2023-12-08 06:22

WASHINGTON, Dec 8 (Reuters) - The dollar rose on Friday after new data showed U.S. job growth accelerated in November and the unemployment rate dropped, pointing to underlying strength in the labor market. The U.S. dollar index was last up 0.3% at 104.0, on track for a modest weekly gain after a bruising November, in which it shed 3%. The yen was 0.52% lower against the dollar at 144.35, following its biggest rally in almost a year the day before. U.S. nonfarm payrolls added 199,000 jobs last month, the Labor Department's Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast 180,000 jobs created. The employment report, which showed the unemployment rate fell to 3.7%, suggested that financial market expectations that the U.S. Federal Reserve could pivot to cutting interest rates as soon as the first quarter of 2024 were premature. "So far, there’s nothing in the data that forces (the Fed) off their ‘let’s see what happens’ stance. The market was clearly leaning in the other direction," said Steven Englander, head of global G10 FX research at Standard Chartered Bank in New York. Traders of short-term U.S. interest-rate futures on Friday pared bets the Fed will start cutting interest rates in March after the report, and now see a May start to rate cuts more likely. Markets had earlier priced in about a 60% chance of a March start to Fed rate cuts but, after the readout, pared that to just under 50%. "In the short term, the U.S. rates market has just gotten, I think, way too dovish on the Fed," said Stephen Miran, co-founder of Amberwave Partners. "The massive ease in financial conditions since the start of November basically means that the Fed doesn't need to cut to throw fuel on that fire." YEN ENTHUSIASM Although the yen was lower after the readout of the U.S. November jobs data, it surged by as much as 1.2% earlier on, adding to Thursday's 2% rally after Bank of Japan (BOJ) Governor Kazuo Ueda gave the clearest steer yet that the central bank is considering when to wrap up its negative rates policy. It was headed for its fourth weekly gain against the dollar on Friday. The Japanese currency has vaulted to multi-month highs against a range of others in the last two days, although some of that strength dissipated over Friday's European trading session. Thursday's rally was the largest one-day jump for the yen since January. But without more impetus from the BOJ, it may not have much more scope for outsized gains. "I think it’s pretty clear the BOJ is where other central banks were in late 2021. The case for having the lowest real interest rates in the world ... is not very strong at this point. But the question is, how long do they want to prepare the market?" said Englander. The yen has fared best against higher-yielding currencies, such as the pound. Sterling fell to a two-month low against the yen on Friday, but last recovered to rise 0.66% to 181.88. Elsewhere, the euro fell 0.31% to $1.07585, while the pound dropped 0.38% to $1.255, and was set for a weekly decline. The Australian dollar fell 0.32% to $0.65795, while the Chinese yuan weakened 0.27% to 7.1877 against the dollar in offshore trading. Data on Thursday showed China's exports grew for the first time in six months in November, while imports shrank. In cryptocurrencies, bitcoin last rose 1.58% to 43,981, hovering near its highest since April 2022. https://www.reuters.com/markets/currencies/yen-rallies-hints-boj-policy-shift-2023-12-08/

2023-12-08 06:09

A look at the day ahead in European and global markets from Tom Westbrook Nine of the G10 central banks are expected to cut interest rates next year. Not Japan. Bank of Japan Governor Kazuo Ueda's open discussion of a difficult policy year ahead and of possible paths out of negative interest rates has jolted short sellers out of the yen, afraid that the long-awaited yen rally may have begun. The yen is up four weeks in a row for the first time since March. It steadied in Tokyo trade on Friday, perhaps since data showed the economy slowed more sharply than first thought in the third quarter, which makes the next policy steps more complicated. Japanese government bonds have been heavily sold, tugging global yields higher. The Nikkei dropped to a one-month low. The consequences of above-zero rates in Japan, and particularly the possibility the BOJ will be hiking while the rest of the world is cutting, could be huge since it may trigger an unwinding of carry trades and a rearrangement of the flow of Japanese capital. The BOJ next meets on Dec. 19. Before then the ECB, Bank of England and Fed will all meet, with markets expecting rates to stay on hold. U.S. non-farm payrolls figures due later on Friday round out the week and will set the tone for the policymakers. An upside surprise in the jobs numbers would probably generate the most turbulence in markets, since a handful of recent indicators - pointing to a cooling labour market and slowing inflation - were behind a powerful bond rally in anticipation of rate cuts. The European calendar is fairly bare on Friday. Elsewhere in Asia, India's central bank kept its key lending rate on hold, as expected. South Korea's National Pension Service and central bank are in talks to extend their foreign exchange swap programme, sources with direct knowledge of the matter told Reuters, and the won rose sharply. Shares in Australian gas producer Santos (STO.AX) rose 6% and Woodside stock (WDS.AX) fell 0.5% after the companies confirmed speculation they were in preliminary merger talks. Key developments that could influence markets on Friday: Economics: Final German CPI, U.S. non-farm payrolls https://www.reuters.com/markets/europe/global-markets-view-europe-2023-12-08/

2023-12-08 05:52

Dec 8 (Reuters) - The European Union is poised to give its member states the power to halt gas imports from Russia and Belarus, the Financial Times reported on Friday. Any member state will be able to block companies from Russia and Belarus from obtaining space in their gas pipelines and liquefied natural gas terminals, FT reported citing a draft legal text proposed by Brussels. EU member states could have the authority to "partially or, where justified, completely limit" access to infrastructure to gas operators from Russia and Belarus, in order to protect their vital security interests, the newspaper said. The negotiators from member nations and the European Parliament are expected to endorse the preliminary text on Friday, the report added. The European Commission did not immediately respond to a Reuters request for comment. The EU previously implemented a collaborative gas procurement initiative in order to replenish gas reserves ahead of winter and avoid a repeat of last year's record-high energy prices and concerns about deficits in Europe resulting from Russia's reduction of gas supplies. The member nations of EU are also currently engaged in discussions over a proposal put forth by the Commission regarding the 12th package of economic sanctions imposed on Russia as a response to their invasion of Ukraine in February of 2022. https://www.reuters.com/business/energy/eu-give-member-states-authority-halt-russian-gas-imports-ft-2023-12-08/

2023-12-08 05:22

TOKYO, Dec 8 (Reuters) - Toshiba (6502.T) and Rohm (6963.T) said on Friday they would invest 388.3 billion yen ($2.7 billion) to jointly produce power chips, the first collaboration since Rohm's participation in a $14 billion buyout of Toshiba. The latest partnership is what the Japanese industry ministry has hoped for out of concerns that the country's power chip industry is too fragmented to catch up with industry giant Infineon Technologies AG (IFXGn.DE). The ministry separately said it would subsidise up to 129.4 billion yen, or a third of the total investment, as part of an effort to help the domestic power chip industry retain its competitiveness. Power chips efficiently control electric power in cars, electronic devices and industry equipment. The ministry expects the global power chip market to grow to 5 trillion yen by 2030. Under the latest plan, Rohm will invest 289.2 billion yen in its new plant in Miyazaki Prefecture on the southern island of Kyushu to produce silicon carbide power chips, which have become popular with electric car makers because they can handle high voltages and are more efficient. Toshiba will invest 99.1 billion yen in a cutting-edge 300mm fabrication plant it is building in Ishikawa, central Japan, to produce silicon power chips. The investment is part of a plan announced last year to spend 125 billion yen to more than double power chip production. Chips produced at the plants will be sold under their own brands. The collaboration comes after Rohm decided to invest 300 billion yen to join a group led by private equity firm Japan Industrial Partners (JIP) to take Toshiba private. But the two companies said they had been considering the collaboration "for some time", and Rohm's investment in the Toshiba buyout "did not serve as the starting point" for the latest plan. Japanese power chip manufacturers such as Toshiba, Rohm, Mitsubishi Electric (6503.T) and Fuji Electric (6504.T) all have a global presence. ($1 = 143.4400 yen) https://www.reuters.com/markets/deals/toshiba-invest-rohms-new-power-chip-plant-japans-miyazaki-sources-2023-12-07/

2023-12-08 05:07

Nonfarm payrolls forecast increasing 180,000 in November Returning striking workers to offer boost to payrolls Unemployment rate expected to be unchanged at 3.9% Average hourly earnings seen rising 0.3%; up 4.0% y/y WASHINGTON, Dec 8 (Reuters) - U.S. job growth likely picked up in November as thousands of automobile workers and actors returned after strikes, but the underlying trend will probably point to a cooling labor market. The Labor Department's closely watched employment report on Friday, which is also expected to show wages increasing moderately and the unemployment rate unchanged at nearly a two-year high of 3.9%, will cement views that the Federal Reserve is done raising interest rates this cycle. But with employment gains forecast to remain well above the 100,000 jobs per month needed to keep up with growth in the working age population, it could pour cold water on financial market expectations of the U.S. central bank pivoting to cutting rates as soon as the first quarter of 2024. The Fed is expected to keep rates unchanged next Wednesday. It has raised its policy rate by 525 basis points to the current 5.25%-5.50% range, since March 2022. "We're looking for more evidence that restrictive monetary policy and tight credit conditions are having the desired effect, dampening inflationary pressures, not only in the economy more broadly, but also the labor market," said James Knightley, chief international economist at ING in New York. "I don't think the Fed will be signaling a desire to cut on the scale that the market is looking to price right now, but they will be pretty happy with the evidence of the cooling jobs market." Nonfarm payrolls likely increased by 180,000 jobs last month after rising 150,000 in October, according to a Reuters survey of economists. About 25,300 members of the United Auto Workers (UAW) union ended their strikes against Detroit's "Big Three" car makers on Oct. 31, which depressed manufacturing payrolls that month, government data showed. At least 5,000 UAW members remain on strike, the majority of them at Mack Trucks. Payrolls also likely got a lift from 16,000 members of the SAG-AFTRA actors union going back to work. Still, employment gains would be less than the monthly average of 238,800 jobs this year. Demand for workers is moderating as the hefty rate hikes from the Fed curb demand in the broader economy. The government reported this week that there were 1.34 job openings for every unemployed person in October, the lowest since August 2021. There has also been anecdotal evidence of slowing hiring, with the Fed's Beige Book report last week describing demand for labor as having "continued to ease" and "most districts reported flat to modest increases in overall employment" from early October through mid-November. Temporary help, a harbinger of future hiring, has declined for much of this year. The average workweek has also dropped from 34.6 hours in January to 34.3 hours in October. It is expected to have been unchanged at that level in November. RISING LABOR POOL But not every economist agrees that the labor market is softening, arguing that significant portions of the economy, especially in the service sector, remain understaffed. Indeed, an Institute for Supply Management survey this week showed services industry businesses in November reporting "issues" backfilling vacancies caused by normal attrition. There were also comments that "the labor market remains very competitive" and about "trying to get to full staff levels." "We're not convinced that the labor market has really slowed abruptly here," said Dean Maki, chief economist at Point72 Asset Management in Stamford, Connecticut. "The underlying trend in job growth remains pretty healthy." The unemployment rate has risen from a 53-year low of 3.4% in April. The increase, however, has been driven by a rise in labor supply rather than companies laying off workers. Economists said there was a risk that the jobless rate could hit 4.0% in November, but urged against interpreting the rise as a sign of deteriorating labor market conditions. "More people are coming into the labor force, and they're counted as unemployed when they come in," said Dan North, senior economist at Allianz Trade North America. "It's not companies firing people. So, it's not the usual dynamic that would make one concerned." The expanding labor pool is slowing wage growth, boosting the Fed's efforts to lower inflation to its 2% target. Average hourly earnings are forecast climbing 0.3% after gaining 0.2% in October. That would lower the annual increase in wages to 4.0%, which would the smallest advance since June 2021, after rising 4.1% in October. Moderate wage gains would add to recent data showing inflation ebbing in October. While that could contribute to crimping consumer spending this quarter and beyond, economists do not expect a recession, but rather a period of tepid growth. Most did not see the economy shedding jobs until the second quarter of 2024. "We may have some quarters of virtually flat growth, overall, very very slow growth for the whole year," said North. https://www.reuters.com/markets/us/strong-us-job-growth-seen-november-strikes-end-trend-slowing-2023-12-08/

2023-12-08 04:23

MUMBAI, Dec 8 (Reuters) - The Indian rupee was flat on Friday as market participants reckoned that U.S. jobs data due later in the day is likely to be the bigger cue for the unit as investors have largely priced in the central bank's expected status quo on policy rates. The rupee was at 83.34 against the U.S. dollar as of 09:45 a.m. IST, barely changed from its close at 83.3525 in the previous session. The dollar index was slight lower at 103.59 while Asian currencies were largely range bound. The rupee is largely "expected to trade sideways ahead of the Reserve Bank of India's monetary policy," said Dilip Parmar, a foreign exchange research analyst at HDFC Securities. The RBI will deliver its monetary policy decision at 10 a.m. IST and is widely expected to keep rates unchanged. The policy decision "should largely be a non-event," for the rupee as no surprises are expected, a foreign exchange trader at a private bank said. India's overnight index swap market hinted that the RBI is unlikely to rush to cut interest rates even if the U.S. Federal Reserve starts bringing down rates early next year. Fed futures are currently pricing in a 55% chance of a rate cut as soon as March next year. The 10-year U.S. Treasury yield inched up to 4.15% in Asia after having fallen to its lowest level in three months overnight. While data in the U.S. on Thursday showed that the number of Americans filing for initial jobless claims increased slightly less than expected, investors will closely watch the non-farm payrolls data due later in the day. Reuters' polls estimate that the U.S. unemployment rate remained unchanged at 3.9% in November, while non-farm payrolls are expected to have risen to 180,000 up from 150,000 in October. https://www.reuters.com/markets/currencies/us-jobs-data-seen-key-indian-rupee-compared-rbi-policy-decision-2023-12-08/