2024-08-27 05:31

U.S. house prices fall in June U.S. consumer confidence rises Dollar falls to nearly eight-month low vs Swiss franc Dollar index drops to more than one-year low NEW YORK, Aug 27 (Reuters) - Sterling climbed to its highest against the U.S. dollar in more than two years on Tuesday, while the greenback dropped to a more than one-year low after gains the previous session, as investors awaited key economic data this week and next. Currency moves remained driven by the prospect of upcoming U.S. interest rate cuts, which has pressured the dollar in recent weeks. Investors see a rate cut at the Federal Reserve's September meeting as all but certain, with debate now focused on the possibility of a 50-basis-point (bp) cut instead of 25. The rate futures market has attached a 37% probability that the Fed will raise rates by 50 bps, unchanged from late on Friday, according to LSEG calculations. About 106 bps of cuts in 2024 are priced in by futures traders. "Since Jackson Hole, the dollar has been grinding lower, but I would argue it's more sideways than anything else," said Eugene Epstein, head of structured products, North America at Moneycorp in New York, referring to last week's Kansas City Fed’s Jackson Hole, Wyoming, symposium. "(Fed Chair Jerome) Powell's comments were ultimately seen as dovish in every way. Non-U.S. dollar stores of wealth such as crypto recovered a little bit too. So this is all perceived as a dovish follow-through from Friday's Jackson Hole." Sterling has been one beneficiary of the weakness in the U.S. currency, and on Tuesday the pound hit its highest since March 2022 at $1.3246. It was last up 0.3% at $1.3226. The pound garnered support from the contrast between Friday's remarks by Powell, which underscored market pricing for meaningful U.S. rate cuts starting next month, and the more cautious comments of Bank of England Governor Andrew Bailey. DOLLAR'S BIG MONTHLY DECLINE The dollar index was down 0.3% at 100.53 , after earlier dropping to its lowest since July last year. For the month of August, the dollar has fallen 3.2%, on track for its biggest monthly decline since November 2022. The greenback edged lower after data showed U.S. house prices dipped 0.1% on a month-on-month basis after being unchanged in May. They increased 5.1% in the 12 months through June, the smallest year-on-year rise since July 2023, Tuesday's report also showed U.S. consumer confidence rose in August. The Conference Board' consumer confidence index increased to 103.3 this month from an upwardly revised 101.9 in July. The market though showed little reaction to the data. Investors are awaiting data on the preliminary estimate for gross domestic product in the second quarter, jobless claims, and personal consumption expenditures (PCE) index, the Fed's preferred inflation gauge. The euro gained 0.2% versus the dollar to $1.1181, just off Monday's 13-month top. "After a strong rally since early August, it looks like euro/dollar could be due some consolidation," Chris Turner, global head of markets at ING, said in a note to clients. "The run-up in oil prices on the back of increased Middle East tension and Libyan supply challenges will not be helping." Oil prices also paused recent advances to trade more than 2% lower on Tuesday, after a surge of more than 7% in the previous three sessions, on supply concerns prompted by fears of a wider Middle East conflict and the potential shutdown of Libyan oilfields. One currency boosted by the surge in oil prices was the Canadian dollar, which rose against the U.S. currency, having touched a five-month peak earlier in the session. The U.S. dollar was last down 0.3% at C$1.3449 . Elsewhere, the Australian dollar rose 0.3% to US$0.6791, not far from a one-month high of $0.6799 hit on Friday. Against the Swiss franc, the dollar fell to its lowest since early January and was last down 0.7% at 0.8414 franc . Sign up here. https://www.reuters.com/markets/currencies/currencies-tread-water-middle-east-risks-temper-rate-cut-optimism-2024-08-27/

2024-08-27 05:23

Wall Street indexes finish higher Oil prices drop 2% Gold trades above $2,500 European stocks gain U.S. dollar weakens NEW YORK/LONDON, Aug 27 (Reuters) - A gauge of global shares climbed in choppy trading while oil prices slipped on Tuesday as investors weighed geopolitical risks as well as impending Nvidia earnings and U.S. inflation data. Markets are anticipating an imminent start to the Federal Reserve's monetary policy easing, after Chair Jerome Powell said on Friday the central bank was ready to start cutting rates. Wall Street's main indexes ended higher in choppy trading, with the Dow Jones Industrial Average (.DJI) , opens new tab adding 0.02% to 41,250.50, the S&P 500 (.SPX) , opens new tab gaining 0.16% to 5,625.80 and the Nasdaq Composite (.IXIC) , opens new tab rising 0.16% to 17,754.82. European stocks finished up 0.16% (.STOXX) , opens new tab, following a late rally in Japan's Nikkei index, which ended 0.47% higher. MSCI's all-country index of stocks <.MIWD00000PUS > was up 0.15% at 831.24. Gold traded above $2,500 per ounce on rate cut expectations and lingering concerns about the Middle East conflict, exacerbated by a major missile exchange between Israel and Hezbollah on Sunday. Middle East tensions - along with concerns about a potential shutdown of Libyan oil fields - had led to a surge in oil prices of more than 7% over the previous three sessions. However, that rally lost steam on Tuesday, with a slight dip in prices. Investors were also on edge ahead of Nvidia's (NVDA.O) , opens new tab earnings report on Wednesday, where anything short of a stellar forecast from the chipmaker could jolt investor confidence in the AI-fuelled rally. "I think the big story today is what's going to happen with Nvidia tomorrow, and this seems to be like what everybody is poised to react and nobody wants to really commit one way or the other," said James St. Aubin, chief investment officer at Ocean Park Asset Management in Santa Monica, California. "Nvidia is almost 5% of the S&P 500 earnings contribution and almost 7% of the market cap weight so it's significant in terms of its influence of the overall market." U.S. consumer confidence rose to a six-month high in August although Americans are becoming more anxious about the labor market, data showed on Tuesday. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.3% at 100.55, with the euro up 0.21% at $1.1184. Personal consumption expenditures (PCE) price index, a key U.S. inflation measure that is preferred by the Fed, is due on Friday and could further influence market perceptions of how quickly the central bank officials will act. The yield on benchmark U.S. 10-year notes rose 1.5 basis points to 3.833%. Investors are betting on either a 25-basis point or a 50-basis point interest-rate cut in September, with odds of a 25-bps cut at about 71%, while odds of a 50-bps cut are at about 29%, according to CME Group's Fed Watch tool. "I think 25 bps is locked and loaded in terms of the market expectations at this point, but the question is, is 50 bps on the table?" St. Aubin added. Also keeping sentiment in check was a move by Canada, following the lead of the United States and European Union, to impose a 100% tariff on imports of Chinese electric vehicles and a 25% tariff on imported steel and aluminium from China. Oil prices fell, with Brent futures settling down 2.3% at $79.55 a barrel, while U.S. crude fell 2.4% to $75.53. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-08-27/

2024-08-27 04:52

LAUNCESTON, Australia, Aug 27 (Reuters) - Asia's imports of seaborne thermal coal ticked up in August to the highest in eight months, but the strength was largely driven by North Asia's developed economies rather than the usual heavyweights of China and India. A total of 79.87 million metric tons of the fuel predominantly used to generate electricity will arrive at Asian ports in August, according to data compiled by commodity analysts Kpler. This is up from 77.1 million tons in July and is the highest since December's 80.54 million. Asia's demand for thermal coal has accelerated in recent months amid warmer-than-usual summer weather, which has boosted demand for air conditioning. The increased demand for coal used in power generation has been most keenly felt in the developed economies of North Asia, namely Japan, South Korea and Taiwan. Japan, Asia's third-biggest coal importer behind China and India, is on track for imports of 9.09 million tons of thermal coal in August, down from July's 9.53 million, according to Kpler. But July and August are Japan's two strongest months for thermal coal imports since the peak winter month of January, and August's arrivals are also higher than the 8.91 million in the same month last year. South Korea, Asia's fourth-ranked coal importer, is on track for imports of 8.27 million tons in August, the highest since July 2022 and up from 6.58 million in July. Taiwan's imports are estimated at 4.13 million tons in August, down slightly from July's 4.46 million, but these two months are the strongest since September last year. A common factor between Japan, South Korea and Taiwan is they prefer higher grade thermal coal, with the benchmark being Australian coal loaded at Newcastle port with an energy content of 6,000 kilocalories per kilogram (kcal/kg). The index for this grade , as assessed by commodity price reporting agency Argus, reached the highest since late December in the week to Aug. 23, ending at $146.03 a ton. This was up marginally from $145.92 a ton the previous week, although the index has rallied 11.7% from its mid-year low of $130.68 reached in the week to June 28. CHINA, INDIA While the price of higher quality Australian coal has been driven by rising demand in North Asia, the same cannot be said for lower-grade fuel, which is favoured by China and India, as well as buyers in Southeast Asia such as Vietnam and Malaysia. Australian coal with an energy content of 5,500 kcal/kg dropped to $86.41 a ton last week, its fourth straight weekly decline and it's now at the weakest since April. Indonesian coal with an energy content of 4,200 kcal/kg fell to a one-year low $50.64 a ton in the week to Aug. 23, its fifth straight losing week. Indonesia is the world's biggest exporter of thermal coal and Australia ranks second, while China and India are the biggest buyers of Indonesia cargoes and of lower-grade Australian fuel. China's imports of seaborne thermal coal edged higher in August to 29.97 million tons, up from 28.52 million July. However, for the past four months China's thermal coal imports have been effectively flat, anchored in a narrow range around 30 million tons, indicating the strong growth in demand over the past two years appears to be levelling out. India is on track for imports of 13.45 million tons of seaborne thermal coal imports in August, down a touch from July's 13.67 million. Similar to China, India's imports for the past three months have been effectively flat around 13.5 million tons. The steady picture for China and India goes some way to explain the recent gentle downtrend in the prices of lower grade coal, while the rising imports in North Asia's developed economies justify the move up for higher quality coal. However, North Asia's demand tends to be more seasonal and is about to enter the slack period between the summer and winter peaks, which may put some downward pressure on the Newcastle Index price. But much will depend on whether utilities in those countries want to keep ample stockpiles ahead of the winter peak, which may lead to stronger-than-usual demand in the shoulder season. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/commodities/rising-asian-thermal-coal-imports-driven-by-japan-skorea-russell-2024-08-27/

2024-08-27 04:46

MUMBAI, Aug 27 (Reuters) - The Indian rupee weakened slightly on Tuesday, tracking a decline in its Asian peers, but its losses were limited by mild dollar sales by state-run banks, traders said. The rupee was at 83.9325 as of 10:10 a.m. IST, against a close of 83.90 in the previous session. Month-end dollar bids from importers weighed on the rupee in early trading, but state-run banks were present on offer, blunting the impact, a trader at a foreign bank said. While current levels are "their (Reserve Bank of India's) zone" to offer dollars, state-run banks didn't appear to be acting on the central bank's behalf on Tuesday, the trader said. The RBI has routinely intervened this month to ensure that the rupee doesn't fall below the 84 handle. The currency had touched its record low of 83.9725 on Aug. 7. The dollar index was little changed at 100.8 while Asian currencies were down between 0.1% and 0.4%. The rupee is expected to "trade in a 83.80-83.95 range intraday with sideways price action," FX advisory firm IFA Global said in a note. Meanwhile, dollar-rupee forward premiums slipped from multi-month highs hit in the previous session, pressured by an uptick in U.S. bond yields. The 1-year implied yield was down 2 basis points (bps) at 2.10%. The 1-year Treasury yield rose 5 bps to 4.46% in Asia trading. With Federal Reserve Chair Jerome Powell having signalled that the U.S. central bank will begin to cut rates next month, investors are focussed on whether it will deliver a 25 bps or a 50 bps cut. Investors have currently priced in nearly 100 bps of rate cuts over the Fed's next three meetings in 2024 , meaning they expect a 50 bps cut at one of the meetings. Sign up here. https://www.reuters.com/markets/currencies/rupee-slips-state-run-banks-dollar-sales-cap-losses-2024-08-27/

2024-08-27 04:33

A look at the day ahead in European and global markets from Ankur Banerjee Optimism over looming U.S. interest rate cuts have been tempered by nervousness over what economic data will show in the coming weeks, sky-high expectations from earnings of AI darling Nvidia and evolving tensions in the Middle East. That has left markets on edge and taking a breather, with the yen hovering near three-week highs, the dollar steady but close to 13-month lows and Asian stocks down 0.42% on Tuesday after touching its highest in a month on Monday. Oil prices eased after surging in the previous session due to supply concerns, while gold was hovering close to a record peak touched last week on safe haven flows. Futures indicate European stock markets are set for a subdued open as well, with London stocks returning from a holiday on Monday. Investors await key economic data this week, including EU inflation on Friday, for signals on the policy path for the European Central Bank, which meets on Sept. 12, where traders have broadly priced in a 25 basis point rate cut. Nvidia's earnings on Wednesday will set the tone for a potential AI rally and improved risk appetite now that markets are braced for rate cuts. Anything other than an eye-watering growth forecast will likely unnerve investor confidence, but until then, markets will be jittery and choppy. Focus will be on Europe's technology stocks, after the tech index (.SX8P) , opens new tab slid 1% on Monday. Another thing to watch for will be how European markets react to lacklustre earnings from Temu-owner PDD Holdings (PDD.O) , opens new tab that underscored weak demand from Chinese consumers, wiping out $55 billion in market capitalisation. European luxury companies have also been hit by reduced spending from Chinese consumers. The U.S. personal consumption expenditure price index - the Fed's preferred gauge of inflation - is due on Friday and will be closely scrutinised especially after Fed Chair Jerome Powell all but confirmed a rate cut in September. Markets are only concerned about the size of the cut - will it be a 25 bp cut or a bigger 50 bp cut next month. Traders are pricing in 100 bps of easing for the rest of the year's three Fed meetings. Data will decide where the Fed heads. Key developments that could influence markets on Tuesday: Economic events: Germany detailed GDP data for Q2 Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-08-27/

2024-08-27 02:52

MUMBAI, Aug 27 (Reuters) - The Indian rupee is expected to largely struggle on Tuesday amid a decline Asian currencies, weak risk appetite and higher oil prices. The 1-month non-deliverable forward indicated that the rupee will slightly weaker-to-flat to the U.S. dollar from its previous close of 83.90. The rupee was on Monday unable to take advantage of Federal Reserve Chair Jerome Powell's dovish shift at the Jackson Hole gathering last week. The currency had opened at 83.80, before dollar demand from importers pegged it back. This "has been a pattern", the dips (on dollar/rupee) "just do not hold", an FX salesperson at a bank said. "I think its only a matter of time that we see 84 and higher and we are advising companies to hedge keeping that in mind." The rupee has been at a risk of dipping past 84 for a large part of this month, which it has largely avoided mainly due to heavy intervention by the Reserve Bank of India at 83.96-83.97 via public sector banks, traders say. ASIAN CURRENCIES, SHARES DROP The positive mood in Asia from Powell's pivot to rate cuts did not last long. Shares and currencies declined, while the dollar index managed to recover slightly. Markets are expected to "remain fairly quiet" until Friday when the U.S. July PCE inflation figures are published, ING Bank said in a note. U.S. Treasury yields inched up amid a rise in oil prices. Brent crude climbed more than 3% on Monday amid worries of a widening Middle Eastern conflict. How Asian currencies fare over the remainder of the year is largely dependant on the extent of Fed rate cuts and the U.S. Presidential elections in November. While a rate cut has been fully priced in for next month, there is uncertainty on the size. Meanwhile, the U.S. elections are currently a toss up. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.98; onshore one-month forward premium at 7.5 paisa ** Dollar index up at 100.87 ** Brent crude futures at $81.2 per barrel ** Ten-year U.S. note yield at 3.82% ** As per NSDL data, foreign investors bought a net $462.8 mln worth of Indian shares on Aug. 23 ** NSDL data shows foreign investors bought a net $180.9 mln worth of Indian bonds on Aug. 23 Sign up here. https://www.reuters.com/markets/currencies/rupee-wrestle-with-weak-asian-leads-jump-oil-prices-2024-08-27/