2024-10-09 19:33

Canadian dollar weakens 0.6% against the greenback Touches its weakest since Aug. 16 at 1.3710 Price of U.S. oil settles 0.5% lower 10-year yield touches a 10-week high at 3.290%. TORONTO, Oct 9 (Reuters) - The Canadian dollar weakened to a near eight-week low against its U.S. counterpart on Wednesday as oil prices fell and after investors reduced their bets on the pace of expected interest rate cuts from the Federal Reserve. The loonie was trading 0.6% lower at 1.37 to the U.S. dollar, or 72.99 U.S. cents, after touching its weakest level since Aug. 16 at 1.3710. It was the sixth straight day of declines for the currency, the longest daily losing streak since July. "It's a disappointing run for the Canadian dollar," said Adam Button, chief currency analyst at ForexLive. "The bulk of the move has been on the U.S. dollar side as the market recalibrates Fed expectations." The U.S. dollar (.DXY) , opens new tab held on to earlier gains against a basket of major currencies after minutes from the Fed's latest meeting showed that policymakers did not feel committed to continuing with unusually large half-percentage-point rate cuts. The price of oil, one of Canada's major exports, settled 0.5% lower at $73.24 a barrel on rising U.S. crude inventories, but the risk of supply disruptions curbed price declines. Investors were awaiting Canada's monthly employment report, due on Friday, which is expected to show the show the economy adding 27,000 jobs in September. The data "may help settle expectations for the BoC policy at this month's meeting," Shaun Osborne, chief currency strategist at Scotiabank, said in a note. Investors expect the Bank of Canada to ease interest rates further at a policy decision on Oct. 23, and see a 30% chance that the central bank steps up the pace of easing to 50 basis points from 25 basis points. Canadian government bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 3.7 basis points at 3.272% after earlier touching its highest level since July 30 at 3.290%. Sign up here. https://www.reuters.com/markets/currencies/canadian-dollar-weakens-sixth-day-against-us-counterpart-2024-10-09/

2024-10-09 15:22

NEW YORK, Oct 9 (Reuters) - Widening U.S. budget deficits and inflationary trade policies after the Nov. 5 presidential election could weigh on U.S. government bonds despite the near-term advantages of a central bank in easing mode, bond giant PIMCO said on Wednesday. The bond-focused U.S. manager, with $1.9 trillion in assets, expects a so-called soft landing for the U.S. economy as inflation subsides and economic activity remains on solid footing. A worse-than-anticipated slowdown could still be positive for bonds, as the Federal Reserve would cut interest rates more aggressively, it said. But while it favors intermediate-duration bonds such as five-year Treasury securities that are expected to gain value due to lower interest rates, the outlook is cloudier for longer-duration bonds that could be negatively affected by U.S. fiscal and trade policies, said PIMCO. "High government deficits could push long-term yields higher over time," Tiffany Wilding, a managing director and economist, and Andrew Balls, chief investment officer for global fixed income, wrote in an economic outlook report. The Committee for a Responsible Federal Budget, a budget-focused think tank, estimated this week that tax and spending plans of Republican presidential candidate Donald Trump could add $7.5 trillion to U.S. deficits over the next 10 years, while Vice President Kamala Harris could add nearly half that amount. "U.S. deficits will be the biggest loser no matter which party wins" said PIMCO. High government debt will contribute to a steepening of the U.S. yield curve, which occurs when long-dated bonds perform worse than short-dated ones, it said. Trade policies could further worsen the outlook for bonds as higher tariffs on imports, expected under a Trump presidency, would likely be inflationary and drag on economic growth. "The potential for globally disruptive trade policies appears greater under a second term for former President Donald Trump, while Vice President Kamala Harris seems more likely to continue the current more targeted approach should she prevail," said PIMCO. This could complicate the U.S. central bank's efforts to return inflation to its 2% target. "Monetary policymakers will have to be mindful that higher short-run inflation (as the additional costs of tariffs are passed on to consumers) risks rising inflation expectations, despite the downside risks to growth as real incomes fall." Sign up here. https://www.reuters.com/markets/us/wider-us-deficits-inflationary-trade-policies-threaten-bond-outlook-says-pimco-2024-10-09/

2024-10-09 13:19

Oct 9 (Reuters) - Dallas Federal Reserve Bank President Lorie Logan on Wednesday said she supported last month's outsized interest-rate cut but wants smaller reductions ahead, given "still real" upside risks to inflation and "meaningful uncertainties" over the economic outlook. "Following last month’s half-percentage-point cut in the fed funds rate, a more gradual path back to a normal policy stance will likely be appropriate from here to best balance the risks to our dual-mandate goals," Logan said in her first public remarks since the Fed reduced its policy rate to the 4.75%-5.00% range three weeks ago. The central bank, she said, "should not rush to reduce the fed funds target to a 'normal' or 'neutral' level but rather should proceed gradually while monitoring the behavior of financial conditions, consumption, wages and prices." In prepared remarks to an energy conference hosted by the Greater Houston Partnership, Logan ran through a litany of reasons to go slow, even as she also noted that inflation progress has been broad-based and the labor market has cooled. "I continue to see a meaningful risk that inflation could get stuck above our 2% goal," she said, noting the potential for stronger-than-expected consumer spending or economic growth; "unwarranted" further easing in financial conditions; and the possibility that the level of borrowing costs that neither presses down or up on economic growth - the "neutral rate" - is higher than it was before the pandemic. Other upside inflation risks include the reemergence of supply chain issues amid geopolitical risks and the East Coast dockworkers strike, she said, noting that workers and port operators plan to revisit their contract in January. Logan did nod to risks that the labor market, while still healthy, could "cool beyond what is needed to sustainably return inflation to 2% or that the employment situation may even deteriorate abruptly." And Logan also said she "supported" the decision, though omitting any modifier like "strongly" or "whole heartedly" that other Fed policymakers have used to characterize their degree of enthusiasm for the half-point move. "Less-restrictive policy will help avoid cooling the labor market by more than is necessary to bring inflation back to target in a sustainable and timely way," Logan said. Her comments made clear she remains worried that inflation pressures could reemerge. "Downside risks to the labor market have increased, balanced against diminished but still real upside risks to inflation," she said. "Any number of shocks could influence what that path to normal will look like, how fast policy should move and where rates should settle." The policy path, she added, should not follow a preset course; the Fed, she said, "will need to remain nimble and willing to adjust if appropriate." The Fed will release minutes of its Sept. 17-18 meeting later on Wednesday, and investors expect to learn more about how divided policymakers may have been about delivering a bigger-than-expected rate cut, and their outlook for the rate path ahead. Sign up here. https://www.reuters.com/markets/rates-bonds/feds-logan-calls-gradual-rate-cuts-says-should-not-rush-2024-10-09/

2024-10-09 12:48

DUBAI, Oct 9 (Reuters) - Saudi Arabia's King Salman has recovered after successfully completing medical tests for lung inflammation on Wednesday, the state news agency (SPA) said, citing the royal court. The royal court said on Sunday the 88-year-old monarch would undergo medical tests for a lung inflammation. The king of the world's biggest oil exporter and a major U.S. ally in the Middle East had received medical care for lung inflammation in May as well. He last chaired a cabinet meeting on Sept. 24, state news agency reports (SPA) show, after issuing a royal decree in August that allows the cabinet to convene in the absence of both himself and the prime minister, his son Crown Prince Mohammed bin Salman. Prince Mohammed offered reassurances about the health of the king at a cabinet meeting on Tuesday, state media reported. Sign up here. https://www.reuters.com/world/middle-east/saudi-king-salman-completes-medical-tests-successfully-state-news-agency-says-2024-10-09/

2024-10-09 12:05

Dollar near a two-month high Bullion falls for the sixth straight session Odds of 25 bps US rate cut in November at 76% Oct 9 (Reuters) - Gold retreated for the sixth straight day on Wednesday on an advancing dollar and diminished expectations for a larger rate cut from the Federal Reserve in November. Spot gold fell 0.5% to $2,607.93 per ounce by 02:39 p.m. ET (1839 GMT). U.S. gold futures for December delivery settled 0.4% lower at $2,626. "The markets aren't moving because the extraordinary payrolls report may require a recalibration by the FOMC. It's why gold hasn't budged and looks to be down for the sixth straight session though the pullback has been modest," said Tai Wong, a New York-based independent metals trader. "The dollar has surged over the past few sessions that's adding downward pressure to gold," he added. The dollar index (.DXY) , opens new tab hit a near two-month high, making bullion more expensive for holders of other currencies. The minutes of the Sept. 17-18 session, at which the Fed lowered the benchmark policy rate by half a percentage point, noted the future pace of cuts will not be determined by large initial reduction. Markets now see a 76% likelihood of a 25-basis-point cut from the Fed next month, according to the CME FedWatch tool. Zero-yield bullion is a preferred investment amid lower interest rates. Dallas Fed Bank President Lorie Logan said she wants smaller reductions ahead, given the "still real" upside risks to inflation and "meaningful uncertainties" over the economic outlook. Investors now await U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data due on Thursday and Friday, respectively, for further insights on interest rate outlook. "Despite the modest pull-back, expectations of lower interest rates and ongoing geopolitical tensions suggest the backdrop for gold is likely to remain supportive over the long term," said Kinesis Money market analyst Carlo Alberto De Casa in a note. Spot silver slipped 0.8% to $30.46 per ounce. Platinum was steady at $949.91, while palladium rose 1.6% to $1,038.25. Sign up here. https://www.reuters.com/markets/commodities/gold-lacks-momentum-investors-brace-fed-minutes-2024-10-09/

2024-10-09 11:55

Oct 9 (Reuters) - More than 160,000 homes and businesses in Georgia, the Carolinas, Texas and California were without power on Wednesday as Hurricane Milton is expected to make landfall on Florida's Gulf Coast late Wednesday, according to PowerOutage.us. The utility with the most outages was U.S. energy company Duke Energy (DUK.N) , opens new tab, a major supplier in the Carolinas, with about 63,108 customers still out in North Carolina, according to PowerOutage.us. The Category 5 hurricane became the third-fastest intensifying storm on record in the Atlantic, growing from a Category 1 to a Category 5 in less than 24 hours. It could be potentially one of the most destructive ever to hit the region, which is still recovering from devastation caused by Hurricane Helene less than two weeks ago. "Sadly, Helene's devastation is unlike anything we've ever experienced in the western parts of the Carolinas," said Jason Hollifield, Duke Energy's storm director for the Carolinas. "While Duke Energy workers have made substantial progress overall, extremely difficult and targeted work lies ahead before the company can restore additional customers in the hardest-hit communities," Duke Energy said. Meanwhile, Milton is on a rare west-to-east path through the Gulf of Mexico and is likely to bring a deadly storm surge of 10 feet (3 meters) or more of flooding to much of Florida's Gulf Coast. Here are the major outages by state: Sign up here. https://www.reuters.com/business/energy/over-160000-us-customers-without-power-hurricane-milton-approaches-2024-10-09/