2023-10-10 19:32

Copyrighted Image by: Reuters. The dollar index fell by 0.23% on Tuesday, influenced by a stock market rally and Atlanta Fed President Bostic's dovish stance on further interest rate hikes. This drop comes despite some safe-haven demand spurred by Middle East turmoil. Bostic expressed that the current policy rate is adequate to bring inflation down to 2%. In contrast, the EUR/USD rose by 0.24% on Tuesday. This increase was triggered by the dollar's weakness, hawkish signals from ECB's Holzmann about potential interest rate hikes following supply shocks, and an unexpected increase in Italy's industrial production. The USD/JPY also saw an increase of 0.13% on Tuesday as the yen weakened due to reduced safe-haven demand after a substantial rally in the Nikkei Stock Index, coupled with a decline in Japanese government bond yields. Meanwhile, gold and silver prices rose for the third consecutive day, driven by factors such as a weaker dollar, dovish comments from Bostic, and a decrease in the 10-year T-note yield. The precious metals' prices were buoyed by these factors, marking a continuation of gains from previous days. https://www.investing.com/news/forex-news/dollar-index-weakens-amid-stock-market-rally-and-dovish-fed-stance-93CH-3195388

2023-10-10 07:12

Copyrighted Image by: Reuters. Neil Phillips, co-founder of Glen Point Capital and former hedge fund chief, is set to face trial next week in New York over allegations of manipulating the foreign exchange market tied to a $20 million transaction handled by Morgan Stanley. The bank's involvement in the case was disclosed during an indictment revelation amid a dispute over expert witnesses. Phillips' trial strategy includes bringing forward a former JPMorgan Chase & Co. (NYSE:JPM) trader to testify in his defense. This move emerged during a disagreement over expert witnesses, including ex-JPMorgan trader Andrew Newman, who will argue that Morgan Stanley should have hedged against the option involved in the alleged manipulation. The prosecutors accuse Phillips of commodities fraud, alleging he directed $725 million in trades to inflate the South African rand's value against the US dollar (USD/ZAR) with the aim of triggering the option at a barrier rate of 12.50 rand (USD1 = ZAR19.1782). This trial may determine the legality of "barrier chasing," which Phillips argues is standard trading practice. Glen Point Capital purchased the option through an intermediary and identified JPMorgan as its prime broker. Nomura Holdings (NYSE:NMR) Inc. managed Phillips' trades, and US District Judge Lewis Liman will oversee the expert testimony hearing. Phillips was arrested in Spain in 2022 and extradited to the US to face these charges. The prosecutors have withdrawn the most serious wire fraud charges against Phillips, but he still faces a potential 10-year prison sentence if found guilty of these allegations. https://www.investing.com/news/forex-news/neil-phillips-faces-trial-over-alleged-forex-market-manipulation-93CH-3194638

2023-10-10 05:40

Copyrighted Image by: Reuters. The Reserve Bank of India (RBI) has ceased the exchange or deposit of INR 2,000 notes in banks from Saturday, October 7, 2023. This decision follows the RBI's announcement on September 30 that INR 3.42 lakh crore ($46 billion) out of the total INR 3.56 lakh crore ($48 billion) worth of INR 2,000 banknotes in circulation since May 19 had been returned by September 29. The return rate was reported at 96%, leaving INR 0.14 lakh crore ($1.9 billion) as valid currency. Despite the cessation of deposits in banks, these notes remain legal tender and can still be exchanged or deposited at any of the RBI's 19 Issue Offices located in major Indian cities such as Mumbai, Delhi, Chennai, and Kolkata. For those wishing to exchange or deposit their INR 2,000 notes at these offices, they will need to adhere to due diligence procedures. This includes the submission of identification documents such as PAN, Aadhaar, or Driver's License for KYC compliance and bank account details for the credit process. While the RBI has discontinued this facility in banks, it has not set a deadline for exchanges or deposits at its regional offices. The central bank stated that this provision would be available "till further advice." The notes can also be sent via India Post, increasing accessibility for those living outside major cities. This move by the RBI is part of a broader effort to manage the circulation of high-value banknotes in India. As such, holders of INR 2,000 notes are encouraged to take advantage of the exchange facility at RBI regional offices or through India Post until further notice. https://www.investing.com/news/forex-news/rbi-discontinues-deposit-of-inr-2000-notes-in-banks-maintains-exchange-at-regional-offices-93CH-3194448

2023-10-10 03:06

Copyrighted Image by: Reuters. Investing.com - The U.S. dollar edged higher Tuesday, supported by its safe-haven status as violence in the Middle East continued, but gains were limited after dovish comments from a couple of Fed officials. At 03:05 ET (07:05 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 105.925. Safe havens continue to see demand The Israeli military announced earlier Tuesday that more than 200 targets were struck overnight in Gaza as the country responded to the weekend attacks by the Palestinian group Hamas. Traders are bracing for a drawn-out conflict, with more than 1,500 lives already having been lost, with Israel likely to launch its first ground offensive in Gaza since 2014. This means that the dollar is likely to continue to see support, while USD/JPY has retreated from the 150 level even though the yen is slightly weaker Tuesday, at 148.89. USD/ISR fell 0.2% to 3.9375, with the Israeli shekel steadying just off an almost eight-year low, after the central bank promised $30 billion in foreign exchange selling. Higher U.S. yields could negate further interest rate hikes However, the dollar’s gains are limited after a couple of Fed officials indicated that the recent selloff in bonds might lessen the need for further interest rate hikes. "If long-term interest rates remain elevated because of higher term premiums, there may be less need to raise the Fed funds rate," said Dallas Fed president Lorie Logan, while Fed Vice Chair Philip Jefferson said the central bank would need to "proceed carefully" given the recent rise in yields. There are a number of Fed officials due to speak later Tuesday, ahead of the release of the minutes of the September monetary policy meeting on Wednesday and then Thursday’s U.S. CPI data. Euro drifts lower ahead of Lagarde’s speech EUR/USD fell 0.1% to 1.0561, ahead of the release of the Italian industrial production figures for August. This is expected to show an annual fall of 5.0%, a deterioration from the previous month’s 2.1% drop, an indication of the difficulties the region is having the day after the equivalent German release added fuel to fears of a potential recession. European Central Bank President Christine Lagarde is set to speak later in the session as the IMF and World Bank annual meetings in Morocco get going. Elsewhere, GBP/USD fell 0.1% to 1.2222, AUD/USD dropped 0.1% to 0.6405 and NZD/USD fell 0.2% to 0.6011, with these risk-sensitive currencies still under pressure. https://www.investing.com/news/forex-news/dollar-edges-higher-fed-officials-question-need-for-more-hikes-3194254

2023-10-10 00:57

Copyrighted Image by: Reuters. On Tuesday, the People's Bank of China (PBOC) continued to manage the yuan's exchange rate against the U.S. dollar using a floating system, allowing for a fluctuation within a +/- 2% band. The system is designed to accommodate market supply-demand dynamics, economic indicators, and global currency market movements. The daily midpoint of the yuan's value is influenced by these factors. Within a trading day, the yuan can shift by up to 2% from this midpoint. This approach allows for some flexibility in the yuan's value while maintaining a degree of control over its stability. In instances where significant volatility occurs or if the yuan approaches the band limit, the PBOC intervenes through currency transactions. This intervention aims to maintain stability in the exchange rate and prevent any drastic fluctuations that could impact economic stability. There are potential plans to widen the fluctuation band to 3%, providing even more flexibility for the yuan's value. However, this would also require closer monitoring and potentially more frequent interventions from PBOC to ensure continued stability in the exchange rate. https://www.investing.com/news/forex-news/yuans-exchange-rate-system-managed-by-pboc-permits-2-fluctuation-93CH-3194212

2023-10-10 00:37

Copyrighted Image by: Reuters. Investing.com - Crude prices fell Tuesday after a one-day rebound as traders hit the pause button on the market’s advance to better assess the impact from the Israel-Hamas war. New York-traded West Texas Intermediate, or WTI, crude for delivery in November settled down 41 cents, or 0.5%, at $85.97 per barrel. London-traded Brent for the most-active December contract settled down 50 cents, or 0.6%, at $87.81. Both WTI, the US crude benchmark, and its UK peer Brent rose just over 4% on Monday with markets on red alert over fears of political and economic contagion from the fighting in the wake of the surprise attack by Hamas militants on Israel over the weekend But 24 hours later, markets appeared to have calmed, with a risk-on fervor pushing up stocks on Wall Street. Crude prices, meanwhile, dipped in the absence of credible estimates on how many barrels of oil produced, traded or shipped out of the Middle East would be stranded by newest tensions in the region. No word of clampdown on Iranian oil Since late 2022, Washington has turned a blind eye to surging Iranian oil exports, bypassing American sanctions. The priority in Washington was an informal détente with Tehran so as to allow the world more oil supply in the advent of OPEC+ production cuts. As a result, Iranian crude output is estimated to have surged nearly 700,000 barrels a day this year – the second-largest source of incremental supply in 2023, behind only US shale oil. Now, as reprisal for Tehran’s involvement, the United States could turn its full attention again towards enforcing the sanctions on Iran and that would be positive for crude prices, analysts said. But as of Tuesday, there was no word yet of a clampdown on Iranian oil. “Crude prices are lower as profit-taking settled in after it was clear a fresh catalyst was needed to take prices above the $90 a barrel level,” said Ed Moya, analyst at online trading platform OANDA. “Energy traders will have lots of time to assess how the Israel-Hamas conflict impacts Saudi production, if Iranian crude will face sanctions, and if other OPEC+ members will pick up their production levels.” Energy analysts at ING had a similar view. "There is still plenty of uncertainty across markets following the attacks in Israel over the weekend," said ING analysts, in a note. "If reports of Iran's involvement turn out to be true, this would provide another boost to prices, as we would expect to see the U.S. enforcing oil sanctions against Iran more strictly. That would further tighten an already tight market." There should be no “free lunch” helping oil rally It was also important to put the brakes on any oil rally to prevent the market from getting ahead of itself again, like it did in the third quarter — in spite of concerns about global inflation and stagnating European growth, said John Kilduff, a partner at New York energy hedge fund Again Capital. Crude prices rose almost 30% between July and September, reaching more than one-year highs that took WTI above $95 and Brent to over $97. “It’s alright to assign some geopolitical risk to oil in situations like this, but not to the extent that the geopolitical risk itself becomes a free lunch for the trade,” said Kilduff. “As of now, there’s no proof that there’ll be a meaningful reduction in barrels because of this war alone and that includes any clampdown on oil exports from Iran, which is a supporter of all things Hamas. Until and unless we get evidence of that, crude prices should not trade much higher than where they did last week.” OPEC+ vows that cuts will continue The downside in crude prices was, meanwhile, limited by Saudi Energy Minister Abdulaziz bin Salman’s pledge that output cuts by oil producers in the global alliance known as OPEC+ will continue. The Saudis and Russians, who jointly lead the OPEC+, are withholding a daily supply of 1.3 million barrels between them, while the rest of the 23-nation alliance is contributing to a squeeze of another 2 million barrels or more. “I honestly believe that the best thing I could say is that the cohesion of OPEC+ should not be challenged,” Abdulaziz said on the sidelines of a climate conference in Riyadh. “We’ve been through the worst, I don’t think we will have to go through any terrible situation at all,” “Yes, we may be delayed with a decision on what to do, but I would not forfeit the precautionary approach, even if it goes beyond a month or two, or three or four months, or five months,” he added. https://www.investing.com/news/commodities-news/oil-rebound-pauses-on-reality-check-over-impact-from-israelhamas-war-3194200