2024-09-02 05:37

Sept 2 (Reuters) - Climate change will be high on the agenda as Pope Francis embarks on his longest ever foreign trip on Monday, visiting Indonesia, Papua New Guinea, East Timor and Singapore over 12 days. Following are some of the climate challenges facing the countries on his itinerary. RISING SEA LEVELS Pope Francis has warned rising sea levels will mean many populations will probably have to move their homes in a few years. This is already happening in Indonesia, with its densely populated and low-lying coastal regions at risk from subsidence and flooding. It is already relocating its national capital from Jakarta to a new and less vulnerable city on Borneo. Indonesia's National Research and Innovation Agency warned in 2021 that 115 islands in the country's sprawling archipelago could be completely submerged by the end of the century. Singapore has predicted its coastal waters could rise by more than a metre by the end of the century, piling pressure on its flood defences and threatening its low-lying land. Sea levels in the Pacific Ocean are rising faster than the global average, the World Meteorological Organisation said last week, and the increase is also linked with more intense tropical storms throughout the western Pacific region. RAIN Francis has highlighted the risks of more frequent and intense rains and floods as temperatures rise. South East Asia and the Western Pacific are particularly vulnerable. In May, Papua New Guinea suffered a catastrophic landslide which the government said buried more than 2,000 people alive, and was caused by heavy rains and storms. Intense rain has also led to fatalities in Indonesia in May and August. East Timor is struggling to build resilience to extreme weather after suffering its worst flooding in fifty years in 2021. It warned in a climate policy document submitted to the U.N. that extreme rainfall during its wet season together with increased drought risks during the dry months were posing risks to food and water security. In the worst-case scenario, Singapore by the end of the century could see rainfall nearly double during its monsoon season, the country said in its 2024 climate change assessment. HEAT Pope Francis described the earth as having "a fever" in a video message on Friday. All the countries on Pope Francis's itinerary are particularly exposed to soaring heat, which is already impacting health and economic productivity in the region. Singapore warned in the climate assessment that temperatures in excess of 35 degrees Celsius (95 Fahrenheit) could become the norm by the end of the century, with averages projected to rise by up to 5C if emissions remain high. East Timor says its economy is also threatened by rising ocean temperatures, which are killing coral reefs and damaging its fishing industry. Sign up here. https://www.reuters.com/world/asia-pacific/climate-threats-pope-francis-asia-pacific-itinerary-2024-09-02/

2024-09-02 05:22

MUMBAI, Sept 2 (Reuters) - The Indian rupee weakened marginally on Monday and forward premiums declined, while market participants looked for cues on the pace of the Federal Reserve's rate cuts in a data-packed week. The rupee was at 83.8775 to the U.S. dollar at 10:29 a.m. IST compared to its previous close of 83.8625. Other Asian currencies were down between 0.2% and 0.5%, and the dollar index was little changed at 101.74. Traders await the U.S. ISM manufacturing and services prints, along with the JOLTS job openings, ADP private payrolls and the weekly jobless claims data due this week. The highly-anticipated non-farm payrolls report is due on Friday. "It will not be an exaggeration to say that this Friday's U.S. jobs report will be most important in a long time for fx and rates," a currency trader at a bank said. "For the rupee, well, one can hope that it will at least have a bit of impact." Fed Chair Jerome Powell's comments on the U.S. labour market at Jackson Hole last month have made this Friday's the payrolls report more significant than usual. This week's jobs data will likely be a deciding factor for the Fed to start with a 25 or 50 basis points cut, HSBC Bank said in a note. Considering all the data that is lined up, this is a "make-or-break week" for the dollar, it said. Currently, investors are pricing in a 30% probability of a 50 bps rate cut and 70% for a 25 bps. PREMIUMS DIP The dollar/rupee forward premiums retreated slightly, with the 1-year implied yield down 1 bps. Forward premiums have been on an uptrend over the last one-and-a-half months amid the Fed rate cut expectations. Sign up here. https://www.reuters.com/markets/currencies/rupee-forward-premiums-dip-cues-pace-fed-rate-cuts-awaited-2024-09-02/

2024-09-02 05:19

Sept 2 (Reuters) - The dollar edged down on Monday but remained within striking distance of its highest level in almost two weeks as investors' focus moved to a U.S. jobs report due at the end of this week. U.S. payrolls, due on Friday, will be crucial after Federal Reserve chair Jerome Powell pivoted from a battle against inflation to a readiness to guard against job losses. Analysts say the job figures will determine the magnitude of the Federal Reserve's expected rate cut. Markets have already priced in for weeks a cut of 25 basis points. The greenback had earlier advanced to its strongest since Aug. 20, buoyed by a rise in long-term Treasury yields to the highest since mid-August as inflation data pointed to a smaller rate cut. U.S. gross domestic product figures also indicated the economy was on a solid enough footing to give the Federal Reserve room to be less aggressive in easing its policy. Traders currently see a 33% chance of a 50-bps Fed rate cut this month, while fully pricing in a quarter-point cut. A week earlier, expectations were 36% for the larger reduction. "These days, it is all about economic figures," Athanasios Vamvakidis, global head of forex strategy at BofA, said. "We expect the dollar to weaken in the second half of this year, but the market shouldn’t get too excited about it," he added, flagging a euro target at $1.12. "The U.S. economy is slowing but is still doing much better than the rest of the world." The dollar index measure against six major peers weakened by 0.08% to 101.67, after hitting 101.79, a level not seen since Aug. 20. It sank as low as 100.51 last week for the first time since July 2023 after Fed Chair Powell sent a strong message that the easing campaign would begin at the upcoming policy meeting. The euro firmed 0.2% to $1.1060, after hitting $1.1043, its lowest since Aug. 19. On the political front in Europe, Alternative for Germany (AfD) was on track to become the first far-right party to win a regional election in Germany since World War Two, projections showed, giving it unprecedented power even if other parties are sure to exclude it from office. "The only clear lessons are that the far-right AfD continues to resist the temptation of power until they get an outright majority," Christian Schulz, deputy chief European economist at Citi. Some investors worried that a political stalemate in Berlin and Paris could prevent Europe from moving forward integration initiatives which could boost growth and make Europe able to play a bigger role in global affairs. Money markets reduced their bets on rate cuts from the European Central Bank as August services inflation remained sticky and ECB policymakers provided no clues about additional monetary easing after a widely expected September rate cut. They have priced in 59 bps worth of rate cuts by year-end - implying two 25-bps moves and a 36% chance of a third cut - from 67 bps right after the release of German inflation data last week and from 70 bps in mid-August. NON-FARM PAYROLLS A U.S. public holiday on Monday made for a slow start to the week for the dollar, analysts said, but the following days will see a steady flow of macroeconomic data that culminates with the non-farm payrolls on Friday. Economists surveyed by Reuters expect the addition of 165,000 U.S. jobs in August, up from an increase of 114,000 in the previous month. Analysts said data at around consensus forecasts were consistent with a soft landing and the Fed easing its policy by 25 bps this month. "With figures at or below 100,000, we will see risks of a hard landing and the market pricing in a higher chance of a 50 bps rate cut," BofA's Vamvakidis said. The dollar rose 0.40% to 146.74 yen . Analysts argued it would be hard to see the dollar rally against the yen at a time when the Fed is about to cut rates. Treasury bonds won't trade on Monday due to the U.S. holiday, but the 10-year yield stood at 3.9110% following a 4.4-bp rise on Friday. Sign up here. https://www.reuters.com/markets/currencies/dollar-edges-two-week-high-vs-euro-us-payroll-data-looms-2024-09-02/

2024-09-02 05:17

63-year-old woman killed by falling tree in Victoria Emergency services deal with thousands of call outs overnight Tasmania also affected, thousands without power SYDNEY, Sept 2 (Reuters) - A woman has died and more than 120,000 were left without power after high winds and heavy rain hit southern Australia, authorities said on Monday. There was widespread damage in the states of Victoria and Tasmania, while a 63-year-old woman was killed after a tree fell on a cabin at a holiday park on the border between Victoria and New South Wales, emergency services said. "It's a sad and tragic set of circumstances for the woman's family and my thoughts and sympathy go out to her and the emergency services who responded to that incident," Victoria Premier Jacinta Allan told a news conference. Victoria's State Emergency Services received over 2,800 call outs overnight, mostly for fallen trees and building damage, she added. At least 121,000 remained without power on Monday, Allan said, down from as many as 180,000 in the early hours of the morning. Weather warnings remain in place for much of the state's south east coast, as winds of almost 150 km per hour (93 mph) lashed the state overnight. A Victoria state government advisory on Monday told people to avoid coastal areas because of dangerous waves, unstable land in cliff areas, and flooding in low-lying areas. The southern island state of Tasmania has also been hit by wild weather, with thousands left without power on Sunday. "We've seen another wild night of weather across the state with extensive destruction," Mick Lowe, executive director of Tasmania's State Emergency Services, told a news conference on Monday. Extreme weather events are common for many Australians. The storms across the south of the country follow days of unseasonably high winter temperatures of almost 30 degrees Celsius (86 degrees Fahrenheit) in New South Wales' capital Sydney. Sign up here. https://www.reuters.com/business/environment/woman-dead-120000-without-power-damaging-storms-hit-australia-2024-09-02/

2024-09-02 05:03

Swiss franc more appealing in carry trades after yen blow-up Investors hope for stability, aided by central bank Yet safe-haven status can lead to big rallies LONDON, Sept 2 (Reuters) - As investors turn to the Swiss franc as an alternative to Japan's yen to fund carry trades, the risk of the currency staging one of its rapid rallies remains ever present. The Swiss franc has long been used in the popular strategy where traders borrow currencies with low interest rates then swap them into others to buy higher-yielding assets. Its appeal has brightened further as the yen's has dimmed. Yen carry trades imploded in August after the currency rallied hard on weak U.S. economic data and a surprise Bank of Japan rate hike, helping spark global market turmoil. The Swiss National Bank (SNB) was the first major central bank to kick off an easing cycle earlier this year and its key interest rate stands at 1.25%, allowing investors to borrow francs cheaply to invest elsewhere. By comparison, interest rates are in a 5.25%-5.50% range in the United States, 5% in Britain, and 3.75% in the euro zone. "The Swiss franc is back as a funding currency," said Benjamin Dubois, global head of overlay management at Edmond de Rothschild Asset Management Suisse. STABILITY The franc is near its highest in eight months against the dollar and in nine years against the euro , reflecting its status as a safe-haven currency and expectations for European and U.S. rate cuts. But investors hope for a gradual decline in the currency's value that could boost the returns on carry trades. Speculators have held on to a $3.8 billion short position against the Swiss franc even as they have abruptly moved to a $2 billion long position on the yen , U.S. Commodity Futures Trading Commission data shows. Analysts commonly see a large short position as a sign that a currency is being used to fund carry trades. "There is more two-way risk now in the yen than there has been for quite some time," said Bank of America senior G10 FX strategist Kamal Sharma. "The Swiss franc looks the more logical funding currency of choice." BofA recommends investors buy sterling against the franc , arguing the pound can rally due to the large interest rate gap between Switzerland and Britain, in a call echoed by Goldman Sachs. The SNB appears set to cut rates further in the coming months as inflation dwindles. That would lower franc borrowing costs and could weigh on the currency, making it cheaper to pay back for those already borrowing it. Central bankers also appear reluctant to see the currency strengthen further, partly because of the pain it can cause exporters. BofA and Goldman Sachs say they believe the SNB stepped in to weaken the currency in August. "The SNB will likely guard against currency appreciation through intervention or rate cuts as required," said Goldman's G10 currency strategist Michael Cahill. 'INHERENTLY RISKY' Yet the Swissie, as it is known in currency markets, can be an unreliable friend. Investors are prone to pile into the currency when they get nervous, thanks to its long-standing safe-haven reputation. Cahill said the franc is best used as a funding currency at moments when investors are feeling optimistic. A quick rally in the currency used to fund carry trades can wipe out gains and cause investors to rapidly unwind their positions, as the yen drama showed. High levels of volatility or a drop in the higher-yielding currency can have the same effect. The SNB and Swiss regulator Finma declined to comment when asked by Reuters about the impact of carry trades on the Swiss currency. As stock markets tumbled in early August, the Swiss franc jumped as much as 3.5% over two days. The franc-dollar pair has proven sensitive to the U.S. economy, often rallying hard on weak data that causes U.S. Treasury yields to fall. "Any carry trade is inherently risky and this is particularly true for those funded with safe-haven currencies," said Michael Puempel, FX strategist at Deutsche Bank. "The main risk is that when yields move lower in a risk-off environment, yield differentials compress and the Swiss franc can rally," Puempel added. A gauge of how much investors expect the Swiss currency to move , derived from options prices, is currently at around its highest since March 2023. "Considering the central banks, you can see how there may be more sentiment for some carry players to prefer the franc over the yen," said Nathan Vurgest, head of trading at Record Currency Management. "The ultimate success of this carry trade might still be dependent on how quickly it can be closed in a risk-off scenario," Vurgest said, referring to a moment where investors cut their riskier trades to focus on protecting their cash. Sign up here. https://www.reuters.com/markets/currencies/swiss-franc-carry-trade-comes-fraught-with-safe-haven-rally-risk-2024-09-02/

2024-09-02 04:37

A look at the day ahead in European and global markets from Wayne Cole. It's been a quiet start to the month with holidays in the United States and Canada sapping liquidity ahead of a deluge of data culminating in U.S. payrolls on Friday. Wall Street and European stock futures were all little changed. The Asian August PMIs were decent, with China's Caixin popping up to 50.4, and above forecasts of 50.0, though it also showed the first decline in new export orders in eight months. Chinese shares still slipped, however, led by losses in the real estate sector. Japan's PMI also improved to 49.8, while business investment gained momentum in the second quarter. Markets still wager the BOJ will shy away from hiking in October, though the meeting is right at the end of the month and there will be a lot more data under the bridge by then. As long as the Nikkei doesn't swoon, they might want to get back on track to normalising policy. For the Fed, markets are betting the size of its September rate cut could depend on the payrolls report given Chair Powell flatly stated they did not want to see further weakness in the labour market. A result in line with forecasts of +165,000 and 4.2% would likely see the chance of 50 basis points recede further, though it would take an extraordinarily strong report to make markets give up on 25 basis points. Forecasts range from +100,000 to +208,00 and 4.1% to 4.4%, and anything like the latter reading would rekindle recession talk and have investors baying for half a point off rates. Futures are 100% for 25bp and 31% for 50bp. Fed Governor Christopher Waller and NY Fed President John Williams happen to be speaking after the job data, giving the market a near-instant reaction. Also important this week will be the ISM surveys, JOLTS job openings and ADP employment, trade and the Fed's Beige Book. The Bank of Canada is widely expected to cut its rates on Wednesday, with markets implying a 22% chance of 50 basis points given signs the economy flatlined in July. For currencies, the euro was done no favours by wins for far-right parties in German state elections which added a fresh layer of political uncertainty around the fate of the EU. It's pinned at $1.1050 with support down at $1.0948. The dollar has eased a touch to 146.00 yen, after an early top of 146.60. Key developments that could influence markets on Monday: - S&P Global PMIs for Germany, France, UK and EU - Introductory statement by ECB bank supervisor Claudia Buch at Hearing of the Committee on Economic and Monetary Affairs of the European Parliament Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-09-02/