Carry-Trade Rotation Looms as Key Negative for Asian Currencies
Falling volatility means there's less prospect of earning capital gains from any currency appreciation, so traders are instead having to rely on potential returns from carry, which involves borrowing in countries with low interest rates and investing in others offering higher returns. The relatively meager rates in many Asian countries make their currencies unattractive as targets for such a trade, a Bloomberg analysis shows.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
9 minutes ago
- Yahoo
Trump wants more American pick-ups in Tokyo and London. That may be a hard sell
By David Dolan, Maki Shiraki and Marie Mannes TOKYO/STOCKHOLM, August 7 (Reuters) -Donald Trump is right that Japan and Europe buy few American-made cars - but it has little to do with trade barriers. From Tokyo to London, many consumers see Detroit's offerings as simply too big and too gas-guzzling. Switch Auto Insurance and Save Today! The Insurance Savings You Expect Affordable Auto Insurance, Customized for You Great Rates and Award-Winning Service That view has made Chevrolets and Cadillacs a hard sell, and a rare sight, in cities full of slimmer cars from the Toyota Corolla to Honda Civic, Volkswagen Golf and Renault Clio. Trump often complains about what he sees as a refusal to accept U.S. cars while the Japanese and Europeans sell millions of automobiles a year into the United States. In recent trade deals, both markets agreed to drop or ease safety tests on American vehicle imports. Europe will lower levies on U.S. cars. But it may take more than a change of rules and lower tariffs to convince Japanese and European consumers, who contend with narrow roads and painfully tight parking, to buy big American-made Ford F-150 trucks and Cadillac Escalade SUVs. "American cars are designed for wide roads and freeway driving, so handling them on narrow Japanese streets can be tricky. It takes a bit of technique," said Yumihito Yasue, president of Johnan Jeep Petit in Tokyo, which imports and services vintage cars from the United States. His customers tend to be enthusiasts in their 50s and 60s who grew up seeing American cars on TV and in movies. On a recent weekday, he was servicing two Chevrolets, a lustrous brown 1971 Nova and a low-slung 1986 El Camino, both with their steering wheels on the left. In Japan, steering is on the right. Yasue inherited his love of American cars from his father, who started the business four decades ago and would travel to California to scout for cars. Yasue took over after his father died nine years ago, and sells about 20 vehicles a year. "What makes American cars special is the design. Compared to Japanese or German cars, the body shape is more beautiful. Especially the lines, like the rear lines and the fenders," he said. Some 3.7 million new cars were sold in Japan last year, with a third of those mini or "kei" cars - tiny, fuel efficient vehicles not produced by American automakers. Overall, foreign cars accounted for 6% of new car sales, data from the Japanese Automobile Manufacturers Association showed. Of those, around 570 Chevys, 450 Cadillacs and 120 Dodges were sold, data from the Japan Automobile Importers Association showed. Ford pulled out of Japan almost a decade ago. Tesla makes cars sleeker than some of Detroit's and is becoming more popular. The data does not give a breakdown for the EV maker. 'WE DON'T BUY FORD F-150S' In Europe, smaller locally-made U.S. cars have done well: models like the best-selling Ford Puma and the older Fiesta. But over the past two decades, Ford and General Motors have pivoted towards larger pickups and SUVs, vehicles less suited to Europe's narrow streets and compact-car culture. Ford, a big player in Europe from the early 1900s, has seen sales in the region fall sharply, from 1.26 million vehicles in 2005 to just 426,000 in 2024, according to data from the European Automobile Manufacturers' Association (ACEA). Its market share dropped from 8.3% to 3.3%. "We don't buy Ford F-150s, that's not what our roads are scaled for, it's not what our customers want," Andy Palmer, former CEO of Aston Martin, told Reuters. GM exited Europe in 2017, selling Opel after pulling back Chevrolet, but returned with its Cadillac Lyriq last year. It sold a mere 1,514 of the U.S.-made SUV, according to auto data firm Jato. A GM spokesperson said Cadillac was growing its all-electric lineup in Europe, and the vehicles had been well-received in the markets where they were launched. A Ford spokesperson said the firm exported "passion products" to Europe like the Bronco and Mustang, alongside locally-made models tailored for the market. Clive Sutton, a British car dealer in London who sells luxury American models, said his buyers were drawn to the rarity of vehicles like the giant Cadillac Escalade. But he admitted it was a challenge. "There are people that want that car because of its exclusivity and its perceived status," Sutton said. "But it's not the most easy car to find a parking space for, certainly in central London." COMPETITIVE MARKET Trump has also put pressure on South Korea to open its market to American cars and said duty-free access was part of the trade deal the two countries agreed last week. There, imported vehicles account for less than one-fifth of the car market and U.S. models for only 16% of the imported car segment, which is dominated by German rivals, according to data from the Korea Automobile Importers & Distributors Association. German manufacturers have also carved out a strong presence in Japan's luxury market. Mercedes-Benz sold more than 53,000 vehicles last year, making it the most popular foreign brand, followed by BMW at more than 35,000. Japanese automakers say Europeans have been successful because they committed the time and resources to the market. Detroit carmakers, meanwhile, are often associated with left-hand drive cars, which are more challenging to drive on the left-hand side of the road. But some U.S. manufacturers are changing. GM has offered the Corvette only in right-hand drive since the eighth generation version went on sale in 2021. That may be one reason why some 80% of buyers are new customers, a GM spokesperson said. The Corvette is the only model Chevy offers in Japan, and it has sold fewer than 1,000 of them a year for the last decade. GM this year announced plans for a line-up of right-hand-drive Cadillac EVs and deliveries of the Lyriq started in July. 'WOW, A FOREIGN CAR' Jeep, which sells right-hand drive models, has been the most popular American brand for more than a decade, the importer data showed. It sold just shy of 10,000 vehicles last year in Japan. Yukimi Nitta used to drive a "kei" car but she was drawn to the Jeep Wrangler's appearance, which she described as "friendly" and "outdoorsy". The 42-year-old hair salon owner is now on her second Jeep - a limited-edition beige model - and hopes to switch again to another limited-edition colour. Parking is tight but manageable, she said, and two of her friends have since bought Wranglers. "People often say, 'Wow, a foreign car!' But once you drive it, it feels totally normal. I wish more people would try it," she said. While the Wrangler does burn through fuel quickly, the resale value is good, making it possible to switch out colours, something owners do, Nitta said. A spokesperson for Jeep owner Stellantis said it actively promoted owner events. In July, it announced a collaboration with the "Jurassic World" movie series featuring a limited-edition pink Wrangler, the spokesperson said. Big American cars and trucks might find it hard to follow in Jeep's tracks. Daniel Cadwell, an American living in Tokyo, exports used Japanese camper vans and wagons to the United States. He said he was struck by the size of American cars whenever he went home. "They are just excessively big," said Cadwell, who runs Javan Imports in Portland with his U.S.-based business partner. "I think it is highly challenging for a car of that sort to be seen as attractive in Japan."
Yahoo
9 minutes ago
- Yahoo
Dollar holds losses on US economy concerns, Fed appointments
By Rocky Swift TOKYO (Reuters) -The dollar remained lower against major peers on Thursday, as expectations of Federal Reserve rate cuts grew and concerns swirled about partisanship creeping into key U.S. institutions. Initial jobless claims in the United States are under scrutiny after last week's disappointing nonfarm payrolls, which triggered a slide in the greenback. Meanwhile, the euro found support ahead of anticipated talks next week to end the war between Russia and Ukraine. Last week, President Donald Trump fired the official responsible for the labour data he did not like, and focus is centring on his nomination to fill a coming vacancy on the Fed's Board of Governors and candidates for the next chair of the central bank. "All those things suggest that we're seeing those political risks around the U.S. dollar increase, and on top of that you've got the weak data coming through," said Tony Sycamore, a market analyst at IG. Any progress in ending the war in Ukraine "is going to be a positive driver of the euro," he added. The dollar index, which measures the greenback against a basket of major peers, edged up 0.1% to 98.259 in early trade in Asia, after a 0.6% slide in the previous session. The U.S. currency was little changed at 147.36 yen. The euro stood at $1.1654, down almost 0.1% after a 0.7% jump previously. The U.S. Labor Department is expected to report that initial claims for unemployment benefits likely rose by 3,000 to 221,000 for the week ended August 2. Continued jobless claims for the week that ended July 26 are expected to increase slightly. Data last Friday showed U.S. employment growth was weaker than expected in July while the nonfarm payrolls count for the prior two months was revised down considerably, suggesting a sharp deterioration in labour market conditions. Fed funds futures traders are now pricing in a 94% probability of a 25 basis point cut at the Fed's September meeting, up from 48% a week ago, according to the CME Group's FedWatch Tool. In total, traders see 60.5 basis points in cuts this year. Trump could meet Russian leader Vladimir Putin as soon as next week, a White House official said on Wednesday, as the U.S. kept up pressure on Moscow to end the war in Ukraine. The president said on Tuesday he would decide on a nominee to replace outgoing Fed Governor Adriana Kugler by the end of the week and had separately narrowed the possible replacements for Fed Chair Jerome Powell to a short list of four. Sterling was steady at $1.33505. The Australian dollar was little changed at $0.65. Bitcoin edged 0.1% lower to $115,038.79. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Washington Post
11 minutes ago
- Washington Post
Trump threatens 100% tariffs on computer chips for companies that don't build in U.S.
President Donald Trump said Wednesday that he would place a 100 percent tariff on all computer chips imported to the United States, but exempt companies that commit to 'building' on U.S. soil. The proposal puts economic pressure on U.S. firms, particularly in the tech industry, which generally depend on Asia for the crucial components, setting the stage for more of the showy investment deals Trump has prompted from the industry in his second term. Because importers often pass on the tariff costs to consumers, the chip levies could raise the price of consumer goods dependent on chips ranging from smartphones to kitchen goods to automobiles. Apple has secured an exemption from the chip tariff, Trump said Wednesday. He announced the new semiconductor trade policy at a White House event alongside Apple CEO Tim Cook, who said his company would increase its investment in U.S. jobs and suppliers over coming years. 'We're going to be putting a very large tariff on chips and semiconductors,' Trump said. 'But the good news for companies like Apple is if you're building in the United States or have committed to build, without question, committed to build in the United States, there will be no charge.' Apple said in its most recent annual report that 'substantially all' of its products are manufactured at least in part by other companies, 'located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam.' In a Wednesday blog post, Apple said it would spend $600 billion on hiring workers and buying from U.S.-based suppliers during Trump's term, expanding a commitment made in February by $100 billion. Much of that spending will go toward regular business operations such as paying employees and producing TV shows for its streaming service. Apple also touted a deal with its longtime supplier Corning, a high-tech glass maker, to eventually produce all the glass for iPhones and Apple Watches at the company's Kentucky facilities and said it was working with a group of computer chip companies to produce more of the components it uses inside the U.S. 'We're a proud American company,' Cook said at the Wednesday event, where he also said Trump had been 'a great advocate for American innovation and manufacturing' and gifted him a glass sculpture of a silicon wafer mounted on a 24-karat gold base. The president praised Cook, calling him a 'great, great man.' Trump's chip policy is designed to give firms 'breathing room' to move manufacturing facilities and supply chains to the U.S., similar to the White House's treatment of tariffs on automakers, said a Trump administration official, who spoke on the condition of anonymity because they were not authorized to speak publicly. The president in April revised his original plans for levies on auto imports to relieve manufacturers from the effects of 'stacked' tariffs that would apply to vehicles, component parts and source materials. 'We're fully cognizant of the fact that you can't set up a factory overnight on something as complicated as semiconductors,' the official said. 'This is designed to reflect that and build in some flexibility.' White House spokesperson Kush Desai said the administration is taking a 'nuanced, multifaceted approach' to boosting American manufacturing. Spokespeople for the Semiconductor Industry Association, which represents semiconductor companies and has lobbied against restrictions on imports, did not immediately return a request for comment. Trump's tariff regime for his second term, launched in February, blindsided the tech industry which has made innovations such as smartphones into mass market products in part by creating complex supply chains that crisscross the Pacific Ocean. Tech firms joined other companies in announcing plans in line with Trump's urging for more investment in the U.S. Companies including Amazon, chipmaker Nvidia, ChatGPT creator OpenAI, and pharma companies Roche and Eli Lilly announced multibillion-dollar spending commitments that were lauded by the White House. A string of industry CEOs met with the president over the past weeks and months. Apple stood to lose hundreds of millions of dollars from the tariffs, Cook told investors in May. But after the CEO met with Commerce Secretary Howard Lutnick and other senior White House officials in April, Trump said he would exempt iPhones and other consumer tech products, The Washington Post previously reported. Trump has repeatedly threatened to place tariffs on computer chips, crucial components in electronic devices of all kinds and in products such as cars and home appliances. But the components were exempted from his initial tariffs announced in February, pending an investigation by the Commerce Department to evaluate whether chips are subject to a trade law that can be used to apply tariffs to products presenting a national security risk. The administration has conducted a similar process for steel and pharmaceuticals. Trump's pledge to exempt companies 'that build in the United States' and Apple's apparent success in securing an exemption suggests other tech bosses may seek similar treatment with their own promises to invest in the United States. Although Trump has said his tariffs are intended to boost U.S. manufacturing, he did not make clear if only new factories would qualify for an exemption, or what scale of investment he would deem sufficient. That could give him significant leverage over corporations reliant on chips. Despite efforts by successive administrations to increase domestic chip manufacturing, Asian suppliers dominate. The White House has celebrated the president's trade policies as creating a 'Trump effect,' incentivizing businesses to create jobs and prosperity for his supporters. But many of the investments announced by tech companies since he took office in January were in the works before his November victory, or have not yet come to fruition. During his first week in office, Trump announced OpenAI, SoftBank, Oracle and other corporations would invest up to $500 billion in a project called Stargate to build as many as 20 data centers, warehouses stuffed with computers, to power AI projects. As of July, the only facility the companies have announced is a complex in Abilene, Texas, which began construction during the Biden administration. The Washington Post has a content partnership with OpenAI. In his first term, Trump announced a multibillion-dollar deal for Taiwanese tech manufacturer Foxconn to build a facility in Wisconsin. It never opened. Cook, who Trump accidentally called 'Tim Apple' at a White House event in his first term, has successfully navigated Trump's previous attempts to levy tariffs that would constrain his company's smartphone business. Cook developed a warm relationship with Trump during his first term, unlike other Silicon Valley CEOs, in part through communicating with him directly without intermediaries, The Post previously reported. That playbook has been emulated by executives at many other businesses, who now regularly call or dine with Trump.
