2024-06-05 04:56

MUMBAI, June 5 (Reuters) - The Indian rupee will rely on the central bank stepping in to defend the currency on Wednesday, amid likely foreign portfolio outflows following the unexpected outcome of the country's general election. Non-deliverable forwards indicate the rupee will open largely unchanged from 83.53 in the previous session. The rupee is not too far from the all-time low of 83.5750 hit in April. The rupee posted its biggest single-day percentage decline in a year on Tuesday after Prime Minister Narendra Modi-led alliance's narrower-than-expected win prompted foreign investors to dump Indian equities. Foreign institutional investors sold a record $1.5 worth of Indian shares on Tuesday, per provisional data from the National Stock Exchange. The NSE Nifty 50 (.NSEI) New Tab, opens new tab and S&P BSE Sensex (.BSESN) New Tab, opens new tab logged their worst day in more than four years. The rupee's losses would have been larger if not for the Reserve Bank of India, which likely sold dollars near 83.50. It is expected to continue to do so in the coming days, traders say. The rupee's volatility will likely be "smoothed for now, but medium-term questions have surfaced", HSBC Bank said in a note. "Beyond the immediate risk of portfolio outflows and carry trade unwinds from the election uncertainty, we see potential medium-term implications from the election result," said Pranjul Bhandari, chief India and Indonesia economist at HSBC. The trend of more moderate INR NEER (Nominal Effective Exchange Rate) depreciation in recent years may not continue if there are changes to the structural reform agenda and the RBI may be more determined to build up large FX reserve buffers, she said. The rupee's Asian peers were mostly higher on the day amid the increasing likelihood that the Federal Reserve will cut rates in September. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.60; onshore one-month forward premium at 7.5 paisa ** Dollar index down at 104.12 ** Brent crude futures up 0.1% at $77.6 per barrel ** Ten-year U.S. note yield at 4.34% ** As per NSDL data, foreign investors bought a net $824.3 million worth of Indian shares on June 3 ** NSDL data shows foreign investors bought a net $272.6 million worth of Indian bonds on June 3 Sign up here. https://www.reuters.com/markets/currencies/rupee-count-central-banks-help-amid-portfolio-outflows-2024-06-05/

2024-06-05 04:55

MUMBAI, June 5 (Reuters) - The Indian rupee rose on Wednesday, aided by likely intervention from the central bank after the currency slumped the most in over a year in the previous session following a narrower than expected victory margin for Prime Minister Narendra Modi-led alliance. The rupee was at 83.4525 against the U.S. dollar as of 10:15 a.m. IST, up nearly 0.1% from its close at 83.53 in the previous session. The Reserve Bank of India (RBI) likely intervened in the non-deliverable forwards market to support the rupee, seven traders said. "Think we are headed lower (on the rupee) in the near term but the pace will depend on how the RBI acts," a foreign exchange trader at a large private sector bank said. Benchmark equity indices, the BSE Sensex (.BSESN) New Tab, opens new tab and Nifty 50 (.NSEI) New Tab, opens new tab, were slightly in the green after logging their worst fall in four years on Tuesday, with foreign investors pulling out a record $1.5 billion, according to provisional exchange data. Traders expect outflows from Indian equities to continue this week as markets digest the election outcome. "We now forecast USD/INR at 83.00 by calendar year end, from 82.00 previously," Michael Wan, senior currency analyst at MUFG Bank said. The dollar index was at 104.2 while most Asian currencies gained amid a slip in U.S. bond yields after data bolstered hopes of rate cuts by the Federal Reserve this year. Odds of the Fed cutting rates in September ticked higher to nearly 65%, up from about 60% on June 3, according to CME's FedWatch tool. Sign up here. https://www.reuters.com/markets/currencies/rupee-ticks-higher-likely-cenbank-intervention-traders-eye-equity-flows-2024-06-05/

2024-06-05 04:34

A look at the day ahead in European and global markets from Ankur Banerjee: A softening labour market and a cooling economy have traders perking up with expectations of a September rate cut from the Federal Reserve, lifting stocks and keeping the dollar under pressure. There are still worries though that the economy could miss a soft landing and head for recession - that battle between "bad news is good news" and "bad news is bad news" is keeping investors on edge. European stock markets are set for a higher open, futures indicate, with the continent-wide STOXX 600 (.STOXX) New Tab, opens new tab hoping to shrug off Tuesday's drop ahead of PMI data from the euro zone, France and Germany. The European Central Bank's policy meeting on Thursday will likely keep risk appetite in check as traders await comments to get clarity on how the central bank will follow up after a widely expected rate cut this week. Asian stocks were broadly higher after data showed U.S. job openings fell more than expected in April to the lowest level in more than three years, leading the markets to price in a 65% chance of a rate cut in September and 45 basis points of easing this year. The data drove Treasury yields lower and weighed on the dollar, which was hovering near a two-month low against a basket of six rivals . The focus shifts to nonfarm payrolls data on Friday. In Asia, the spotlight remained on Indian markets after Tuesday's spectacular drop after election results showed a victory margin for Prime Minister Narendra Modi that fell short of expectations. India's Nifty 50 index (.NSEI) New Tab, opens new tab was volatile in early trading, hinting at investor worries over the prospect of a coalition government that may not be as market friendly as previously hoped. Meanwhile, a report on Monday that online broker E*Trade may consider banning Keith Gill, the meme-stock influencer who ignited frenzied trading in shares of GameStop (GME.N) New Tab, opens new tab in 2021, has triggered a backlash on social media sites. E*Trade-parent Morgan Stanley (MS.N) New Tab, opens new tab declined to comment on the report and the messages on social media calling for a boycott of the brokerage platform. Key developments that could influence markets on Wednesday: Economic events: Composite and services PMI data for May from France, Germany and euro zone; S&P services and composite PMI May data for UK. Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-06-05/

2024-06-05 00:50

U.S. private sector jobs data shows lower-than-expected increase U.S. services sector recovers in May Bank of Canada cuts rates by 25 basis points Focus on ECB meeting, U.S. nonfarm payrolls report NEW YORK, June 5 (Reuters) - The U.S. dollar drifted higher on Wednesday after data showed the services sector in the world's largest economy rebounded in May after contracting the month before, highlighting uncertainty surrounding the expected start of the Federal Reserve's easing cycle later this year. The Institute for Supply Management said its nonmanufacturing purchasing managers index rose to 53.8 last month from 49.4 in April. May's reading, the highest since August, overshot estimates of a 50.8 reading. In afternoon trading, the dollar index was up 0.1% at 104.28 <=USD>, after earlier hitting 103.99 on Tuesday, its lowest since April 9. Even with the strong ISM services data, Vassili Serebriakov, FX strategist at UBS in New York, said he believes the U.S. economy is slowing down, although "it's not clear that you should outright sell the dollar." He said the market is pricing in about two rate cuts by the Fed this year, so not leaving much room to price in more easing than what has already been factored in by investors. "In that context, we are still not convinced that the dollar has a lot of downside," Serebriakov said. The euro, the biggest component of the dollar index, turned lower after the ISM data, trading slightly down at $1.0874 . Investors are now looking to the European Central Bank meeting on Thursday, in which the bank is widely expected to lower its deposit rate from a record high of 4%. Earlier in the session, the Bank of Canada (BOC) cut interest rates by 25 basis points (bps) to 4.75%, its first cut in four years. The bank said more easing was likely if inflation continued to moderate. The U.S. dollar rose against the Canadian currency after the BOC rate move, and was last up 0.1% at C$1.3688 . Analysts expect the Bank of England to emulate the ECB's and BOC's moves when the British central bank convenes in two weeks to decide on interest rates. The Swiss National Bank, meanwhile, already started easing in March, and could cut rates again this month after Swiss inflation held steady in May. US PRIVATE PAYROLLS RISE LESS THAN EXPECTED Earlier on Wednesday, data showed U.S. private payrolls increased less than expected in May while data for the prior month was revised lower. Private payrolls increased by 152,000 jobs last month after rising by a downwardly revised 188,000 in April, the ADP Employment report showed. Economists polled by Reuters had forecast private employment rising 175,000 last month. The dollar showed little reaction to the ADP report. Aside from the ECB, investors are also looking to Friday's nonfarm payrolls report, with the market expecting 185,000 new jobs created last month, according to a Reuters poll. "The weak JOLTS (Job Openings and Labor Turnover Survey) data does not pass the threshold of significant slowing in the labor market, which is not going to affect rate expectations," said Marc Chandler, chief market strategist, at Bannockburn Forex in New York. Fed funds futures raised the chance of a rate cut in September to 70% on Wednesday, according to LSEG's rate probability app, compared with 59% late Tuesday. It was slightly below 50% earlier last week. The rate future market is also pricing between one to two cuts this year. In other currency pairs, the dollar surged 0.8% against the yen to 156.09 yen. The Japanese currency retraced Tuesday's gains driven by investors unwinding bets in emerging markets, after Japanese real wages fell for a 25th straight month in April as inflation outpaces nominal pay rises. On Tuesday, Bank of Japan Deputy Governor Ryozo Himino said the central bank must be "vigilant" about the impact of yen weakness on the economy and inflation. Investors see the BOJ tightening its policy in the future, though not enough to strengthen the yen. Emerging markets stabilised after a turbulent few days. The Mexican peso gained against the dollar, which fell 1.6% to 17.567 pesos. The ruling left-wing Morena party was re-elected and, in coalition, within reach of two-thirds majorities in both Congress chambers. India's rupee recovered from a seven-week low against the dollar. Election results in India showed voters had returned Narendra Modi to power by a much slimmer margin than expected. The dollar was last down 0.2% versus the rupee at 83.370. Sign up here. https://www.reuters.com/markets/currencies/dollar-finds-footing-traders-turn-us-services-data-2024-06-05/

2024-06-05 00:39

US crude stocks rise vs estimates for a fall, EIA says US Fuel stocks see bigger-than-expected rise, EIA says Fed to likely cut rates twice this year - Reuters poll Saudi Arabia cuts price of flagship crude to Asia HOUSTON, June 5 (Reuters) - Oil prices climbed 1% on Wednesday, rebounding from four-month lows, as hopes of an interest rate cut by the U.S. Federal Reserve in September outweighed demand concern after data showed builds in U.S. crude and fuel stocks. Brent crude futures settled 89 cents higher, or 1.2%, at $78.41 a barrel, while U.S. West Texas Intermediate crude futures climbed 82 cents, or 1.1%, to $74.07. U.S. crude stocks jumped by 1.2 million barrels in the week to May 31, compared with analysts' estimates for a draw of 2.3 million barrels, data from the U.S. Energy Information Administration showed. However, the build was below the American Petroleum Institute's reading on Tuesday of an increase of more than 4 million barrels. Gasoline inventories rose by 2.1 million barrels versus expectations for an increase of 2 million barrels, adding to demand concerns as the week reflected fuel usage around the Memorial Day holiday, which is traditionally viewed as the start of the U.S. summer driving season Distillate stocks rose by 3.2 million barrels compared with estimates of an increase of 2.5 million, EIA data showed. Meanwhile, the U.S. Federal Reserve will cut its key interest rate in September and once more this year, according to a majority of forecasters in a Reuters poll. Traders now see a nearly 69% chance of a September rate reduction, according to the CME's FedWatch tool. Expectations had hovered around 50% last week. "Data outside of the oil world was sufficiently weak that it's going to give cover to the Fed to finally cut rates and spur some growth," said John Kilduff, partner at Again Capital. Lower interest rates decrease the cost of borrowing, which can incentivize economic activity and boost oil demand. U.S. stock indexes also climbed on Wednesday, as investors strengthened bets for an earlier-than-expected start to the Federal Reserve's policy easing cycle. Both contracts have fallen for five straight sessions, and declined more than 1% on Tuesday to their lowest settlement levels since early February. The slide followed news from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, of plans to increase supply from the fourth quarter despite recent signs of weakening demand growth. "The comments from OPEC+ were a may or could, it's not definitive and if prices are in the low $70s, I don't see OPEC raising production," said Dennis Kissler, senior vice president of trading at BOK Financial. Saudi Arabia's energy minister, Prince Abdulaziz bin Salman, has said OPEC+ would pause the unwinding of the cuts or reverse them if demand wasn't strong enough to absorb the barrels. The U.S. could hasten the rate at which it replenishes the country's Strategic Petroleum Reserve, Energy Secretary Jennifer Granholm told Reuters on Tuesday, adding that she believes the global oil market is well supplied. Weighing on prices, however, was a cut, the first in five months, in Saudi Arabia' official selling price for its flagship Arab Light crude oil to Asia. The price reduction for Asia underscores the pressure faced by OPEC producers as non-OPEC supply continues to grow and demand concerns. Sign up here. https://www.reuters.com/business/energy/oil-slips-sixth-consecutive-day-big-builds-us-oil-fuel-stocks-2024-06-05/

2024-06-05 00:35

DURBAN, June 4 (Reuters) - A storm ripped through the South African coastal province of KwaZulu-Natal on Monday, killing at least 11 people and leaving a trail of destruction in its wake, local officials said. Drone footage taken on Tuesday in the South African town of Tongaat showed residents sifting through debris strewn around their damaged homes, trying to salvage what was left of their belongings. Local media cited the premier of KwaZulu-Natal, Nomusa Dube-Ncube, as saying the death toll could rise from the 11 reported killed so far. Trevor Freemantle, who was driving in the area, filmed dark clouds swirling above the suburb of La Mercy near Durban. "It really did look like something you would see in a movie," he told Reuters. "After it passed I noticed vehicles that had been struck by debris and a truck had been turned on its side." Sign up here. https://www.reuters.com/world/africa/storm-rips-through-coastal-south-african-province-killing-11-2024-06-04/