2024-01-08 06:25

NEW YORK, Jan 8 (Reuters) - The dollar dropped against the euro and yen on Monday as investors continued to digest last week's mixed U.S. economic data and looked ahead to a key inflation reading for fresh clues on when the Federal Reserve is likely to begin cutting interest rates. The greenback initially bounced on Friday after data showed that U.S. employers hired 216,000 workers in December, above economists' expectations in a Reuters poll, while average hourly earnings rose 0.4%, which was also above expectations. The U.S. currency then dropped, however, as investors focused on some underlying factors in the jobs report that showed less strength. It declined further after a separate report showed the U.S. services sector slowed considerably in December, with a measure of employment dropping to the lowest level in nearly 3-1/2 years. "Friday's nonfarm payroll data was kind of a mixed bag. The headline number was definitely quite high and good, but there were a lot of subsets to that data point that showed some larger weakness in the labor market as well," said Helen Given, FX trader at Monex USA in Washington. "There are definitely cracks slowing down the pace of labor hiring in the U.S. and the labor market is definitely loosening," she added. The release on Thursday of the consumer price inflation report for December will be the main piece of economic data this week. It is expected to show headline inflation rose 0.2% in the month and by 3.2% on an annual basis. (USCPI=ECI), (USCPNY=ECI) A New York Fed report on Monday showed that U.S. consumers' projection of inflation over the short run fell to the lowest level in nearly three years in December. A drop in inflation closer to the Fed's 2% annual target would make it more likely that the U.S. central bank will cut rates in the coming months. Fed funds futures traders are pricing in rate cuts beginning in March, though the odds of a move that soon have fallen. Traders now see a 64% chance of a rate reduction in March, down from 89% a week ago, according to CME Group's FedWatch Tool. Some analysts see the Fed as most likely to make its first cut in order to avoid the gap between the federal funds rate and inflation widening too far, as such a scenario would tighten economic conditions more than policymakers intend. Atlanta Fed President Raphael Bostic said on Monday that with inflation still above the central bank's target, his bias is for monetary policy to remain tight even though overall risks in the economy have become balanced between those posed by rising prices and those posed by slower employment growth. RATE-CUT EXPECTATIONS The dollar index was last down 0.23% at 102.21, after gaining 1% last week, the most in six months. The index hit a five-month low of 100.61 on Dec. 28. But with other major central banks including the European Central Bank and Bank of England also expected to cut rates this year, some analysts see significant further weakness in the U.S. currency as unlikely this year. The euro rose 0.19% to $1.09595. The greenback fell 0.35% to 144.10 Japanese yen . The Bank of Japan (BOJ) is expected to be an outlier this year by lifting rates out of negative territory, though interest rates in the country are likely to remain below those of its global peers. The timing of any hike may also be pushed back after Japan last week suffered a 7.6 magnitude earthquake in the western Noto peninsula. "The earthquake aftermath can push back speculation of a BOJ policy tweak later this month," John Briggs, global head of economics and markets strategy at NatWest Markets, noted in a report on Monday. In cryptocurrencies, bitcoin jumped 7.1% to$47,065, the highest level since April 2022. The U.S. Securities and Exchange Commission is due to decide whether to approve bitcoin exchange-traded funds. https://www.reuters.com/markets/currencies/dollar-holds-ground-us-inflation-data-looms-2024-01-08/

2024-01-08 06:23

A look at the day ahead in European and global markets from Wayne Cole. It's been a typically cautious start to the week in Asia, made all the more muted by a holiday in Japan, with Chinese stocks again dragging on regional markets. A drop in Chinese 10-year bond yields to four-year lows says a lot about how investors rate the economy and the need for more stimulus. European and U.S. stock futures were also in the red, although losses were minor as yet. Geopolitics has hardly helped, as Israeli strikes against Hezbollah in Lebanon led Washington to warn of a wider conflict in the Middle East. Attacks on shipping in the Red Sea forced Maersk to divert all container vessels around Africa's Cape of Good Hope, which could lead to higher shipping costs that slow the process of global disinflation. On the other hand, oil was easing again after Saudi Arabia slashed prices for Asia to 27-month lows, offsetting the risk of supply disruptions in the Red Sea. U.S. crude slipped 1%, undoing some of last week's 3% bounce. Inflation will be front and centre this week with CPIs out from the United States and China, as well as Tokyo - which is so large it counts as a proxy for all of Japan these days. The core Tokyo CPI on Tuesday is seen easing to 2.1% and thus closer to the Bank of Japan's 2% target, making it easier for the central bank to maintain its ultra-easy policy at its Jan. 23 meeting. China's CPI, due on Friday, is expected to have fallen at a slightly slower pace in December than in the previous month, although recent PMIs point to barely any pricing power for manufacturers. For markets, the main event will be Thursday's U.S. CPI, with investors counting on the core rising by a tame 0.2% month-on-month and dragging the annual pace down to 3.8%, a level not seen since mid-2021. The risk of a surprise is always great with these numbers as rounding means a difference of 0.01 percentage point can result in big market swings. Goldman, for instance, is forecasting 0.27% and TD Securities 0.14%. The former leads to a bitterly disappointing 0.3% headline, and the latter a warmly welcomed 0.1%. Whatever the result, it will likely again shift wagers on where the Federal Reserve is heading. Futures have already pared back pricing for a March rate cut to 64%, from nearly 100% late last year. The market still implies a hefty 134 basis points of cuts for 2024, well above the Fed's own dot plots for 75 bp. Equities also face the start of Q4 earnings season with robust profits needed to support valuations. Major banks including JPMorgan Chase (JPM.N) and Citigroup (C.N) kick start the reporting rush on Friday, with consensus seeing S&P 500 profits up 3% year-on-year. Key developments that could influence markets on Monday: - Data on German trade and industrial orders for Nov - Eurozone Nov retail trade and unemployment, Jan Sentix index - Swiss inflation for Dec - U.S. consumer inflation expectations survey - Federal Reserve Bank of Atlanta President Raphael Bostic speaks https://www.reuters.com/markets/europe/global-markets-view-europe-2024-01-08/

2024-01-08 06:10

Three major U.S. stock indexes end higher U.S. crude oil falls 4% U.S. consumer price data, U.S. bank earnings due this week NEW YORK, Jan 8 (Reuters) - Global stock indexes rose on Monday with gains in U.S. tech-related shares driving a more than a 2% jump in the Nasdaq, while U.S. oil prices dropped 4% as price cuts by top exporter Saudi Arabia overshadowed Middle East tensions. Shares of Boeing (BA.N) fell 8% and limited gains in the Dow Jones industrial average. The U.S. Federal Aviation Administration ordered the temporary grounding of some Boeing 737 MAX 9 jets fitted with a panel that blew off an Alaska Air Group (ALK.N) jet in midair on Friday. The U.S. dollar and Treasury yields eased as investors awaited this week's U.S. inflation data and weighed when the U.S. central bank might start cutting interest rates. A New York Federal Reserve report said consumers expect lower inflation as well as weaker income and spending over the next several years. U.S. consumer price data for December, due Thursday, is expected to show headline inflation rose 0.2% in the month, for a 3.2% annual gain. (USCPI=ECI), (USCPNY=ECI) In cryptocurrencies, bitcoin jumped 7.1% to$47,065, the highest level since April 2022. The U.S. Securities and Exchange Commission is due to decide whether to approve bitcoin exchange-traded funds. Stock investors are looking ahead to quarterly results from companies. Major banks including JPMorgan Chase (JPM.N) get the next U.S. reporting period under way with reports due Friday. The S&P 500 technology index (.SPLRCT) rose 2.8% on the day. "We do think the gains (in megacaps) will be sustainable after last year's outperformance," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. The S&P 500's 24% rally in 2023 has increased valuations, so much is riding on the upcoming earnings season. The Dow Jones Industrial Average (.DJI) rose 216.90 points, or 0.58%, to 37,683.01, the (.SPX) gained 66.30 points, or 1.41%, at 4,763.54 and the (.IXIC) climbed 319.70 points, or 2.20%, to 14,843.77. The MSCI world equity index (.MIWD00000PUS), which tracks shares in 49 nations, gained 0.89%, while European stocks (.STOXX) ended up 0.4%. In energy, U.S. crude fell $3.04, or 4.1%, to settle at $70.77 a barrel, while Brent crude fell $2.64, or 3.4% to settle at $76.12. Saudi Arabia on Sunday cut the February official selling price (OSP) of its flagship Arab Light crude to Asia to the lowest level in 27 months. Meanwhile, geopolitical tensions were also on the radar as disruptions in the Red Sea raised shipping costs in Europe, while the Israeli conflict with Hamas threatened to spread to Lebanon. In afternoon trading, the benchmark 10-year Treasury yield was down three basis points (bps) at 4.011% . The dollar dropped 0.3% against the yen to 144.21 , while the U.S. dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was down 0.2% at 102.28. Fed funds futures traders are pricing in rate cuts beginning in March, though the odds of a move that soon have fallen. Friday's data gave a mixed picture: a Labor Department report showed U.S. employers hired more workers than expected in December, while a survey from the Institute for Supply Management (ISM) showed activity in the services sector fell in December. In the precious metals market, gold prices fell to a three-week low. https://www.reuters.com/markets/global-markets-wrapup-1-2024-01-08/

2024-01-08 04:48

MUMBAI, Jan 8 (Reuters) - The Indian rupee rose to its strongest level in three weeks on Monday, aided by broad-based offers to sell dollars after mixed U.S. economic data did little to aid the greenback. The rupee was at 83.06 against the U.S. dollar as of 10:08 a.m. IST, higher by 0.1% compared with its close at 83.15 in the previous session. The rupee rose to an intra-day high of 83.0550 in early trading. The dollar index was little changed at 102.49 but had risen above the 103 handle on Friday after data showed that the U.S. economy created more jobs than expected in December. The U.S. economy added 216,000 new jobs in December, well above the 170,000 forecasted by economists polled by Reuters. However, the dollar shed its gains after the ISM services purchasing managers' index showed U.S. services sector slowed considerably in December. The rupee's gains Monday were aided by broad-based offers to sell dollars, a foreign exchange trader at a state-run bank said. A break of the rupee's "strong resistance" at 83 could create room more appreciation, the trader added. Meanwhile, Brent crude oil futures fell by over 1% to $77.93 per barrel on the back of sharp price cuts by Saudi Arabia and a rise in OPEC output. A continuation of dollar inflows and robust domestic economic data should support further strengthening of the rupee, Amit Pabari, managing director at FX advisory firm CR Forex said. After the mixed U.S. economic data only marginally moved the needle on Federal Reserve rate cut expectations, the focus this week will be on U.S. consumer inflation data due on Thursday. Investors are currently pricing in a nearly 64% chance that the Fed will cut rates in March, down from 68% as of Jan. 5, according to CME Group's FedWatch tool. https://www.reuters.com/markets/currencies/rupee-rises-three-week-high-traders-eye-strong-resistance-near-83-2024-01-08/

2024-01-08 04:35

Jan 8 (Reuters) - India's fuel consumption rose to a seven-month high in December to about 20.054 million metric tons, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed. Total consumption, a proxy for oil demand, in December rose by 6.2% from 18.89 million tons in November, data showed. It was up around 2.6% compared with the same period a year earlier. Sales of diesel, mainly used by trucks and commercially-run passenger vehicles, rose by 0.9% month-on-month to 7.60 million tons. Sales of gasoline in December slipped 4.5% from the previous month to 2.99 million tons. Sales of sports utility vehicles rose in December, while small car sales fell despite high discounts, data from Indian automakers showed last week. Sales of bitumen, used for making roads, rose by 12.9% from November, while fuel oil use increased by 9.6% in December. Cooking gas, or liquefied petroleum gas, sales rose by 5.6% to 2.63 million tons, while naphtha sales jumped by 27.9% to about 1.33 million tons, the data showed. DOMESTIC SALES (in million tons) https://www.reuters.com/world/india/indias-fuel-demand-hits-seven-month-high-december-2024-01-08/

2024-01-08 04:26

LAUNCESTON, Australia, Jan 8 (Reuters) - Asia's imports of seaborne thermal coal rose to a record high in December as top buyer China sucked up cargoes amid peak winter demand. But the robust demand did little to move prices as Indonesia and Australia, the two largest shippers of the fuel used mainly to generate electricity, saw strong gains in exports. Asia's imports of seaborne thermal coal reached 83.69 million metric tons in December, up from 78.87 million in November and the highest in records compiled by commodity analysts Kpler going back to January 2017. The strength was led by China, with seaborne thermal coal imports of 32.08 million tons, another record high according to Kpler data, and up from 29.57 million in November. China's appetite for imported thermal coal soared in 2023 as coal-fired power generation rose amid lower hydropower output and rising electricity demand as the economy posted a modest recovery from the weakness caused by Beijing's previous strict zero-COVID policy. It's also worth noting that China's domestic coal production has also been rising, with November output hitting a record high on a daily basis of 13.8 million tons, besting the previous peak of 13.5 million from March last year. In the first 11 months of last year China, the world's biggest coal producer, consumer and importer, saw production rise 2.9% to 4.24 billion tons. Despite the rising domestic output, imports have remained competitive because of lower prices for the main grades of Indonesian and Australian coal that form the bulk of China's imports. Indonesian coal with an energy content of 4,200 kilocalories per kilogram (kcal/kg) , as assessed by commodity price reporting agency Argus, dropped to $57.82 a metric ton in the week to Jan. 7, a two-month low and 36% below the level at the start of 2023. Australian coal with an energy content of 5,500 kcal/kg also dropped last week, falling to $93.23 a ton, a five-week low and 30.1% weaker than in the same week in 2023. Indonesia's exports of thermal coal hit 48.05 million tons in December, the most since March last year, with China taking the lion's share at 20.99 million, also the most since March. INDIA MODERATES One of the reasons why the strong demand for Indonesian thermal coal isn't showing up in higher prices, is that India, the second-biggest coal importer, has been trimming purchases. India imported 15.53 million tons of seaborne thermal coal in December, down from 17.65 million in November and the lowest since September. It's also worth noting that India has been diversifying its coal suppliers somewhat, taking higher volumes from South Africa, with imports from the swing supplier to both the Atlantic and Indian basins rising to 2.78 million tons in December from 2.67 million in November. In December, South Africa's share of India's imports was 17.9%, while in July last year it was 9.6%. FAR EAST DEMAND If softer demand from India is helping to keep a lid on prices for lower energy coal grades, weakness in the price of the premium fuel is down to muted demand in the main buyers of this type, Japan and South Korea, Asia's third- and fourth-biggest importers respectively. Japan's imports of seaborne thermal coal did rise in December, to 10.64 million tons from 8.79 million in November. However, the December volume was still more than 1 million tons adrift of the 11.87 million imported in the same month in 2022. South Korea landed 7.30 million tons in December, up from 6.10 million in November but below the 7.55 million from December last year. Japan and South Korea mainly buy coal priced against Australian 6,000 kcal/kg fuel, and this grade ended at $131.99 a ton on Jan. 5, according to data from trading platform globalCOAL. The price has dropped for three consecutive weeks, having recently peaked at $157.01 a ton in the seven days to Dec. 15. The peak so far in the current northern winter is also substantially below the peaks around $415 a ton from the winter of 2022-23, when prices were still elevated amid concerns that the loss of Russian coal and pipeline natural gas in the wake of Moscow's invasion of Ukraine would cause an energy crisis in Europe. The overall picture for the seaborne thermal coal market in Asia is that supply has risen by enough to offset strong demand by China. The outlook for the first quarter of 2024 will largely depend on whether China continues to favour imports, or whether domestic output takes a greater share of power generation and non-fossil fuel alternatives, such as hydro, wind and solar also pick up. The opinions expressed here are those of the author, a columnist for Reuters. https://www.reuters.com/markets/commodities/asia-thermal-coal-imports-hit-record-supply-keeps-prices-muted-russell-2024-01-08/