2024-08-23 04:58

U.S. Fed Chair Powell says inflation heading down Dollar index softens ahead of Powell's speech Despite Friday gains, oil down for the week HOUSTON, Aug 23 (Reuters) - U.S. light crude oil gained more than 2% a barrel on Friday after comments by U.S. Federal Reserve Chair Jerome Powell indicated the central bank was preparing to cut interest rates. Brent crude futures settled up by $1.80, or 2.33%, at $79.02 a barrel. U.S. West Texas Intermediate (WTI) crude futures finished up $1.82, or 2.49%, at $74.83. "The pivot by the Federal Reserve is real," said Phil Flynn, senior analyst at Price Futures Group. "It's impacting all commodities." This week, both benchmarks hit their lowest since early January, after the U.S. government sharply lowered its estimate of jobs employers added this year through March, raising fears of a possible recession. On Friday, Powell endorsed easing the Fed's policies, saying further cooling in the job market would be unwelcome. He also expressed confidence inflation was within reach of the U.S. central bank's 2% target. "The upside risks to inflation have diminished. And the downside risks to employment have increased," Powell said in a highly anticipated speech to the Kansas City Fed's annual economic conference in Jackson Hole, Wyoming. "The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks." The U.S. dollar index softened to about 101.45 ahead of the speech. A cheaper greenback typically lifts demand for dollar-denominated oil from investors holding other currencies. Morgan Stanley said in a note on Friday that a drawdown in oil inventories has somewhat supported oil prices. "For now, the balance in the oil market is tight, with inventories drawing approximately 1.2 million barrels per day in the last four weeks, which we expect will continue in the balance of [the third quarter]," the bank said. Recent data from China, the top oil importer, has pointed to a struggling economy and slowing oil demand from refiners. A renewed push for a ceasefire in Gaza between Israel and Hamas has also helped ease supply worries and weighed on oil prices. U.S. and Israeli delegations started a new round of meetings in Cairo on Thursday to resolve differences over a truce proposal. Ceasefire talks to stop the war in Gaza have reduced fears the conflict would impact crude oil supplies. U.S. energy firms this week cut the number of oil and natural gas rigs operating for a second week in a row, energy services firm Baker Hughes (BKR.O) , opens new tab said on Friday. The number of oil rigs was unchanged at 483 this week, while gas rigs fell by one to 97. , , Sign up here. https://www.reuters.com/markets/commodities/oil-set-end-week-lower-demand-concerns-easing-supply-woes-2024-08-23/

2024-08-23 04:44

BEIJING, Aug 23 (Reuters) - China's Commerce Ministry met with automakers and industry associations on Friday to discuss raising import tariffs on large-engined gasoline vehicles, sounding a warning as the European Union nears a tariff decision on Chinese electric cars. The 27-strong bloc is due to vote in October on whether to adopt additional duties of up to 36.3% on Chinese-made electric vehicles on top of its standard 10% import tariff. The EU on Tuesday revised down the proposed duties from the 37.6% rate set in July, but stopped short of abandoning them to Beijing's dismay. On Wednesday, China hit back by announcing it had widened its investigations into imported EU products by adding an anti-subsidy probe of various cheese, milk and cream goods to anti-dumping checks on pork and brandy. In a statement on Friday, the Commerce Ministry said officials had "listened to the opinions and suggestions of industry, experts, and scholars on raising the import tariffs on fuel-powered cars with large displacement engines." Representatives of relevant industry associations, research associations, and automakers joined the meeting, it added. State-owned tabloid Global Times, which first reported the investigations into European pork and dairy, in June also raised the prospect of China raising its import tariff on large-engined gasoline cars. Doing so would hit Germany hardest. Its exports of vehicles with engines of 2.5 litres or larger to China were worth $1.2 billion last year, Chinese customs data shows. China has been canvassing member-states to counter the EV tariffs, as the European Commission, which oversees the bloc's trade policy, cannot implement the duties if a qualified majority of 15 EU members representing 65% of the EU population vote against them. Germany, along with Finland and Sweden, abstained from a July advisory vote on whether to back the tariffs' permanent adoption, sources have said. France, Italy and Spain backed the proposed tariffs, and are among those that would be most affected by any punitive duties resulting from China's growing number of trade investigations. Sign up here. https://www.reuters.com/business/autos-transportation/china-meets-automakers-discuss-import-tariffs-large-cars-ahead-eu-tariff-vote-2024-08-23/

2024-08-23 04:33

A look at the day ahead in European and global markets from Stella Qiu The big mover in Asia was a 0.5% rise in the yen as Bank of Japan Governor Kazuo Ueda disappointed some by saying the central bank still plans to raise interest rates if the economy and inflation turn out as forecast. Fair enough. The market crash that prompted policymakers to turn dovish three weeks ago is in the rear view mirror. In some modest reaction to Ueda's comments, the Nikkei oscillated between gains and losses but was last up 0.4%, and domestic yields rose 2 basis points. Supporting the governor's view is inflation data out earlier in the day that showed Japan's core inflation accelerated for a third straight month to 2.7% in July. The "core core" index, which excludes food and energy costs, dipped to 1.9%, but that is still around the BOJ's target of 2%. Traders still ascribe a very low chance of a hike in October, but a move in December is now priced at 70%. Elsewhere, sentiment turned cautious ahead of the Federal Reserve Chair Jerome Powell's speech in Jackson Hole. Every major stock market fell, driven by a pullback in technology shares, although Wall Street futures were up slightly. Europe is set for a mixed open, with EUROSTOXX 50 futures down 0.2% and FTSE futures up 0.2% amid little top-tier data for the region. Powell's address could move markets significantly, or turn out to be over-hyped. After all, his colleagues on Thursday already alluded to a rate cut in September, voicing support for a "slow and methodical" approach. Taken together with surveys showing the U.S. economy still growing at a healthy pace, markets slightly pared back the chance of an outsized half-point cut in September to 24%, from 38% a day earlier. A quarter-point cut is fully priced in. Regardless of the size of the reduction, Democrats will be happy to see the Fed finally kick-starting its easing cycle before the presidential election in November . Vice President Kamala Harris just formally accepted her party's nomination on the last day of the Democratic National Convention. Key developments that could influence markets on Friday: -- Sweden unemployment rate for July -- Canada retail sales for June -- U.S. new home sales -- Fed Chair Jerome Powell's speech in Jackson Hole Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-08-23/

2024-08-23 03:41

SHANGHAI, Aug 23 (Reuters) - China's yuan inched higher against a softer dollar on Friday and looked set for the fifth straight weekly gain, its longest winning streak in more than three years. The yuan was supported by stronger corporate interest in converting their foreign exchange receipts on the back of recent dollar weakness, but gains were capped by market caution ahead of Federal Reserve Chair Jerome Powell's speech in Jackson Hole, Wyoming, later on Friday. Powell' remarks are expected to offer more clues on the monetary policy trajectory in the world's largest economy and affect global financial markets, traders said. By 0300 GMT, the yuan was trading 0.07% higher at 7.1428 to the dollar. If it retains all the gains into the late night close, it would have strengthened 0.23% against the dollar for the week, booking its longest weekly winning streak since May 2021. "Yuan depreciation pressure has been alleviated as we have seen a general weakening of the dollar over the last month or two," said Lynn Song, chief economist for Greater China at ING. "The main reason for this is on the external side, as market expectations for Fed rate cuts have grown, and if the Fed cuts rates at a relatively fast pace, yield spreads should move to favour continued recovery of the yuan." Song expected policymakers to continue to keep currency stability as a high priority moving forward. China's central bank has been setting its daily official yuan midpoint fixing at levels firmer than market projections for more than a year, with traders and analysts widely interpreting it as an official attempt to keep the currency stable and supported. And the discrepancy between the official guidance and market projections have gradually narrowed over the past few weeks. On Friday, the People's Bank of China (PBOC) set the midpoint rate , around which the yuan is allowed to trade in a 2% band, at 7.1358 per dollar, 122 pips firmer than a Reuters' estimate. The offshore yuan traded at 7.1425 yuan per dollar , up about 0.06% in Asian trade. LEVELS AT 0300 GMT: Sign up here. https://www.reuters.com/markets/currencies/chinas-yuan-set-longest-weekly-winning-streak-since-2021-2024-08-23/

2024-08-23 03:35

CHICAGO Aug 22 (Reuters) - Democratic presidential candidate Kamala Harris said in her Democratic National Convention speech on Thursday that as president she will aim to pass a middle class tax cut. Harris said her opponent, Republican presidential candidate Donald Trump, was not concerned about the middle class. "Instead of the Trump tax hike we will pass a middle class tax cut that will benefit more than 100 million Americans," Harris said in her speech, without giving further details. Harris argued that the Republican former president's plan for tariffs will serve as a price hike. Trump has threatened to use tariffs to achieve what he terms as fair trade relations and deals with other countries. Harris called building the middle class "a defining goal of her presidency" and vowed, if elected, to create an "opportunity economy" where "everyone has the chance to compete and a chance to succeed." Last week, Harris outlined proposals to cut taxes for most Americans, ban "price gouging" by grocers and build more affordable housing. Her agenda may run into resistance from both corporations and the U.S. Congress, which rejected similar proposals when they came from Democratic U.S. President Joe Biden. Harris is aiming to draw a contrast with her opponent on broad economic policies, specifically on tariffs and taxes. Sign up here. https://www.reuters.com/world/us/kamala-harris-says-president-she-will-aim-pass-middle-class-tax-cut-2024-08-23/

2024-08-23 02:48

MUMBAI, Aug 23 (Reuters) - The Indian rupee is expected to open marginally higher on Friday, with traders awaiting possible cues from Federal Reserve Chair Jerome Powell on the extent and timing of interest rate cuts. The 1-month non-deliverable forward indicated that the rupee will open at 83.92 to the U.S. dollar compared with the close of 83.9525 in the previous session. For a large part of this month, the rupee has been holding near 84, except for a brief respite when it managed to hit 83.75. The Reserve Bank of India has intervened regularly to make sure the local currency does not weaken past 84. "The 84-handle will definitely be at risk on Monday morning, depending on the way markets react to Powell's comments," a currency trader at a bank said. "I doubt the RBI will be that resolute in defending 84 on Monday if post Powell's comments, we see the dollar ripping higher." The rupee has been a laggard in Asia, not benefitting from the increased confidence of the Fed cutting rates at each of the remaining three meetings this year. Powell, in his speech at Jackson Hole later in the day, is expected to reinforce that interest rates are coming. Powell’s comments at Jackson Hole in the past have provided cues on where rates are headed. We expect Powell to express "a bit more confidence" in the inflation outlook and to put a bit more emphasis on downside risks in the labour market than in his press conference after the July Fed meeting, Goldman Sachs said in a note. "A speech along these lines would be consistent with our forecast of a string of three consecutive 25 bps cuts in September, November, and December," the investment bank said. Investors are more optimistic than Goldman Sachs, pricing in a total of 100 basis rates from September to December. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.99; onshore one-month forward premium at 7 paise ** Dollar index down at 101.34 ** Brent crude futures down 0.2% at $77.1 per barrel ** Ten-year U.S. note yield at 3.84%, India 10-yr bond yield at 6.86% ** As per NSDL data, foreign investors sold a net $51.3 mln worth of Indian shares on Aug. 22 Sign up here. https://www.reuters.com/markets/currencies/rupee-inch-up-traders-await-powells-cues-interest-rate-cuts-2024-08-23/