2025-12-15 05:20

Increased interest in EM FX a key takeaway from whipsawed 2025 Dollar weakness expected to continue in 2026, bolstering EMs Hedge funds, bank FX desks benefited the most LONDON, Dec 15 (Reuters) - Trading in the Hungarian forint, long a niche emerging market currency, has more than doubled since U.S. President Donald Trump took office in January, with trader interest only growing since his sweeping "Liberation Day" import tariffs announcement. These increased volumes are no blip either, say traders, strategists and hedge funds navigating the almost $10-trillion-a-day global FX markets. Sign up here. The forint has strengthened roughly 20% against the dollar this year, set for its best year in almost a quarter of a century and making it one of 2025's top emerging currency performers . It has been a good year more widely: MSCI's Emerging Market Currency Index (.MIEM00000CUS) , opens new tab hit a record in July and is on course for its best year since 2017, having gained more than 6%. Traders, fund managers and analysts spoken to by Reuters mostly expect this trend to continue next year, too. The gains come as a more volatile and weakening dollar prompts investors to rethink exposure to the currency and question long-held assumptions about the direction and standing of the greenback. Meanwhile, they are betting on improving value across some developing countries from South Africa to Hungary as they diversify away from U.S. assets. "We think that the cycle of what we would call a bear market for EM currencies, which has lasted for 14 years now, has likely turned," said Jonny Goulden, head of EM Fixed Income Strategy Research at JPMorgan. "That is part of this turn in the dollar cycle, where the world owns a lot of U.S. assets and has avoided EM assets." TRADING RISKS DRAW IMF WARNING For Elina Theodorakopoulou, portfolio manager for emerging markets debt at Manulife, the surprise this year was that price swings were triggered by events in developed economies. "It was the cool kid in the class this year, emerging markets, in the sense that it wasn't the driver of volatility," said Theodorakopoulou. The U.S.-driven splintering of world trade, geopolitical upheaval and divergent central bank policy is expected to continue to drive price moves. Investors, including hedge funds, are making and losing money, while for governments, appreciating currencies and capital inflows have major economic implications, from reducing the appeal of exports to bolstering their ability to raise and repay debt. The risks have not gone unnoticed. The International Monetary Fund in its latest financial stability report warned about dangers from currency markets. Nearly half of global FX turnover is intermediated by just a small group of mostly large banks, leaving the market exposed should they scale back activity during periods of stress, the IMF said. Currency volumes are up almost 30% in the past three years, the latest data by the Bank for International Settlements from April shows. And 2025 has been a rollercoaster ride, with developed market currency volatility (.DBCVIX) , opens new tab spiking to two-year highs in April before easing. A steadier market has made it a more attractive environment for carry trades -- borrowing in low-yielding currencies to invest in higher-yielding ones. Hedge fund EDL Capital, which manages $1 billion, is up 28% this year, on gains at the start of the year and around so-called Liberation Day, helped by bets against the dollar, said a source with knowledge of the matter. As a money-spinner for banks, trading EM currencies was a boon, data compiled for Reuters by Vali Analytics shows. EM currency trading generated almost $40 billion in revenue for the top 25 global banks in the first nine months, their best year so far. That's more than twice the $19 billion the banks earned from Group of 10 currencies, the data firm's analysis shows. The G10 comprises major currencies from the dollar to sterling to the euro. Finding opportunities to make money in currency trading, especially among the G10, has been challenging, said Samer Oweida, global head of foreign exchange and emerging markets trading at Morgan Stanley. "If investors stayed within FX, they rotated into higher-yielding structural stories across emerging markets." Just over half of 14 top currency traders, hedge fund managers and analysts Reuters spoke to see greater interest in EM currencies as a key trend likely to continue in 2026. Increased hedging and volatility in an era where dollar strength is no longer a given are also likely to persist, they said. A NEW LIGHT The soft dollar tide has not floated all boats, however. Anaemic trade and investment flows pushed India’s rupee to record lows, while worries about central bank independence and political unrest have hurt Indonesia's rupiah IDR=. But while the dollar has recovered from a beating -- it suffered its biggest first-half dive since the early 1970s with losses of almost 11% -- analysts expect U.S. rate cuts will bring further weakness. Traders are pricing two more quarter-point rate cuts by the Federal Reserve next year, LSEG data show. For many EM currencies that backdrop is key and has fuelled inflows. For some, ramped-up carry trades have added to momentum. Mexico's peso and Brazil's real are also among the best-performing emerging currencies this year. They feature prudent central banks and high interest rates, in Brazil's case rates are at a two-decade high of 15%, as well as easily accessible currency and bond markets. "There have been strong inflows into broad EM, across both local and external (bond markets), and I would not bet on that trend reversing anytime soon,” said Nikolas Skouloudis, portfolio manager at Amia Capital, which manages roughly $1.4 billion. The hedge fund returned 16% in the year so far, said a separate source familiar with the fund's performance. https://www.reuters.com/business/wild-currency-swings-put-emerging-markets-spotlight-2025-12-15/

2025-12-15 05:01

Brent, WTI prices steady after 4% losses last week Venezuelan oil exports down sharply since US seizure of tanker Surplus outlook, potential Ukraine peace deal weigh on prices DENVER, Dec 15 (Reuters) - Oil prices slid on Monday as investors balanced disruptions linked to escalating U.S.-Venezuelan tensions with oversupply concerns and the impact of a potential Russia-Ukraine peace deal. Brent crude futures settled down 56 cents, or 0.92%, to $60.56 a barrel, and U.S. West Texas Intermediate crude settled at $56.82 a barrel, down 62 cents, or 1.08%. Sign up here. Both contracts slid more than 4% last week, weighed down by expectations of a global oil surplus in 2026. Venezuela's oil exports have fallen sharply since the U.S. seized a tanker last week and imposed fresh sanctions on shipping companies and vessels doing business with the Latin American oil producer, according to shipping data, documents and maritime sources. The market is closely monitoring developments and their impact on oil supply, with Reuters reporting the U.S. plans to intercept more ships carrying oil from Venezuela following the tanker seizure, intensifying pressure on Venezuelan President Nicolas Maduro. Venezuela's state-run oil company PDVSA suffered a cyberattack , opens new tab, it said on Monday, and tankers due to pick up crude there were making u-turns as tensions esclated. "The grind lower in oil prices and the achieving of month-to-date lows across the major futures complex last week might have seen more negative pricing if it were not for the upping of the ante by the United States with regard to Venezuela," said John Evans, an analyst with PVM. Still, ample oil supplies already en route to China - Venezuela's biggest oil buyer - as well as plentiful global supplies and weaker demand are buffering some of the impact of supply disruptions tied to the tanker seizure. MARKET REMAINS FOCUSED ON GEOPOLITICS Progress in U.S. peace talks also pushed the market lower on Monday. Ukrainian President Volodymyr Zelenskiy offered to drop his country's aspiration to join the NATO military alliance as he held five hours of talks with U.S. envoys in Berlin on Sunday. A second round of talks concluded on Monday. "Over the past two days, Ukrainian-U.S. negotiations have been constructive and productive, with real progress achieved," Rustem Umerov, secretary of the National Security and Defence Council, wrote on X after Monday's talks. A possible peace deal could eventually increase Russian oil supply, which is currently sanctioned by Western countries. Rising expectations of a surplus also weighed on prices, as did weaker economic data out of China. Factory output there slowed to a 15-month low in November, while retail sales grew at their weakest pace since December 2022. J.P. Morgan Commodities Research said in a note on Saturday that oil surpluses in 2025 were expected to widen further into 2026 and 2027, as global oil supply was projected to outpace demand, expanding at three times the rate of demand growth through 2026. "Risk off, with US equities markets trading lower, and weaker than expected Chinese economic data are not helping crude oil," said Giovanni Staunovo, an analyst with UBS. https://www.reuters.com/business/energy/oil-rises-fears-supply-disruption-us-venezuela-tensions-escalate-2025-12-15/

2025-12-15 03:50

U.S. employment data due on Tuesday Palladium climbs to 2-month peak, platinum at 14-year high Dec 15 (Reuters) - Spot gold pared earlier gains on Monday following progress in critical talks between U.S. officials and Ukrainian President Volodymyr Zelenskiy aimed at ending the war, while traders awaited key U.S. jobs data. Spot gold was up 0.2% at $4,309.82 an ounce by 01:55 p.m. ET (18:55 GMT), after rising more than 1% earlier in the session. U.S. gold futures settled 0.2% higher at $4,335.2 an ounce. Sign up here. Progress in Russia-Ukraine peace talks appears to be dampening safe-haven demand for gold, said senior analyst at Kitco Metals Jim Wyckoff. He added that gold is also under pressure from profit-taking and week-long liquidation, as some traders who bought futures earlier are now selling. U.S. special envoy Steve Witkoff said "a lot of progress was made in Ukraine talks," while a U.S. official told Reuters that the two sides have moved closer to narrowing differences between Russia and Ukraine. Traders now await the U.S. non-farm payrolls report and retail data, scheduled for release on Tuesday, for further cues on the Federal Reserve's policy path. Markets are currently pricing in a 78% chance of a rate cut in January 2026, according to CME FedWatch Tool. Gold, traditionally viewed as a safe-haven asset, tends to perform well during periods of geopolitical and economic uncertainty. Spot silver rose 2.6% to $63.61, after reaching a record-high of $64.65 on Friday, staying within striking distance of the unprecedented $65/oz milestone. "Silver is leading the pack when it comes to precious metals. By year-end, we'll be trading north of $65 and I could see $70 in the early part of quarter one next year," said RJO Futures senior market strategist Bob Haberkorn. Meanwhile, spot platinum added 2.5% to $1,788.55, hitting its highest level since September 2011, while palladium rose to a two-month high, adding nearly 5% to $1,560.25 per ounce. Russia's Nornickel, the world's largest palladium producer, said in a metals market review that including investment demand, the palladium market could see a deficit of 0.2 million ounces this year. https://www.reuters.com/world/india/gold-rises-softer-dollar-yields-markets-eye-us-jobs-data-silver-steadies-2025-12-15/

2025-12-15 03:02

MUMBAI, Dec 15 (Reuters) - The rupee weakened further past the 90-per-dollar mark on Monday to a record low for the third consecutive session, driven by concerns over a prolonged deadlock in U.S.-India trade negotiations and persistent portfolio outflows. The rupee fell to 90.7850, extending its year-to-date decline to about 6%, before ending the session slightly higher at 90.73, compared with 90.4150 in the previous session. Sign up here. The Reserve Bank of India likely intervened to cap the rupee's fall, traders said, while also noting that gradual depreciation of the currency is likely to persist in the absence of a trade deal with the United States. "Let's see what happens in the next few months," India's trade secretary said on Monday, referring to the ongoing negotiations. "There's a fair expectation that both countries will be able to agree to a deal to lower reciprocal tariffs," he said. India's merchandise exports to the U.S., the country's largest export market, rose over 21% year-on-year in November, data released on Monday showed. This helped narrow the country's merchandise trade deficit (INTRD=ECI) , opens new tab to a five-month low of $24.53 billion last month. The improved data provided only fleeting relief to the currency in the face of persistent corporate hedging demand and likely portfolio outflows, traders said. Foreign investors have net sold over $18 billion of local stocks over the year so far, on track to be the worst yearly outflow on record. The negatively skewed dollar flows and the drag from the trade stalemate have left the rupee unable to benefit from a broadly weaker dollar, which is on track to end the year down more than 9% against a basket of major currencies. The focus now turns to the RBI's 3-year dollar-rupee buy/sell swap auction slated for Tuesday. Bankers expect the swap to be fully subscribed but say corporate interest could be muted due to elevated hedging costs. https://www.reuters.com/world/india/rupee-hover-near-all-time-low-fragile-risk-tone-skewed-flows-2025-12-15/

2025-12-15 02:47

Equities slip as investors take a breath ahead of big week Central banks including ECB, BOJ, BOE, Riksbank and Norges Bank due to meet Investors await delayed US data including jobs and inflation Bitcoin falls over 2%, US crude futures settle down 1% NEW YORK/ LONDON, Dec 15 (Reuters) - MSCI's global equities gauge fell slightly with U.S. Treasury yields on Monday as investors were shy about taking big bets as they waited for the week's busy schedule of U.S. economic data releases including the jobs report and retail sales as well as the latest inflation reading. U.S. stocks ended Monday's session modestly lower after attempting a comeback earlier in the day following Friday's slump amid concerns about inflation and a bubble in artificial intelligence shares. Sign up here. After digesting last week's update from the Federal Reserve, investors were turning their attention to this week's crop of economic data, which was delayed by the 43-day U.S. government shutdown, including the jobs report for November and retail sales data as well as the consumer price index (CPI) inflation report. With traders already pricing in more rate cuts in 2026 compared with Fed estimates for just one, R. Burns McKinney, portfolio manager at NFJ Investment Group, said investors are hoping for a jobs report that is weak enough to support more easing. "This is the kind of market where investors are kind of hoping for softness. We're right back to where bad news is good news. You just don't want the bad news to be terribly bad. You want mildly bad news," said McKinney. New York Fed President John Williams said on Monday the U.S. central bank's interest rate cut last week leaves it in a good position to deal with what lies ahead, adding that he sees inflation moderating amid cooling in the job market. Boston Fed President Susan Collins said she supported last week's rate cut due to a changing inflation outlook but that she "would want greater clarity about the inflation picture before adjusting policy further." On Wall Street, the Dow Jones Industrial Average (.DJI) , opens new tab fell 41.49 points, or 0.09%, to 48,416.56, the S&P 500 (.SPX) , opens new tab fell 10.90 points, or 0.16%, to 6,816.51 and the Nasdaq Composite (.IXIC) , opens new tab fell 137.76 points, or 0.59%, to 23,057.41. "The two main drivers of the market all year long have been the easing interest rate cycle and AI momentum and over the past week those two are starting to come into a little bit of doubt," said Brian Mulberry, senior client portfolio manager, Zacks Investment Management. He added with the year-end drawing closer, "you have a lot of people rebalancing their portfolio, taking risk off the table going into 2026, expecting more volatility. They're probably right." MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab fell 1.35 points, or 0.13%, to 1,007.53. Earlier, the pan-European STOXX 600 (.STOXX) , opens new tab index closed up 0.74% as investors in Europe returned to risk assets. In U.S. Treasuries, yields dipped while investors waited for the last major economic releases for 2025. The yield on benchmark U.S. 10-year notes fell 1.8 basis points to 4.178%, from 4.196% late on Friday while the 30-year bond yield fell 0.8 basis points to 4.8496%. The 2-year note yield, which typically moves in step with Fed interest rate policy expectations, fell 2.3 basis points to 3.508%, from 3.531% late on Friday. CENTRAL BANK DECISIONS LOOM In currencies, the U.S. dollar fell against the yen and the euro and turned very slightly positive against the Swiss franc as traders prepared for central bank decisions and U.S. economic data. Among the policy decisions due this week, the Bank of Japan is expected to hike rates by 25 basis points to 0.75%, while the Bank of England may make an equal-sized cut to 3.75%. The European Central Bank is expected to keep interest rates on hold, alongside Sweden's Riksbank and Norway's Norges Bank. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.11% to 98.30. The euro was up 0.08% at $1.1749 while against the Japanese yen , the dollar weakened 0.39% to 155.21. Against the Swiss franc , the dollar strengthened 0.04% to 0.796. In cryptocurrencies, bitcoin fell 2.78% to $86,005.01. In energy markets, o fell as investors balanced supply disruptions linked to escalating U.S.-Venezuelan tensions with oversupply concerns and the impact of a potential Russia-Ukraine peace deal. U.S. crude settled down 1.08%, or 62 cents, at $56.82 a barrel and Brent fell to $60.56 per barrel, down 0.92%, or 56 cents on the day. In precious metals, spot gold pared earlier gains on Monday as investors waited for U.S. jobs data while some were hoping for progress in critical talks between U.S. officials and Ukrainian President Volodymyr Zelenskiy aimed at ending the war with Russia. Spot gold was up 0.02% at $4,302.84 an ounce while U.S. gold futures rose 0.09% to $4,303.90 an ounce. https://www.reuters.com/world/china/global-markets-wrapup-1-2025-12-15/

2025-12-15 01:42

MUMBAI, Dec 15 (Reuters) - The rupee's rough patch is likely to extend into the final few weeks of the year as weak flows and the lack of a U.S. trade deal bog down investor sentiment, while bonds will react to the central bank's debt purchase and foreign investors' activity. The currency hit a record low of 90.55 before closing at 90.4150 on Friday, down 0.5% on the week and set for its worst yearly fall since 2022. Sign up here. The dollar index logged its third consecutive weekly decline last week, weighed down by expectations of further policy easing by the U.S. Federal Reserve. That offered little relief to the Indian rupee, which remained under strain from portfolio outflows and sentiment dampened by the absence of a trade deal. Traders expect the rupee to hover between 89.80 and 90.80 this week and reckon that volatility could pick up as the year draws to a close and trading activity gets thinner. Trade negotiations between India and the United States remain a focal point for investors. In the absence of a breakthrough, analysts think the rupee is poised to keep drifting lower. Subdued capital flows and reduced central bank intervention have been the immediate drivers of the rupee's recent underperformance versus emerging-market peers, against the backdrop of a wider current account deficit, Goldman Sachs analysts said in a note. Among broader markets, the focus this week will be on the Bank of Japan's policy decision. Markets have almost fully priced in the chance of a rate hike to 0.75% from 0.5% at the December 18-19 meeting. In Indian bond markets, the 10-year benchmark 6.48% 2035 bond yield settled at 6.5931% on Friday, up 10 bps from the previous week, posting its biggest weekly rise in nearly four months. Bonds fell amid heavy selling pressure from foreign players as well as a sharp spike in overnight index swap rates due to offshore paying interest. Traders expect the yield to drift between 6.55% and 6.65%, with major focus on the central bank's upcoming bond purchase. Last week, the RBI bought 500 billion rupees of bonds at higher-than-expected cutoff prices, which led to some relief in a market that was otherwise dominated by sellers. Traders will continue to remain focused on activity from foreign portfolio investors closer to the year-end, to watch if they continue their selling streak. Foreign investors net sold bonds worth over 54 billion rupees, while foreign banks have net sold bonds worth 30 billion rupees in the first two weeks of December. Wontae Kim, portfolio manager at Western Asset Management, said he is broadly neutral on the rupee but "overweight" government bond duration, and this has not changed meaningfully in the last year. "In Singapore our mandate is pan Asia, and in the Asian context, Indian yields are generally higher and thus have higher hedging costs than regional peers." KEY EVENTS: India ** November WPI inflation - December 15, Monday (12:00 p.m. IST)(Reuters poll 0.60%) ** December HSBC manufacturing, services and composite Flash PMI - December 16, Tuesday (10:30 a.m. IST) ** Minutes of Reserve Bank of India's monetary policy meeting - December 19, Friday (05:00 p.m. IST) U.S. ** November non-farm payrolls and unemployment rate - December 16, Tuesday (7:00 p.m. IST) ** October retail sales - December 16, Tuesday (7:00 p.m. IST) ** December S&P Global manufacturing, services and composite Flash PMI - December 16, Tuesday (8:15 p.m. IST) ** November consumer price inflation - December 18, Thursday (7:00 p.m. IST) (Reuters poll: 3%) ** Initial weekly jobless claims for week to December 13 - December 18, Thursday (7:30 p.m. IST) ** December Philly Fed Business index - December 18, Thursday (7:30 p.m. IST) ** November existing home sales - December 19, Friday (8:30 p.m. IST) ** December U-Mich sentiment - December 19, Friday (8:30 p.m. IST) https://www.reuters.com/world/india/indian-rupee-set-keep-drifting-lower-bonds-track-debt-buy-fpi-activity-2025-12-15/