2023-12-18 06:59

NEW YORK, Dec 18 (Reuters) - The U.S. dollar slipped against the euro on Monday, extending last week's fall, as the U.S. currency remains under pressure from the Federal Reserve's signaling last week the possibility of interest rate cuts next year. The dollar was higher against the yen as the Bank of Japan (BOJ) kicked off a two-day meeting that could be crucial in determining the timing of the end of the central bank’s ultra-loose stance on interest rates. Bets that the Fed will lower its benchmark overnight interest rate at its March meeting by a quarter of a percentage point soared last week after the U.S. central bank left its policy rate unchanged in the 5.25%-5.50% range and officials forecast three-quarters of a percentage point in cuts next year. "The Fed, having failed to push back on the aggressive dovish repricing we've seen over the last six weeks or so, has given license for financial conditions to loosen further," said Michael Brown, market analyst at Trader X in London. Meanwhile, European Central Bank policymakers do not expect to change their message on the need for high interest rates before their March meeting, making any rate cut before June difficult, seven people familiar with the matter told Reuters. "Time will tell if the ECB is forced to cut interest rates sooner and more aggressively than it hopes to, but clearly markets are content betting against central banks' "higher for longer" mantra," Matthew Weller, global head of research at FOREX.com and City Index, said in a note. The Federal Reserve is not pre-committing to cutting interest rates soon and swiftly, and the jump in market expectations that it will do so is at odds with how the U.S. central bank functions, Chicago Fed President Austan Goolsbee said on Monday. Goolsbee was the latest in a slew of Fed speakers who have pushed back against financial market expectations of how abruptly the central bank will pivot to rate cuts, including Cleveland Fed President Loretta Mester, the New York Fed's John Williams and Atlanta Fed's Raphael Bostic. "The amount of pushback we've started to see post (Fed Chair Jerome) Powell's press conference is clearly a risk to that downside USD view, though that push back on the idea of cuts as soon as March seems largely to be falling on deaf ears thus far," Brown said. The dollar index , which measures the currency's strength against a basket of six rivals, was 0.07 % lower at 102.55 . The euro was 0.22 % higher against the dollar. The yen retreated on Monday, but held near its recent highs, as the Bank of Japan (BOJ) kicked off a two-day meeting that could be crucial in determining the timing of the end of the central bank’s ultra-loose stance on interest rates. The dollar was last up 0.51% against the Japanese currency at 142.935 yen. The Japanese currency has had a volatile few weeks, as markets struggle to get a grip on how soon the BOJ could phase out its negative interest rate policy, with comments from Governor Kazuo Ueda this month initially sparking a huge rally in the yen. That was later reversed on news that a policy shift was unlikely to come as early as December, and investors now await Tuesday's BOJ decision for further clarity on the bank's rate outlook. In any case, since hitting a multi-decade low against the dollar near 152 in November, the yen has gained around 6% in value as traders have grown increasingly convinced the BOJ's low-rates drag on the currency will not last much longer. "This shift in sentiment will no doubt be welcomed by the Bank of Japan and to some extent helps them out with respect to the weakness of the yen ahead of tomorrow’s rate decision," CMC markets strategist Michael Hewson said. "There is now less incentive for them to think about altering their current policy settings, although they might hint at starting to execute some form of shift early next year." Elsewhere, the Australian and New Zealand dollars, which can often act as barometers for investor risk appetite in the currency market, traded about flat on the day but remained near their respective 5-month highs against the U.S. currency. The pound was 0.31 % lower against the dollar at $ 1.2641 , as the prospect of interest rates remaining higher in Britain than in most other major economies next year offered some support to the British currency. Bitcoin was about flat on the day at $41,612. https://www.reuters.com/markets/currencies/yen-cedes-some-ground-ahead-critical-boj-test-2023-12-18/

2023-12-18 06:38

Dec 18 (Reuters) - Goldman Sachs trimmed its price expectation for Brent crude in 2024 by $10 per barrel to between $70 and $90, saying strong production from the United States would moderate any upside in oil prices. "We still look for range-bound prices and only moderate price volatility in 2024. Elevated spare capacity to handle tightening shocks should limit upside price moves," its analysts said in a note dated Sunday. The investment bank now expects Brent to recover to a peak of $85 per barrel in June 2024, and to average at $81/$80 in 2024/2025 compared to $92 previously. Brent was trading around $77 as of 0526 GMT on Monday, down 20% from multi-month highs hit in September. U.S. West Texas Intermediate crude was around $72 a barrel. Continued supply from non-Organization of the Petroleum Exporting Countries (OPEC) sources, led by the U.S, shows that several tailwinds to the U.S. production are likely to persist in 2024, Goldman Sachs added. Analysts said they expect U.S. Lower 48 crude output to reach 11.4 million barrels per day (mb/d) in the fourth quarter of next year, and hiked U.S. total liquids supply 2024 growth forecast to 0.9 mb/d from 0.5 mb/d earlier. However, OPEC decision to rein in supply, a recovery in China, restocking in the U.S. and modest recession risk should limit downside risk to oil prices, the bank noted. "Saudi Arabia is unlikely to 'flush' the market in 2024", Goldman analysts said, adding "we expect full extensions of the OPEC+ cuts announced in April 2023 (1.7 mb/d) through 2025, and of the additional 2.2 mb/d package through 2024Q2." "We adjust our OPEC range trade to a short $70 put, long $80/90 call spread option on Brent Jun24, and still recommend long summer 2024 gasoline margins," they added. https://www.reuters.com/markets/commodities/goldman-cuts-2024-brent-price-forecast-strong-us-supply-2023-12-18/

2023-12-18 06:28

BENGALURU, Dec 18 (Reuters) - Shares in Indian steel-to-power conglomerate JSW Group fell as much as 5% on Monday, a day after its billionaire Chairman Sajjan Jindal said that local media reports accusing him of rape were "false and baseless". Flagship firm JSW Steel (JSTL.NS) slid 1.8%, while JSW Energy (JSWE.NS) and JSW Infrastructure (JSWN.NS) reversed losses to trade about 0.1% and 1.7% higher, respectively. On Sunday, local media reported that a 30-year-old woman had filed a rape complaint against Jindal at a Mumbai police station. The media said the alleged incident occurred last year. In an email to Reuters, Jindal denied the allegations and said that he would cooperate with any investigation. As of Friday's close, JSW Steel had notched seven consecutive weeks of gains, while JSW Infrastructure had climbed for three straight weeks. Shares of JSW Steel has risen more than 11% so far this year, while JSW Energy surged over 51%. JSW Infrastructure has mounted nearly 49% since listing in early October this year. https://www.reuters.com/markets/commodities/indias-jsw-group-firms-shares-pare-losses-after-early-slump-2023-12-18/

2023-12-18 06:07

Dec 18 (Reuters) - Some investors are predicting an increase in corporate bond issuance in the New Year, after bond yields slid last week, opening the door for companies to refinance existing debt or issue new debt at lower costs. Total U.S. investment-grade corporate debt issuance in 2023 is expected to be similar to 2022's total of roughly $1.23 trillion, according to data from the Securities Industry and Financial Markets Association (SIFMA) trade group, well below 2021 and 2020 totals of $1.47 trillion and $1.85 trillion, respectively. But investors and other market participants now see issuance picking up next year following expectations of a quicker pace of interest-rate easing after last week's Federal Reserve meeting. There are $770 billion in investment-grade bonds due in 2024, according to data by Morgan Stanley (MS.N). The majority of corporate borrowers have been waiting for the Fed to cut rates before refinancing in the current high-rate environment. “This should be an extremely welcome environment for corporate issuance," said Blair Shwedo, head of U.S. sales and trading at U.S. Bank. Shwedo cited the combination of buying in U.S. Treasuries and a tightening of credit spreads - or the difference in interest rates between Treasuries and corporate bonds of the same maturity - that has resulted in lower borrowing costs for companies. Continued spread tightening will lead to more high-grade bond supply next year, albeit mainly due to refinancing needs, according to Steven Oh, global head of credit and fixed income at asset manager PineBridge Investments. High-grade corporate bond yields have fallen 36 basis points since the Fed's meeting last week, when officials outlined a median forecast of 75 basis points in net rate cuts next year. Yields ended Friday's session at 5.20%, according to the ICE BofA U.S. Corporate Index (.MERC0A0). BofA Global Research analysts said in a Dec. 14 report that the drop in yields had an immediate impact on supply and demand for investment-grade bonds. "First, it weakens the outlook for the market technicals by weighing on yield-sensitive demand while encouraging opportunistic supply," they wrote. Markets are now pricing in a less than 70% chance of a Fed rate cut by March, earlier than previous bets and further supporting the case for a pick-up in investment-grade issuance next year. Even so, some market participants expect 2024's total IG issuance will align with this year and last, expressing a belief that the market is overestimating the timing and length of rate cuts next year. "We don't see a big change in the outlook for forecasted supply for 2024," said Natalie Trevithick, head of investment-grade credit strategy at asset manager Payden & Rygel. Companies typically only refinance 6%-10% of their total outstanding debt on an annual basis, she added. Regardless, lower borrowing costs and growing investor appetite for riskier corporate debt have shifted the market dynamic more in favor of borrowers, according to Trevithick. "The market now feels that we are at the end of the Fed hiking cycle," she said, "and that has given investors a lot of comfort in terms of wanting to own (corporate bonds)." https://www.reuters.com/markets/rates-bonds/us-corporate-bond-issuance-seen-increasing-after-yields-slide-2023-12-18/

2023-12-18 05:56

MUMBAI, Dec 18 (Reuters) - Importers should use the Indian rupee's rally to the highest in nearly three months to hedge a large part of their near-term foreign payments, bankers and analysts said on Monday. The rupee was at 82.9475 to the U.S. dollar at 11:20 a.m. IST, compared to the previous close of 83.00. The currency had climbed to 82.9150 earlier in the day, the highest since Sept. 22. "After Friday's surprising knock down (on USD/INR), we are seeing a bit of sideways around 83, which you would expect," a fx sales person at a bank said. "If you are an importer, it would be tempting to see if there is more room to run. However, we think a more prudent approach is to at least hedge out most of the payments that are due this month." The rupee has managed to strengthen past 83 largely on the back of surging equity inflows. Foreign investors bought more than $1 billion of Indian shares on Friday, according to provisional data. That follows $1.5 billion of purchases from Monday to Thursday, according to NSDL data. If the pace holds, foreign inflows in December are likely to be the highest this year. Meanwhile, other Asian currencies were mostly weaker after Federal Reserve officials sought push back against the dovish interest rate outlook that investors are pricing in. New York Fed President John Williams, in a CNBC interview, said the Fed "isn't really talking about rate cuts right now" and it's "premature" to speculate about them. https://www.reuters.com/markets/currencies/rupee-rally-continues-importers-recommended-increase-hedging-2023-12-18/

2023-12-18 05:54

BAN KHON SUNG, Thailand Dec 18 (Reuters) - A sleeping cat hugs a fish in a picture seen from the air, picked out in sprouting rainbow seedlings in a rice field in Thailand to illustrate a traditional proverb about abundance. Farmer Tanyapong Jaikham and a team of workers planted the seedlings at various spots in the field in the northern province of Chiang Rai to depict cartoon cats, hoping to lure tourists and cat lovers. "We're expecting tens of thousands to come and see the art in the rice fields," he said. The process relies on GPS coordinates to position the seedlings as designated in an initial artist's sketch, he said, with the plants changing tint as they grow. "It's crucial to position them accurately, and the rice will gradually change shades over time," he added, until in the final harvest stage, the rice straw yields the portrait of Cooper, the cat on which it was modelled. Viewing towers are being built in the surrounding area to give visitors a glimpse of the artwork, which is based on a Thai saying, "There is fish in the water and rice in the fields." The world's second largest exporter of the grain after India, Thailand aims to ship 8.5 million metric tons this year. Young people wanting to learn more about the interaction of art and technology could also benefit from visiting the site, Tanyapong said. "Previously, rice was mainly considered for consumption," he said. "This approach allows us to develop tourism and agriculture simultaneously." https://www.reuters.com/world/asia-pacific/thai-rice-farmer-makes-art-with-plantings-that-depict-cats-2023-12-18/