2024-04-04 04:49

NEW YORK, April 4 (Reuters) - Words of caution from Federal Reserve officials on Thursday about the need to keep interest-rate cuts in check until inflation clearly slows snuffed a Wall Street stock rally and sparked a rise in bond prices. Global equity markets had risen after data showing an increase in new claims for U.S. unemployment benefits kept intact the outlook for the Fed to soon cut rates, ahead of a key jobs report due out on Friday. But several policymakers soon doused expectations that rate cuts were likely on the horizon as they endorsed a careful approach to the start of monetary easing. The U.S. central bank has "time for the clouds to clear" on inflation before starting to cut rates, Richmond Fed President Thomas Barkin said. If inflation continues to stall, no cuts may be required at all by year end, said Minneapolis Fed President Neel Kashkari. And Chicago Fed President Austan Goolsbee called persistent, outsized price increases in housing services the biggest impediment to returning inflation to the Fed's 2% target. Since the rally that began in October, the market has enough reasons to feel a little exhausted and vulnerable to sellers, said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey. "There were a lot of buyers anticipating the beginning of an interest-rate-decline cycle. At first they were willing to accept that maybe it would come on a delayed basis, but it would come," he said. "Now there's just a little bit of doubt as to whether it is going to come this year." Early in the session gold prices rallied to an all-time high, with spot gold hitting $2,304.09 an ounce, and the benchmark S&P 500 was near a fresh all-time high. But Wall Street closed sharply lower, with the Dow Jones Industrial Average (.DJI) , opens new tab tumbling 1.35%, the S&P 500 (.SPX) , opens new tab 1.23%, and the Nasdaq Composite (.IXIC) , opens new tab 1.4%. MSCI's gauge of global equity performance (.MIWD00000PUS) , opens new tab fell 0.61%. Stocks rallied after data showed the number of Americans filing new claims for unemployment benefits rose to a two-month high last week, suggesting wage pressures would soften and help slow inflation. While layoffs increased to a 14-month high in March, job cuts were little changed compared with the same period last year, which pointed to a still-strong labor market. "We're seeing that people are getting jobs, and even though you may have had a bit more people who got laid off, we got a lot more of them getting jobs," said Steven Ricchiuto, U.S. chief economist at Mizuho Securities in New York. "This number is showing you the tenor of the labor market remains very firm. More importantly, continuing claims is well below the 2 million level" considered normal, he said. The belief that a rate-cutting cycle will start within the next quarter is really powerful for most investors, said Marvin Loh, senior macro strategist at State Street in Boston. Bonds rallied as their yields, which move inversely to prices, fell late in the session. Bond investors were balancing their positions before Friday's jobs report for March. Nonfarm payrolls likely increased by 200,000 jobs, down from a 275,000 rise in February, a Reuters survey shows. The two-year Treasury yield, which reflects interest rate expectations, fell 3.4 basis points to 4.645%, while the yield on the benchmark 10-year note fell 4.8 basis points at 4.307%. The dollar hit a two-week low on the view that the Fed would cut rates by July, if not June, while the battered yen held steady under the key 152 level. The dollar index , a measure of the U.S. currency versus six peers, fell 0.01%, while the risk of Japanese intervention kept the dollar down 0.02% at 151.27 yen . Oil prices extended gains, settling up more than $1, as geopolitical tensions and output cuts outweighed caution about Fed rate cuts. Brent futures for June settled up $1.30, or 1.5%, to $90.65 a barrel while U.S. West Texas Intermediate futures for May settled up $1.16, or 1.4% to $86.59 a barrel. Gold prices took a breather after hitting an all-time high earlier in the session. U.S. gold futures settled 0.2% lower at $2,308.50 an ounce.. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-04-04/

2024-04-04 04:48

NEW YORK, April 4 (Reuters) - The dollar hit a two-week low on Thursday as economic data supported expectations for quick interest rate cuts in the U.S., and fell against the battered yen. An unexpected slowdown in U.S. services growth, supporting the idea of bringing interest rates down, had pushed the dollar lower on Wednesday. Still, the U.S. currency was able to pare some earlier losses after Minneapolis Federal Reserve President Neel Kashkari said rate cuts might not be required this year if inflation continues to stall. Richmond Fed President Thomas Barkin said on Thursday that inflation data at the start of this year "has been a little less encouraging," and raises the question of "whether we are seeing a real shift in the economic outlook, or merely a bump along the way." The dollar index , which measures the U.S. currency against six rivals, was down 0.077% at 104.14 after hitting 103.910, its lowest level since March 21. The major focus for the rest of the week will be on the release of the monthly U.S. employment report on Friday. Economists polled by Reuters are forecasting 200,000 jobs were added in March. "Powell seems to still be targeting a June rate cut and that's why I think that this labor report, the reaction could be amplified, particularly if we see non-farm payrolls coming in on the lower side of expectations or below expectations," said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi US. The yen was close to its 34-year low versus the greenback as the Bank of Japan's historic policy shift to end eight years of negative interest rates has failed so far to bolster the currency. BOJ Governor Kazuo Ueda said the central bank could "respond with monetary policy" if exchange-rate moves affect the country's inflation and wages in ways that are hard to ignore, the Asahi newspaper reported late Thursday. The rates picture, with U.S. 10-year yields at more than 4% and Japan's still close to zero, is keeping big Japanese investors' cash abroad, where it can earn better returns, depriving the yen of support from repatriation flows. The yen was up 0.27% versus the dollar at 151.28, after hitting 151.975 last week. Japanese authorities will likely intervene in the currency market if the yen breaks out of a range it has been in for years and weakens well beyond 152 per dollar, former top Japanese currency official Tatsuo Yamazaki said on Thursday. "I'm not sure they'll draw the line right at 152, but I think that somewhere near 152 they have to jump in there," said Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered Bank in New York. The Swiss franc dropped around 0.6% against the dollar after data showed the Swiss consumer price index rose by a lower-than-expected 1.0% from a year ago in March. The Swiss franc fell on Thursday to 0.9848 against the euro, its lowest level since early May 2023. A day earlier, it dropped to 0.9095 against the dollar, its lowest level since early November 2023. Analysts said the further drop in Swiss inflation in March reinforced the view that the Swiss National Bank would cut rates by an additional 50 basis points this year. The euro was up 0.12% on Thursday and back to the middle of a range it has kept for a year at $1.085. European inflation came in softer than expected on Wednesday, reinforcing expectations for a European rate cut in June. Traders gave a leg up to the Australian and New Zealand dollars in response, sending the Aussie above its 200-day moving average and to a two-week high of $0.66180. The New Zealand dollar has regained a foothold above $0.60 and was last trading 0.33% higher at $0.603. Traders expect New Zealand rate cuts to begin in August but Australian rates to be on hold until November. Chinese markets were closed for a holiday. In cryptocurrencies, bitcoin was last up 3.3% at $67,918, while ether was last 0.6% higher at $3,324. Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. https://www.reuters.com/markets/currencies/dollar-takes-breather-ahead-us-jobs-data-2024-04-04/

2024-04-04 04:37

April 4 (Reuters) - A look at the day ahead in European and global markets from Wayne Cole. A 1.6% bounce in the Nikkei has led Asian shares higher so far today as the yen skids on pretty much all the major crosses. Since the threat of intervention has capped the dollar at 152.00 yen, investors feel safe in selling the yen against everything else. Even the Canadian dollar reached a 16-year peak versus the Japanese currency, helped in part by the recent sustained rise in oil prices. It's not just oil. Copper has reached a 13-month peak and gold another record above $2,300 an ounce . Copper may have been boosted by China's moves to promote auto trade-ins and scrap government-set minimum down payments for consumers financing new car purchases. Autos, particularly EVs, are big users of copper. Gold seems to be benefiting from buying by momentum funds and commodity trading advisors (CTAs) since its clean break of $2,072 resistance. There's also a sense that investors are concerned at the mountain of debt global governments are issuing, seeking to put money in assets that are limited in quantity. That may be one reason for the demand revival in cryptocurrencies like bitcoin, which, at least theoretically, are limited in supply. The ascent of oil, if sustained, could prove a headache for central banks as it adds to inflation pressure while acting as a tax on consumers. OPEC+ ministers showed no inclination to increase output at their meeting on Wednesday, keeping voluntary cuts of 2.2 million barrels per day in place until at least the end of June. That would not be welcome to the Federal Reserve given the rise in prices paid reflected in the ISM manufacturing survey this week, although that was thankfully balanced by a drop in prices in the services survey. Fed Chair Jerome Powell chose not to rock the boat and reaffirmed rate cuts are coming if the data pans out as they expect. No less than seven Fed officials are speaking on Thursday and will no doubt have their own views on rates. Fed fund futures still favour a June start to cuts at 62%, though that's down from 74% a month ago. The bigger shift has been in how fast and far rates are expected to fall, with roughly 73 basis points priced in for this year compared to more than 140 basis points in January. Investors have also taken 100 basis points of easing out of 2025, so that rates are now seen ending next year around 4% rather than 3%. The recent rise in longer-term yields suggests Treasury investors clearly fear the neutral level for U.S. rates is no longer 2.5%, but 3% or higher. Event risk ahead includes U.S. Treasury Secretary Janet Yellen's visit to China, although it's a holiday there today and Friday and news has been scant. Yellen during her nearly weeklong trip to Guangzhou and Beijing intends to raise U.S. concerns about China's large and growing excess manufacturing capacity, particularly in new energy goods. European final PMIs for March are not expected to diverge much from the advance readings, and producer prices are expected to show another chunky fall in February that would reinforce expectations for a June start to ECB easing. Analysts look for a small rise in U.S. weekly jobless claims, though they can surprise from time to time. Note ADP jobs numbers were strong enough for Goldman Sachs to raise its payrolls forecast by 25,000 to 240,000, so Friday is shaping up to be a testing session. Key developments that could influence markets on Thursday: - Final March PMIs for Europe, euro zone Feb PPI - ECB releases minutes of its March meeting - Riksbank publishes minutes from last policy meeting - U.S. weekly jobless claims, trade balance for Feb - Fed speakers include Patrick Harker; Thomas Barkin; Austan Goolsbee; Neel Kashkari; Loretta Mester; Alberto Musalem and Adriana Kugler Get a look at the day ahead in European and global markets with the Morning Bid Europe newsletter. Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-04-04/

2024-04-04 03:25

BENGALURU, April 4 (Reuters) - The Indian rupee will strengthen only marginally against the U.S. dollar over the coming three months as the Reserve Bank of India (RBI) uses its foreign exchange reserves to manage volatility and keep the currency relatively strong, a Reuters poll found. While most emerging market currencies have weakened against the dollar so far this year, the rupee has traded in a tight range of 82.64/$-83.45/$ and is down less than 0.5%. That stability has been largely driven by the RBI's continued intervention in FX markets. Its foreign exchange reserves (INFXR=ECI) , opens new tab recently hit a record high of $642.63 billion. "The RBI's two-way FX intervention to keep the rupee stable has capped volatility compared to USD/Asia. The RBI has been building up its foreign currency reserves, whenever possible, which are now at record high," noted Dhiraj Nim, a forex strategist at ANZ. "It believes them, not the exchange rate, to be its first line of defense against external shocks. We expect this trend to continue and the rupee to gain modestly over 2024." The rupee was expected to gain slightly to 83.11/$ in a month and 82.90/$ in three months from Wednesday's rate of 83.43/$, the March 28-April 3 Reuters poll of 46 foreign exchange analysts showed. That outlook has remained largely unchanged for several months and has been unaffected by the greenback's relative strength so far this year. The RBI is expected to keep the repo rate unchanged this week and then cut it in the third quarter. The U.S. Federal Reserve is widely predicted to start reducing U.S. borrowing costs in June. But the risk the Fed may not only cut rates later but also cut fewer times than currently expected is increasing. "The key risk to INR (Indian rupee) trajectory will be a further push back in the Fed's rate-cut cycle beyond June," said Aditi Gupta, an economist at Bank of Baroda. "Growth (in the U.S.) has been holding up, which may lead the Fed to delay its rate-cut cycle, which will make the case for a stronger dollar in the near term." Still, the rupee was forecast to gain nearly 1.1% to 82.50/$ in six months and around 1.7% to 82.00/$ in a year. (For other stories from the April Reuters foreign exchange poll:) Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. https://www.reuters.com/markets/currencies/indian-rupee-rise-modestly-against-dollar-next-three-months-2024-04-04/

2024-04-04 03:19

MUMBAI, April 4 (Reuters) - The Indian rupee may drop to a record low at the open on Thursday despite Federal Reserve Chair Jerome Powell's indication that there was room for rate cuts this year, which triggered a drop in the dollar index. Non-deliverable forwards indicate the rupee will open at around 83.46-83.48 to the U.S. dollar compared with 83.4350 in the previous session and weaker than the 83.45 record low hit last Wednesday. The dollar index dropped through the European and U.S. trading sessions on Wednesday. For the rupee right now "it is not about what the dollar is index is up to", a forex trader at a bank said. "All through yesterday, we saw persistent dollar demand and when you are this close to making a new lifetime high (on USD/INR), there is bound to be a lot of nervousness." The dollar demand on Wednesday was attributed by most traders to oil companies and other importers. One trader said that it was possible that position squaring in dollar/rupee currency futures was impacting spot. Meanwhile, Powell on Wednesday said that "if the economy evolves broadly" along expected lines, he and his Fed colleagues largely agree that a lower interest rates will be appropriate "at some point this year." The dollar, which was already under pressure from weaker-than-expected U.S. services data, dropped further following Powell's comments. "The Fed still seems likely to make its first rate cut in June," Angeline Ong, an analyst at broker IG, said. Fed Funds futures are currently pricing in a near 60% probability of a rate cut in June and markets see a total of three cuts this year. Atlanta Fed President Raphael Bostic view was at odds with the market pricing. He reiterated the Fed should only reduce borrowing costs once over the course of 2024. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.55; onshore one-month forward premium at 7.25 paise ** Dollar index down at 104.18 ** Brent crude futures up 0.2% at $89.5 per barrel ** Ten-year U.S. note yield at 4.36% ** As per NSDL data, foreign investors sold a net $53.7mln worth of Indian shares on Apr. 2 ** NSDL data shows foreign investors bought a net $119.3mln worth of Indian bonds on Apr. 2 Keep up with the latest medical breakthroughs and healthcare trends with the Reuters Health Rounds newsletter. Sign up here. https://www.reuters.com/markets/currencies/rupee-may-slide-record-low-despite-dollar-fall-post-powells-comments-2024-04-04/

2024-04-04 01:02

HUALIEN, Taiwan, April 4 (Reuters) - A helicopter plucked to safety on Thursday six people stranded in a mining area after Taiwan's worst earthquake in 25 years, and rescue workers reached 400 people cut off in a hotel in a mountainous national park by air, and confirmed all were safe. Hundreds of aftershocks struck Taiwan's eastern region, driving scores to seek shelter outdoors, as the death toll from Wednesday's 7.2-magnitude quake rose to 10, with the tally of injured at 1,099, authorities said. A helicopter ferried to safety six miners trapped on a cliff in a dramatic rescue after the quake cut off the roads into Hualien's soaring mountains, in footage shown by the department. The department said four foreigners remained unaccounted for - one Canadian, one Indian and two Australians. Rescue workers located most of the roughly 50 hotel workers marooned on a highway as they headed to a resort in the Taroko Gorge national park. They also reached the same hotel in the gorge, cut-off by the quake, by helicopter and established all 400 people there were safe. The fire department said work would continue in the morning to re-open the road. The discovery of a dead body on a hiking trail near the entrance to the gorge took the total deaths to ten. The agriculture ministry urged people to keep away from the mountains because of the risk of falling rocks and the formation of "barrier lakes" as water pools behind unstable debris. Thursday was the start of a long-weekend holiday for the tomb-sweeping festival, when families traditionally return home to attend to ancestral graves, though others will also visit tourist attractions. People in largely rural and sparsely populated Hualien county were readying to go to work and school when the earthquake struck offshore on Wednesday. Buildings also shuddered violently in Taipei, but the capital suffered minimal damage and disruption. TERRIFYING AFTERSHOCKS All those trapped in buildings in the worst-hit city of Hualien have been rescued, but many residents unnerved by more than 300 aftershocks spent the night outdoors. "The aftershocks were terrifying," said Yu, a 52-year-old woman, who gave only her family name. "It's non-stop. I do not dare to sleep in the house." Too scared to return to her apartment, which she described as being in a "mess", she slept in a tent on a sports ground being used for temporary shelter. Dozens of residents queued outside one badly damaged 10-storey building, waiting to go in and retrieve belongings. Clad in helmets and accompanied by government personnel, each was given 10 minutes to collect valuables in huge garbage bags, though some saved time by throwing items out of windows into the street below. "This building is no longer liveable," said Tian Liang-si, who lived on the fifth floor, as she scrambled to gather her laptop, family photographs and other crucial items. She recalled the moment the quake struck, sending the building lurching and furniture sliding, while she rushed to save the four puppies she keeps as pets. "I'm a Hualien native," she told Reuters. "I'm not supposed to fear earthquakes. But this is an earthquake that frightened us." The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. https://www.reuters.com/world/asia-pacific/taiwan-earthquake-injuries-climb-above-1000-hotel-workers-still-missing-2024-04-04/