While producer prices were unchanged last month, some components showed strength, which was expected to translate into a higher monthly readings in the key inflation measures tracked by the U.S. central bank for its 2% target. "Import prices do not feed through directly to producer and consumer prices but are a signal inflationary pressures remain muted and adds some support to another rate cut in November," said Matthew Martin, a senior U.S. economist at Oxford Economics. "In tandem with falling prices at China's factory gates, import price gains will be modest." Import prices slipped 0.4% last month, the biggest drop since December 2023, after a revised 0.2% decrease in August, the Labor Department's Bureau of Labor Statistics said. Import prices were previously reported to have declined 0.3% in August. Last month's drop in import prices, which exclude tariffs, was in line with economists' expectations. In the 12 months through September, import prices dipped 0.1%. That was the first year-on-year drop in seven months and followed a 0.8% increase in August. Imported prices of fuels and lubricants plunged 7.0% after falling 2.9% in August. They were pulled down by a 7.1% tumble in the prices of petroleum. Imported natural gas prices plummeted 14.5%. Excluding fuel, import prices rose 0.1% for the third straight month. They increased 1.8% year-on-year in September. Food prices dropped 1.5% after rising 0.2% in August, reflecting a 12.2% decline in vegetable costs. Excluding fuels and food, imported prices gained 0.3% after being unchanged for two straight months. The so-called core import prices increased 1.7% year-on-year in September. TAME READINGS The dollar weakened through much of September against the currencies of the United States' main trade partners. It has since regained ground. The U.S. central bank is expected to cut interest rates again next month, but by a smaller 25 basis points against the backdrop of a resilient economy. The Fed launched its easing cycle with an unusually large half-percentage-point reduction in its policy rate to the 4.75%-5.00% range in September amid growing concerns about the labor market. It hiked rates by 525 basis points in 2022 and 2023 to combat a surge in inflation. Prices for imported capital goods were unchanged after climbing 0.2% in August. Imported motor vehicles, parts and engines prices rose 0.2% while consumer goods, excluding automotives, rebounded 0.2%. Prices of goods imported from China were unchanged after edging up 0.1% in August, which was the first monthly gain since October 2022. Prices for Chinese imports dropped 1.0% year-on-year in September. But prices for Japanese imports fell 0.2% on a monthly basis. Prices for imports from Canada decreased 1.6%, while those from Mexico fell 1.1%. European Union import prices edged down 0.1%. "Import prices are not an obstacle in returning inflation back to the Fed's 2% target," said Conrad DeQuadros, senior economic advisor at Brean Capital. The report also showed export prices fell 0.7% last month after sliding 0.9% in August. They were pulled down by a 0.9% decrease in prices of nonagricultural exports, which more than offset a 0.6% advance in agricultural goods. There were increases in the prices for nuts, other food preparations, meat, wheat and corn. But export prices for soybeans fell. In the 12 months through September, export prices dropped 2.1%. That was the biggest decline since January and followed a 0.9% decrease in August. Sign up here. https://www.reuters.com/world/us/us-import-prices-post-biggest-drop-nine-months-september-2024-10-16/

2024-10-16 14:40

Outlook for UK gilts is quite positive, says PIMCO Says UK budget unlikely to undermine fiscal credibility Finance minister Reeves to announce budget plans on Oct 30 LONDON, Oct 16 (Reuters) - Britain's new government is unlikely to upset investors in its first budget this month and the outlook for its debt is more positive than financial markets appear to believe, senior executives from global asset manager PIMCO said. Finance minister Rachel Reeves is due to announce her debut tax-and-spending plans on Oct. 30, a little more than two years after then-prime minister Liz Truss plunged the UK government bond market into crisis with her plans for big tax cuts. Speculation about increased borrowing by the government of Prime Minister Keir Starmer - whose centre-left Labour Party returned to power in July after 14 years in opposition - has contributed to an underperformance of gilts in recent weeks. "We do expect the fiscal outlook in the UK to be tight, and we continue to expect the deficit to fall in future years," Peder Beck-Friis, a senior vice president at PIMCO, said in a Reuters interview with executives from the firm on Wednesday. "We will be surprised if the government announced anything that would lead markets to question the fiscal credibility that we've seen in the UK over the last two years." Beck-Friis said he believed financial markets would price in more interest rate cuts by the Bank of England once markets and the BoE realised the outlook for inflation and growth was lower than they thought, following similar shifts in the United States, Canada and New Zealand. "We continue to like UK government bonds," he said. "I think one of the key premises is that we think that the terminal rate that's priced into financial markets looks high relative to our expectation and that inflation will continue to ease." GILTS IN FAVOUR British government bond prices rose sharply on Wednesday after weaker-than-expected inflation data but those gains narrowed only some of their recent underperformance. "Gilts yields are attractive on an absolute basis in terms of yield, but also we would expect some potential capital appreciation on these holdings over time," Beck-Friis said. Andrew Balls, PIMCO's chief investment officer for global fixed income, said the expected fiscal restraint in Britain by the new government stood in contrast to much bigger deficits in the United States. "We tend to favour gilts as one of the better global sources for duration," Balls said, speaking in the same interview. On Britain's economy, Beck-Friis said weak productivity improvements, tighter immigration controls and higher levels of workplace dropouts since the pandemic meant growth was likely to be stuck at around 1% to 1.25% a year, similar to the euro zone. Balls said one area for optimism was the government's plan to reduce red tape and speed up construction of infrastructure and housing. "It's not easy for a government to raise productivity growth, but to the extent they're able to deliver on it in the planning permission stuff, (it) seems like a positive if they're able to do something significant there," he said. Sign up here. https://www.reuters.com/world/uk/pimco-says-uk-budget-unlikely-shock-markets-gilts-look-attractive-2024-10-16/

2024-10-16 12:48

Oct 16 (Reuters) - Ukraine has asked the International Maritime Organization to send a monitoring mission to ports in the southern Odesa region amid intensified Russian attacks, Foreign Minister Andrii Sybiha said on Wednesday. In recent weeks, Russian troops have ramped up missile strikes on Ukraine's southern port infrastructure and damaged a total of four foreign-flagged civilian vessels since Oct. 6. "Amid increased Russian terror, Ukraine has officially appealed to the International Maritime Organization to immediately send an international monitoring mission to the ports," Sybiha told a briefing in Odesa after meeting his counterparts from the Nordic-Baltic Eight group. He stressed that Russian strikes on port infrastructure, grain storage facilities and civilian vessels threatened global food security. Ukraine is a major global grain grower and before Russia's invasion in 2022 the country exported about 6 million tons of grain alone per month via the Black Sea. About 85% of Ukrainian food exports now leaves Ukraine from its Black Sea ports. Insurance sources had already reported a jump in insurance costs and some cancelled bookings after recent Russian attacks. Ukraine says that Russia had carried out almost 60 attacks on ports over the past three months, resulting in the damage and destruction of nearly 300 port infrastructure facilities and 22 civilian vessels. Sign up here. https://www.reuters.com/world/europe/ukraine-requests-monitoring-mission-odesa-ports-amid-russian-strikes-2024-10-16/

2024-10-16 12:41

SINGAPORE, Oct 16 (Reuters) - Sinopec (600028.SS) , opens new tab is advancing development of shale oil at its pilot project Jiyang in east China, now pumping 1,600 metric tons per day (11,680 barrels per day), up from 100 tons in 2021, the state oil and gas group said on Wednesday. At this rate, Sinopec is on track to deliver a target set in 2022 to produce 500,000 tons a year in 2025 at Jiyang, which is situated mostly in Shandong province and covers 7,300 sq km (1.8 million acres). Following a call from the central government to boost domestic energy security, China's national oil companies are making greater efforts to tap hard-to-extract shale deposits to help compensate for older, fast-depleting conventional oilfields. Currently Jiyang has 36 wells that each pump more than 100 tons a day, with the Fengye 1-1HF well having the highest daily output of 262.8 tons, Sinopec said. The Jiyang shale oil zone, part of the ageing conventional Shengli oilfield, has an estimated shale oil resource of 10.5 billion tons, of which 1.73 billion tons have been identified as prospective reserves, Sinopec said. Despite the huge resource size, shale oil remains among the geologically most challenging and costly types of oil to explore and produce, with output making up only 1% of China's total crude oil production. Sign up here. https://www.reuters.com/business/energy/sinopec-says-east-china-shale-oil-field-pumping-1600-tons-day-2024-10-16/

2024-10-16 12:39

Oct 16 (Reuters) - Canadian miner Lithium Americas (LAC.TO) , opens new tab said on Wednesday General Motors (GM.N) , opens new tab will contribute $625 million to their new joint venture for developing the Thacker Pass project in Nevada. U.S. automakers are ramping up their output of EVs and hybrids and aiming to reduce their reliance on China for battery-related materials in a competitive market. U.S.-listed shares of Lithium Americas were up 16.5% at $3.11 in premarket trade. The Vancouver, Canada-based firm said GM will acquire a 38% asset-level ownership stake in Thacker Pass for $625 million, which includes $430 million of direct cash funding to support the construction of Phase 1 and a $195 million letter of credit facility. The new agreement replaces the delayed investment worth $330 million in August by both companies. Earlier this year, the U.S. Department of Energy had planned to lend Lithium Americas up to $2.26 billion to build the Thacker Pass lithium project, which holds enough of the battery metal to build 1 million electric vehicles annually. The company said it expects to close the DOE loan in the next few weeks and intends to make the final investment decision for the project by the end of the year. Initial construction at the site in Humboldt County, just south of Nevada's border with Oregon, started in March 2023 after Lithium Americas won a long-running and complex court case against conservationists, ranchers and Indigenous communities. The lithium miner said GM will also enter into an additional 20-year offtake agreement for up to 38% of production from Phase 2 of Thacker Pass, upon closing of the transaction. Separately, GM said it would invest $10 million into material science firm Forge Nano. The automaker intends to use the firm's battery material coating on EV cells to increase performance and lifetime. Sign up here. https://www.reuters.com/markets/deals/general-motors-contribute-625-mln-new-jv-with-lithium-americas-2024-10-16/