2024-09-23 10:51

Sept 23 (Reuters) - Sterling dipped against the dollar on Monday but touched a new two-year high versus the euro as business activity readings pointed to diverging economic cycles in the British and euro zone economies. The pound slipped 0.2% to $1.3298, hovering below a more than two-year high it touched against the dollar on Friday. British businesses reported a slowdown in growth this month, according to a survey on Monday that also showed waning price pressures, potentially encouraging the Bank of England (BoE) to consider cutting rates again. The preliminary estimate of the UK S&P Global Composite Purchasing Managers' Index (PMI) fell to 52.9 in September, below economists' forecast of 53.5 but still well above the 50 level that separates growth from contraction. Sterling, however, gained ground against the euro. Euro/sterling slid 0.3% to 83.59 pence - its weakest since August, 2022. A similar survey showed euro zone PMIs sank to 48.9 this month from August's 51.0, with Germany's decline deepening and France returning to contraction following a boost in August due to the Olympic Games. Market pricing showed traders are betting on 44 bps more of rate cuts from the European Central Bank by the end of the year, and 40 bps of easing from the BoE. The ECB has cut rates twice this year, while the BoE has reduced rates just once. The central bank last week kept rates at 5.0%, saying it would be careful about future cuts. Signs of economic resilience and sticky service sector prices have aided expectations that the BoE need not be aggressive in monetary policy easing compared to other major central banks. "Over the past two years, no G10 economy has seen its data outperform expectations as much as the UK and together with high real rates the currency remains in a sweet spot," FX strategists at Deustche Bank said in a note. British finance minister Rachel Reeves said there would be no return to austerity or widespread cuts, promising long-term growth despite previous warnings of a tough budget to fix the foundations of the economy. Reeves previously suggested taxes were likely to rise in her first budget on Oct. 30 because of what she said was a 22 billion-pound ($29 billion) hole in the public finances. Sign up here. https://www.reuters.com/markets/currencies/sterling-two-year-peak-versus-euro-after-pmi-data-2024-09-23/

2024-09-23 10:46

BRUSSELS, Sept 23 (Reuters) - The European Commission launched a challenge at the World Trade Organisation (WTO) on Monday against China's investigation into EU dairy products, initiated after the European Union placed import tariffs on Chinese electric vehicles. This is the first time the European Union has taken such action at the start of an investigation, rather than wait for it to result in trade measures against the bloc. "The EU's action was prompted by an emerging pattern of China initiating trade defence measures, based on questionable allegations and insufficient evidence, within a short period of time," the commission said. Proceedings at the WTO start with a mandatory period of 60 days for the parties to consult each other. The Commission said it would ask the WTO to set up an adjudicating panel if the consultations did not lead to a satisfactory solution. WTO panels usually take more than a year to reach conclusions. China initiated its anti-subsidy investigation on Aug. 21, targeting EU liquid milk, cream with a fat content above 10% and various types of cheeses. The Commission said it was confident that EU dairy subsidy schemes are fully in line with international rules and not causing injury to China's dairy sector. The EU imposed provisional duties in July on electric vehicles built in China and EU members are expected to vote soon on final tariffs, which would apply for five years. China also has ongoing anti-dumping investigations into EU brandy and pork. Sign up here. https://www.reuters.com/markets/eu-launches-wto-challenge-against-chinas-european-dairy-subsidies-probe-2024-09-23/

2024-09-23 10:42

BUCHAREST, Sept 23 (Reuters) - Recent flooding in the eastern Romanian county of Galati caused damage worth 62.2 million lei ($13.90 million) according to a preliminary estimate, the president of the local council Costel Fotea said in a Facebook post on Monday. He said 20 county roads have been affected for a total length of 77.6 kms and over 40 bridges. ($1 = 4.4753 lei) Sign up here. https://www.reuters.com/world/europe/flood-damage-romanian-county-galati-seen-139-mln-says-council-2024-09-23/

2024-09-23 10:15

MUMBAI, Sept 23 (Reuters) - The Indian rupee ended flat on Monday as dollar demand from local oil companies pulled the currency off a near three-month high, hit due to likely portfolio inflows. The rupee closed at 83.5525 against the U.S. dollar, nearly unchanged from its close at 83.5625 in the previous session. The currency rose to 83.4450 earlier in the session, its highest since June 28. Asian currencies were on the backfoot with the Philippine peso down 0.6%, leading losses. The dollar index rose above the 101 mark and was last quoted up 0.3% on the day. The rupee had risen in the last five sessions, benefiting from a pickup in portfolio inflows and broad weakness in the dollar after the Federal Reserve kicked off its rate cuts last week. Overseas investors have net bought more than $7.5 billion of Indian stocks and bonds over September so far, the highest monthly inflow in 2024. Given the recent price action on the dollar/rupee pair, "any upward moves should be seen as an opportunity to sell", Amit Pabari, managing director at FX advisory firm CR Forex said. "It will be interesting to see how the Reserve Bank of India plays its hand," Pabari said, referring to whether the central bank will allow the rupee to rise further or intervene to limit appreciation. Meanwhile, dollar-rupee forward premiums rose, with the 1-year implied yield touching a 17-month peak of 2.38%. The 1-year yield has risen 22 basis points in September. Given the improved odds of another 50-bp rate cut by the Fed, bankers expect the rise to continue. Investors await remarks from Fed policymakers later in the day to gauge the future path of policy rates. Sign up here. https://www.reuters.com/markets/currencies/rupee-ends-flat-after-hitting-3-month-peak-oil-firms-dollar-bids-weigh-2024-09-23/

2024-09-23 10:09

A look at the day ahead in U.S. and global markets from Mike Dolan With U.S. markets now mapping the extent of the Federal Reserve's easing cycle ahead, the prospect of inflation undershooting the central bank's target adds a new twist. Last week's hefty half-point Fed rate cut leaves another 200 basis points of easing before the central bank gets back to what Fed officials themselves see as a long-term 'neutral' rate at 2.9%. Markets think they'll do pretty much all of that within 12 months. And with August's update on the Fed's favored PCE inflation gauge due later this week, Fed governor Christopher Waller on Friday said the main reason he opted for such a big start to the rate cutting campaign was concern about the speed with which inflation is falling below target. Claiming the Fed examined the latest components of the PCE index as it met, he said they convinced him to move big and suggested the speed of the whole easing cycle could be as fast as the tightening round two years ago. "Core PCE is running below our target, and that's with very high housing services inflation," Waller said on CNBC. "That is what put me back a bit to say, wow, inflation is softening much faster than I thought it was going to." Whatever that means for the next 12 months, it's an interesting steer on Friday's PCE release - where consensus forecasts had the annual core PCE rate ticking up to 2.7% from 2.6% in July. And the comments saw short-term Treasury yields slip back below 3.6% - just above two-year lows. The two-to-10-year yield curve steepened to some 14 basis points, its most positive in two years too. And bond volatility captured by the MOVE (.MOVE) , opens new tab index fell back to its lowest since July. The energy and international backdrop also encouraged the disinflation and easing picture more broadly. Crude oil prices fell back again on Monday towards $70 per barrel - in part due to alarming European business surveys that show activity across the bloc contracting again in September, German industry struggling and an Olympics-related French service sector fillip fading. Crude has now been running at a negative annual rate of more than 20% for three weeks. The U.S. gas pump price fell last week to its lowest since February and is also clocking year-on-year declines of about 17%. The euro zone survey shock, meantime, saw the euro slide almost a cent at one point - briefly dipping back below $1.11 as the implications for European Central Bank easing were assessed. That's buoyed the dollar index (.DXY) , opens new tab broadly - with Japan out on holiday on Monday. As the equivalent UK surveys continued to show an expansion there, the euro skidded to its lowest level against the pound in two years. Elsewhere, China's yuan fell back after the central bank there trimmed its 14-day reverse repo rate - encouraging hopes of more easing and stimulus to revive the spluttering economy despite disappointed expectations for lending rate cuts last week. World stocks were generally steady to higher - with Wall Street futures in positive territory ahead of the bell and the release of S&P Global's U.S. flash business surveys for this month. In politics, Democrat Kamala Harris appears to have extended her national opinion poll leads over rival Donald Trump in the latest series of surveys ahead of November's White House race. In the corporate world, much of the focus was on troubled chipmaker Intel (INTC.O) , opens new tab. Bloomberg News reported on Sunday that U.S.-based asset management company Apollo Global Management APO.N has offered to make an investment of as much as $5 billion in Intel. That came after news on Friday that Qualcomm (QCOM.O) , opens new tab had last week approached Intel to explore a potential acquisition. In Europe, shares of Germany's Commerzbank (CBKG.DE) , opens new tab fell 6% as the government said it would retain its 12% stake in the lender, that will likely keep any merger with Italy's UniCredit (CRDI.MI) , opens new tab on hold. Key developments that should provide more direction to U.S. markets later on Monday: * U.S. flash September business surveys from S&P Global, Chicago Fed August business survey * Atlanta Federal Reserve President Raphael Bostic, Chicago Fed President Austan Goolsbee, Minneapolis Fed chief Neel Kashkari all speak. European Central Bank board member Piero Cipollone speaks * UK finance minister Rachel Reeves addresses annual Labour Party conference * US Treasury sells 3-, 6-month bills Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-09-23/

2024-09-23 08:40

MUMBAI, Sept 23 (Reuters) - A three-month rally in dollar-rupee forward premiums is expected to push on amid wagers of another outsized rate cut in the United States while India's central bank moves cautiously on monetary easing, six bankers said. The dollar/rupee 1-year implied yield rose for the sixth straight session on Monday to hit 2.38%, the highest in nearly one-and-a-half years. The 1-year implied yield has jumped nearly 75 basis points over the last three months, as investors priced in faster and deeper U.S. rate cuts. Forward premiums reflect the interest rate differential between the United States and India and are therefore impacted by expectations for the future path of the interest rates in the two economies. Higher premiums, which reflect a widening of the gap between the interest rates, make hedging of FX risks costlier for importers. The gap between U.S. and Indian rates is expected to rise as the Federal Reserve could opt for quicker monetary easing to protect a softening labour market, while the Reserve Bank of India stays focused on keeping inflation contained. Fed policymakers surprised most economists last week when they kicked off the rate cut cycle with a 50-basis-point reduction. The probability of a similar rate cut in November has risen to 50%, according to the CME FedWatch tool. Given the heightened odds, the risks are in favour of dollar/rupee forward premiums maintaining their uptrend, six FX spot and swap traders at different banks said. The market is likely to stay interested in entering sell/buy swaps or to "pay" in the forward market, Apurva Swarup, vice president at Shinhan Bank India, said. He expects the 1-year implied yield to climb to 2.60%. The 1-year U.S. and India interest rate differential, based on overnight indexed swaps, was at 2.62% compared to 2.38% reflected in forward premiums, suggesting room for an upside in the premiums. Sign up here. https://www.reuters.com/markets/asia/rally-dollarrupee-forward-premiums-may-have-room-run-bankers-say-2024-09-23/