2025-07-24 11:44
Expectations for higher rates support yen, but politics weigh Expected trade deal with Europe in line with expectations Markets watch for possible Lagarde comments on euro strength Australian dollar rises on risk asset rally July 24 (Reuters) - The dollar edged higher against the euro on Thursday following progress in U.S. trade talks with key partners, but was mixed versus the yen, which got a lift from expectations for higher rates while political risks weigh. The Japanese central bank's deputy governor, Shinichi Uchida, said a trade deal with Washington had reduced economic uncertainty, comments that fuelled optimism in the market about the potential resumption of interest rate hikes. Sign up here. Analysts believe the yen will face persistent headwinds after Sunday's upper house election, with the opposition considering a no-confidence motion. The European Union is nearing a deal that would impose a broad 15% tariff on EU goods, in line with economists' expectations, while markets await the European Central Bank policy meeting where President Christine Lagarde could comment on the recent strength of the single currency. "The ECB faces a challenge that is quantitatively different from the BoJ's," said Thierry Wizman, global forex and rates strategist at Macquarie Group. "The euro has appreciated by far more than the JPY so far in 2025, meaning that the disinflationary impulse from U.S. import tariffs may be greater in the EU than in Japan, or the ECB may suspect as much," he added. Expectations are for ECB policymakers to keep rates unchanged, though markets will look out for what they say about the outlook for monetary policy. Analysts expect the ECB to ease monetary policy if euro strength dampens economic growth and inflation by making imports cheaper and exports less competitive. PMI data showed fragility in France following budget cut proposals there, but also resilience in Germany and other parts of the euro zone. Data showed that German business activity continued to grow marginally in July. "As of now, there has been very little tariff impact on the hard data," said Mohit Kumar, economist at Jefferies. "But that does not mean it's not coming," he added, arguing it would take at least three months to see the fallout of trade duties on hard economic figures. ECONOMIC FALLOUT Meanwhile, risk assets rallied as the trade deals eased fears over the economic fallout of a global trade war. The risk-sensitive Australian dollar rose to an eight-month high of $0.6625 on Thursday. The euro fell 0.2% at $1.1749, not far from a high of $1.1830 it hit earlier this month, which marked its strongest level in more than three years. Against the yen , the dollar rose 0.05% to 146.55, snapping a three-day falling streak, after hitting a fresh 2-week low earlier in the session at 145.86. Olivier Korber, forex strategist at Societe Generale, expects the yen to strengthen further, citing support from the trade deal and prospects for higher interest rates. "The local press reported that he (Prime Minister Shigeru Ishiba) should decide if he will resign in late August and, if that were to happen, a new party leader would probably be selected in September," Korber said. "This would ensure a smoother political transition, thus limiting market uncertainty," Ishiba denied on Wednesday he had decided to quit after a source and media reports said he planned to announce his resignation to take responsibility for a bruising upper house election defeat. Currencies mostly shrugged off news that U.S. President Donald Trump, a vocal critic of Federal Reserve Chair Jerome Powell, will visit the central bank on Thursday, a surprise move that escalates tensions between the administration and the Fed. https://www.reuters.com/world/africa/dollar-rises-against-euro-mixed-versus-yen-trade-deal-progress-2025-07-24/
2025-07-24 11:43
USS IM manages $106 billion for higher-education staff CEO Pilcher says policy change crucial for faster action Corporates will change 'when it's sane for them to do that' LONDON, July 24 (Reuters) - Britain's biggest private sector pension scheme plans to step up lobbying of governments, regulators and standard-setters to push for faster action amid a worsening climate outlook, its investment chief told Reuters. The Universities Superannuation Scheme, which manages nearly 78 billion pounds ($105.67 billion), has reduced emissions linked to its own portfolio. But Simon Pilcher said there was only so much schemes could achieve through asset reallocation. Sign up here. "That's why the high-value engagement is with governments and regulators to create the environment where the low-carbon action happens. It is, I would say, 90% up to them and only 10% up to capital allocation," the chief executive of USS Investment Management said. The British government in May signed an accord with pension investors to try to scale up investment in UK infrastructure and green programmes to help the country reach its net-zero goal, which is enshrined in law. Pilcher said changing the rules to make it easier for companies and consumers to overhaul their climate-damaging practices was the most effective lever for change, and the scheme had decided to "turn the dial up" on its lobbying efforts. "Corporates will change their activity when it's sane for them to do that," Pilcher said. "There needs to be a strong financial interest for those businesses to do the sensible thing; no one is going to spend money if, bluntly, they're going to be wasting that money." While USS IM has no formal arrangements with other investors, it has good relationships with the UK's local government pension schemes, and investors such as Railpen and Nest, the country's biggest auto-enrolment scheme, making it an influential voice within the sector. In the UK, lobbying would include talking to the Department for Energy Security and Net Zero about its strategy and encouraging them to, for example, reform the planning process to make it easier to connect renewables to the electricity grid. The United Nations said last October the world was on course to hit more than 3 degrees Celsius of warming above the pre-industrial average by the end of the century, based on current emissions-reduction pledges by countries, way off the world's goal of capping warming at 1.5 C. ($1 = 0.7381 pounds) https://www.reuters.com/sustainability/cop/britains-biggest-pension-scheme-lobby-governments-more-climate-2025-07-24/
2025-07-24 11:38
Preliminary headline PMI slows to 51 in July vs 52 in June CBI: manufacturing more stable but outlook weak Both surveys suggest further weakness in the jobs market Bank of England contending with slowdown and inflation LONDON, July 24 (Reuters) - British companies are struggling to grow and the job market continues to weaken, but inflation pressures are still lurking in the economy, according to surveys that are likely to keep the Bank of England on course for only gradual interest rate cuts. S&P Global's preliminary UK Composite Purchasing Managers' Index (PMI) slowed to 51.0 in July from 52.0 in June, not far above the 50.0 level that separates growth from contraction. A Reuters poll had forecast a smaller fall to 51.8. Sign up here. The survey's employment gauge dropped to its lowest since February, with businesses in part blaming the decision by finance minister Rachel Reeves to make them pay more in staff social security contributions from April. "Particularly worrying is the sustained impact of the budget measures on employment," Chris Williamson, chief business economist at S&P Global Market Intelligence, said. The impact of higher trade tariffs, launched by U.S. President Donald Trump, also weighed on firms. A separate survey by the Confederation of British Industry suggested Britain's manufacturing sector, which accounts for about 10% of the economy, had stabilised after a downturn. But the outlook remains fragile with factories cutting jobs again. The BoE is expected to reduce interest rates for the fifth time in 12 months on August 7 as it focuses on the slowdown in the jobs market, despite inflation rising further above the central bank's 2% target to 3.6% in June. Thursday's surveys underscored the BoE's dilemma with companies facing price pressures as well as weaker demand. The PMI showed prices charged by firms speeding up for the first time since April as suppliers sought to offset some of Reeves' tax increase and higher wage bills. "In our view, the Bank should be more concerned about the ominous state of the jobs market and what it implies for wage growth," James Smith, an economist with ING, said. However, another three-way split on the BoE's Monetary Policy Committee was possible in August similar to May's voting pattern, Smith said. At that meeting, two members voted for a big half-point rate cut due to their worries about the jobs market, while five backed a smaller quarter-point cut and two said borrowing costs should stay on hold because of inflation risks. Matt Swannell, chief economic advisor to the EY ITEM Club, a forecasting organisation, said it remained unlikely that the BoE would speed up its rate cuts after August's reduction. "We're yet to see the sort of deterioration in the official labour market or activity data that could prompt a pivot to faster rate cuts," Swannell said. S&P Global's Williamson said the PMI survey suggested Britain's economy was growing at a quarterly pace of just 0.1% with a risk that it could prove weaker. The PMI for the services sector slipped to 51.2 in July from June's 52.8. The manufacturing sector PMI rose for a fourth month in a row to 48.2 from 47.7 but remained in contraction territory for a 10th consecutive month. https://www.reuters.com/world/uk/uk-firms-struggle-price-pressures-likely-keep-bank-england-alert-2025-07-24/
2025-07-24 11:37
Future of titanium unit likely to be among first decisions of incoming CEO Trott Trott's vision for Rio includes focus on streamlining core businesses, sources say Global iron ore operations likely be grouped together, sources say July 24 (Reuters) - Rio Tinto (RIO.L) , opens new tab is considering a possible sale of its titanium unit due to weak prices and low returns, three sources said, just as incoming CEO Simon Trott will weigh up a restructuring of the world's second-largest miner when he takes over next month. Titanium, used to make paints, cosmetics and food colouring, is also a vital ingredient in jet engine parts, missile casings, rocket components, submarines and naval vessels because of its strength, corrosion resistance and lightweight properties. Sign up here. China, the world's biggest producer and consumer of titanium dioxide, has expanded its production to capture over half the global market over the past decade, according to data from the U.S. Geological Survey. China wields significant pricing power, which has knock-on effects for Western miners, including on margins. Against this backdrop, Rio Tinto (RIO.L) , opens new tab, (RIO.AX) , opens new tab has been evaluating whether the titanium business still has a place in its portfolio. How to exit it could be one of Trott's first decisions, the three sources familiar with matter said. Rio Tinto declined to comment. Rio would not be the first to exit titanium. Bowing to investor pressure, DuPont (DD.N) , opens new tab in 2013 said it would spin off its own titanium dioxide business , opens new tab. In the company's portfolio, titanium falls under the Minerals business, headed by Sinead Kaufman. This division also includes borates, used in cleaning products, as well as the Iron Ore Company of Canada, diamonds, and the Jadar lithium project in Serbia. The Minerals division reported an underlying EBITDA of $1.1 billion in 2024, 24% lower than in 2023, the company's financial report shows. Iron and titanium operations in South Africa and Canada accounted for more than half. Trott, who takes over as the company's CEO on August 25, has headed the iron ore division since 2021. There is an acknowledgement at the company that internal costs, such as staffing, are excessive, sources have told Reuters, so cost-cutting is expected. "There's going to be a middle management clean out," said one of the sources, who was not authorised to speak publicly. Part of Trott's pitch and vision for Rio includes a focus on streamlining the structure of the company's core businesses iron ore, copper, lithium and aluminium, the sources said. Australia and possibly Canada's iron ore operations, and the upcoming Simandou project in Guinea are likely to be grouped together, as well as the recently acquired U.S. lithium company Arcadium and its other lithium projects and investments, they added. Rio is scheduled to release its half-year results on July 30. https://www.reuters.com/world/americas/rio-tinto-weighs-sale-titanium-business-sources-say-2025-07-24/
2025-07-24 11:27
KARACHI, July 24 (Reuters) - A deputy chief of Pakistan's spy agency met currency exchange firms this week to address a sharp slide in the rupee, prompting a security crackdown on "black market dollar trade", the head of the country's forex association told Reuters on Thursday. The action helped stabilise the open market rate and the rupee recovered against the dollar by one rupee on Thursday, said Exchange Companies Association of Pakistan chairman Malik Muhammad Bostan. Sign up here. "The dollar is down one rupee today in the open market. This is because we're finally getting the supply we need," Bostan said. A spokesperson for the spy agency, the Inter-Services Intelligence (ISI), did not immediately respond to an email seeking comment. The ISI is led by Pakistan's powerful military. The action marks the second such intervention in two years after the military helped curb speculative currency trade in 2023. https://www.reuters.com/world/asia-pacific/pakistan-spy-agency-targets-black-market-dollar-trade-curb-rupee-slide-says-2025-07-24/
2025-07-24 11:27
Spy agency's deputy chief met exchange firms over rupee fall Move underscores armed forces' expanding economic role Open market dollar rate down one rupee after latest action KARACHI, July 24 (Reuters) - A deputy chief at Pakistan's spy agency met with currency exchange firms this week amid a sharp slide in the rupee, leading to a crackdown on black market dollar trade, the head of the country's forex association told Reuters on Thursday. The move, a demonstration of the military's growing role in managing the economy, marks the second such intervention, following a 2023 army clamp down that halted an earlier sharp plunge in the currency, helping stabilise the exchange rate until this month. Sign up here. Currency dealers say the rupee is again under pressure as a result of dollar hoarding, cross-border smuggling, and banking restrictions that have driven demand to unregulated dealers offering quicker or better rates. Faisal Naseer, a major general heading the internal security arm of the military's Inter-Services Intelligence, met with exchange firms this week, according to Malik Muhammad Bostan, chairman of the Exchange Companies Association of Pakistan. Following the meeting, security forces, including the Federal Investigation Agency - a civilian security agency - began targeting illegal currency dealers, many of whom subsequently went underground, he said. The open market dollar rate was down one rupee following the intervention, said Bostan, who credited the enforcement drive and a resulting improvement in the supply of dollars to the market. A spokesperson for the military's media wing did not immediately respond to a request for comment. Border controls with Iran and Afghanistan were tightened during tensions with India earlier this year, curbing illicit currency flows. But with checks now eased and the central bank buying dollars to build reserves, formal supply is under strain, Bostan said. Under Pakistan's $7 billion programme with the International Monetary Fund, authorities have pledged to keep the gap between the interbank and open market rates within 1.25% to prevent remittances - crucial to maintaining foreign exchange levels - from shifting to informal channels and eroding reserves. Despite this week's crackdown, dollars are still not available in upscale areas of the commercial hub Karachi, pushing buyers to the grey market, where rates remain about 5% above interbank, said Adnan Sheikh of Pakistan Kuwait Investment Company. https://www.reuters.com/world/asia-pacific/pakistan-spy-agency-targets-black-market-dollar-trade-curb-rupee-slide-2025-07-24/
