2024-01-05 08:10

PRAGUE/WARSAW, Jan 5 (Reuters) - The Czech crown and Polish zloty will likely lead central and eastern European currency gains in 2024 as interest rate cuts go slower than some bet while Warsaw's moves to unblock European Union funds will also cheer investors, a Reuters poll found. Poland's zloty led the region in 2023 by rising nearly 8% against the euro, with the bulk of those gains coming after a broad alliance of pro-European Union parties won a majority in an October election. That has paved the way for an improvement in relations with Brussels which had been shaken by eight years of nationalist rule. At the same time, the Polish central bank paused an interest rate cutting cycle in the final months of 2023 and analysts expect it could stay on hold for the first half of 2024. "Overall in 2024 I think the zloty will be strong," said Marcin Sulewski, CEE economist at Ipopema Securities. "This will be thanks to there being no interest rate cuts in Poland and the outlook for the inflow of EU funds." The poll forecast the zloty to rise 1.3% by the end of 2024 to 4.30 to the euro. The currency hit a similar level at the end of 2023 but has since corrected. Warsaw had seen billions in EU funds frozen due to a dispute over the rule of law. However it has already received a 5 billion euro advance payment that was not contingent on rule-of-law conditions and now expects to receive around 18.5 billion euros in 2024. For the crown , analysts in the poll forecast a 1.6% rise to 24.25 to the euro this year. The currency fell to a 1-1/2 year low beyond 24.70 to end 2023 after the Czech National Bank joined Hungary and Poland in cutting interest rates. But the bank has indicated it will be cautious in loosening policy. Jiri Polansky, an analyst at Erste Group Bank's Ceska Sporitelna unit, said while the crown will face short-term weakness, it should get a boost from slow interest rate cuts and a gradual economic recovery. "This will be reflected in an improvement in foreign trade as well as market sentiment," he said. Hungary's forint , meanwhile, should retreat in the next 12 months, with the median forecast expecting it at 385.40 to the euro, down 1.4% from Wednesday's closing price. The Hungarian central bank has been most aggressive in easing its monetary policy - while it still maintains the highest base rate in the EU - and analysts say further policy loosening will weigh on the currency. The Romanian leu is also expected to weaken about half a percent, to 5.00 to the euro in 12 months, an unchanged forecast from the previous poll in December. Romania's central bank is not rushing to cut interest rates, but Jakub Kratky of Generali Investments CEE said "persisting imbalances and growth constraints will continue to weigh on the overall macro mix, so modest (leu) depreciation remains the base case." (For other stories from the January Reuters foreign exchange poll:) https://www.reuters.com/markets/currencies/crown-zloty-lead-fx-charge-2024-forint-seen-weaker-2024-01-05/

2024-01-05 06:42

WAJIMA, Japan, Jan 5 (Reuters) - The United States said on Friday it is preparing military logistical support and aid for regions in Japan devastated by an earthquake that killed 94 people, forced about 33,000 people to leave their homes, and left over 200 people unaccounted for. "The U.S. is here to support our friend and ally in its earthquake response. Military logistical support, food, and other supplies are being readied," U.S. ambassador to Japan Rahm Emanuel posted on social media site X. Japan is in talks with the U.S. about emergency assistance and rejected offers for help from other countries including China for the time being. "We are not accepting any personnel or material aid from other countries or regions at the moment given the situation on the ground and the effort that would be required to receive them," Japan's top spokesperson Yoshimasa Hayashi said. A U.S. official who declined to be named told Reuters the two governments were coordinating on possible assistance from U.S. troops. About 54,000 U.S. forces personnel are based in Japan, the biggest U.S. military presence abroad, according to the Chicago Council on Global Affairs. U.S. armed forces were deeply involved in disaster relief efforts in the 2011 earthquake, providing over 24,000 personnel with 24 ships and 189 aircraft. They also provided earthquake aid in Kyushu island in 2016. "All of U.S. Forces Japan remain ready to support our Japanese Allies during this difficult time. We are unable to provide specifics on military support operations at this time, but we will provide updates when we have more that we can share," the U.S. Forces in Japan said in a statement. MORE THAN 100 TRAPPED The 7.6 magnitude quake struck western Japan's Noto peninsula on the afternoon of New Year's Day, flattening homes, triggering a tsunami and cutting off remote communities. As the emergency response moved from rescue to aid and recovery, Japanese Prime Minister Fumio Kishida said there were offers for help and messages of condolence from governments including Taiwan and China. The full extent of the damage remains unclear, with rescue teams struggling to reach remote areas due to severed roads and broken infrastructure. But with more than 200 people missing, the disaster is likely deadlier than the 2016 earthquake and could be the worst since a massive earthquake and tsunami struck the east coast of Japan in 2011. Shigeru Sakaguchi, the mayor of badly-hit Wajima city, said there are likely more than 100 people still trapped under collapsed buildings and rubble, according to the Mainichi newspaper. The U.S. will provide a $100,000 aid package that includes resources such as blankets, water, and medical supplies, according to a statement released by its embassy in Japan. Volunteers such as Aydin Muhammet, who is usually based in Nagoya, are also heading into areas wrecked by the tremor to give whatever aid they can provide. "You can't turn a blind eye after seeing that ... I felt like I had to go, I just had to do something," he said. TSUNAMI DAMAGE At least 120 hectares (296 acres) of land also appears to be flooded from a tsunami triggered by the earthquake, according to Japan's land ministry. "We still don't have a full picture, and it's likely that the area flooded by the tsunami could spread," an unnamed land ministry official said to the daily Asahi newspaper. A preliminary probe led by researchers at the University of Tokyo estimated that the highest point of the tsunami on the western coast of the peninsula could have reached up to 4.2 meters (14 ft) above normal sea level. The first wave of the tsunami may have reached the northern-most tip of the Noto peninsula within a minute of the initial quake, according to Tohoku University tsunami expert Fumihiko Imamura, giving residents barely any time to evacuate. Details of the tsunami had been unclear as the tide gauge stopped emitting data immediately after the initial quake, Japan's Meteorological Agency said. Japan's Coast Guard said it was searching one missing person who was washed away by tsunami in Suzu city, the first known potential casualty from the tsunami so far. Survivors still face a long road to recovery, even as businesses rush to return to business as usual. The earthquake has also cast doubt over Japan's push to restart nuclear plants that have been idled. Japan will spend 4.74 billion yen ($32.7 million) from state budget reserves to support those hit by the quake, Finance Minister Shunichi Suzuki told reporters on Friday, according to media reports. https://www.reuters.com/world/asia-pacific/japan-accept-earthquake-relief-us-only-nikkei-2024-01-05/

2024-01-05 06:33

NEW DELHI, Jan 5 (Reuters) - The Indian Navy on Friday rescued the crew of a merchant vessel after its attempted hijack in the Arabian Sea and said it had not found any pirates on board. An Indian Navy warship intercepted the Liberian-flagged MV Lila Norfolk bulk carrier less than a day after it had received a report that the vessel had been hijacked about 460 nautical miles off Somalia. About five to six armed people boarded the vessel on Thursday, according to a report received by the UK Maritime Trade Operations (UKMTO) agency, which said the ship's crew had gathered in the ship's citadel. The navy said all 21 crew on board, including 15 Indians, had been evacuated. The vessel, which was chartered by miner Anglo-American (AAL.L), left the Acu port in Rio de Janeiro, Brazil, on Dec. 6 carrying iron ore, the company said in a statement. "The entire crew is safe and the ship is on its way to its destination, scheduled to arrive on Jan. 12," it said, without detailing the volume of iron ore the ship was carrying. The vessel was destined for Khalifa bin Salman in Bahrain, according to British maritime security firm Ambrey. "The attempt of hijacking by the pirates was probably abandoned with the forceful warning by the Indian Navy," the navy said in a statement. The Indian Navy has increased its surveillance of the Arabian Sea after recent attacks in the region. The hijacking and attempted hijacking of commercial ships in the Gulf of Aden and Arabian Sea resumed in December after a six-year lull. Experts believe pirates have been encouraged by U.S.-led anti-piracy naval forces diverting their attention to the neighbouring Red Sea to thwart attacks there by Houthi rebels. Data from the Indian Navy's Information Fusion Centre - Indian Ocean Region show at least three hijackings in December. The previous such incident was reported in 2017. "The sudden revival in ship hijacking and attacks can only be attributed to the pirates' willingness to take advantage of the fact that the focus of anti-piracy maritime forces has largely shifted from the Gulf of Aden to the Red Sea," Abhijit Singh, head of the Maritime Policy Initiative at the Observer Research Foundation think tank in New Delhi, said. India is not part of the U.S.-led Red Sea task force. https://www.reuters.com/world/india-sends-warship-after-hijacking-liberian-flagged-vessel-arabian-sea-2024-01-05/

2024-01-05 06:20

U.S. economy creates 216,000 jobs in December U.S. services sector index falls in December Fed funds futures price in five rate cuts in 2024 U.S. dollar index on pace for best weekly rise since mid-July NEW YORK, Jan 5 (Reuters) - The dollar was little changed on Friday after a rally in response to mixed data that suggested the world's largest economy showed pockets of weakness but remained resilient overall. The dollar index was flat at 102.43 in afternoon trading after hitting 103.10 in wake of the stronger-than-expected U.S. jobs report. That was the highest since mid-December. For the week, the dollar gained 1.1%, on pace for its best weekly rise since mid-July. The greenback earlier rallied after data showed the U.S. economy created 216,000 new jobs in December, exceeding the consensus forecast of 170,000. The unemployment rate was steady from November at 3.7%, compared with expectations of a rise to 3.8%, while average earnings rose 0.4% on a monthly basis, against forecasts of a 0.3% gain. But that report was offset by data later in the session that indicated the U.S. services sector slumped last month. The Institute for Supply Management (ISM) said its non-manufacturing index fell to 50.6 last month, the lowest reading since May, from 52.7 in November. The services industry accounts for more than two-thirds of the economy. Economists polled by Reuters had forecast the index little changed at 52.6. More importantly, the ISM's measure of services sector employment plunged to 43.3 last month, the lowest since July 2020 when the economy was reeling from the first wave of the pandemic. The index was at 50.7 in November. The dollar fell after the ISM report, dropping to session lows below 102. The U.S. currency subsequently trimmed losses. "At the end of the day, this is about market positioning," said Marc Chandler, chief market strategist at Bannockburn Forex in New York. "I see big outside days in the dollar index and I see net little changed on the day. The market lacks conviction and we should expect some broad consolidation maybe within today's range for the next few days." Post-data, U.S. rate futures have priced in about five rate cuts of 25 basis points (bps) each for 2024, with the year-end fed funds rate expected at roughly 4% compared with the current level of 5.25%, according to LSEG's rate probability app. Early this week, the market had factored in six rate declines. U.S. rate futures traders have also factored in easing bets at the March Fed meeting to around 66%, largely unchanged from the odds seen over the last week. Analysts said the jobs report suggested that the Federal Reserve would probably be in no rush to cut interest rates over the next few months. In the end, the futures market would likely come around closer to the Fed's forecast of about 75 bps of rate cuts in 2024, they noted. "Overall, I think the market is a bit ahead of itself here...I call March about a 50/50 meeting, and I wonder if we don't stick around there for a little while as the data rolls in," said Adam Button, chief currency analyst at ForexLive in Toronto. "Inflation numbers will look really good by about June, but asking for that in March is aggressive. If the numbers start to turn I think the Fed isn’t going to hesitate, I think they've indicated that now, but this one jobs report - is this a game changer or not? I don’t think it's a game changer." The market also shrugged off data showing U.S. factory orders increased more than expected in November, rising 2.6% after declining 3.4% in October. In other currencies, the dollar was slightly higher against the yen at 144.655 . It rose as high as 145.98 yen, a three-week peak, after the payrolls data. On the week, the greenback advanced 2.2% versus the Japanese currency, on track for its best weekly performance since June 2022. The euro, on the other hand, inched lower versus the dollar to $1.09405 . Europe's common currency fell 0.9% on the week, its largest weekly drop since early December and snapping a run of three weeks of increases. https://www.reuters.com/markets/currencies/dollar-set-strongest-week-since-july-reduced-rate-cut-bets-2024-01-05/

2024-01-05 06:19

U.S. Secretary of State Blinken visits Middle East U.S. employment data shows increased hiring and wages Rig count declines for third time in four weeks Maersk diverts vessels from Red Sea for foreseeable future HOUSTON, Jan 5 (Reuters) - Oil prices rose on Friday as U.S. Secretary of State Antony Blinken began a week-long sweep through the Middle East in an attempt to contain regional tensions stoked by the Israel-Hamas conflict. Brent crude futures settled up $1.17, or 1.51%, at $78.76 a barrel while U.S. West Texas Intermediate crude futures finished up $1.62, or 2.24%, at $73.81. Both benchmarks are on track to end the first week of the year higher, rebounding from losses on Thursday triggered by hefty increases in U.S. gasoline and distillate stocks. "With the tensions in the Middle East, the geopolitical trading premium has to get pushed higher," said John Kilduff, partner at Again Capital LLC. "It's hard for traders to fight the headlines." Shipping giant Maersk (MAERSKb.CO) said it will divert all vessels away from the Red Sea for the foreseeable future, warning customers of disruptions. A U.S. government report showing employment grew in December would be supportive of demand in the coming year, Kilduff said. U.S. employers hired more workers than expected in December while raising wages at a solid clip, prompting financial markets to dial back expectations that the Federal Reserve would start cutting interest rates in March. Non-farm payrolls increased by 216,000 jobs last month, the Labor Department's Bureau of Labor Statistics said. Economists polled by Reuters had forecast payrolls rising by 170,000 jobs. The economy added 2.7 million jobs in 2023, down sharply from the 4.8 million positions created in 2022. "Strong employment should point to strong demand for fuel," Kilduff said. The latest Fed meeting on Thursday gave a growing sense that inflation is under control and raised concern about the risks that an "overly restrictive" monetary policy may hold for the economy. Bank of America on Friday said it was taking a defensive stance towards oil stocks because of the long-term price forecast for oil. It said it expects the $70-$90 a barrel Brent trading range in place since OPEC+ intervened to hold, adding that "a permanently backward oil curve steepened by spare capacity" is a headwind for sector value. Oilfield services company Baker Hughes said the count of active drilling rigs - oil and natural gas rigs combined - fell by one last week to 621 for the third decline in four weeks. Crude oil drilling rigs were up by one at 501 while natural gas drilling rigs fell by two to 118. https://www.reuters.com/markets/commodities/us-crude-futures-rise-2-middle-east-tensions-2024-01-05/

2024-01-05 06:13

US services sector slows in December Nonfarm payrolls increase in December Falling domestic prices spur Indian demand Jan 5 (Reuters) - Gold held steady on Friday after swinging up and down a percentage point on mixed U.S. economic data, but bullion eyed its first weekly decline in four weeks on an overall stronger dollar and higher Treasury yields. Spot gold rose 0.1% to $2,044.21 per ounce by 3:15 p.m. EST (2015 GMT) after falling and then rising by about 1% earlier in the session. Prices were set to shed nearly 1% for the week. U.S. gold futures settled mostly unchanged at $2,049.80. Official data showed U.S. employers hired more workers than expected in December, but separate data from the Institute for Supply Management (ISM) indicated that the U.S. services sector slowed considerably last month. "First, the nonfarm payrolls data came in stronger than expected, due to which we saw some pressure applied to gold ... However, on the heels of that we received some weaker-than-expected ISM data and as a result we've seen a turn in trend," said David Meger, director of metals trading at High Ridge Futures. Both the U.S. dollar and 10-year Treasury yields hit their highest levels in three weeks, heading for their best weeks since July and October, respectively. "With the U.S. Federal Reserve pivoting towards rate cuts, we see the guessing game with regards to the number of rate cuts being a major driver of volatility in the months ahead," Saxo Bank's head of commodity strategy, Ole Hansen, said in a note. The market expects a chance of about 67% for a Fed rate cut by March, according to the CME FedWatch tool. Lower interest rates decrease the opportunity cost of holding non-yielding gold. On the physical front, gold buying in major consumer India rose this week, as domestic prices fell back from record highs. Silver rose 0.8% to $23.17 per ounce, but braced for its second weekly fall, and platinum gained 0.5% to $961.53, but headed for its worst week in eight weeks. Palladium fell 0.9% to a three-week low of $1,027.11 in its ninth consecutive session of declines and was down 6.4% on the week. https://www.reuters.com/markets/commodities/gold-set-first-weekly-fall-four-us-jobs-data-focus-2024-01-05/