Analysis : Currencies

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Rouble rebounds after trading suspension, Gazprom shares down

Rouble rebounds after trading suspension, Gazprom shares down

* This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine MOSCOW, Sept 5 (Reuters) - The rouble turned to gains after slipping beyond the 61 mark against the dollar on Monday, while shares in Gazprom inched lower after Russia said it had stopped gas supplies to Europe via the Nord Stream 1 pipeline. At 1142 GMT, the rouble was 0.3% stronger at 60.40 against the dollar after hitting 61.45, its weakest level since Aug. 16. Against the euro, it gained 1.9% to 59.70 . The rouble pared losses it incurred after the Moscow Exchange suspended trading on its foreign currency and precious metals markets for 85 minutes, citing a "revealed mistake in the configuration of the forex market's trading system". Still, the rouble has been the world's best-performing currency this year, buoyed by emergency capital controls rolled out by the central bank in a bid to halt a mass sell-off. Rouble volatility has subsided since the currency hit a record low of 121.53 per dollar in Moscow trade in March, soon after Russia sent tens of thousands of troops into Ukraine. It rallied to a seven-year high of 50.01 per dollar in June. The rouble is likely to remain flat this week "if the Russian economy does not face unexpected shocks or some policy decision - such as budget rule implementation - which may change economic fundamentals and FX market conditions," BCS Global Markets said in a note. Worried about the strong rouble that dents revenues from selling commodities abroad for foreign currency, Russia has been considering buying the currencies of China, India and Turkey to hold in its National Wealth Fund (NWF) as part of its plan to reinstate a budget rule which diverts excess oil revenues into the country's rainy day fund. On the stock market, the dollar-denominated RTS index dipped 0.1% to 1,282.9 points and the rouble-denominated MOEX Russian index was 0.4% lower at 2,455.1 points. Shares in Gazprom underperformed the market and fell 0.8% on the day after rallying last week thanks to a dividend payment announcement. Gazprom remains in focus as the latest Nord Stream shutdown, which Russia says will last for as long as it takes to carry out repairs, added to European fears of winter gas shortages that could help tip major economies into recession and energy rationing. "A new rise in gas prices in Europe is guaranteed, and for Gazprom itself - a further decline in production," Finam brokerage said in a note.   For Russian equities guide see For Russian treasury bonds see (Reporting by Andrey Ostroukh, Editing by Mark Potter, Ed Osmond and Andrea Ricci)
September 05, 2022 at 11:51 am
Safe haven dollar eases as risk appetite lifted by jobs data

Safe haven dollar eases as risk appetite lifted by jobs data

* Dollar falls; Aussie, Kiwi and sterling gain * Traders price in 69% chance of 75 bps Fed hike in Sept (Adds New York dateline, analyst quote, updates prices) NEW YORK/LONDON, Aug 8 (Reuters) - The dollar eased on Monday, giving back some of the gains it made following Friday's blockbuster U.S. jobs report, as investors looked ahead to Wednesday's inflation data for more clues about the Federal Reserve's next steps. U.S. job growth rose much more than expected in July, data showed on Friday, lifting the employment level above its pre-pandemic mark and calming fears that the economy was in recession. Investors read the data as a indication the Fed could raise interest rates more aggressively to combat inflation. The upbeat mood carried into Monday, with global stock markets gaining ground. "We're seeing some broad dollar weakness because the risk vibe is fairly buoyant," Erik Bregar, director of FX & precious metals risk management at Silver Gold Bull, said of the safe haven currency. The dollar index, which measures the greenback against a basket of peer currencies, was at 106.23 at 10.15 a.m. eastern time (1415 GMT), down 0.394%, compared with Friday's 10-day high of 106.930. Traders were pricing in a roughly 69% chance of the Fed raising rates by 75 basis points (bps) at its September meeting, according to Refinitiv data. Fed Governor Michelle Bowman said on Saturday that the U.S. central bank should consider more 75 bps hikes at coming meetings to bring inflation back down. "The U.S. dollar has been supported by the combination of stronger U.S. economic data releases and hawkish comments from regional Fed presidents that have encouraged market participants to push back expectations for a dovish policy pivot from Fed," MUFG currency analysts Derek Halpenny and Lee Hardman said in a note to clients. Markets are looking ahead to U.S. inflation data for July, which will be released on Wednesday. Analysts polled by Reuters expect annual inflation to have eased to 8.7% in July from 9.1% previously. High inflation combined with Friday's labor market reading could push the market to fully price in 75 basis points of Fed hikes for September, according to Tim Graf, head of EMEA macro strategy at State Street. "If you have both things (jobs growth and inflation) still running very, very hot then it becomes very difficult, I think, to back away from another 75 basis point hike," he said. As global stock indexes ticked higher, currencies seen as riskier, such as the Australian and New Zealand dollars, made gains, with the Aussie up 1.12% at $0.69885 and the Kiwi up 0.79% at 0.6293. . The dollar was down 0.33 versus the yen, with the pair changing hands at 134.57. Euro zone bond yields fell back down after gaining following the jobs data on Friday. Italian bonds appeared to brush off a decision by Moody's to lower Italy's ratings outlook. The euro edged up 0.04% at $1.02005. "If quiet summer markets prompt renewed interest in the carry trade, the euro will probably be one of the preferred funding currencies," said ING FX analyst Chris Turner in a client note. The British pound was 0.41% higher at $1.2122. Foreign Secretary Liz Truss - who is expected to replace Boris Johnson as prime minister next month - has said she plans to hold a review of the Bank of England's mandate. Markets showed little reaction to China announcing fresh military drills in the seas and airspace around Taiwan. "We're still in the realm of the political, thankfully, where righteous indignation doesn't necessarily move markets," said State Street's Graf. (Reporting by Elizabeth Howcroft; Editing by Alex Richardson and Barbara Lewis)
August 08, 2022 at 04:49 pm
Steady dollar casts shadow on EM currencies as growth fears persist

Steady dollar casts shadow on EM currencies as growth fears persist

* Dollar up on safe-have appeal * Indian rupee cracks 79 per dollar * Taiwan stocks suffer sharp losses July 1 (Reuters) - A firm dollar put pressure on emerging market currencies and stocks at the start of a new quarter on Friday as disappointing economic data from across the world cemented fears of a global recession. Soaring inflation and hawkish comments from major central bank chiefs this week have steered investors out of risky emerging markets into safe-haven assets such as the dollar and government bonds. The MSCI's index of EM currencies dipped 0.1%, heading towards mid-May lows, while its equities counterpart dropped 0.7%. Both the indexes on Thursday marked their worst quarterly performances since the pandemic-led crash in March 2020. "The global economic and market environment has been deteriorating for EMs that continue to face multiple headwinds, compounded by more hawkish DM and EM central banks," strategists at Generali Investments said in a note. "In addition to a duration issue, EM external debt is also under pressure from spread widening." Data on Thursday showed U.S. consumer spending rose less than expected in May, while surveys from Asia and Europe pointed to stalling manufacturing activity, even though China recorded an expansion. The South African rand dipped to trade at 16.35 per dollar, nearing a new low for the year. The currency hit a 20-month low in the previous session after South African state power utility Eskom said it would continue the worst power cuts the country has seen in more than two years later on Thursday and Friday. The Turkish lira, among the worst performing currencies this year, slipped to 16.75 per dollar, while the Indian rupee breached the 79-per-dollar level to hit a fresh record low. Euro-linked currencies such as the Hungarian forint and Polish zloty weakened as data showed eurozone inflation hit yet another record high in June, firming the case for rapid European Central Bank rate hikes starting this month. Among stocks, tech-heavy bourses in Asia led the losses after a report said the world's biggest contract chipmaker TSMC saw clients scaling back orders and U.S. firm Micron Technology reported a weak outlook. Taiwan's economic fundamentals are good and investors should remain calm and rational, and not panic, Deputy Finance Minister Frank Juan told Reuters on Friday, after the country's stock index closed down 3.3%, making it the worst performer in Asia. For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX   For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see (Reporting by Sruthi Shankar in Bengaluru; Editing by Devika Syamnath)
July 01, 2022 at 12:23 pm
Euro climbs as ECB eyes rate hikes, dollar slides

Euro climbs as ECB eyes rate hikes, dollar slides

By Sinéad Carew NEW YORK (Reuters) - The dollar index fell on Monday while the euro rallied after the European Central Bank indicated a move from negative interest rates, and riskier currencies gained ground along with equities. ECB President Christine Lagarde said in a blog post that the bank was likely to lift the euro area deposit rate out of negative territory by the end of September and could raise it further if it saw inflation stabilizing at 2%. After declining last week, U.S. equities followed European stocks higher on Monday. [.N] The euro's rally came as the dollar fell broadly after already selling off last week. [FRX] Investors had more appetite for riskier assets on Monday as they reacted to Lagarde's comments and easing worries that a European recession was imminent while the U.S. outlook looked less inspiring, according to Erik Nelson, macro strategist at Wells Fargo, New York. "We're seeing more optimism around global growth - European growth, Chinese growth, UK growth, and a little bit less optimism about U.S. growth. So the growth divergence theme is really a big thing and moving out of favor for the dollar," Nelson said. 74e746b1-f764-486c-ae7a-83f7512257be2 The euro was the big gainer, last up 1.13% at $1.0687, having risen as much as 3.4% from its multi-year intraday low of $1.0349 on May 13. The U.S. dollar index, which had hit a two-decade high of 105.01 on May 13, was last down 0.82% at 102.09. "Investors are still interested in the greenback, but foreign currency pressure to the upside has created a little bit of a headwind for the U.S. dollar," said JB Mackenzie, managing director of futures and forex at Charles Schwab. In particular, Mackenzie pointed to the euro's rise after the ECB indication that it would become more hawkish. "Everybody else has been hiking interest rates. The ECB has been the last one to do that so that was what put pressure on the euro. Now all of a sudden, you're starting to hear that they're going to be changing their policy route," Mackenzie said. Whether the dollar is taking a breather or keeps falling will depend on news from the U.S. Federal Reserve, according to Mackenzie, who will be watching closely for policy clues in minutes from the Fed meeting, due to be released this week. The greenback has already soared this year but with expectations for repeated rate hikes already priced in, Wells Fargo's Nelson said it may trade sideways for some time. Last week speculators' net long positioning on the U.S. dollar slipped, after hitting their highest level since late November in the previous week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday. The Australian dollar, which initially showed a muted reaction to the victory for the center-left Labor Party in national elections at the weekend, was up 0.77% at $0.7106 . SWISS FRANC GAINS Meanwhile the Swiss franc was gaining against the dollar after Swiss National Bank governing board member Andrea Maechler said in an interview published on Monday that the bank will tighten monetary policy if inflation in Switzerland remains persistently high. The dollar was last down 0.89% against the Swiss franc after hitting its lowest level since late April. Sentiment around China also helped riskier currencies. Shanghai is edging out of a pandemic-related lockdown, and an unexpectedly big rate cut in China last week reassured investors. Also China will broaden its tax credit rebates, postpone social security payments and loan repayments, roll out new investment projects and take other steps to support the economy, state television quoted the Cabinet as saying on Monday. The yuan had its best week since late 2020 last week and in offshore markets on Monday firmed to 6.704 per dollar, its strongest since early May. [CNY/] Geopolitics are also in focus in Asia this week as U.S. President Joe Biden tours the region. ======================================================== Currency bid prices at 3:09PM (1909 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 102.0900 102.9500 -0.82% 6.718% +102.9500 +102.0400 Euro/Dollar $1.0687 $1.0569 +1.13% -5.99% +$1.0697 +$1.0559 Dollar/Yen 127.9150 127.9200 -0.01% +11.11% +128.0550 +127.1600 Euro/Yen 136.70 135.03 +1.24% +4.90% +136.8000 +134.6700 Dollar/Swiss 0.9660 0.9743 -0.89% +5.85% +0.9751 +0.9629 Sterling/Dollar $1.2577 $1.2496 +0.68% -6.98% +$1.2601 +$1.2482 Dollar/Canadian 1.2774 1.2846 -0.55% +1.04% +1.2842 +1.2767 Aussie/Dollar $0.7106 $0.7052 +0.77% -2.24% +$0.7127 +$0.7046 Euro/Swiss 1.0324 1.0289 +0.34% -0.43% +1.0335 +1.0266 Euro/Sterling 0.8495 0.8457 +0.45% +1.13% +0.8504 +0.8434 NZ $0.6463 $0.6410 +0.84% -5.57% +$0.6491 +$0.6400 Dollar/Dollar Dollar/Norway 9.5905 9.7400 -1.64% +8.75% +9.7330 +9.5800 Euro/Norway 10.2510 10.2923 -0.40% +2.38% +10.3123 +10.2207 Dollar/Sweden 9.8115 9.9285 -0.13% +8.80% +9.9711 +9.8023 Euro/Sweden 10.4850 10.4983 -0.13% +2.45% +10.5190 +10.4595 (Reporting by Sinéad Carew in New York; and Tommy Wilkes in London; Additional reporting by Tom Westbrook in Singapore; Editing by Jan Harvey, Will Dunham and Matthew Lewis)
May 23, 2022 at 09:34 pm
Dollar hits 6-year high vs yen as BOJ moves against rising bond yields

Dollar hits 6-year high vs yen as BOJ moves against rising bond yields

NEW YORK, March 28 (Reuters) - The dollar hit a six-year high versus the yen after the Bank of Japan moved to contain rising bond yields, while U.S. Treasury yields soared to new multi-year highs, highlighting a divergence between the BOJ and other major central banks. Treasury 10-year yields vaulted above 2.5% to three-year highs, with the U.S. Federal Reserve expected to deliver a half-point interest rate rise in May as it tackles rising inflation, having kicked off its tightening cycle this month. "We now expect the FOMC to hike by 50 bps at the next two meetings before shifting back to a 25-bps-per meeting cadence for the reminder of the year," said Michael Gregory, deputy chief economist at BMO Capital Markets Economics. Interest rate hike expectations helped lift the dollar to its highest in two weeks against a basket of six major peer currencies, last up 0.313% at 99.158, at 3:20 p.m. Eastern Standard Time (1920 GMT). Against the yen, the dollar surged as much as 2.5% to its highest level since August 2015 and the biggest one-day rise since March 2020. Yen losses in March surpass 7% and the currency is set for its biggest monthly and quarterly falls since 2016. The dollar was last up 1.34% against the Japanese currency at 123.715 yen. Struggling to swim against the tide lifting interest rates higher globally, the BOJ staunchly defended its 0.25% yield cap on Monday by offering to buy an unlimited amount of government bonds (JGBs) for the first four days of this week. While that did not stop 10-year yields hitting the upper limit of the BOJ's policy band, it sent the yen spiraling. "On net, JGBs mostly shook off what was just a repeated gesture to defend the 10-year yield ceiling but the signal toward expanding money supply contributed to yen softness alongside the more dominant Federal Reserve effects on the dollar," said Derek Holt, head of capital markets economics at Scotiabank Economics. Big energy import bills and the loss of tourism revenues mean "the weight on the yen is likely to remain for the next year," said Colin Asher, senior economist at Mizuho. The Japanese currency also lost ground against the euro, which is increasingly underpinned by expectations the European Central Bank will join the rate hike club this year. The euro gained 1.27% to 135.895 yen, a four-year high. The euro edged up 0.03% against the greenback to 1.0984 . The single currency's fortunes this week could be determined by inflation figures from major European economies, with the bloc's harmonized HICP inflation seen edging up to 6.5% in March. Analysts at Monex said given the yen's weakness and risks to the euro from the Ukraine-Russia conflict, the dollar would likely stay buoyant, especially if Friday's jobs data proved strong. "Should wage growth continue to tick up despite the recent increase in labor supply, money markets are likely to fully price two 50 bp hikes from the Fed in May and June," they added. In commodity currencies, the Australian dollar dipped 0.33% to $0.74895, but was not far off its recent four-month high. In cryptocurrencies, bitcoin rose 2.53% to a year-to-date high of $48,050.90. It bitcoin holds above $47,000, it could be in for a major breakout, said Edward Moya, senior analyst at Oanda. "Once bitcoin crosses the $50,000 level, that should trigger further retail and institutional interest," he said. (Reporting by John McCrank in New York; additional reporting by Sujata Rao and Dhara Ranasinghe in London; Editing by Jonathan Oatis and Alison Williams)
March 28, 2022 at 09:45 pm
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