2026-02-04 02:01

Yen weakens ahead of unpredictable Japanese election Takaichi's strong showing may hurt yen; hit government bonds Dollar steadies after sharp jump on Warsh appointment to Fed SINGAPORE, Feb 4 (Reuters) - The U.S. dollar was steady on Wednesday as investors remained cautious after a partial government shutdown swiftly ended while the yen weakened near a two-week low ahead of what is shaping up to be an unpredictable national election over the weekend. Currency markets were still digesting Kevin Warsh's nomination by U.S. President Donald Trump as the next Federal Reserve chief, with the dollar broadly firming on expectations that Warsh is unlikely to push for rapid rate cuts. Sign up here. Investors have also been relieved as the appointment eased some of the concerns over the Fed's independence after Trump's constant attacks on the central bank and current Fed Chair Jerome Powell. The euro was a shade stronger at $1.1834, while sterling stood at $1.3715, steady ahead of policy meetings at the European Central Bank and the Bank of England on Thursday. Both central banks are expected to stand pat on rates. The dollar index , which measures the greenback against six major currencies, was at 97.33, not far from the one-week high of 97.73 it touched on Monday. The dollar strength since the Warsh announcement wreaked havoc in precious metals although they have since recovered somewhat. The dollar index fell 1% in January after dropping 9.4% last year due to the Fed cutting rates, shrinking interest differentials with other major currencies and as concerns about U.S. fiscal deficits and political uncertainty swirled. UOB strategists said volatility will likely stay elevated in the run-up to Warsh's appointment. "This will likely include lots of theatrics during the upcoming Congress confirmation proceedings which may not be a straight-forward process," they said in a note on Wednesday. "In-between a jittery market and an assertive President, the work cuts out for Warsh who needs to prove that he is an objective and steady Fed chair who is able to galvanize the entire FOMC." Trump late on Tuesday signed a spending deal into law that ended a partial U.S. government shutdown after four days, although crucial employment data that was due on Friday will be delayed because of the shutdown. JAPANESE ELECTION IN FOCUS The yen was 0.3% softer at 156.26 per dollar on Wednesday, its weakest since January 23, when the currency strengthened sharply from 159.23 amid speculation the New York Federal Reserve conducted rate checks. The prospect of a joint U.S.-Japan intervention to boost the yen has broadly pulled the currency back from the brink, although the yen's fate hangs in the balance ahead of this weekend's Japanese election. In the national election Prime Minister Sanae Takaichi is seeking voter backing for increased spending, tax cuts and a new security strategy that is expected to accelerate a defence build-up. "A strong showing by the LDP will embolden Takaichi to advance her budget stimulus plans, raising the risk of a larger government debt burden and weighing on Japanese government bonds and the JPY, " said Carol Kong, currency strategist at Commonwealth Bank of Australia. Takaichi earlier this week triggered a yen selloff after a campaign speech in which she talked up the benefits of a weaker currency. While she later walked back those comments, worries linger that mixed signals from the prime minister could hurt efforts to support the frail currency. The Australian dollar was at $0.7028 after a sharp 1% rise in the previous session as the Reserve Bank of Australia hiked interest rates, leaving markets wagering further hikes would be needed this year. The New Zealand dollar edged lower at $0.604. Meanwhile, China's yuan briefly hit a near 33-month high against the dollar underpinned by firmer central bank guidance, though the fix was weaker than anticipated and viewed by investors as an attempt to keep the currency's gains in check. The yuan has been clocking steady gains pushed up by booming exports and while analysts think authorities will resist further strengthening, risks are to the upside and could test the country's fragile economy. https://www.reuters.com/world/africa/dollar-steady-yen-wobbles-ahead-japan-election-2026-02-04/

2026-02-04 00:41

Feb 4 (Reuters) - Hong Kong's CK Hutchison (0001.HK) , opens new tab said on Wednesday its Panama Ports Company unit has started international arbitration proceedings against Panama after a court there annulled its licences to operate two Panama Canal ports. Panama's Supreme Court last week ruled the contracts violated Panama's constitution by giving the company exclusive privileges and tax exemptions. Sign up here. The decision casts doubt on the future ownership of the two ports and CK Hutchison's planned $23 billion deal to sell its port businesses. "The board strongly disagrees with the determination and corresponding actions in Panama," CK Hutchison said in a statement to the Hong Kong Stock Exchange. "The group continues to consult with its legal counsel and reserves all rights, including recourse to additional national and international legal proceedings in the matter." CK Hutchison has operated the ports for nearly three decades. Panama government did not immediately respond to a request for comment. https://www.reuters.com/world/asia-pacific/ck-hutchison-unit-launches-arbitration-against-panama-over-port-ruling-2026-02-04/

2026-02-04 00:05

CHICAGO, Feb 3 (Reuters) - The chair of the U.S. Senate's agriculture committee warned on Tuesday that farmers were suffering heavy losses, while more than two dozen former industry leaders sounded the alarm about the risk of a "widespread collapse of American agriculture" ahead of a $12 billion government bailout expected to reach growers this month. For three years, the costs of seed, fertilizer and other farm inputs rose, while plentiful grain supplies limited profits for farmers, economists said. Then, President Donald Trump returned to office last year, sparking trade disputes that disrupted U.S. crop exports and immigration crackdowns that increased labor costs and left some farms with crops rotting in fields. Sign up here. Many farmers are now bracing to potentially lose money for a fourth consecutive year. Tough credit conditions are forcing those with limited cash flows to make decisions about what acres to plant and how much fertilizer to buy, economists said. BY THE NUMBERS https://www.reuters.com/business/finance/former-us-agriculture-officials-top-republican-senator-warn-farm-country-trouble-2026-02-04/

2026-02-04 00:03

LONDON, Feb 4 (Reuters) - Britain unveiled a framework on Wednesday to accelerate development of advanced nuclear reactors, aiming to become a global leader in the next-generation technology. The Labour government has said nuclear plants will play an important role in helping Britain meet its climate targets, provide clean energy to the growing AI sector and create jobs. Sign up here. During U.S. President Donald Trump's visit to Britain last year, several U.S. companies announced plans to build advanced nuclear projects in the country, including X-Energy, Holtec and Bill Gates-backed TerraPower. Advanced nuclear reactors use novel fuels and coolants that allow them to operate at higher temperatures, meaning they could supply both electricity to the growing AI sector and industrial heat. "Advanced nuclear technology could revolutionise how we power industry and propel the AI data centre boom," Nuclear Minister Patrick Vallance said in a press release. Under the framework, the government will create a pipeline of projects meeting readiness criteria, offering developers a streamlined path through planning and regulation. The projects will need to secure private financing but will also be able to discuss government support, and can seek investment from Britain's National Wealth Fund, which was set up in 2024 to drive economic growth and support the country's net zero transition, the government said. https://www.reuters.com/sustainability/boards-policy-regulation/britain-launches-framework-boost-advanced-nuclear-reactor-development-2026-02-04/

2026-02-03 23:07

Miran on unpaid leave from his CEA post since Fed appointment Had promised Senate would depart Council if Fed tenure prolonged WASHINGTON, Feb 3 (Reuters) - Federal Reserve Governor Stephen Miran resigned on Tuesday from his position as chair of the White House's Council of Economic Advisers, fulfilling a pledge he made to the Senate as his assignment at the central bank becomes longer-lasting. Miran had been on unpaid leave from his CEA post since President Donald Trump appointed him last year to fill an unexpected vacancy on the Fed's Board of Governors to a term that expired January 31. The arrangement drew the ire of Democratic Senators who said it would make a presidential puppet of the Fed's newest policymaker. Sign up here. Miran said he had been legally advised there was no need to quit his CEA post as the Fed job was only for a few months. "I promised the Senate that if I should stay on the Board past January, I would formally depart the Council," Miran said in his resignation letter dated Tuesday and reviewed by Reuters. "I believe it is important to stay true to my word while I continue to perform the job at the Federal Reserve to which you and the Senate appointed me." Trump on Friday announced plans to nominate former Fed Governor Kevin Warsh as the next chair of the central bank to succeed Jerome Powell. While this would fill the Fed Board seat currently occupied by Miran, the law allows him to serve until a successor is confirmed by the Senate. The White House had no immediate comment on whether Pierre Yared, now the CEA's acting chair, would be named to the top post permanently. Miran's resignation was first reported by Barron's. Miran has argued for sharply lower interest rates at every Fed meeting since he joined the central bank last September. Trump has made no secret of his desire for the Fed to reduce interest rates, and indeed made support for easier monetary policy one of his criteria for a new Fed chief. Powell, whose leadership term ends in May, disclosed in January that the Department of Justice (DOJ) had launched a criminal probe into statements he made to the Senate about Fed building renovations. Powell has described the investigation as part of a broader effort by the administration to exert control over the Fed. The DOJ last year also opened an investigation into Fed Governor Lisa Cook for alleged misstatements on her mortgage application. She denies wrongdoing and is suing to stop Trump's attempt to fire her in a case that is before the Supreme Court. A majority of the Senate Banking Committee - including all its Democratic members and one of its Republican members - have decried the DOJ's investigation of Powell as political intimidation and have said they oppose moving forward on Warsh's nomination while it is ongoing. https://www.reuters.com/world/us/feds-miran-resigns-white-house-job-2026-02-03/

2026-02-03 23:02

Exports drive 6% yuan gain vs dollar in nine months Average of 13 analyst forecasts has yuan at 6.92/dlr in Dec Goldman Sachs revises forecast stronger to 6.7 SHANGHAI, Feb 4 (Reuters) - Booming exports are pushing up China's currency and while analysts think authorities will resist further gains, risks are to the upside and could test the country's fragile economy. As the yuan exchange rate tiptoed toward and then passed the strong side of 7-per-dollar last year, foreign currency flows into Chinese banks hit a record $452 billion in December. Sign up here. The amount converted to yuan also hit a record of $311 billion, figures from the State Administration of Foreign Exchange showed, with the flow sending the exchange rate to its strongest point since 2023 at 6.9378 per dollar on Tuesday. Bank analysts think that is more or less enough and say a toolkit of semi-official yuan selling, restraining the trading band, persuasive arguments from authorities and tweaks to reserve ratios for the banking system can be rolled out to keep it from gaining further. An average of 13 forecasts from global investment banks has the currency at 6.92 to the dollar by year's end, while market pricing points to around 6.8 in the derivatives market. That sort of level is likely to frustrate the country's trading partners, where manufacturers are under pressure from Chinese rivals, and add more fuel to a boom in offshore yuan borrowing. But out-of-consensus calls point to it rising further if exporters ramp up their yuan conversions, with Goldman Sachs this week raising its 12-month yuan forecast to 6.7 per dollar, about 3.5% firmer than Tuesday's trading level. "The pace of appreciation has exceeded our expectations and that is even before the sharp move lower in the broad dollar," said Goldman analysts, who based their outlook on record flows and what they viewed as a shift in tone from the central bank. The People's Bank of China manages the yuan by keeping it inside a band that is 2% on either side of a midpoint that it announces each trading day. It declined to comment on its stance on the currency or on analyst forecasts when contacted by Reuters. Last month, central bank Deputy Governor Zou Lan said the yuan is expected to experience two-way fluctuations while maintaining flexibility. BASE CASE A stronger yuan erodes a competitive advantage for exporters, so analysts believe a runaway rally is unlikely. They point to state bank selling and signals from the PBOC's midpoint settings as evidence authorities will weigh in against gains. "Given that China's economic growth is still highly dependent on exports, the People's Bank of China may not yet be willing to risk a more significant appreciation of the currency," said Wei He, an economist at Gavekal Dragonomics. The PBOC midpoint has been weaker than market estimates since November and - traders say - state banks have been dollar buyers whenever the yuan has started to rise too sharply. Analysts also expect authorities to adjust foreign exchange reserve requirements, since they could force banks to buy and hold more dollars and offset yuan buying. "We see a high chance for the 20% risk reserve on banks' forward FX sale to be removed and expect FX reserve requirement ratio to be raised," said Janice Xue, a strategist at Bank of America Global Research. China's 5% gross domestic product growth last year rested upon an export surge that delivered a record trade surplus of $1.2 trillion, up around 20% from a year earlier. "Our base scenario remains a strong export performance, which could support the yuan," said Chaoping Zhu, global market strategist at J.P. Morgan Asset Management. "However, as foreign governments become more cautious (about) the impacts on their economies, uncertainties are rising for Chinese export growth." "This might suggest a higher two-way volatility in the exchange rate," he said, which he thinks is likely to fluctuate in a range around 7-per-dollar. On a trade-weighted basis, (.CFSCNYI) , opens new tab the yuan is at the lower end of a range that it has kept since the pandemic, which provides support for exporters. UPSIDE RISKS Stability has also been the defining feature of the nine-month rally that has lifted the yuan nearly 6% against the dollar, which traders say is aimed at boosting the currency's appeal for investment, lending and reliability for settling trade. That also holds momentum in check against the risk that a rising currency drives a positive feedback loop where buying from exporters sends it higher, encouraging more buying. Ding, a Shanghai-based electrical industry exporter who only provided his surname, said his firm was already converting more dollars to yuan more quickly because of recent exchange rate moves. To be sure, at 68.8%, the proportion of export receipts converted to yuan in December was on the rise, but it was not a record and analysts believe authorities can manage even bigger flows. "We expect the level of surplus to go beyond $1 trillion again in 2026," said Kelvin Lam, senior China+ economist at Pantheon Macroeconomics, who expects the exchange rate to be at 6.85 at the end of the year. "Repatriation of the USD piled outside of China because of trading activity will continue to be a driving force to push (the yuan) to the stronger end, but the PBOC will make sure the appreciation (is) on a gradual, measured pace." https://www.reuters.com/business/finance/yuan-expected-rise-2026-beijing-has-its-reasons-saying-not-so-fast-2026-02-03/