2024-06-19 06:16

June 19 (Reuters) - Sterling rose slightly versus the euro and the dollar after data showed British inflation returned to the Bank of England's 2% target in May for the first time in nearly three years. The drop in annual consumer price inflation from April's 2.3% reading was in line with economists' median expectation in a Reuters poll and marks a sharp decline from the 41-year high of 11.1% reached in October 2022. The euro dropped 0.04% to 84.46 pence against the pound from 84.48 pence right before the data. Sterling was up 0.05% against the dollar at $1.2713 , having traded at $1.2704 earlier. Markets are pricing in an about 50% chance of a first rate cut by August and almost half a percentage point in monetary easing in 2024. The BoE meets on Thursday to discuss interest-rate policy, but is not expected to make any changes. Sign up here. https://www.reuters.com/markets/currencies/sterling-edges-up-after-uk-inflation-data-2024-06-19/

2024-06-19 05:31

Carmakers urge tariff hikes on gasoline-powered car imports Meeting attended by Chinese and European automakers -sources Call comes after Brussels slapped tariffs on China EVs SHANGHAI/BEIJING/BERLIN, June 19 (Reuters) - Chinese automakers have urged Beijing to hike tariffs on imported European gasoline-powered cars in retaliation for Brussels' curbs on exports of Chinese-made EVs, the state-backed Global Times newspaper said on Wednesday. In a closed-door meeting on Tuesday also attended by European car companies, China's auto industry "called on the government to adopt firm countermeasures (and) suggested that positive consideration be given to raising the provisional tariff on gasoline cars with large-displacement engines," according to the report. The meeting, organised by China's Ministry of Commerce, was held in Beijing and attended by SAIC (600104.SS) New Tab, opens new tab, BYD , BMW (BMWG.DE) New Tab, opens new tab, Volkswagen (VOWG_p.DE) New Tab, opens new tab and its Porsche (P911_p.DE) New Tab, opens new tab division, two people with direct knowledge of the matter said. The main aim of the meeting was to put pressure on Europe and lobby against the tariffs Brussels announced last week to shield its car industry from Chinese competition, they added. The meeting was also attended by Mercedes-Benz (MBGn.DE) New Tab, opens new tab, Stellantis (STLAM.MI) New Tab, opens new tab and Renault (RENA.PA) New Tab, opens new tab, two separate sources familiar with the matter told Reuters. The ministry did not immediately respond to a faxed request for comment. The European carmakers either declined to comment or did not immediately respond to requests for comment. Industry insiders say both Europe and China have reasons for wanting to strike a deal in the months ahead to de-escalate tensions and avoid the addition of billions of dollars in new costs for Chinese EV makers, as the EU process allows for review. The announcement to impose tariffs could trigger talks between Brussels and Beijing that are aimed at avoiding them, said Stefan Hartung, CEO of Bosch (ROBG.UL), the world's largest automotive supplier. 'TARIFF WAR' The European Commission said on Wednesday it was looking into the situation "with a view to discussing if a mutually agreeable solution can be found." EU trade policy is turning increasingly protective amid concerns that China's production-focused, debt-driven development model could see the 27-member bloc flooded with cheap goods, including electric vehicles, as Chinese firms look to boost sales overseas due to weak demand at home. The European Commission's June 12 announcement that it would impose anti-subsidy duties of up to 38.1% on imported Chinese EVs from July followed a move by the United States to hike tariffs on Chinese cars in May, and opens a new front in the West's trade war with Beijing. "Personally, I think it is unfair to start a tariff war solely on the basis of (China's) capacity utilisation rate and insufficient demand for China's new energy vehicles," said Zhang Yansheng, chief research fellow, China Center for International Economic Exchanges. "We can see that China has adopted a package of policies to solve the 'overcapacity' problem, so this year, next year, and into the next four years, China's capacity utilisation will continue to rise," he added. The Global Times first reported late last month that a Chinese government-affiliated auto research centre was suggesting China raise its import tariffs on imported gasoline sedans and sport utility vehicles with engines larger than 2.5 litres to 25%, from the current rate of 15%. Chinese authorities have previously hinted at possible retaliatory measures through state media commentaries and interviews with industry figures. HOSTILE HINTS The same newspaper last month also hinted that Chinese companies planned to ask authorities to open an anti-dumping investigation into European pork products, which China's commerce ministry on Monday announced it would undertake. It has also urged Beijing to look into EU dairy imports. Exports of passenger vehicles with engines bigger than 2.5 liters from Europe to China totalled 196,000 units in 2023, up 11% year-on-year, according to data from China Passenger Car Association. In the first four months of 2024, exports of such vehicles from Europe to China stood at 44,000 units, down 12% from the same period a year ago. EU car exports to China were worth 19.4 billion euros ($20.8 billion) in 2023, while the bloc bought 9.7 billion euros of electric vehicles from China, according to EU statistics agency figures. China accounts for about 30% of German carmakers' sales, and Germany is by far the largest exporter of vehicles with engines of 2.5 litres or above, having shipped $1.2 billion worth to China since the beginning of this year, Chinese customs data shows. Mercedes Benz's big-sized GLE Class SUV, S Class sedans and Porsche's Cayenne are the three most popular imported cars from Europe in China, the three of which accounted for more than one-fifth of the total 155,841 imported cars of European brands in the first five months, according to data tracked by China Merchants Bank International. Slovakia is China's fourth-largest and the EU's second-biggest provider of cars with large engines. This year it has exported $803 million worth of sport utility vehicles. The United States, the United Kingdom and Japan all also export large numbers of cars with engines bigger than 2.5 liters, and would presumably stand to benefit most from the proposed tariff increase. ($1 = 0.9314 euros) Sign up here. https://www.reuters.com/business/autos-transportation/china-automakers-urge-beijing-raise-tariffs-large-gasoline-vehicles-imported-eu-2024-06-19/

2024-06-19 05:29

June 19 (Reuters) - The dollar struggled for direction on Wednesday while the euro remained close to its recent lows on concerns that a new government in France could weaken fiscal discipline, increasing the debt risk premium across the euro area. Meanwhile sterling rose after data showed British service inflation was stronger than expected. U.S. markets are closed on Wednesday, which is likely to result in muted trading. The greenback dropped overnight as U.S. retail sales suggested that economic activity remained lacklustre and the Federal Reserve will cut rates sooner. The euro rose 0.1% to $1.0746; it hit on Friday a 1-1/2-month low at $1.07. The yield gap between French and German government debt, which is now seen as a gauge of risks of a budget crisis at the heart of Europe, eased slightly since Monday but remained close to its seven-year highs hit last week. Analysts flagged that the single currency was far from pricing any serious threat to the financial stability of the euro area bloc. "The very limited move in forex in contrast to the OAT (French government bond yield) spread move does underline the fact that the reaction is more about a reappraisal of fixed income risks," said Derek Halpenny, head of research global markets at MUFG. National Rally's (NR) leader, Marine Le Pen, said she sought cohabitation with President Emmanuel Macron and would be respectful of institutions, triggering expectations that NR could backtrack on fiscally expensive pledges if it should win the elections in early July. The European Central Bank could also buy French bonds to avoid "unwarranted and disorderly" yield spread widening. Still, ECB chief economist Philip Lane said recent market turmoil was "not disorderly". The European Commission on Wednesday proposed widely expected disciplinary steps against France, Italy and five other European Union countries over running excessive budget deficits. The dollar index was flat at 105.20. Markets are now pricing in an around 65% chance the Fed will begin easing rates in September, according to the CME FedWatch tool, with nearly 50 basis points worth of cuts expected this year. Sterling rose 0.1% against the euro to 84.43 pence per euro and 0.13% against the dollar to $1.2725 after British data showed underlying price pressures remained strong. "What matters now is how much stock the Monetary Policy Committee puts on the spot – and arguably backward-looking – data," said said Sanjay Raja, chief U.K. economist at Deutsche Bank Research, recalling that survey figures have been "more encouraging." Markets priced an around 25% chance of a Bank of England rate cut in August, down from 50% before data, and 44 basis points of monetary easing in 2024, down from almost half percentage point before figures. The BoE holds its policy meeting on Thursday. The Swiss Franc hit a seven-month high against the euro at 0.9479, and was last down 0.1% at 0.9503. The single currency has weakened constantly against the Swiss currency since the end of May when it hit 0.9930 per franc, its highest since April 2023. "Some observers see this as a renewed threat of intervention or as an implicit put that (Swiss National Bank Chairman Thomas) Jordan is offering to all market participants who hold long Swiss Franc positions, especially against the euro," said Ulrich Leuchtmann head of forex strategy at Commerzbank, recalling a speech by Jordan at the end of May. Jordan argued that inflation risks would likely be associated with a weaker Swiss franc, which the SNB "could counteract by selling foreign exchange." BofA expects the SNB to deliver its second 25 bps cut next week and to state a willingness "to be active in the foreign exchange market as necessary". The Australian dollar rose 0.29% to $0.6675 against the U.S. currency, also helped by a hawkish message from Reserve Bank of Australia Governor Michele Bullock after the central bank's rate decision on Tuesday. The yen was little changed at 157.925 per dollar, as it continues to be pressured by stark interest rate differentials between Japan and the U.S., in particular. Analysts said Bank of Japan monetary tightening was on the horizon, but the BOJ would take a slow approach. Sign up here. https://www.reuters.com/markets/currencies/dollar-steadies-sterling-dips-ahead-inflation-test-2024-06-19/

2024-06-19 05:19

June 19 (Reuters) - There will be no global markets report during U.S. hours on Wednesday June 19, as markets are closed for a public holiday. Reuters will resume the report in Asian trading hours on Thursday June 20. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-06-19/

2024-06-19 04:45

SEOUL, June 19 (Reuters) - South Korea's foreign exchange authorities view the 1,385 level as a line in the sand for the won versus the dollar, two sources involved in the policy discussions told Reuters on Tuesday, citing recent measures to arrest the currency's weakness. The Bank of Korea and the finance ministry were preparing measures to intervene in the USD/KRW spot market had it breached the 1,385 level in late-May, the sources said, requesting anonymity due to the sensitivity of the matter. "The authorities were waiting to see if the won weakens beyond the 1,385 level to decide the timing of measures to support the won," one of the sources said, referring to his conversations with FX authorities. A fast weakening of the won has been causing headaches for policymakers in Asia's fourth-largest economy as the currency lost 6.5% against the dollar so far this year. The won hovered around 1,381.6 per dollar on Wednesday. On May 31, the finance ministry said the Bank of Korea and the National Pension Fund are in talks to expand their FX swap line of $35 billion, a programme that allows the fund to borrow the central bank's forex reserves instead of buying dollars in the onshore currency market. Sign up here. https://www.reuters.com/markets/currencies/south-korea-fx-authorities-aimed-cap-dollar-won-1385-sources-say-2024-06-19/

2024-06-19 04:37

A look at the day ahead in European and global markets from Ankur Banerjee Investors will get another chance to see if the global disinflation story gains more traction with UK inflation data taking centre stage on Wednesday. Its outcome though may not significantly affect the Bank of England's policy review the day after. Headline inflation in May is expected to be 2% year over year - back to the BoE's target - after April's 2.3%, with the easing in prices a result of household energy bills easing. But the central bank is widely expected to stand pat on rates as policymakers focus on wage growth and service sector inflation, which is estimated to come in at 5.5% in May. Data last week showed British wages picked up more quickly than forecast, keeping the pressure on the central bank to keep rates higher for longer. The inflation reading and the consequent policy decision will provide investors with some clarity ahead of Britain's general elections in July, with the blue-chip FTSE 100 (.FTSE) New Tab, opens new tab sliding 3% since hitting a record high in May. Markets may be feeling a sense of deja vu. After all, it was just last week when mild U.S. inflation readings came in hours before an overall hawkish stance by Federal Reserve officials, who cut their median projection for three quarter-point rate cuts to just one for the year. With U.S. markets closed, trading may be subdued throughout the day. Sterling remains muted and was last at $1.2711, while the dollar wobbled after retail sales data on Tuesday indicated signs of exhaustion among U.S. consumers. The data slightly pushed up expectations of a rate cut in September, although with the Fed being so data dependent those expectations will be volatile in the near term. At the start of the year, traders had priced in as much as 160 basis points of cuts in 2024, but now anticipate 48 bps of easing. No such worries for Nvidia (NVDA.O) New Tab, opens new tab as the AI darling dethroned tech heavyweight Microsoft (MSFT.O) New Tab, opens new tab to become the world's most valuable company at $3.335 trillion. The rally in technology stocks continued into Asia taking regional stocks higher, with tech-focused Taiwan stocks scaling yet another record high, while South Korean stocks touched their strongest since January 2022. Key developments that could influence markets on Wednesday: Economic events: UK May inflation report, UK PPI data for May Sign up here. https://www.reuters.com/markets/global-markets-view-europe-2024-06-19/