2024-10-08 05:26

Yen stronger on safe-haven flows Focus on US inflation, Fed minutes China stock rally fizzles, yuan eases NEW YORK/LONDON, Oct 8 (Reuters) - The dollar held firm on Tuesday, treading water just under last week's seven-week highs as investors assessed the outlook for further U.S. rate cuts, with concerns about the conflict in the Middle East and China's struggling economy lending support. The U.S. data calendar is relatively light this week. Investors will seek trading signals from Wednesday's release of minutes from the Federal Reserve's September meeting, where officials almost unanimously agreed to cut rates by 50 basis points, as well as Thursday's September Consumer Price Index report. "Just given the market was probably caught too short the dollar on Friday, I think there is going to be caution and patience ahead of CPI on Thursday," said Vassili Serebriakov, FX strategist at UBS in New York. The euro slipped 0.03% to $1.0971, still near the seven-week low of $1.09515 hit Friday. The pound edged 0.02% higher to $1.3085, after hitting a three-week low of $1.30595 on Monday. Traders have shifted their expectations of monetary easing from the Fed this year. A strong jobs report last week gave credence to Fed Chair Jerome Powell's comments that the central bank would stick to its usual quarter-percentage-point rate reductions after it began its easing cycle with September's big cut. New York Fed President John Williams, a permanent vote of the rate-setting Committee, echoed Powell's comments, telling the Financial Times in an interview that ran on Tuesday he did not consider the September move "as the rule of how we act in the future". Markets are ascribing an 87% chance of a 25-basis-point reduction in November, the CME FedWatch tool showed, and some now bet on no cut at all. Just 50 bps of easing is priced in by December, down from more than 70 bps a week earlier. That has helped the buck surge against major rival currencies like the euro, sterling and the yen. The yen had also seen some safe-haven buying because of rising geopolitical worries but gave a bit later so that dollar/yen ended 0.06% firmer at 148.27. It touched a seven-week high of 149.10 on Monday on concerns that the Bank of Japan would be raising rates in the near term. Prime Minister Benjamin Netanyahu said Israeli airstrikes had killed two successors to Hezbollah's slain leader, as Israel expanded its offensive against the Iran-backed group. The comments were released hours after the deputy leader of Hezbollah left the door open to a negotiated ceasefire. The dollar index , which measures the U.S. currency against major rivals, rose 0.06% to 102.54. "If soft enough, Thursday's CPI update could eventually help (in) calming the Fed doves' nerves and prevent the U.S. dollar from stepping into the medium-term bullish consolidation zone against many majors," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "If not, the no-November-cut pricing could take off, and that would mean higher yields, a stronger U.S. dollar across the board, weaker other currencies, and some negative pressure on equity valuations." The benchmark 10-year U.S. Treasury yield remained above 4%, having touched the level on Monday for the first time in two months as traders curtailed wagers on big rate cuts. Meanwhile, the Chinese yuan dropped to 7.0648 per dollar, while China's stock markets returned with a strong open after a week-long holiday break, but finished well off their highs as a lack of detail dented optimism around stimulus measures. "I guess the markets were expecting more details. So that probably was much of the focus initially," said Serebriakov. "Not that there has been big moves on the back of that. I think the Aussie probably was the highlight today, just underperforming across the board. The dollar rose to its highest price since Aug. 19 against the Canadian dollar and was last up 0.3% at C$1.3657. The Australian dollar slid 0.27% to US$0.6739, delving its lowest since Sept. 16. In cryptocurrencies, bitcoin fell 1.42% to $62,106.00. Ethereum was flat to $2,441.30. Sign up here. https://www.reuters.com/markets/currencies/dollar-holds-7-week-highs-traders-consider-us-rates-outlook-2024-10-08/

2024-10-08 05:17

Oct 8 - Bitcoin has been distinctly listless in the past three months after starting the year with a bang. The crypto leader has largely shuttled between $56,000 and $63,000 so far in the second half of the year - a contrast to the first six months when it jumped 45%, propelled by the launch of U.S. exchange-traded funds (ETFs) tracking its spot price. Market players are now eyeing possible new crypto catalysts heading into year-end and early 2025, beyond broader market-moving events such as shifts in U.S. interest rates and the American presidential election. Jake Ostrovskis, trader at UK-based crypto firm Wintermute, is anticipating the upcoming launch of options on BlackRock's spot bitcoin ETF, a new product he believes could attract more U.S. retail money after its approval by the Securities and Exchange Commission last month. Because regulators view bitcoin as a commodity, though, such options may also need the green light from the Commodity Futures Trading Commission, which oversees commodity derivatives, said Youwei Yang, chief economist at BIT Mining . "If successful ... (ETF options) could increase bitcoin's market sophistication and volatility, driving greater institutional and retail engagement," Yang added. It's been quite a run for crypto as the anticipation and approval of U.S. ETFs helped drive bitcoin activity globally. The total size of the cryptocurrency market has ballooned to $2.2 trillion as of Oct. 1 this year, from $8.3 billion at the start of 2023, according to CoinGecko data. "We've observed a significant increase in institutional on-boarding and trading activity," this year said Ostrovskis, adding there was a strong demand for platforms and services for digital assets that resemble traditional financial structures. Notoriously wild bitcoin's 90-day volatility has fallen to 42% this year from 67% in mid-2020, according to Deutsche Bank data. Market watchers cautioned that bitcoin still showed a strong correlation to other cryptocurrencies and was likely to be among the first assets dumped by investors retreating from uncertainty and risk; bitcoin slumped 5% on a new spike in hostilities in the Middle East last week, for example. BIGGEST CRYPTO COUNTRIES? Chainalysis' Global Adoption index, which tracks crypto use in 151 countries with measures including trading and payments, surpassed the 2021 crypto bull market between the fourth quarter of 2023 and the first quarter of 2024. Crypto adoption is particularly strong in lower-income countries which often have less developed and accessible mainstream financial systems, the report showed. India took top spot, followed by Nigeria in Chainalysis' rankings, while seven of the other top 20 countries were Asian emerging markets including Indonesia, Vietnam and the Philippines. Crypto fans often point to uses in countries with high inflation and rapid currency depreciation - such as Turkey and Argentina - as evidence of digital money's real world use. Chainalysis also noted a significant increase in decentralized finance (DeFi) and stablecoin activity in Sub-Saharan Africa, Latin America, and Eastern Europe. "The value proposition for bitcoin and stablecoins in Latin America are intact," said Mauricio Di Bartolomeo, co-founder of crypto loan provider Ledn. "Most of the emerging world wants to bank in dollars, but they don't necessarily trust their banks." The United States ranked fourth overall on the adoption ranking, while South Korea and China were 19th and 20th, respectively. In terms of crypto transaction volumes, the U.S. is the world's biggest market followed by India, according to Deutsche Bank. Sign up here. https://www.reuters.com/technology/cryptoverse-bored-bitcoin-seeks-direction-after-big-bang-2024-10-08/

2024-10-08 05:09

Oct 8 (Reuters) - Federal Reserve Bank of New York President John Williams said that it will be appropriate again for the central bank to reduce rates 'over time,' after September's big half percentage point rate cut, in an interview published by the Financial Times on Tuesday. Last week, Federal Reserve Chair Jerome Powell indicated the bank would likely stick with quarter-percentage-point interest rate cuts and was not "in a hurry" after new data boosted confidence in economic growth and consumer spending. Williams, who holds a permanent vote on the rate-setting Federal Open Market Committee, echoed Powell's comments, telling the FT he doesn't see the September move "as the rule of how we act in the future." "I personally expect that it will be appropriate again to bring interest rates down over time," he told the FT. "Right now, I think monetary policy is well positioned for the outlook, and if you look at the SEP [Summary of Economic Predictions] projections that capture the totality of the views, it's a very good base case with an economy that’s continuing to grow and inflation coming back to 2 per cent." On Friday, government data showed an unexpectedly strong job market, which called into question widespread concerns the labor sector was weakening. The payrolls report prompted a repricing of near-term Fed rate cuts. Traders are now pricing in an 87% chance of a quarter-point rate cut next month, and have taken out any chance of an outsized half-point cut, according to CME's FedWatch tool. (https://bit.ly/47UUMxb , opens new tab) Sign up here. https://www.reuters.com/markets/rates-bonds/feds-williams-says-interest-rate-should-be-cut-over-time-ft-reports-2024-10-08/

2024-10-08 04:33

A look at the day ahead in European and global markets from Rae Wee Investors hoping for a roaring restart to China's stock rally, after the mainland's week-long holiday, were disappointed on Tuesday when Beijing policymakers offered only broad brush strokes about stimulus plans at a high-profile press conference. The National Development and Reform Commission (NDRC) said it was "fully confident" of meeting its targets but offered none of the details that investors are craving on China's aggressive stimulus measures. Although the key mainland stock indexes did surge 10% to multi-year highs shortly after the open, those gains were quickly pared back. In stark contrast to the mainland, shares in Hong Kong showed a sea of red, with the Hang Seng Index (.HSI) , opens new tab tumbling more than 10% at one point. Analysts initially attributed the divergence to Chinese stocks playing catch-up, since Hong Kong had surged while the mainland was on holiday, but it was soon clear that the markets were disappointed over the lack of stimulus specifics from Beijing. That's set up a negative opening for Europe, with stock futures falling in Asia hours. EUROSTOXX 50 futures slid 0.8%, while FTSE futures retreated 0.5%. The economic calendar is relatively light for the day, leaving the focus squarely on China, although fears of an escalating conflict in the Middle East and a repricing of Federal Reserve expectations will also remain front of mind for investors. Oil prices retreated on Tuesday - in part reflecting events in China, although it was also due to a slight step back from a strong rally at the start of the week on developments in the Middle East. Hezbollah fired rockets at Haifa, and Israel looked poised to expand its offensive into Lebanon. Worries about disruptions to oil supplies have sent Brent and U.S. crude futures surging more than 10% for the month so far, and they look unlikely to reverse course anytime soon. As for the Fed, the market's short-lived conviction that it would stick to a dovish path evaporated after Friday's blockbuster payrolls report. Market pricing now points to just another 50 basis points of rate cuts by December. The benchmark 10-year Treasury yield , reflecting the less aggressive expectations, stayed elevated above 4% on Tuesday, while the two-year yield hovered near its highest in more than a month. Key developments that could influence markets on Tuesday: - European Central Bank, Federal Reserve policymakers speak - Germany industrial output (August) Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-10-08/

2024-10-08 03:33

MUMBAI, Oct 8 (Reuters) - The Indian rupee is expected to hold near all-time lows on Tuesday amid the 10-year U.S. Treasury yields hitting the highest in two months and relentless equity outflows. The Reserve Bank of India, however, is expected to not let the rupee slip past the psychologically important 84 handle. The 1-month non-deliverable forward indicated that the rupee will open largely unchanged from 83.9775 in the previous session and just shy of the 83.9850 lifetime low hit last month. The U.S. Treasury 10-year yield topped 4% for the first time in more than two months on Monday. The dollar index was holding just below 102.50, up more than 2% from recent lows. The recaliberation in expectations regarding the pace at which the Federal Reserve will bring down borrowing costs following the blowout U.S. jobs report have pushed U.S. yields higher and boosted the dollar. U.S. equities dropped 1% on Monday, pegged back by the higher U.S. yields. "Middle East tensions too remain supportive of the dollar and U.S. equities have lost the momentum with the quantum of Fed rate cuts now in question," Srinivas Puni, managing director at forex advisory firm at QuantArt Market Solutions, said. On USD/INR, he said that the recent range remains intact for now. The expectation that the rupee will continue to be in a narrow range despite the ongoing changes in the Fed rate outlook, large equity outflows from Indian equities and oil worries is based on the assumption that the RBI will keep defending the 84 level. The RBI on Monday asked state-run and private lenders to refrain from betting heavily against the rupee in an effort to support the currency, a repeat of what they had done in August. The RBI's support has meant that the rupee has not been impacted by the more than $5 billion of equity outflows in just five sessions this month. KEY INDICATORS: ** One-month non-deliverable rupee forward at 84.10; onshore one-month forward premium at 12 paise ** Dollar index at 102.42 ** Brent crude futures 1.9% at $79.4 per barrel ** Ten-year U.S. note yield at 4% ** As per NSDL data, foreign investors sold a net $1,148.7 mln worth of Indian shares on Oct. 4 ** NSDL data shows foreign investors bought a net $7.7 mln worth of Indian bonds on Oct. 4 Sign up here. https://www.reuters.com/markets/currencies/rupee-rely-central-bank-support-amid-higher-us-yields-outflows-2024-10-08/

2024-10-08 00:43

China's stimulus details disappoint, impacting global stocks U.S. inflation data and corporate earnings in focus U.S. Treasury yields rise on recalibrated Fed expectations NEW YORK, Oct 8 (Reuters) - A gauge of global stocks advanced on Tuesday after a rally on Wall Street overshadowed disappointment over the lack of details in China's stimulus, as investor focus shifts to upcoming U.S. inflation data and corporate earnings. On Wall Street, U.S. stocks closed sharply higher as the benchmark S&P 500 bounced back from a drop of nearly 1% a day earlier, with a jump of more than 2% in technology (.SPLRCT) , opens new tab stocks providing key support. Stocks had stumbled on Monday on increasing concerns about a wider conflict in the Middle East and as last week's solid U.S. payrolls report caused a reassessment on the size and pace of interest rate cuts from the Federal Reserve. Investors are also eyeing Thursday's inflation reading with the release of the latest consumer price index (CPI), while banks are scheduled to kick off the corporate earnings season at the end of the week. "The Fed keeps telling you that they're data-dependent - so the end of this week is big to see whether or not inflation is truly tamed," said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh. "But the Fed has been signaling where - not necessarily when - rates are going, and they have signaled that they're going lower." The Dow Jones Industrial Average (.DJI) , opens new tab rose 126.13 points, or 0.30%, to 42,080.37, the S&P 500 (.SPX) , opens new tab rose 55.19 points, or 0.97%, to 5,751.13 and the Nasdaq Composite (.IXIC) , opens new tab rose 259.01 points, or 1.45%, to 18,182.92. European shares closed lower, as a lack of details on China's long-awaited fiscal stimulus weighed on sectors related to the world's second-largest economy, such as mining and luxury goods. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab advanced 1.24 points, or 0.15%, to 844.96. The STOXX 600 (.STOXX) , opens new tab index ended 0.55% lower. Hong Kong's Hang Seng Index (.HSI) , opens new tab plunged 9.4%, its biggest drop since 2008, erasing some of the big gains made during a Chinese holiday, after government economic planner Zheng Shanjie told reporters that China is "fully confident" of achieving economic targets for 2024 and would pull forward 200 billion yuan ($28.36 billion) from next year's budget to spend on investment projects and support local governments. But a failure to sufficiently detail new or large measures sparked concerns about China's commitment to pull the economy out of its current slump. The Shanghai Composite (.SSEC) , opens new tab and blue-chip CSI300 (.CSI300) , opens new tab, both of which were closed during the holiday, ended 4.6% and 5.9% higher, respectively, paring earlier gains of more than 10%. U.S. Treasury yields were slightly lower in choppy trading on factors such as Federal Reserve monetary policy, investor positioning, and economic outlooks affected market moves. Expectations for a 25-basis-point rate cut from the Fed at its November meeting stand at 87.3%, according to CME's FedWatch Tool , opens new tab, with the market pricing in a 12.7% chance of the Fed's holding rates steady. Last week the market was fully pricing in a cut of at least 25 basis points with a 36.8% chance for another outsized 50 basis point cut. The yield on benchmark U.S. 10-year notes dipped 0.6 basis point to 4.02%. Oil prices dropped, following a recent rally sparked by rising hostilities in the Middle East, as fears eased of supply interruptions from the conflict between Israel and Iran and a massive Gulf of Mexico hurricane. U.S. crude settled down 4.63% to $73.57 a barrel, and Brent tumbled to settle at $77.18 per barrel, also down 4.63%. Prime Minister Benjamin Netanyahu said Israeli airstrikes had killed two successors to Hezbollah's slain leader, as Israel expanded its offensive against the Iran-backed group. The comments were released hours after the deputy leader of Hezbollah left the door open to a negotiated ceasefire. The dollar index , which measures the greenback against a basket of currencies, was unchanged at 102.48, with the euro up 0.04% at $1.0978. Against the Japanese yen , the dollar strengthened 0.07% to 148.29. Sterling strengthened 0.13% to $1.31. To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-10-08/