2024-10-09 06:02

NEW YORK/LONDON, Oct 9 (Reuters) - The U.S. dollar edged higher on Wednesday, taking in stride the release of minutes from the Federal Reserve's September meeting that showed a substantial majority of policymakers backed its outsized 50-basis point rate cut. Traders also digested comments from Fed officials and kept their powder dry for Thursday's release of September's consumer price index. Investors were confident that the central bank will not continue easing so aggressively, and minutes from the Federal Open Market Committee were out of date after last Friday's robust nonfarm payroll data caused markets to reprice near-term Fed rate cut expectations. "The market has been building up to the minutes for a couple of days now, both the minutes and the inflation report. So, the dollar index has been moving up higher and clearly the tipping point was the strong U.S. jobs report," said Amo Sahota, executive director at Klarity FX in San Francisco. Sahota said it looked like Fed Chair Jerome Powell had to convince more participants than originally thought who had supported only a quarter-point cut. The minutes said "a few others indicated they could have supported such a decision." Only one, Fed Governor Michelle Bowman, actually dissented. 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. On the docket later are Boston Fed President Susan Collins and San Francisco Fed President Mary Daly. Looking at the fed funds futures term structure, traders see about an 83% chance of a 25 basis point cut at the November meeting, and about 50 bps more by year-end, according to LSEG calculations. Odds for the Fed standing pat next month are 17%. The euro extended its sell-off to a two-month low against the greenback, and was last off 0.36% at $1.094. Dollar/yen rose 0.72% to 149.26, topping Monday's high to reach its priciest since Aug. 15. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, extended its rally to the highest since Aug. 16 and was 0.38% higher at 102.88. The yen has been whiplashed since Japan's new Prime Minister Shigeru Ishiba, known for being a critic of easy monetary policy, surprised markets with recent remarks that the nation is not ready for further rate hikes. Ishiba has set a snap election for Oct. 27, ahead of the Bank of Japan's October monetary policy meeting and the U.S. presidential election on Nov. 5. Worries about demand from China have been a theme all week, amid disappointment in the follow-up to last month's stimulus measures. Especially hard hit on Wednesday were the Australian and New Zealand currencies. "We've got the CPI tomorrow. I think that China's announcement that they are going to make another announcement Saturday, the Ministry of Finance, that's important," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, adding "we're not seeing much of an effect here today in the dollar block." China's finance ministry on Wednesday called a press conference for Saturday on fiscal policy, raising expectations of stimulus, a day after a news conference from the state planner - the National Development and Reform Commission - disappointed markets by yielding no major new stimulus details. But that did little for the Aussie, which fell 0.43% vs the U.S. dollar to $0.6716 . The yuan weakened to 7.0810 per dollar. The New Zealand dollar was one of the biggest movers on Wednesday after the Reserve Bank of New Zealand cut interest rates by 50 basis points. The kiwi tumbled 1.32% to US$0.6057 and hit its lowest since Aug. 19. "We see mounting near-term headwinds (for the New Zealand dollar against the U.S. dollar) including hawkish repricing for the Fed, potential geopolitical escalation, de-risking ahead of the U.S. election, exhausted momentum in terms of trade, and now a more-dovish-than-expected RBNZ," said Lenny Jin, global FX strategist at HSBC. "Potentially strong fiscal stimulus from China is an upside risk but the (Australian dollar) is set to benefit more." Against the Swiss franc , the dollar strengthened 0.42% to 0.86, reaching its highest since Aug. 20. Sterling weakened 0.25% to $1.3071, hitting it cheapest since Sept. 12. In cryptocurrencies, bitcoin fell 1.60% to $61,348.93. Ethereum declined 0.81% to $2,422.42. Sign up here. https://www.reuters.com/markets/currencies/dollar-steady-ahead-fed-minutes-nz-dollar-falls-after-rate-cut-2024-10-09/

2024-10-09 04:34

A look at the day ahead in European and global markets from Tom Westbrook Gravity brought China's soaring stock market back to earth with a thud on Wednesday. Disappointment about the lack - so far - of follow-through on stimulus promises has triggered a pullback in a spectacular rally and could be a harbinger of further weakness in China-exposed assets trading in London and Europe. At the time of writing, the Shanghai Composite (.SSEC) , opens new tab was down more than 5% and headed for its largest slump since the pandemic collapse of February 2020. A bounce in Hong Kong was quickly snuffed out. Metals and other commodities were on the slide along with China proxies such as the Australian dollar. China watchers say yesterday's National Development and Reform Commission news conference was never going to be the forum for a substantial policy announcement. "More patience please," noted HSBC economist Jing Liu in a note pointing out that we are yet to hear from the State Council or the finance ministry on the specifics of stimulus. But, clearly, the opportunity to reassure markets has been missed and the rally is unlikely to be sustainable until authorities show investors the money, and lots of it. China volatility already pulled down European miners and luxury stocks on Tuesday but further drops in the iron ore price and selling of Rio Tinto (RIO.AX) , opens new tab and BHP (BHP.AX) , opens new tab shares in Sydney suggest more pressure ahead. Elsewhere the New Zealand dollar slid through its 200-day moving average as the central bank cut interest rates by 50 basis points and left the door open to further cuts - just as markets are paring back their expectations for U.S. rate cuts. Indian government bonds rallied after FTSE Russell said they would be included in its emerging markets' index. South Korean government bonds were added to the FTSE World Government Bond Index (WGBI) but were not traded owing to a public holiday. Minutes for September's Federal Reserve meeting are due later in the session, though they may not add much since Fed officials have been out in force in recent days pointing out last week's strong jobs reading is positive for the economy. Key developments that could influence markets on Wednesday: - German trade data - September Federal Reserve minutes Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-10-09/

2024-10-09 04:26

RBNZ's outsized cut prompts bets for another 50 bp cut in Nov RBNZ says inflation is within 1%-3% target, sees subdued economy New Zealand dollar slips, swaps fall on dovish policy stance WELLINGTON, Oct 9 (Reuters) - New Zealand's central bank slashed rates by 50 basis points on Wednesday and said policy is still restrictive even though inflation has returned to target, prompting markets to bet on yet more aggressive easing and sending the kiwi dollar skidding. The decision to reduce the cash rate to 4.75% was in line with market pricing and most economists' expectations, with 17 of 28 economists in a Reuters poll having forecast the Reserve Bank of New Zealand (RBNZ) to cut the benchmark rate by half a percentage point. “The Committee agreed that it is appropriate to cut the OCR (official cash rate) by 50 basis points to achieve and maintain low and stable inflation, while seeking to avoid unnecessary instability in output, employment, interest rates, and the exchange rate," the central bank said in its policy statement. The kiwi dollar tumbled 0.9% to $0.6084, the lowest since August 19, while two-year swap rates declined 7 basis points to 3.605% after the decision. Swaps imply there is further 45 basis points of easing to come at the RBNZ's November meeting. "Overall, the October meeting reinforces the bank's dovish stance and indicates no clear signs of slowing in November. With inflation within target and the labour market fragile, the RBNZ will ease rates more swiftly," said Shannon Nicoll, associate economist at Moody’s Analytics. Minutes from the RBNZ committee said it assessed that annual inflation has returned to within its 1% to 3% target range in the third quarter, and is converging on the 2% midpoint. New Zealand's annual inflation has come off in the past few months, and the most recent data showed it was at 3.3% in the second quarter. "Members agreed that an OCR of 4.75% is still restrictive and leaves monetary policy well-placed to deal with any near-term surprises," the minutes added. This is the second consecutive meeting in which the central bank has cut the official cash rate after starting its easing cycle in August with a 25-basis-point reduction. “The New Zealand economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a low-inflation economy. Lower import prices have assisted the disinflation,” the RBNZ statement said. ANZ chief economist Sharon Zollner said that while the next move remains conditional on data, "there was nothing in today’s commentary to dissuade the market from continuing to price a follow-up 50bp cut in November as the likeliest outcome." Citi economists are now forecasting an even bigger 75 bps cut next month, from 50 bps previously, saying they see little need for the cash rate to be "so restrictive" given the large policy-review gap between November and February next year. WEAKENED ECONOMY The central bank said the economy, which contracted in the second quarter, was expected to remain subdued over the near term with weak house price growth and lower levels of net immigration crimping overall demand. The committee also warned about spillover effects from the escalating Middle East conflict, saying it could pose significant risks to both global economic activity and energy prices. Furthermore, it noted that economic growth in the United States and China is expected to slow. Confidence improved slightly after the central bank’s rate cut in August when it also forecast the cash rate to move down to 3.85% by end-2025, underlining broad market consensus for more stimulus to shore up the economy. New Zealand’s rate cuts align with similar moves by many central banks globally as policymakers rollback their aggressive inflation-busting tightening campaigns. The Federal Reserve slashed rates by an outsized 50 basis points at its last meeting in September. New Zealand's neighbour Australia remains an outlier to the easing trend as policymakers there say restrictive conditions must remain in place for a while longer to bring inflation to heel. ASB Bank said the RBNZ's decision underlined that rates were still well above neutral settings. "Cutting by 50bp more than once would make the RBNZ a bit of a central bank maverick," ASB chief economist Nick Tuffley said. "But it is a reflection that the OCR, even at 4.75%, is still some way above neutral settings that we place in a 3-4% range." Sign up here. https://www.reuters.com/markets/new-zealands-central-bank-cuts-cash-rate-50-bps-475-2024-10-09/

2024-10-09 04:15

MUMBAI, Oct 9 (Reuters) - The Indian rupee rose slightly on Wednesday, comforted by a decline in oil prices and gains in most of its regional peers, while traders awaited the Reserve Bank of India's monetary policy decision. The rupee was at 83.9275 as of 09:30 a.m. IST, compared to its previous close at 83.9625. The currency has hovered close to its record low of 83.9850 over the past three sessions, but avoided falling below it largely due to the RBI's interventions. Other Asian currencies were mostly higher, with the Thai baht up 0.6% and leading gains, while the dollar index was little changed at 102.5. Brent crude oil futures declined 4.5% on Tuesday as news of a possible ceasefire between Israel and Hezbollah cooled concerns of a supply disruption. It was last quoted slightly higher at $77.4 per barrel. Despite the supportive global cues, traders expect the rupee's gains to be shallow given the persistent outflows from local equities. Overseas investors have net sold about $6.5 billion of shares over the last six trading sessions. Focus for Wednesday's session will be on the RBI's monetary policy decision due at 10:00 a.m. IST. The central bank is widely expected to keep policy rates unchanged for the tenth straight meeting, while some investors are betting on the probability of a change in stance to neutral. "There’s a good chance that the central bank may strike a less hawkish tone and change its policy stance to neutral, with a view to eventually cut rates in December," MUFG Bank said in a note. Remarks from a slew of Federal Reserve policymakers alongside the minutes of the Fed's latest meeting will also be in focus later in the day for cues on the future path of Fed policy rates. Sign up here. https://www.reuters.com/markets/currencies/rupee-finds-breathing-room-oil-prices-fall-rbi-decision-awaited-2024-10-09/

2024-10-09 02:59

MUMBAI, Oct 9 (Reuters) - The Indian rupee is expected to rise marginally at open on Wednesday, tracking a recovery on Asian peers and the drop in oil prices, while the Reserve Bank of India's policy decision and the minutes of the last Federal Reserve meeting are also on traders' radar. The 1-month non-deliverable forward indicated that the rupee will open at 83.93-83.94 to the U.S. dollar compared with 83.9625 in the previous session. The dollar index was holding near the 102.50 area while Asian currencies rose following the recent selloff. Brent crude dropped 4.6% on Tuesday on news of a possible ceasefire between Hezbollah and Israel. Meanwhile, index provider FTSE Russell said on Tuesday Indian sovereign bonds will be added to its Emerging Markets Government Bond Index (EMGBI), following a similar move by JP Morgan and Bloomberg Index Services. The rupee "has a bit going for it today" and "for a change" is likely to trade with a slightly positive bias, a forex trader at a bank said. "The recovery (on the rupee) will not be noteworthy and probably to 83.90 at max. The RBI policy is unlikely to move (rupee) much." The RBI is widely expected to maintain a status quo on the key policy rate, while a few economists are betting on a change in stance to "neutral" which could open the door to a rate cut in December. FED MINUTES Investors will also be eyeing the minutes of the Fed's September meeting, which will show discussions about what at the time had appeared to be a deteriorating labour market that resulted in all but one policymaker agreeing to a 50-basis point cut. The debate about 25 or 50 basis points in cuts at the last meeting will likely tell us something about the Fed's reaction function and its view of risks to employment and inflation, Morgan Stanley said in a note. KEY INDICATORS: ** One-month non-deliverable rupee forward at 84.05; onshore one-month forward premium at 11.50 paise ** Dollar index up at 102.52 ** Brent crude futures at $77.4 per barrel ** Ten-year U.S. note yield at 4.01% ** As per NSDL data, foreign investors sold a net $967.8mln worth of Indian shares on Oct. 7 ** NSDL data shows foreign investors sold a net $136mln worth of Indian bonds on Oct. 7 Sign up here. https://www.reuters.com/markets/currencies/rupee-may-inch-up-tracking-asia-fx-rbi-decision-fed-minutes-loom-2024-10-09/

2024-10-09 00:51

Oct 9 (Reuters) - China's Zijin Mining Group (601899.SS) , opens new tab will buy the Akyem Gold Mine Project in Ghana from U.S.-based Newmont Corp (NEM.N) , opens new tab for $1 billion, the companies said on Wednesday. The sale is a part of Newmont's ongoing programme to divest non-core assets as the company makes a strategic shift to focus on its tier one assets, the U.S. gold producer said. Newmont is expected to receive cash consideration of $900 million upon the deal's closure, with a further $100 million upon satisfaction of certain conditions. The deal will see Zijin's unit Gold Source International acquiring a subsidiary of Newmont, which in turn owns the Akyem project. The transaction is expected to close in the fourth quarter of 2024, subject to regulatory approvals, Newmont said in a statement. "After study, the company is of the view that under the current and anticipated future gold price conditions, the project's utilisable resources and reserves still have significant potential," Zijin said in a statement. The Chinese miner said certain Ghanaian entities had expressed interest in acquiring a minority stake in the asset, adding that it was open to exploring such potential transactions. Sign up here. https://www.reuters.com/markets/deals/chinas-zijin-mining-buy-newmonts-ghana-gold-project-1-bln-2024-10-09/