Dollar slips before data, yen outperforms, eyes on Trump-Putin meeting
The yen outperformed the euro and the pound following the release of surprisingly strong Japanese growth data, which showed export volumes held up well against new U.S. tariffs.
All eyes will be on a meeting in Alaskalater on Friday between Donald Trump and his Russian counterpart Vladimir Putin, focused on the U.S. president's push to seal a ceasefire deal on Ukraine.
U.S. import price figures will be more closely watched than usual after data on Thursday showed a sharp jump in producer prices last month, pushing the dollar higher.
If import prices keep rising, it may signal that U.S. companies are fully absorbing the tariffs, leaving them with two options: pass the costs on to consumers, potentially stoking inflation, or take the hit to profit margins.
Money markets reflect a 95% chance of a 25-basis point Fed rate cut in September. They fully priced a 25-bp cut and a 5% chance of a larger 50-bp move before Thursday's U.S. data.
Markets also await next week's Jackson Hole symposium for clues on the Fed's next move. Signs of weakness in the U.S. labour market combined with inflation fromtrade tariffs could present a dilemma for the Fed's rate cut trajectory.
The U.S. dollar index , that measures the value of the greenback relative to a basket of six major foreign currencies, was down 0.33% at 97.882.
However, it's not just a matter of rate outlook divergence according to some analysts.
Morgan Stanley estimates that the dollar risk premium is currently 6% compared to a range of 5% to 9% since April.
The bank sees ample scope for it to return to, or even exceed, those peaks, potentially weakening the U.S. currency, because investors are increasing the share of their U.S. asset exposure that is hedged against exchange rate risks.
After Trump's so-called Liberation Day tariff announcements, markets sold off U.S. assets, including the greenback, on fears that Washington was about to launch a trade war against its major allies.
The yen was up 0.56% against the dollar at 146.94, helped by data showing Japan's economy grew much faster than expected in the second quarter.
U.S. Treasury Secretary Scott Bessent's remarks earlier this week that the Bank of Japan could be "behind the curve" in dealing with the risk of inflation proved to be another tailwind for the yen.
"Although BoJ Governor Ueda may choose to disregard Bessent's remarks, the Japanese authorities will not want the value of the yen to become more of a concern to the Trump administration than it already is," said Jane Foley senior forex strategist at RaboBank.
The euro rose 0.34% versus the dollar to $1.1687.
Most analysts expect Europe's single currency to benefit from any ceasefire deal in Ukraine.
"The Trump-Putin meeting and any better clarity on the path ahead in the Ukraine conflict have longer-lasting implications for the euro than for the dollar," said Francesco Pesole, forex strategist at ING.
"There is a chance that today might be the first step in the direction of de-escalation, and markets may tread carefully for now," he added.
The pound was up 0.24% against the U.S. currency at $1.3563.
The Australian dollar was up 0.25% versus the greenback at 0.6512.
Elsewhere, bitcoin and ether rose after dropping about 4% each on Thursday. Bitcoin had at one point touched a record high on Thursday on shifting Fed rate-cut expectations.
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Reuters
23 minutes ago
- Reuters
Most Gulf markets dip as Trump-Putin talks fell short; Saudi gains
Aug 17 (Reuters) - Most stock markets in the Gulf ended lower on Sunday as high-stakes talks between U.S. President Donald Trump and Russian President Vladimir Putin failed to produce an agreement to resolve the Ukraine conflict. The highly anticipated Alaska summit yielded no agreement to end or pause the war in Ukraine, failing to remove major uncertainties for oil-reliant economies in the Middle East. In Qatar, the index (.QSI), opens new tab fell 0.5%, hit by a 1.2% fall in the Gulf's biggest lender Qatar National Bank ( opens new tab. Leading stock indexes in Bahrain, Oman and Kuwait also ended lower. Saudi Arabia's benchmark index (.TASI), opens new tab, however, gained 0.6%, helped by a 0.4% rise in Al Rajhi Bank ( opens new tab and a 5.2% increase in Dar Al Arkan Real Estate Development ( opens new tab. Elsewhere, oil giant Saudi Aramco ( opens new tab added 0.4%. Aramco signed an $11 billion rent and leaseback agreement involving its Jafurah gas processing facilities with a consortium led by Global Infrastructure Partners (GIP), part of BlackRock, it said on Thursday. Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab advanced 1.1%, with Commercial International Bank ( opens new tab gaining 1.7%. Egypt registered a record primary surplus of 629 billion Egyptian pounds ($13 billion) in the 2024-2025 fiscal year, equal to 3.6% of the country's gross domestic product, the presidency said in a statement on Saturday. The primary surplus came 80% above that in the 2023-2024 fiscal year. ($1 = 48.2700 Egyptian pounds)
The Guardian
an hour ago
- The Guardian
Putin won in Anchorage. Now Zelenskyy and Europe are in an even more perilous position
Donald Trump portrays himself as a hard-nosed dealmaker. Yet in the run-up to Friday's summit with Vladimir Putin in Anchorage, Alaska, his claim that the Russian leader held him in high regard and was therefore serious about ending the war in Ukraine sounded naive. Putin doesn't let sentimentality shape his political and military decisions. Nor has he disavowed his longstanding claim to four Ukrainian provinces: Donetsk and Luhansk, which together comprise Ukraine's eastern Donbas region, and Zaporizhzhia and Kherson in the south. Despite Russia's overwhelming numerical advantage in troops and weaponry, Putin occupies only one province, Luhansk, almost entirely. Yet he persists. In the days before his meeting with Putin, Trump said the Russian economy 'stinks' and that falling oil prices would cause Russia's war to run aground. The war has certainly placed severe strains on Russia's economy, including high inflation and interest rates, labour shortages and a lack of investment by private businesses. Earnings from oil sales, a key source of state income, have also shrunk by 18% this year due to falling prices. There has even been talk of a recession. But these pressures have not prompted Putin to reassess his war plans. He ignored Trump's proposal for a 30-day ceasefire, which Ukraine's president, Volodymyr Zelenskyy, accepted right away. Likewise, he was unfazed by Trump's threats to impose additional sanctions – with 'severe consequences', as he put it just before the summit – if Russia did not relent. Trump returned from Anchorage empty-handed for other reasons. Successful summits require painstaking advance work by leaders' subordinates; this one was arranged in haste. Given the rush, it was unsurprising that the Anchorage talks ended hours ahead of time. (The working lunch the two delegations were to have was cancelled.) During his post-summit press conference, Trump gamely praised Putin's goodwill and said that they had agreed on 'many points' during discussions that he described as 'productive'. Yet he failed to identify a single point of agreement and, atypically, didn't stay to answer reporters' questions. Putin came out ahead in Anchorage. He didn't agree to Trump's pet proposal for a ceasefire. It was Trump who ended up accepting Putin's position that a ceasefire must be preceded by a comprehensive peace agreement that addresses the 'root causes' of the war. Putin did show some flexibility by agreeing to freeze the frontline if Ukraine were to withdraw from Donetsk and Luhansk, and thus the entire Donbas, enabling Russia to acquire lands it has failed to conquer despite more than 40 months of fighting. Yet this offer could prove to be a trap. If Zelenskyy, who arrives in Washington for talks with Trump on Monday, refuses to do this, Putin may be able to look on as Trump tries to coerce the Ukrainian leader, forcing Europe to take sides. If Trump fails, Putin can paint Zelenskyy as the real obstacle to peace. Trump had declared that there would be no future talks if the summit failed – which it did, as he couldn't obtain a ceasefire, his main objective – yet in Anchorage, he spoke of follow-up meetings. Putin concurred, mischievously suggesting Moscow as the venue, but without indicating that he was open to including Zelenskyy and European leaders. By agreeing to further negotiations and keeping Trump's hopes for a peace deal alive, Putin may have ensured that the efficacy of additional US sanctions on Russia remains untested. By simply showing up in Anchorage, Putin demonstrated that the western policy of isolating him won't work. Zelenskyy and European leaders are undoubtedly relieved that the duo didn't unveil a deal to end the war by partitioning Ukraine. Still, Trump's readiness to accept Putin's insistence on this bilateral meeting after US efforts to include Zelenskyy failed had already sown more mistrust between Washington and Europe. Now Trump has embraced Putin's view that there can be no ceasefire without an overall agreement that addresses all aspects of the conflict. He has also in effect endorsed Putin's call for Ukraine to cede Donbas in exchange for a freeze of the frontline. These shifts will increase Ukraine and Europe's distrust of Trump – to Putin's advantage. Putin's confidence in Russia's eventual victory has been bolstered by Trump's decision, taken well before the summit, to cease direct weapons deliveries to Ukraine – assistance that totalled $65.9bn while Joe Biden was the US president. Russia will continue bombing Ukraine's cities, and its ground troops will keep pushing to grab even more land. In this respect, the summit has changed nothing. What has changed since Trump's return to the White House, though, is the US's role in the war. Ultimately, Trump believes that Russia's invasion does not threaten the US so it's up to the Europeans to support Ukraine's defence, a point JD Vance reiterated shortly before the summit. European countries have been increasing its defence spending and military support to Ukraine. But it had better be prepared to do even more and summon the unity to stay the course. Meanwhile, the lure of additional talks with Putin will keep alive Trump's illusion that continued diplomatic engagement with Russia and his self-proclaimed deal-making skills will eventually end the war – clearing the path to the Nobel peace prize he covets. Rajan Menon is a professor emeritus of international relations at the City College of New York and a senior research scholar at Columbia University's Saltzman Institute of War and Peace Studies
The Independent
an hour ago
- The Independent
Fatal explosion at U.S. Steel's plant raises questions about its future, despite heavy investment
The fatal explosion last week at U.S. Steel's Pittsburgh-area coal-processing plant has revived debate about its future just as the iconic American company was emerging from a long period of uncertainty. The fortunes of steelmaking in the U.S. — along with profits, share prices and steel prices — have been buoyed by years of friendly administrations in Washington that slapped tariffs on foreign imports and bolstered the industry's anti-competitive trade cases against China. Most recently, President Donald Trump 's administration postponed new hazardous air pollution requirements for the nation's roughly dozen coke plants, like Clairton, and he approved U.S. Steel's nearly $15 billion acquisition by Japanese steelmaker Nippon Steel. Nippon Steel's promised infusion of cash has brought vows that steelmaking will continue in the Mon Valley, a river valley south of Pittsburgh long synonymous with steelmaking. 'We're investing money here. And we wouldn't have done the deal with Nippon Steel if we weren't absolutely sure that we were going to have an enduring future here in the Mon Valley," David Burritt, U.S. Steel's CEO, told a news conference the day after the explosion. 'You can count on this facility to be around for a long, long time.' Will the explosion change anything? The explosion killed two workers and hospitalized 10 with a blast so powerful that it took hours to find two missing workers beneath charred wreckage and rubble. The cause is under investigation. The plant is considered the largest coking operation in North America and, along with a blast furnace and finishing mill up the Monongahela River, is one of a handful of integrated steelmaking operations left in the U.S. The explosion now could test Nippon Steel's resolve in propping up the nearly 110-year-old Clairton plant, or at least force it to spend more than it had anticipated. Nippon Steel didn't respond to a question as to whether the explosion will change its approach to the plant. Rather, a spokesperson for the company said its 'commitment to the Mon Valley remains strong' and that it sent 'technical experts to work with the local teams in the Clairton Plant, and to provide our full support.' Meanwhile, Burritt said he had talked to top Nippon Steel officials after the explosion and that 'this facility and the Mon Valley are here to stay.' U.S. Steel officials maintain that safety is their top priority and that they spend $100 million a year on environmental compliance at Clairton alone. However, repairing Clairton could be expensive, an investigation into the explosion could turn up more problems, and an official from the United Steelworkers union said it's a constant struggle to get U.S. Steel to invest in its plants. Besides that, production at the facility could be affected for some time. The plant has six batteries of ovens and two — where the explosion occurred — were damaged. Two others are on a reduced production schedule because of the explosion. There is no timeline to get the damaged batteries running again, U.S. Steel said. Accidents are nothing new at Clairton Accidents are nothing new at Clairton, which heats coal to high temperatures to make coke, a key component in steelmaking, and produces combustible gases as byproducts. An explosion in February injured two workers. Even as Nippon Steel was closing the deal in June, a breakdown at the plant dealt three days of a rotten egg odor into the air around it from elevated hydrogen sulfide emissions, the environmental group GASP reported. The Breathe Project, a public health organization, said U.S. Steel has been forced to pay $57 million in fines and settlements since Jan. 1, 2020, for problems at the Clairton plant. A lawsuit over a Christmas Eve fire at the Clairton plant in 2018 that saturated the area's air for weeks with sulfur dioxide produced a withering assessment of conditions there. An engineer for the environmental groups that sued wrote that he 'found no indication that U.S. Steel has an effective, comprehensive maintenance program for the Clairton plant.' The Clairton plant, he wrote, is "inherently dangerous because of the combination of its deficient maintenance and its defective design." U.S. Steel settled, agreeing to spend millions on upgrades. Matthew Mehalik, executive director of the Breathe Project, said U.S. Steel has shown more willingness to spend money on fines, lobbying the government and buying back shares to reward shareholders than making its plants safe. Will Clairton be modernized? It's not clear whether Nippon Steel will change Clairton. Central to Trump's approval of the acquisition was Nippon Steel's promises to invest $11 billion into U.S. Steel's aging plants and to give the federal government a say in decisions involving domestic steel production, including plant closings. But much of the $2.2 billion that Nippon Steel has earmarked for the Mon Valley plants is expected to go toward upgrading the finishing mill, or building a new one. For years before the acquisition, U.S. Steel had signaled that the Mon Valley was on the chopping block. That left workers there uncertain whether they'd have jobs in a couple years and whispering that U.S. Steel couldn't fill openings because nobody believed the jobs would exist much longer. Relics of steelmaking's past In many ways, U.S. Steel's Mon Valley plants are relics of steelmaking's past. In the early 1970s, U.S. steel production led the world and was at an all-time high, thanks to 62 coke plants that fed 141 blast furnaces. Nobody in the U.S. has built a blast furnace since then, as foreign competition devastated the American steel industry and coal fell out of favor. Now, China is dominant in steel and heavily invested in coal-based steelmaking. In the U.S., there are barely a dozen coke plants and blast furnaces left, as the country's steelmaking has shifted to cheaper electric arc furnaces that use electricity, not coal. Blast furnaces won't entirely go away, analysts say, since they produce metals that are preferred by automakers, appliance makers and oil and gas exploration firms. Still, Christopher Briem, an economist at the University of Pittsburgh's Center for Social and Urban Research, questioned whether the Clairton plant really will survive much longer, given its age and condition. It could be particularly vulnerable if the economy slides into recession or the fundamentals of the American steel market shift, he said. 'I'm not quite sure it's all set in stone as people believe,' Briem said. 'If the market does not bode well for U.S. Steel, for American steel, is Nippon Steel really going to keep these things?' ___
