2024-08-19 06:16

MUMBAI, Aug 19 (Reuters) - The Indian rupee rose to its highest level in nearly two weeks on Monday as the dollar index declined to its lowest level in six months, sparking broad gains in Asian currencies. The rupee was at 83.90 as of 11:10 a.m. IST, up about 0.05% compared with its previous close at 83.94 on Friday. The local currency rose to 83.85 in early trading, its highest level since Aug. 6. The dollar index fell 0.3% to 102.1, its lowest level since mid-January, as investors anticipated a dovish tilt emerging in the Federal Reserve's July policy meeting minutes, due on Wednesday, and Chair Jerome Powell's remarks later in the week. "With US macro data showing disinflation and growth still largely resilient, Chair Powell could provide a stronger signal that the Fed will proceed with rate cuts at the September FOMC meeting," MUFG Bank said in a note. Traders have fully priced in a 25-bps rate cut by the Fed at its September meeting, while resilient U.S. economic data slimmed hopes of a 50-bps cut. Despite gaining in early trading, the rupee lagged behind gains in Asian currencies, which were up by 0.3% to 1.5%. It has declined about 0.2% against the dollar over the last month, diverging from broad-based strength in its peer currencies. Heightened dollar demand from local importers and outflows from equities have hurdled gains in the local currency, traders said. Overseas investors have pulled out $2.5 billion from local stocks over August so far, according to stock depository data. Unless there is a reversal in equity flows, the rupee is unlikely to gain above 83.80 given the strong dollar demand from importers over recent sessions, a foreign exchange trader at a private bank said. Sign up here. https://www.reuters.com/markets/currencies/rupee-touches-near-two-week-high-broad-dollar-weakness-2024-08-19/

2024-08-19 06:08

Bullion hit a record high of $2,509.65 on Friday Gold to reach $2,600/oz by the end of 2024 - UBS analyst Minutes of Fed's July FOMC meeting due Wednesday Aug 19 (Reuters) - Gold edged down on Monday after powering to an all-time high above the important $2,500 per ounce level in the last session on strong safe-haven demand and expectations of an imminent U.S. rate cut as investors seek more cues on the quantum of cuts. Spot gold was down 0.5% at $2,494.59 per ounce as of 1209 GMT, about $15 shy of the record high of $2,509.65 hit on Friday. U.S. gold futures edged 0.2% lower to $2,532.70. "Despite gold having hit a new record high, we expect prices to move even higher over the coming months, with prices expected to reach $2,600/oz by the end of the year," UBS analyst Giovanni Staunovo said. "All eyes will be on the speech of Powell at Jackson Hole on Friday and any indication of an imminent rate cut," Staunovo said adding that he expects Powell to open the door for a rate cut, although more for a 25 bps cut than a 50 bps cut. The market will also scan minutes of the Fed's July policy meeting on Wednesday. Last week, strong U.S. retail sales print and lower-than-expected unemployment claims, along with mild inflation data, restored confidence in the world's largest economy. Bullion has surged over 20% this year, fueled by expectations of U.S. interest rate cuts this year, coupled with rising geopolitical tensions and strong central bank buying. Demand for gold remains potent as geopolitical tensions, particularly in the Israel-Iran-Hamas conflict, is driving safe-haven demand, Achilleas Georgolopoulos, investment analyst at forex broker XM, wrote in a note. Bullion is considered a hedge against geopolitical and economic uncertainties and tends to thrive in a low-interest-rate environment. Elsewhere, spot silver fell 0.1% to $28.99 per ounce. HSBC raised its 2024 and 2025 average silver price forecasts to $27.40/oz and $28.50/oz respectively. "Moderate deficits help explain our outlook for reasonably firm prices this year and in 2025," it said in a note. Platinum eased 0.4% to $950.40 and palladium shed 1.6% to $935.75. Sign up here. https://www.reuters.com/markets/commodities/gold-trades-near-historic-2500-mark-fed-rate-cut-optimism-2024-08-19/

2024-08-19 05:42

NEW YORK, Aug 19 (Reuters) - The dollar fell to a seven-month low and the Japanese yen hit a more than one-week high as traders awaited comments from Federal Reserve Chair Jerome Powell this week that are expected to signal the U.S. central bank will start cutting interest rates in September. A key focus on Powell’s speech at Jackson Hole on Friday will be whether he indicates the Fed is likely to cut rates by 25 or 50 basis points. Odds of a larger cut have declined since data last week showed hotter-than-expected shelter inflation for July and also a strong retail sales report for the month. Another main focus will be whether Powell indicates rate cuts are likely at each meeting going forward. But markets may be overestimating how far and fast the Fed is likely to act. “I think we’re still at the point of the justification to cut in September,” said Eugene Epstein, head of structuring for North America at Moneycorp in New Jersey. “On a relative basis it would be kind of over the top to be one of the last central banks to start their cutting cycle, but then also to start cutting immediately and cut 50 basis points and then cut every meeting after that,” Epstein said. Powell may also be reluctant to commit to any details this week with inflation and jobs data for August still due before the Fed's September meeting. Traders are pricing in a 23% chance of a 50-basis-point cut, down from 50% a week ago, with a 25-basis-point reduction having odds of 77%, according to the CME Group’s FedWatch Tool. Around 210 basis points of rate reductions are expected by the end of 2025. In early August traders aggressively priced for imminent rate cuts after an unexpected increase in the unemployment rate in July raised concerns about a possible recession. A large unwind of popular dollar/yen carry trades, in which traders borrowed the low interest rate yen and bought higher yielding U.S. assets, also roiled the stock market and led to a sharp repricing of rate expectations. Now, “it seems like the market's starting to correct itself a little bit more in the right direction,” said Epstein. Minneapolis Fed President Neel Kashkari said it was appropriate to discuss potentially cutting U.S. rates in September because of the rising possibility of a weakening labor market, the Wall Street Journal reported on Monday. San Francisco Federal Reserve Bank President Mary Daly said it is time to consider adjusting borrowing costs from their current range of 5.25% to 5.5%, speaking in an interview with the Financial Times published on Sunday. Federal Reserve Bank of Chicago President Austan Goolsbee said on Sunday U.S. credit conditions are tight and getting tighter, and that while there's no certainty the Fed will cut interest rates next month as is widely anticipated, not doing so could hurt the job market. Data on Wednesday that will show revisions to the government's jobs data for the period from April 2023 to March 2024 could influence Powell's comments on Friday. "Powell has indicated that the Fed is monitoring the labor market carefully for indications of deterioration and stands ready to intervene if necessary," Quincy Krosby, chief global strategist at LPL Financial, said in note on Monday. "Should the report reveal a considerably smaller number of jobs that were created than were initially announced in monthly payroll reports, the Fed chair's concerns could be amplified in his comments," Krosby said. Minutes from the Fed’s July meeting on Wednesday will also be evaluated for any new clues on its expected rate trajectory. The dollar index was last down 0.56% at 101.89 and reached 101.85, the lowest since Jan. 2. The euro rose 0.47% to $1.108 and got as high as $1.1085, its strongest since Dec. 28. The dollar weakened 0.62% to 146.66 Japanese yen after earlier reaching 145.20, the lowest since Aug. 7. The Japanese currency has gained on optimism that the interest rate gap between the U.S. and Japan will continue to shrink and due to a continued unwind of dollar/yen carry trades. Bank of Japan Governor Kazuo Ueda is expected to discuss the BOJ's decision last month to raise interest rates when he appears in parliament on Friday. Japan's consumer inflation rate likely picked up in July for a third consecutive month, a Reuters poll of 18 economists showed, keeping the central bank on course to consider another rate hike after lifting short-term rates to 0.25% last month. The Australian dollar was boosted by optimism that China will offer new stimulus with shopping vouchers meant to help get growth back towards this year's target of roughly 5%. The Aussie was last up 0.95% at $0.6729 and reached $0.6732, the highest since July 18. In cryptocurrencies, bitcoin fell 0.44% to $59,034. Sign up here. https://www.reuters.com/markets/currencies/dollar-holding-pattern-ahead-fomc-minutes-powell-comments-2024-08-19/

2024-08-19 05:39

Shares up 1.3% VS fall in energy index Australia’s laws work in favour of fossil fuel interests - ACF Scarborough commissioning key growth catalyst - analysts Aug 19 (Reuters) - Woodside's (WDS.AX) , opens new tab $12.5 billion Scarborough gas project in Western Australia has all primary environmental approvals in place, the firm said on Monday, after a green group agreed to dismiss its challenge in a federal court. Shares of the energy company gained as much as 1.3% to A$26.45 during the day against a 0.3% slip in the broader energy index (.AXEJ) , opens new tab. The Australian Conservation Foundation had in June, 2022 asked the country's Federal Court to stop Woodside from working on the Scarborough gas project until an assessment is made about its potential impact on the Great Barrier Reef. The ACF said in a statement on Monday it would not proceed with the legal case against the project any more as it became apparent that it was "unlikely to succeed." "The reality is that Australia’s laws work in favour of fossil fuel interests. There is still no explicit requirement for climate damage to be considered under our key national nature law, the Environment Protection and Biodiversity Conservation Act," the green group said. Woodside said the parties had agreed to seek order from the Federal Court to dismiss the proceedings against the company. The Australian Conservation Foundation (ACF) had earlier argued that the Scarborough project should be evaluated under that law because it will have a significant impact on the Great Barrier Reef, as the exported gas burned in other countries will worsen global warming. "The Scarborough reservoir contains less than 0.1% carbon dioxide and combined with processing design efficiencies will be one of the lowest carbon intensity sources of LNG delivered into north Asian markets," Woodside CEO Meg O’Neill said on Monday. Analysts have flagged that Scarborough's commissioning is a key growth catalyst for Woodside after it has been targeted by numerous climate activists amid the world's shift to cleaner forms of energy. The ACF is also currently embroiled in a similar legal case with coal miner Whitehaven (WHC.AX) , opens new tab, which is set for hearing in 2025. Sign up here. https://www.reuters.com/markets/commodities/woodside-agrees-with-green-group-dismiss-challenge-scarborough-approval-2024-08-19/

2024-08-19 04:40

LAUNCESTON, Australia, Aug 19 (Reuters) - China's production of coal is rising while its share of electricity generation is declining, a seeming contradiction that will likely result in lower imports volumes and cheaper prices. Coal output rose 2.8% in July from the same month a year earlier, hitting 390.37 million metric tons, according to data released on Aug. 15 by the National Bureau of Statistics. July's output was down from June's 405.38 million tons, which was the strongest month so far this year. July was also the third-highest monthly production so far in 2024 and output has been trending higher since April. The rising availability of coal in the world's biggest producer, importer and consumer of the fuel hasn't translated into an increased share of the total electricity generation, the primary use for the fuel. Instead, China's coal-fired power is losing market share to cleaner alternatives, a trend likely to continue, given the ongoing rapid installation of solar, and to a lesser extent, wind capacity. China's thermal power generation dropped in July for a third month on a year-earlier basis, despite rising overall power consumption. Thermal power output, which is largely coal-fired with only a small amount of natural gas generation, fell 4.9% in July from the same month in 2023 to 574.9 billion kilowatt-hours (kWh). Total generation rose 2.5% to 883.1 billion kWh, with hydropower output jumping 36.2% to 166.4 billion kWh. China is experiencing a hotter than usual summer, which has boosted electricity demand for cooling. Hydropower is increasing off a low base in 2023, when output was affected by low rainfall. Other clean energy generation is also grabbing a higher share, with solar up 16.4% in July and nuclear increasing 4.3%. China has ramped up installations of renewable energy, with 102 gigawatts (GW) of capacity being added in the first half of 2024, taking total capacity to more than 700 GW. About 26 GW of wind capacity was added in the first six months of 2024, with the combined wind and solar additions being almost seven times the 18.3 GW of new coal-fired generation. MARKET DYNAMICS The recovery in hydropower and the rapid rollout of solar, coupled with rising coal production, are likely to alter the dynamics of the thermal coal market in China. Domestic prices have started to decline, with the benchmark price of thermal coal at Quinhuangdao , as assessed by consultants SteelHome, slipping to end at 835 yuan ($116.55) a ton on Aug. 16. It has trended lower since its most recent peak of 885 yuan a ton on May 28, and has dropped 11.2% since the peak so far in 2024 of 940 yuan on Feb. 27. The lower domestic price has meant that thermal coal imported from Indonesia and Australia, the world's two biggest exporters of the fuel and the top suppliers to China, has also had to adjust through lower prices. Indonesian coal with an energy content of 4,200 kilocalories per kilogram (kcal/kg) , as assessed by commodity price reporting agency Argus, ended at $51.18 a ton in the week to Aug. 16. This was the lowest in 11 months and the price has dropped 12% since its high so far this year of $58.17 a ton in the week to March 8. Australian coal with an energy content of 5,500 kcal/kg finished at $86.78 a ton in the seven days to Aug. 16, down 10.2% from its peak so far in 2024 of $96.66 in the week to March 1. The softer seaborne coal prices have helped keep import volumes strong so far in 2024, with official data showing imports of all grades of coal rising 13.3% in the first seven months of the year to 295.78 million tons. But data from commodity analysts Kpler suggests that seaborne imports of thermal coal are starting to ease back. Kpler assessed July seaborne thermal coal arrivals at 28.56 million tons, down from 29.38 million in June and 30.67 million in May. For August, it's possible that thermal coal imports will drop for a third month, with Kpler estimating arrivals of 28.26 million tons. With domestic coal output recovering and prices easing, its likely that seaborne cargoes will have to decline in price to remain competitive. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/commodities/chinas-coal-output-rises-share-electricity-slips-russell-2024-08-19/

2024-08-19 04:34

A look at the day ahead in European and global markets from Wayne Cole. Markets kicked off the week with a day of consolidation after their best week of the year, on expectations of a softer than soft landing for the U.S. economy - or no landing at all given many analysts expect it to keep growing between 2% and 3%. S&P 500 futures and Nasdaq futures are ahead by 0.2% or so while the Nikkei (.N225) , opens new tab is flat, having rallied almost 9% last week. The euro is holding above $1.1000 and sterling hit its highest in a month at $1.2953 . Federal Reserve members Mary Daly and Austan Goolsbee were out over the weekend to flag the possibility of easing in September, while minutes due on Wednesday for the last policy meeting should underline the dovish outlook. Futures are 100% priced for a quarter-point cut, and 26% for 50 basis points, with much likely depending on whether the next U.S. payrolls report shows the bounce that many anticipate. On a cautionary note, Goldman Sachs noted the annual re-analysis of payrolls is due on Wednesday and could show a downward revision in the range of 600,000 to 1 million jobs, although they argue this would overstate the weakness of the labour market. Fed Chair Jerome Powell caps the week with his Jackson Hole speech on Friday and markets are clearly priced for a dovish outlook, although not one that sanctions a half-point easing. Markets are likewise fully priced for a Riksbank rate cut on Tuesday, with the only debate being whether they go by 25 or 50 basis points. Japan's consumer price report could revive talk of a Bank of Japan hike, which had all but evaporated since the Nikkei's recent swoon. Markets have just 2 basis points of Japan tightening priced in for October, although some analysts are still calling for a rise of 25 basis points, to 0.5%. On the U.S. politics front, the Democratic convention kicks off on Monday with betting site PredictIt showing Vice President Kamala Harris at 58 cents compared with 45 cents for Donald Trump, a complete reversal from where it was before President Joe Biden dropped out. Key developments that could influence markets on Monday: - Riksbank starts two-day monetary policy meeting - Finland's central bank governor and ECB governing council member Olli Rehn speaks in New York - Federal Reserve Board Governor Christopher Waller speaks Sign up here. https://www.reuters.com/markets/europe/global-markets-view-europe-2024-08-19/