2024-08-19 04:12

SINGAPORE, Aug 19 (Reuters) - The yuan headed for its sharpest gain in two weeks on Monday, riding a wave of broad dollar selling as investors bet on U.S. rate cuts, but slid against a resurgent yen. China's currency climbed as far as 7.1314 per dollar during afternoon trade and was last about 0.4% firmer at 7.1363, its largest one-day rise since early August. The rally puts the yuan back in the middle of its daily trading band - after months at the low end - though that is mostly thanks to a weakening dollar rather than improving sentiment. Yen gains continued to squeeze the yuan against a basket of trading partners' currencies (.CFSCNYI) , opens new tab, where it hit 98.07, the lowest level since Jan. 15, according to Reuters calculations from official data. The yuan fell 1% to 20.38 yen , its heaviest drop since August 5. Traders are looking ahead to China's loan prime rate settings on Tuesday against a backdrop of cratering bank lending, falls in home prices and economic gloom that analysts think will keep the currency from gaining much further. "The weak prospects for the Chinese economy and expectations for additional monetary policy easing will undermine investor confidence on Chinese assets and in turn reduce demand for the yuan," said analysts at the Commonwealth Bank of Australia. The yuan "is unlikely to benefit much from a decline in the U.S. dollar driven by an improving global economy," they added. Globally, Federal Reserve Chair Jerome Powell is expected to make a case for rate cuts in a speech on Friday. Chinese government 10-year bond yields fell 1.8 basis points to 2.17%. The yield on similar U.S. government benchmark debt was 3.9%. The yuan onshore 7-day benchmark repo rate was at 1.74% and in the forwards market, three-month yuan was quoted at 7.0695, 722 pips stronger than the spot rate. Three-month CNH forwards were quoted at 7.0682 per dollar. The People's Bank of China set the midpoint rate , around which the yuan is allowed to trade in a 2% band, at 7.1415 per dollar on Monday, 133 pips firmer than a Reuters' estimate. Key onshore vs offshore levels: LEVELS AT 07:00 GMT Sign up here. https://www.reuters.com/markets/currencies/yuan-creeps-higher-dollar-wobbles-ahead-jackson-hole-2024-08-19/

2024-08-19 04:03

Santiago, Aug 18 (Reuters) - The union at Chile's Escondida copper mine, the world's largest, signed a deal on Sunday with BHP (BHP.AX) , opens new tab, ending a strike that could have threatened global supplies of the red metal. The three-year deal included changes in labour conditions such as "initiatives to optimize shift changes, increase equipment utilization and compliance with the 40-hour law," BHP said in a statement announcing the deal. An internal union message, reviewed by Reuters, asked members to return to work. The mine's powerful union had gone on strike on Tuesday over payment disputes and then come to a preliminary agreement on Friday that had suspended the strike. Earlier in the day the union had sent a memo to members warning it might re-start the strike if the company did not "rectify its position" over contract talks. BHP's statement didn't provide any further details on the deal with the union. But earlier in the week, sources at the company and the union told Reuters that BHP offered workers around $32,000 as a bonus and an additional $2,000 in soft loans. BHP had previously offered a $28,900 bonus per worker, compared with the union's demand of 1% of shareholder dividends from the mine, or roughly $35,000 to $36,000 per member. LME copper prices traded up 1 percent at $9,211 on Monday amid a firmer tone across metals. Sign up here. https://www.reuters.com/markets/commodities/union-bhps-escondida-copper-mine-chile-signs-new-deal-ending-risk-strike-2024-08-19/

2024-08-19 01:15

ORLANDO, Florida, Aug 18 (Reuters) - By one measure, the speculative Japanese yen-funded carry trade has been completely unwound. The latest Commodity Futures Trading Commission data show that hedge funds and speculators have flipped their long-standing short yen position and are now net long of the currency for the first time since March, 2021. It may have taken a lot in recent weeks to prompt the turn - a hawkish Japanese rate hike, yen-buying intervention and a burst of safe-haven demand amid the historic spike in U.S. stock market volatility early this month - but the flip was quick. Data for the week ending August 13 show that funds held a net long position of just over 23,000 contracts, effectively a bullish bet on the currency worth $2 billion. Just seven weeks ago they were net short to the tune of 184,000 contracts. That was their biggest short position in 17 years, a $14 billion bet against the currency. The scale and speed of the bullish momentum shift in July and so far this month is historic. A short position is essentially a bet that an asset will fall in value, and a long position is a wager its price will rise. As analysts at Rabobank point out the yen was the best-performing G10 currency against the dollar in July, rising more than 7%. But it has begun to ease lower again as the vol shock of August 5 fades and investors recover their appetite for risk. The question now is whether CFTC funds and speculators more broadly are inclined to go back into yen-funded carry trades or not. There are persuading arguments on both sides. The bar to extending long yen positions and for further yen appreciation may be higher. The U.S. economy is still growing at a decent clip - a 2% annualized rate, according to the Atlanta Fed GDPNow model's latest estimate - and the dollar's interest rate and yield advantage over the yen remains substantial. The yen 'carry' trade - selling the yen to fund the purchase of higher-yielding currencies or assets - is an attractive strategy from a fundamental perspective despite the recent turmoil. "We still hold the view that it is hard for the Dollar to go down (or to be bullish Yen) substantially or durably in the current environment," FX analysts at Goldman Sachs wrote on Friday. On the other hand the recent turmoil is not in the rear view mirror completely, and volatility may stay above pre-August 5 levels for some time yet. This is bad for carry trades, which rely on low and stable volatility. Measures of implied volatility in dollar/yen from one week to six months out are all higher, especially further out the curve. It may take a more meaningful decline in volatility before speculators consider shorting the yen again. And figures on Friday are expected to show that inflation in Japan climbed to 2.7% last month, the highest since February, likely to keep the Bank of Japan minded to continue tightening policy. All while the Fed is about to start cutting rates. "While the (U.S-Japanese) rate spread will remain attractive, the danger is that we have entered a period of more sustained volatility that will encourage further liquidation of yen carry positions over the coming months," Morgan Stanley's FX strategy team wrote on Friday. (The opinions expressed here are those of the author, a columnist for Reuters) Sign up here. https://www.reuters.com/markets/currencies/funds-go-long-yen-first-time-four-year-mcgeever-2024-08-19/

2024-08-19 00:44

U.S., global stocks add to gains Dollar declines Eyes on Fed minutes, Powell speech to support rate cuts Oil, gold prices dip Aug 19 (Reuters) - Global stocks pushed higher and the dollar tipped lower on Monday, after shares surged last week on expectations the U.S. economy would dodge a recession and cooling inflation would spur interest rate cuts. On Wall Street, stocks added to their recent gains. The Dow Jones Industrial Average (.DJI) , opens new tab rose 0.58%, to 40,896, the S&P 500 (.SPX) , opens new tab gained 0.97%, to 5,608 and the Nasdaq Composite (.IXIC) , opens new tab gained 1.39%, to 17,876. MSCI's broadest index of world stocks jumped by around 1% (.MIWD00000PUS) , opens new tab. The prospect of lower borrowing costs could not sustain gold's historic highs and the dollar dipped against the euro, while the yen lunged higher. U.S. Federal Reserve members Mary Daly and Austan Goolsbee over the weekend flagged the possibility of easing in September, while minutes of the last policy meeting due this week should underline the dovish outlook. Fed Chair Jerome Powell speaks in Jackson Hole on Friday and investors assume he will acknowledge the case for a cut. "We expect the chairman to convey on Friday that the Fed is likely to begin easing monetary policy next month, without fully committing to the size of the rate cut," TD Securities analysts wrote in a note on Monday. Interest rate futures are fully priced for a quarter-point move, and imply a 25% chance of 50 basis points with much depending on what the next payrolls report shows. Yields on U.S. government debt eased on Monday; the yield on benchmark 10-year notes fell 1.9 basis points to 3.873%, from 3.892% late on Friday. Analysts at Goldman Sachs shifted down their U.S. recession expectations to a 20% chance and could push them lower if the August jobs report due in September "looks reasonably good," analysts said in a note on Friday. Broad European shares (.STOXX) , opens new tab moved about 0.6% higher, touching an over three-week high in broad-based market gains, while the blue-chip FTSE 100 index (.FTSE) , opens new tab traded up 0.55%. Investors are anticipating flash Purchasing Managers' Index (PMI) data for Britain, France, Germany and the Eurozone later this week. Earlier, the Nikkei index .N225 closed 1.77% lower at 37,388.62, snapping a five-day winning run that pushed it up 8.7% last week. Chinese blue chips (.CSI300) , opens new tab closed about 0.3% higher. DOLLAR DIP In currency markets, the dollar fell to a seven-month low and the Japanese yen hit a more than one-week high as traders awaited the Fed's decision on interest rate cuts. The dollar lapsed 0.64% to 146.64 yen while the euro firmed to $1.108 , up about 0.5% and continuing its August climb. Even as markets have calmed, it is worth remembering that the economic fundamentals behind the global markets sell-off two weeks ago have not completely vanished, said Deutsche Bank macro strategist Henry Allen. "Economic data has been increasingly soft at a global level, falling inflation means that monetary policy is increasingly tight in real terms, geopolitical concerns are elevated, and we're heading into a tough period on a seasonal basis," said Allen in a note. A softer dollar combined with lower bond yields could not hold gold at its zenith and it fell to around $2,505 an ounce , just down from its all-time peak of $2,509. Oil prices dipped as concerns about Chinese demand continued to weigh on sentiment. U.S. crude lost 2.9% to $74.42 a barrel and Brent fell to $77.79 per barrel, down 2.37% on the day. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-08-19/

2024-08-18 22:45

Aug 18 (Reuters) - Ernesto regained hurricane strength on Sunday and the storm was causing dangerous rip currents on beaches along the U.S. East Coast and Canada, the U.S. National Hurricane Center said. The forecaster also said that additional intensification is expected over the next 12 hours, followed by a weakening before it becomes a post-tropical cyclone on Tuesday. Hurricane Ernesto is about 815 miles (1,312 km) southwest of Newfoundland, Canada, and has maximum sustained winds of 75 mph (120 kph), according to the latest update. The center of Ernesto will pass near southeastern Newfoundland late Monday into Tuesday morning, which could bring wind, waves and rain, NHC added. Ernesto is the fifth named Atlantic storm of what is expected to be an intense hurricane season. Hurricane Ernesto made landfall on Puerto Rico and the U.S. and British Virgin Islands last week. The Caribbean island's main power supplier LUMA Energy said more than 725,000 homes and businesses lost electric service after the heavy rainfall. The Category 1 storm then moved to Bermuda, knocking out power, downing trees and flooding parts of the island on Saturday, but officials have said the British island territory seemed to have escaped any major damage. Sign up here. https://www.reuters.com/world/us/ernesto-becomes-hurricane-again-causing-dangerous-rip-currents-2024-08-18/

2024-08-18 21:51

Aug 19 (Reuters) - A look at the day ahead in Asian markets. The trading week gets underway in Asia on Monday, with investors in pretty good spirits following last week's rebound in risk appetite as the fabled U.S. 'soft landing' comes back into view, a scenario that should bode well for Asian and emerging markets. Emerging market equities posted their biggest weekly rise since April and world stocks their best week since October. The Nasdaq and S&P also had their best week since October, and the VIX 'fear index' of Wall Street volatility is back below 15.0. Even Chinese stocks snapped a three-week losing streak to rebound from a six-month low. Although the bounce was a slender 0.4%, it is a move in the right direction as far as China bulls - and policymakers - are concerned. But China's economic numbers remain weak and continue to undershoot even economists' increasingly gloomy expectations. China's economic surprises index, which has been negative since June, last week fell to its lowest in almost a year. U.S. data and expectations have also slumped in recent months, but there are signs of stabilization, and investors are cooling on bets that the Fed will be forced into delivering a jumbo-sized rate cut next month. Traders have slashed the probability of a 50-basis point move to around 25% as the market turmoil from early this month has evaporated. If recession fears wane, riskier assets like stocks and emerging markets should benefit. The recent strong rebounds in U.S. megacaps should also support Asian assets exposed to U.S. Big Tech - Nvidia shares are up 37% from their Aug. 5 low, so Taiwan's TSMC and the Hang Seng tech index could be in line for further gains this week. The Asian economic and policy calendar on Monday is light. Japanese machinery orders, Malaysian trade and Thai GDP figures are the main highlights. Figures on Friday from the U.S. Commodity Futures Trading Commission, meanwhile, showed that currency speculators are now 'long' the Japanese yen for the first time since March 2021. Since the first week of July when the dollar was at a 38-year high around 162.00 yen, CFTC funds have completely covered one of their biggest short yen positions on record and the Japanese currency has rallied around 10%. These are seismic moves, but it's worth remembering what it took to trigger them - another bout of intervention from Tokyo, an interest rate hike and hawkish posture from the Bank of Japan, and a frenzy of safe-haven buying and carry trade unwinds following the global volatility shock earlier this month. Last week's wave of 'risk on' sentiment that washed over global markets, however, put the brakes on that. Dollar/yen rose 0.7%, not a big move by recent standards, but the biggest rise since June. Here are key developments that could provide more direction to Asian markets on Monday: - Japan machinery orders (June) - Malaysia trade (July) - Thailand GDP (Q2) Sign up here. https://www.reuters.com/markets/asia/global-markets-view-asia-graphic-pix-2024-08-18/