2024-07-09 10:50

ANKARA, July 9 (Reuters) - The head of Turkey's statistics institute has sought to calm criticism of its inflation data, telling reporters on Tuesday its figures are calculated in the same way as in other countries and concerns are "unjust". Credibility concerns were raised earlier this year when Turkey's Statistical Institute (TUIK) said it did not have historical data on product prices beyond May 2022 and stopped sharing it. Separate concerns were raised last week when it released data showing annual inflation fell more than expected to below 72% in June from 75% a month earlier. Addressing the historical data concerns, the institute's head, Erhan Cetinkaya, said inflation was calculated on the basis of more than 600,000 prices and previously published product prices had "no indicative value". "The product basket remains where it is, the tables that are not being published are product prices... In order to announce product prices, another day of work is needed," Cetinkaya was quoted by broadcaster NTV and state-owned Anadolu Agency as saying. No country publishes this data as part of their inflation figures, he added. Hakan Kara, a former chief central bank economist who is now at Bilkent University, was among those criticising TUIK's move to stop publishing the data, saying it was required to calculate the consumer price index in any case. "Is TUIK destroying product prices every month after calculating the consumer price index?" he said in June. Though TUIK has faced questions over inflation calculations since 2018, several economists have said - despite the lack of the historical data - that accuracy has improved since June 2023 when a new cabinet began an economic policy U-turn. Cetinkaya said Turkey's data on official inflation and perceived inflation was "the closest to each other" compared to global peers and that perceived inflation was twice the official figure for Turks. TUIK uses global calculation methods, he said. The central bank has hiked its policy rate to 50% from 8.5% in June of 2023 to cool prices. The June inflation data signalled the start of what is expected to be a sustained slide. Addressing concerns over the June data, Cetinkaya said that certain price hikes would be reflected in July figures. Sign up here. https://www.reuters.com/world/middle-east/turkeys-statistics-chief-defends-inflation-calculations-2024-07-09/

2024-07-09 10:50

LONDON, July 9 (Reuters) - U.S.-based hedge fund Elliott Associates on Tuesday urged a London court to overturn a verdict supporting the London Metal Exchange's (LME) cancellation of nickel trades partly because the exchange failed to disclose documents. The LME annulled $12 billion in nickel trades in March 2022 when prices shot to records above $100,000 a metric ton in a few hours of chaotic trade. Elliott and market maker Jane Street Global Trading brought a case demanding a combined $472 million in compensation, alleging at a trial in June last year that the 146-year-old exchange had acted unlawfully. London's High Court ruled last November that the LME had the right to cancel the trades because of exceptional circumstances, and was not obligated to consult market players prior to its decision. Lawyers for Elliott told London's Court of Appeal that the LME belatedly released documents in May detailing its "Kill Switch" and "Trade Halt" internal procedures. It also newly disclosed an internal report that Elliott said detailed potential conflicts of interest at the exchange. "It was troubling that one gets disclosure out of the blue in the Court of Appeal for the first time," Elliott lawyer Monica Carss-Frisk told the court. Jane Street Global did not appeal the ruling. "If we had had them (documents) in the proceedings before the divisional court, we may well have sought permission to cross examine." LME lawyers said the new documents were not relevant. "The disclosed documents do not affect the reasoning of the divisional court or the merits of the arguments on appeal," the exchange said in documents prepared for the appeal hearing. "Elliott's appeal is largely a repetition of the arguments which were advanced, and rightly rejected." The LME said it had both the power and a duty to unwind the trades because a record $20 billion in margin calls could have led to at least seven clearing members defaulting, systemic risk and a potential "death spiral". Elliott said the ruling diluted protection provided by the Human Rights Act and also wrongly concluded the LME had the power to cancel the trades. It said LME CEO Matthew Chamberlain had acted irrationally and did not have all the information needed to make a proper decision. "Mr Chamberlain's evidence...indicates that he himself was unclear as to the ambit of the powers available to the LME," Elliott said in a document prepared for the appeal. The LME, the world's largest metals marketplace, is owned by Hong Kong Exchanges and Clearing Ltd (0388.HK) New Tab, opens new tab. Sign up here. https://www.reuters.com/markets/commodities/hedge-fund-elliott-challenges-court-verdict-it-lost-against-lme-nickel-2024-07-09/

2024-07-09 10:13

A look at the day ahead in U.S. and global markets from Mike Dolan After an intense month focused on election risk around the world, markets quickly switched back to the more prosaic matter of the cost of money - and whether disinflation is resuming to the extent it allows borrowing costs to finally fall. Thursday's U.S. consumer price update for June is the key moment of the week for many investors - with the headline rate expected to have fallen two tenths of a percentage point to 3.1% but with 'core' rates still stuck at 3.4%. With Federal Reserve chair Jerome Powell starting his two-pronged semi-annual congressional testimony later on Tuesday, the consensus CPI forecast probably reflects what the central bank thinks of the situation right now - encouraging but not there yet. But as the U.S. unemployment rate is now back above 4.0% for the first time since late 2021, markets may look for a more nuanced approach from the Fed chair that sees it increasingly wary of a sudden weakening of the labor market as real time quarterly GDP estimates ebb again to about 1.5%. There were some other reasons for Fed optimism in the lead up to the testimony. The path U.S. inflation is expected to follow over coming years generally softened in June, amid retreating projections of price increases for a wide array of consumer goods and services, a New York Fed survey showed on Monday. Inflation a year from now was seen at 3% as of June - down from the expected rise of 3.2% in May - and five-year expectations fell to 2.8% from 3%. Crude oil prices are better behaved this week, too, falling more than 3% from the 10-week highs hit late last week and halving the annual oil price gain to 10%. The losses on Tuesday came after a hurricane that hit a key U.S. oil-producing hub in Texas caused less damage than many in markets had expected - easing concerns over supply disruption. Before Powell starts speaking later, there will also be an update on U.S. small business confidence for last month. Ahead of the bell, record high U.S. stock indexes look set to extend their gains and S&P500 futures were in positive territory yet again. Fed funds futures have two full quarter-point rate cuts priced for the remainder the year - with ten-year U.S. Treasury yields hovering below 4.3% ahead of another heavy week of debt sales. Some $119 billion of coupons go under the hammer this week, starting with 3-year notes on Tuesday and then 10s and 30s later in the week. The dollar (.DXY) New Tab, opens new tab was marginally higher, edging up against the euro, yen, yuan and pound. In the messier world of politics, the picture was even less clear - though most of the recent soundings from the White House suggest President Joe Biden will remain the Democrat candidate going into November's election. In Europe, Britain's new government set out its stall on how to get growth moving again without much leeway in stretched public finances - concentrating initially on supply-side reforms that clear the deck for infrastructure projects and more housebuilding. UK stocks (.FTSE) New Tab, opens new tab were firmer. In France, the dust settles a bit on the weekend election there that leaves gridlock in parliament but the temporary re-appointment of centrist Prime Minister Gabriel Attal is a move that may see the country through hosting the Olympics next month and possibly a compromise 2025 budget in the Fall. European stocks (.STOXXE) New Tab, opens new tab and the euro edged back after Monday's relief rally following the failure of French far right or left alliance gaining an overall assembly majority. French government debt yields and spreads were steady. In Asia, stocks were broadly higher - with Japan's Nikkei (.N225) New Tab, opens new tab outperforming with gains of almost 2% and Hong Kong's Hang Seng (.HSI) New Tab, opens new tab on the flipside ending in the red. Key developments that should provide more direction to U.S. markets later on Tuesday: * US June NFIB small business survey; Mexico June inflation * Federal Reserve chair Jerome Powell testifies to the Senate Banking Committee; Fed Governor Michelle Bowman and Fed Vice Chair for Supervision Michael Barr both speak * Leaders gather in Washington for NATO Summit * US Treasury auctions $58 billion of 3-year notes, $46 billion of 12-month bills Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-07-09/

2024-07-09 10:09

MUMBAI, July 9 (Reuters) - The Indian rupee closed nearly flat on Tuesday, tracking largely subdued price action in its Asian peers, as investors awaited comments from the Federal Reserve Chair for cues on the future path of U.S. interest rates. The rupee ended at 83.4850 against the U.S. dollar, barely changed from its close at 83.4925 in the previous session. Indian state-run banks were "active on both sides," like on Monday, which along with mostly quiet price action in Asian currencies, kept the rupee in a tight range, a foreign exchange trader at a foreign bank said. The rupee lingered in the 83.4775-83.51 band through the day's session. The currency has maintained an under 10 paisa intra-day trading range so far in July. Fed Chair Jerome Powell will deliver his semi-annual testimony on monetary policy in front of U.S. lawmakers on Tuesday and Wednesday. His remarks may offer fresh cues on the timing of Federal Reserve rate cuts after a string of recent data, including a soft jobs report, helped drive up the odds of September rate reduction to over 75% from nearly 70% last week, according to CME's FedWatch tool. The dollar index is likely to "hover around 105 into the CPI (consumer price index) risk event on Thursday, with any dovish surprises from Powell potentially being offset by EU political concerns," ING Bank said in a note. U.S. consumer inflation data is scheduled on Thursday, followed by India's inflation reading on Friday. Despite a raft of global cues lined up this week, traders expect the rupee to largely hover in its current trading range and be well-supported near 83.60, on expectations that the Reserve Bank of India will curb sharp falls while facing stiff resistance on attempts to rise above 83.25. Sign up here. https://www.reuters.com/markets/currencies/rupee-ends-flat-tracking-rangebound-asian-peers-powells-testimony-focus-2024-07-09/

2024-07-09 10:00

MUMBAI, July 9 (Reuters) - The jump in open interest on rupee/dollar currency futures on the Singapore Exchange indicates that investors are shifting their arbitrage and hedging activity to the city-state after the Indian central bank imposed restrictions on local currency futures, traders said. WHY IT'S IMPORTANT The Reserve Bank of India has been seeking to increase the volume of rupee derivatives traded in the local market relative to offshore, which helps them have more control over the currency. However, in January, the central bank issued revised rules requiring underlying foreign exchange exposure for transacting in exchange-traded rupee derivatives. While it did not specify a reason, central bank officials said the regulations of Foreign Exchange Management Act state that exchange traded currency derivatives are only for hedging. This has had the unintended impact of pushing hedging activity to the Singapore Exchange, going against the RBI's broader objective. BY THE NUMBERS The open interest in rupee/dollar futures on the Singapore Exchange has risen 400% from the start of this year to 268,000 contracts, equivalent to a notional value of nearly $6.5 billion, based on a 7-day average. The average open interest in 2023 was 92,000 contracts. In contrast, open interest on National Stock Exchange of India currency futures has more than halved in the same period to 2.7 million contracts, representing a $2.7 billion notional value. GRAPHIC KEY QUOTES "It's logical. If you impose conditions on trading in onshore, volumes will move to offshore markets," Sajal Gupta, executive director and head of forex and commodities at Nuvama Institutional, said. Foreign portfolio investors, particularly the small-ticket sized ones, will seek alternatives for hedging their currency risk in India while proprietary traders have been completely shut out from the local market, he said. The RBI's hedging rule has helped volumes, a Singapore-based hedge fund analyst said, while pointing out that the margin requirements related to an FX over-the-counter platform were responsible for the increased activity from hedge funds. Sign up here. https://www.reuters.com/markets/currencies/investors-shift-singapore-after-indian-central-banks-curbs-local-rupee-futures-2024-07-09/

2024-07-09 09:40

LONDON, July 9 (Reuters) - The pound was little changed on Tuesday, down very slightly from Monday's one-month peak as investors weighed up new political landscapes in Britain and France. Sterling was unchanged from the previous day at $1.2804, down from Monday's one-month high of $1.2846, with traders also waiting for testimony from U.S. Federal Reserve Chair Jerome Powell later in the day. The Labour party swept to power in a landslide in Thursday's election, promising stability after a volatile period that saw four Conservative Prime Ministers in five years. The pound is one of the best performing currencies this year, largely due to the Bank of England holding interest rates higher than expected at the start of the year as wage and services inflation has remained high. In recent days, signs of a slowdown in U.S. growth have weighed on the dollar and supported sterling. Yet investors and analysts say hopes for more stability have been helpful in the background. "On the hope that UK politics can avoid the dramas and uncertainties associated with the Brexit, (Boris) Johnson and (Liz) Truss periods, we expect that GBP can continue its slow grinding recovery," Jane Foley, head of FX strategy at Rabobank said in a note. Sterling was also flat against the euro , with the euro zone currency changing hands at 84.54 pence. The euro has bounced around in recent weeks due to uncertainty about elections in France, which came to a close on Sunday and resulted in a hung parliament and a surprisingly strong showing for the left. Analysts said they expect further swings in the euro as parties thrash out deals to try to form a government, with the picture remaining murky. Sign up here. https://www.reuters.com/markets/currencies/sterling-holds-near-one-month-peak-wake-uk-election-2024-07-09/