2024-02-27 05:42

LONDON, Feb 27 (Reuters) - Speculators have trimmed their bullish positions in the pound for the first time in eight weeks, suggesting that they may be on the hunt for a new catalyst to give the currency a bit of fresh pep. Weekly figures from the U.S. Commodity Futures Trading Commission (CFTC) show a modest decline to around $3.652 billion, from $3.97 billion previously, the highest since August. The pound has held up better than all other major currencies against the dollar in 2024, down around 0.2% so far this year at about $1.269. And while it has had a decent rally from early February's two-month lows, overall, it has been broadly stuck in a range of around $1.251 to $1.278 since the third week in December. It is not alone in being rangebound. Volatility has collapsed across markets. But sterling volatility has hit a four-year low , reflecting the degree of investor complacency and the currency's steady performance. The Bank of England is one thing that could give the pound a nudge and while it is still expected to cut interest rates later this year, traders think it will cut by less, and far later, than they thought just three weeks ago. The assumption that the BoE will move later than the Federal Reserve and the European Central Bank has given the pound something of an edge in the past 12 months, and in mid-2023 speculators' bullish positions reached a nine-year high of $5.192 billion. However, as traders have also pushed back assumptions of Federal Reserve and European Central Bank rate cuts, the gap between the UK and other markets has only widened modestly. Futures show traders expect the BoE to deliver around 60 basis points (bps) of cuts this year, around half what they expected in early February. The Fed is expected to cut rates by around 82 bps by the end of this year, compared with an expectation for around 133 bps in cuts at the start of the month. This would leave UK and U.S. rates roughly at parity for the first time since May 2022. As for economic data, that too has done little to move the dial. Britain is in a technical recession, but growth hasn't slowed too dramatically and the most recent reading of services sector activity suggests this could well prove to be a shallow, short-lived one. Next week brings finance minister Jeremy Hunt's Spring Budget, words that will make many investors in Britain shudder after the volatility induced by then-Prime Minister Liz Truss' 'mini budget' of autumn 2022. But analysts at ING say current market conditions "could not be more different than those that prevailed at the height of the Liz Truss debacle" and, as such, the pound is unlikely to display such big price swings. For now, no news could be good news for the British currency. ING says the quieter conditions have benefited sterling as the pound's status as a higher-yielding currency is keeping it popular with carry traders - those that borrow a low-yielding currency such as the yen to invest in a higher-yielding one - a strategy that is more difficult in a volatile environment. https://www.reuters.com/markets/currencies/sterling-bulls-take-breather-now-2024-02-27/

2024-02-27 05:33

A look at the day ahead in European and global markets from Tom Westbrook Stocks around the world have travelled great distances to record peaks in recent days, but turned sideways this week while investors and central bankers alike wait on inflation data that could alter the course for interest rates. Figures on the French and German consumer mood are due later in the day, along with Eurozone money supply data and then U.S. numbers for durable goods sales, consumer confidence and home prices. Those releases will be the appetiser ahead of Thursday's main course, U.S. core prices data, but in the meantime investors are taking a breather after last week's wave of AI-fuelled buying. Japanese inflation turned somewhat sour in January, data on Tuesday showed. The 2% year-on-year rise was an upside surprise where traders had seen downside risks, and it lifted the yen slightly by keeping alive expectations for a rate rise in Japan as early as next month. The Nikkei (.N225) , opens new tab touched a new record peak, then retreated to flat. Other markets moved only modestly, save for cryptocurrencies where bitcoin and smaller rival ether rallied to two-year highs on new signs that big investors are circling. The stock price of Houston's Intuitive Machines (LUNR.O) , opens new tab went earthbound fast after the space explorer said communications with its Odysseus lander - lying on its side on the moon - would likely cease on Tuesday. The stock fell 35% on Monday, although it has more than doubled year-to-date as it brought the first U.S. spacecraft to the lunar surface following a five-decade absence. Elsewhere, Kansas City Federal Reserve Bank President Jeffrey Schmid used a debut speech to join the chorus of global policymakers emphasising that they are in no hurry to cut rates, which along with recently released U.S. economic data has started to chasten bond markets. Traders have already pushed out the likely timing of a first Federal Reserve easing from May to June. Futures imply a little more than three quarter-point cuts this year, compared with five at the start of the month. A $42 billion Treasury auction is scheduled for Tuesday, on the heels of $127 billion in two-year and five-year notes auctioned on Monday. U.S. President Joe Biden said he hopes to have a ceasefire in the Israel-Hamas conflict in Gaza start by next Monday as the warring parties appeared to close in on a deal. Sweden cleared the last hurdle to follow Finland in joining NATO. Standard Chartered (STAN.L) , opens new tab said it had suspended since last week new subscriptions by clients in China into offshore products via a quota-based channel. It cited commercial reasons. That comes amid efforts by Beijing to stem capital outflows as a weaker yuan and a slowing economy drive savings abroad. Key developments that could influence markets on Tuesday: Economics: German, French consumer sentiment, French unemployment, Eurozone M3, U.S. durable goods, U.S. S&P house prices Earnings: Abrdn, Munich Re, Puma, eBay, Lowe's, Norwegian Cruise Line Speeches: BoE's Ramsden, ECB's Thedeen https://www.reuters.com/markets/europe/global-markets-view-europe-2024-02-27/

2024-02-27 05:31

MOSCOW, Feb 27 (Reuters) - Russian Prime Minister Mikhail Mishustin has approved a ban on gasoline exports for six months starting from March 1, the RBC daily reported on Tuesday, citing two sources. The temporary export ban does not apply to the agreed volumes of supplies to the Eurasian Economic Union countries, Mongolia, Uzbekistan, Abkhazia and South Ossetia, RBC said. Deputy Prime Minister Alexander Novak earlier addressed the prime minister with a proposal to introduce the temporary ban. In a letter dated Feb. 21, Novak noted that seasonal demand for the fuel will soon pick up in the domestic market. Last September, Russia introduced a ban on fuel exports - except to Belarus, Kazakhstan, Armenia and Kyrgyzstan - in order to tackle high domestic prices and shortages. Almost all the restrictions were subsequently removed by November. https://www.reuters.com/business/energy/russia-ban-gasoline-exports-6-months-rbc-daily-reports-2024-02-27/

2024-02-27 05:09

OPEC+ to mull extending voluntary cuts till year end -sources Gaza's warring enemies cautious over truce talks Coming Up: Weekly API inventory report at 4:30 p.m./2130 GMT HOUSTON, Feb 27 (Reuters) - Oil prices rose more than $1 a barrel on Tuesday as sources said OPEC+ is considering extending voluntary oil output cuts into the second quarter to provide additional support. Brent crude futures rose $1.12, or 1.4%, to $83.65 a barrel, while U.S. West Texas Intermediate crude futures (WTI) were up $1.29, or 1.7%, at $78.87. The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, agreed in November to voluntary cuts totalling about 2.2 million barrels per day (bpd) for the first quarter this year, led by Saudi Arabia rolling over its own voluntary cut. The producer group could keep the additional cuts in place until the end of the year, two of the sources told Reuters. "We are going to see some tight supplies down the road," said Dennis Kissler, senior vice president of trading at BOK Financial. "OPEC is looking for mid-$80s, may be around $85 a barrel on Brent. If we stay below that, they will curtail production all the way to the year end," Kissler added. Also supporting prices on the supply side, Israel and Hamas, as well as Qatari mediators, all sounded notes of caution about progress towards a truce in Gaza, after U.S. President Joe Biden said he believed a ceasefire could be reached in under a week to halt the war for Ramadan. Yemen's Houthi spokesperson said the group's operations in the Red Sea would stop only when Israeli "aggression" against Gaza ends. Houthi missile and drone attacks on international shipping have driven up the cost of transporting energy products and contributed to a tighter market. In the U.S., crude inventories were expected to have risen about 2.7 million barrels last week, while distillates and gasoline stockpiles were seen falling, a Reuters poll showed. The American Petroleum Institute will release the industry group's weekly U.S. crude inventories data at 4:30 p.m. EST (2130 GMT), followed by the government's report on Wednesday morning. Meanwhile, the 3-2-1 U.S. refinery crack spread , a proxy for refining margins, rose to their highest in more than five months. The surge suggests increased profitability for refineries amidst robust consumer demand for petroleum products. Markets expect to see some improvement in Chinese oil demand as improving travel demand over the Lunar New Year holiday outweighed worries of slowing macro-economic indicators. Russian authorities announced a six-month ban on gasoline exports from March 1 to compensate for rising demand and to allow for refinery maintenance. Global crude oil markets were expected to be fairly stable this year at around $80 a barrel, Russel Hardy, CEO of oil and gas trader Vitol, said. Speaking at the Energy Institute conference, Hardy also said global oil demand was expected to peak in the early 2030s. Both oil benchmarks had settled more than 1% higher on Monday after declines of 2-3% over the previous week as markets factored in a greater likelihood that cuts to interest rates might take longer to come than previously expected. https://www.reuters.com/business/energy/crude-edges-higher-supply-concerns-shipping-disruptions-continue-2024-02-27/

2024-02-27 05:08

HONG KONG, Feb 27 (Reuters) - Standard Chartered (STAN.L) , opens new tab has suspended new investments by its clients in China into offshore products via a quota-based channel, the bank said, amid a surge in demand for overseas investments due to weakness in the local market and currency. The London-headquartered bank, in a statement to Reuters, cited "commercial reasons" as its explanation for the suspension of new investments under the qualified domestic institutional investor (QDII) programme. It did not elaborate. StanChart's move comes amid Beijing's efforts to stem capital outflows as weaker yuan and a slowing economy have driven savers to move assets offshore. The QDII programme, first launched in 2006, remains the largest outbound investment channel for Chinese investors. The scheme is capped by a quota set by the State Administration of Foreign Exchange (SAFE). The programme helps Chinese wealth and corporate clients invest in offshore funds, bonds and other structured products. In a client note issued by StanChart last week, which was reviewed by Reuters, the bank said it would not take new subscriptions into offshore-domiciled funds sold via the QDII programme with effect from last Thursday. "Standard Chartered China has suspended the subscription of relevant products for commercial reasons," the bank said in response to Reuters queries. Domestic investors' appetite for overseas assets has been growing strongly since late 2022, as China's stock market performance lagged the U.S. and other major offshore markets. China's blue-chip CSI300 index (.CSI300) , opens new tab hit five-year lows this month, and is down 18% in about a year, pummelled by an unprecedented debt crisis in the property sector and a lack of large-scale government stimulus. "Based on the data the probability is far greater that it was a commercial decision based on quota limitations rather than a stab in the dark that guidance from Beijing forced the issue," said Peter Alexander, founder and managing director of China consultancy Z-Ben Advisors. "There's been no new quota issued to StanChart since 2021," he said. "Clearly there's been a surge in demand over the past several months and with that QDII quota capacity would have been reached." CAPITAL OUTFLOWS As economic and geopolitical woes spur an exodus of investors from China, many have been redirecting money into other markets including Japan, giving the benchmark Nikkei index (.N225) , opens new tab an extra boost as it rockets to all-time highs. Beijing has unveiled a slew of market support measures since last August, which included reducing trading costs, slowing the pace of initial public offerings and prioritising the launch of equity funds. StanChart's move comes as China's yuan has faced renewed depreciation pressure in 2024, weighed down by the dollar's resurgence in light of market bets the Federal Reserve could wait longer than previously expected to begin cutting rates. The yuan has lost about 1.4% against the dollar so far this year. China unofficially suspended QDII in 2015 when gyrations in Chinese stock and currency markets prompted capital flight. The programme was revived , opens new tab three years later after Chinese equities steadied, while the yuan gained sharply against the U.S. dollar. The move by StanChart also comes as the Asia-focused bank's CEO Bill Winters last week talked up China opportunities, with wealth management seen as a main growth plank and its cross-border services giving it an edge over domestic peers. "I don't see any need for or any likelihood of material restrictions on capital flows for Chinese savers or corporations," Winters said on the bank's earnings call on Friday. "I think there have already been some increased restrictions on offshore flows," he said when asked about the impact of potential tightening measures from Beijing on its cross-border business. Since 2006, StanChart has been awarded a total QDII quota of $2.8 billion, the third largest among foreign banks only behind HSBC's (HSBA.L) , opens new tab $4.73 billion and Citigroup's (C.N) , opens new tab $3.5 billion, according to the latest data from SAFE. The regulator and the banks have not disclosed how much of the quotas have been utilised. https://www.reuters.com/business/finance/stanchart-suspends-new-investments-clients-via-chinas-outbound-channel-2024-02-27/

2024-02-27 04:48

MUMBAI, Feb 27 (Reuters) - The Indian rupee was little changed on Tuesday, tracking muted moves in Asian currencies, as markets await the release of key U.S. economic data this week that will help investors refine their expectations of Federal Reserve rate cuts. The rupee was at 82.88 as of 10:05 a.m. IST, barely changed from its close of 82.89 in the previous session. The rupee is broadly expected to keep drifting higher but its nearby resistance at 82.80 is unlikely to break soon, a foreign exchange trader at a private bank said. While the rupee has been supported by buoyant inflows, local dollar demand and likely intervention by the Reserve Bank of India over the last few trading sessions have kept a lid on gains, traders said. The dollar index was last quoted at 103.72 while most Asian currencies were rangebound. In the short term, the local unit is expected to trade within a "narrow range of 82.80 to 83.10", but a rise above the 82.80 level could open up room for further appreciation, Amit Pabari, managing director at FX advisory firm CR Forex said. Meanwhile, dollar-rupee forward premiums were unchanged on the day but traders reckon that the bias on premiums is likely to tilt lower with a focus on the upcoming March 11 maturity of a $5 billion RBI sell-buy swap. The one-year implied yield was down 1 basis point at 1.71%, its lowest level since mid-December. While forward premiums "are stagnant" currently, they are likely to move lower if the RBI takes delivery of the dollars at the time of maturity, the trader cited earlier said. Investors now await the release of U.S. durable goods orders and consumer confidence data, due later in the day. https://www.reuters.com/markets/currencies/rupee-flat-tracking-subdued-asian-peers-bias-forward-premiums-seen-lower-2024-02-27/