Dollar eases as US inflation data keeps September rate cut on table
The consumer price index rose 0.2% last month after gaining 0.3% in June, the Labor Department's Bureau of Labor Statistics said on Tuesday.
In the 12 months through July, the CPI advanced 2.7% after rising 2.7% in June. Economists polled by Reuters had forecast the CPI rising 0.2% and increasing 2.8% year-on-year.
"Underlying inflation remains subdued, giving policymakers room for maneuver as they respond to signs of incipient weakness in labor markets," Karl Schamotta, chief market strategist at Corpay, said.
"Chair Powell should put a September cut on the table when he speaks at Jackson Hole on the 21st," Schamotta said, referring to the Fed's Jackson Hole Economic Symposium later this month.
Currency markets had been in a holding pattern earlier as expectation grew that a moderate reading on U.S. price pressures could cement bets for a Fed rate reduction next month, which increased after last week's soft payrolls data.
The euro erased earlier losses against the buck to trade up 0.06% at $1.16235. The greenback pared gains against the yen to trade 0.17% higher at 148.390 yen .
"Yield differentials are narrowing against the dollar across the policy-sensitive end of the curve, and the greenback is coming under sustained selling pressure against its advanced-economy rivals," Schamotta said.
"This could persist through the end of the summer if incoming data releases confirm a deceleration in the U.S. economy," he said.
Still, with the jury still out on the impact of tariffs on global growth, predicting how the dollar will react through the end of the year remained challenging, Schamotta said.
On Tuesday, speculation about a change of leadership at the Fed was back as Former St. Louis Federal Reserve Bank President James Bullard said he would accept the role of Fed Chair if it was offered to him.
Bullard told CNBC that he would accept the job "if we can protect the value of the dollar ... that'll give us lower interest rates over time; if we aim for low and stable inflation, (and) respect the independence of the institution under the Federal Reserve Act".
Meanwhile, Sterling was up 0.4% on the dollar at $1.34805 after data that showed Britain's jobs market weakened further, albeit more slowly, while wage growth stayed strong - the latter underscoring why the Bank of England is so cautious about cutting interest rates.
The numbers ought not to cause the Bank of England to accelerate the speed of its rate cuts. The BoE cut rates only last week in a tight 5-4 vote.
The Australian dollar fetched $0.64945 , down 0.3%, after the Reserve Bank of Australia's widely-expected decision to cut rates by a quarter point. The central bank cited a slowdown in inflation and a looser labor market, though it was cautious on prospects for further easing.
"We remain of the view that a follow-up cut in November is more likely than not, with the cash rate to then stay at 3.35% for an extended period," said Adam Boyton, head of Australian economics at ANZ, in a note.
Currency markets largely ignored Trump's decision to in sharply higher tariffs on Chinese imports for another 90 days, as widely expected.
Cryptocurrency bitcoin was about flat around $119,395, after climbing as high as $122,308.25 on Monday, taking it close to the all-time peak of $123,153.22 from mid-July.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
16 minutes ago
- Reuters
Are rupee traders jittery about Trump-Putin meet? Options suggest not really
MUMBAI, Aug 14 (Reuters) - Indian rupee options markets suggest traders aren't too anxious about Friday's meeting between the presidents of the U.S. and Russia, with near-term implied volatility at its lowest this month and option pricing showing no bias toward rupee weakness. One-month implied volatility on the dollar/rupee stood at 4.35% on Friday, the lowest this month, while the spot/week implied hovered near monthly lows. Further, the cost of buying options that benefit from a rupee decline was roughly the same for those that profit from its rise, pointing to a lack of clear directional conviction. "Options markets are in no rush to price in a big move on the rupee, which is understandable considering the recently subdued realised volatility," said a rupee volatility trader at a mid-sized private sector bank. "Being long volatility doesn't pay off often, especially when the Reserve Bank of India (RBI) appears to be defending a level." The rupee was quoting at 87.55 to the U.S. dollar, down 0.% from Wednesday. It had touched 87.8850 last week after U.S. President Donald Trump imposed additional tariffs on Indian goods over New Delhi's Russian oil purchases. The RBI had stepped in to prevent the currency from breaching the all-time low of 87.95, a level bankers believe the central bank will continue to defend. The Trump-Putin meeting on Friday in Alaska carries more weight for the rupee than for most of its Asian peers, amid escalating trade tensions with the U.S., which have culminated in potential 50% tariffs on Indian goods. A 25% levy is already in place, with the additional 25% scheduled to take effect on August 27. "If tariffs of 50% were to be sustained, we see USD/INR rising to 89.50 levels by June 2026, implying outright INR underperformance against major currency pairs including Asian FX," MUFG Bank said. Indian financial markets will be shut on Friday, leaving any immediate reaction to be reflected only in Monday's trading.
Daily Record
an hour ago
- Daily Record
Ex-DWP employee shares reasons State Pension payments can never be means-tested
Sandra Wrench worked at the DWP for 42 years and sets out why the contributory benefit cannot be means-tested. Pensions Minister Torsten Bell recently confirmed that the State Pension will not be means-tested in the future after growing speculation on social media hinted that the contributory benefit could be the next to be reviewed by the Labour Government. Under the Triple Lock, the New and Basic State Pensions increase each year in-line with whichever is the highest between average annual earnings growth from May to July, Consumer Price Index (CPI) inflation in the year to September or 2.5 per cent. Deferred State Pensions and additional elements rise by the September CPI inflation rate. Around 55 per cent of social security expenditure goes to pensioners - in 2025/26 the Department for Work and Pensions (DWP) will spend £174.9 billion on benefits for pensioners. This includes spending on the State Pension which is forecast to be £145.6bn over the current financial year. As the costs continue to rise, the topic of means-testing will no doubt surface again, however, former DWP employee Sandra Wrench, who has 42 years' experience dealing with benefits including the State Pension, says it would be 'virtually impossible' to means-test the State Pension due to the different administration structures for the New and Basic State Pensions. Mrs Wrench told the Daily Record: 'There are two main barriers that the Uk Government would face if they did go down this path and why it makes it virtually impossible to means-test the State Pension. 'I worked on the State Pension section at Bedford DWP for 18 years, and when you actually process claims for the State Pension, you have a greater understanding and knowledge of the benefit.' Voluntary Contributions paid by way of cash You can fill in gaps in your National Insurance (NI) record by paying cash into the State Pension scheme by way of Voluntary Contributions. Mrs Wrench explained: 'You are not going to pay cash into a scheme unless you can get your money back. We look at the recent time extension for the payment of Voluntary Contributions from 2006, where the deadline was originally April 5, 2023, but this was extended by the UK Government to April 5, 2025, so they are still actively encouraging the payment of Voluntary Contributions. 'Would they be doing this if they were going to means-test the State Pension? The answer is no.' She continued: 'If the State Pension was means-tested, HM Revenue and Customs (HMRC) would have to refund Voluntary Contributions to those members of the public, who had paid them, but were not entitled to the payment of State Pension. 'State Pension is based on the NI contributions you pay from age 16 to State Pension age - typically, a period of 50 years - so some people may have paid Voluntary Contributions 20/30 years ago for a period in the future. 'It is unlikely that HMRC would retain detailed payment details of Voluntary Contributions, both Class 3 and Class 2, paid all those years ago, even though the NI record will confirm that Voluntary contributions have been paid, which count towards qualifying years.' The DWP insider highlighted how if the State Pension was means-tested, would HMRC be able to refund NI contributions from all those years ago? Mrs Wrench said: 'In a nutshell, the answer is probably no, unless the customer had kept detailed records of all payments made for past years.' She continued: 'I myself paid a substantial sum into the Additional Pension Top Up scheme for those who were State Pension age before April 2016, and this scheme ran between Oct 2015 and April 2017. 'Due to the higher rate of Basic State Pension for the New State Pension, currently £230.25 a week, this gave those pensioners who were State Pension age before April 2016 with the lower amount of Basic State Pension, currently £176.45 a week, the opportunity of purchasing up to £25 a week additional pension to help bridge this gap.' It's important to note that the Additional Pension uprates annually under the CPI measure of the Triple Lock. Additional Pension (1978-2016) and contracted out employment The Old?Basic State Pension scheme consists of three parts: Basic State Pension - paid on the number of qualifying years which you have Additional pension - first known as SERPS (State Earnings Related Pension Scheme) from 1978, then known as the Second State Pension from 2002 to 2016, and it was the additional State Pension scheme you could contract out The Graduated Retirement Pension which existed from 1961-1975 Mrs Wrench explained that with 'contracted out' employment, your additional pension is paid with your occupational pension as opposed to being paid by the state. She continued: 'DWP have admitted and confirmed in writing that they do not know the exact amount your scheme will pay you as a result of contracting out as it will depend on the actual rules of your private scheme. 'So DWP would have to estimate the amount of additional pension in pay for State Pension purposes, if that person had been in contracted out employment. So how can you means-test an amount which is estimated? 'DWP have stated that the pension you get from your workplace or personal pension scheme for the periods you were contracted out, should include an amount that, in most cases, will be the equivalent of the Additional State Pension you would have got if you had not been contracted out, and this amount is known as the Contracted-Out-Pension-Equivalent (COPE). 'DWP will know how much Additional Pension you would have got if you had not been contracted out, but this figure will be distorted once it is incorporated into an occupational pension scheme, via contracted out employment.' Contributory and Non Contributory Benefits Mrs Wrench explained how non contributory benefits are funded by general taxation and do not depend on NI contributions, and are benefits such as Attendance allowance, Carer's Allowance, Child Benefit, Universal Credit and Personal Independence Payment. Contributory benefits are funded by NI contributions and include benefits such as Jobseekers Allowance, Employment and Support Allowance, State Pension and Statutory Sick Pay. Mrs Wrench said: 'You could understand non contributory benefits being means tested, such as Universal Credit, but you would be hard pushed to start means testing contributory benefits, such as State Pension, as the payment of these depend on NI contributions paid by the public, and the public have paid into the scheme. 'With means testing, you are paid the benefit on a temporary basis, and if your circumstances change, the amount of money you are paid could fluctuate. The last thing you want when you reach retirement is fluctuating income, and the anxiety which accompanies this . 'At least with the State Pension, you receive what you are entitled to, know exactly how much money you have coming in a month and know exactly where you stand financially' She added: 'To mention means-testing the State Pension may cause concern for some people, particularly when their State Pension may be their main source of income, but for the reasons mentioned above, it is highly unlikely that the government would be actually able to means-test it.'
Reuters
an hour ago
- Reuters
Key US natural gas trends to track as LNG exports hit new highs
LITTLETON, Colorado, Aug 14 (Reuters) - U.S. exports of LNG have scaled new highs so far this year, rising by over 20% from the same months in 2024 to cement the U.S.' position as the world's largest supplier of the super-chilled fuel. Demand for U.S. natural gas has also climbed to record highs among commercial and industrial users, which has helped lift total U.S. gas consumption by the largest gas users by 5% from the year before to new all-time highs. Gas prices for all major consumers have also increased notably from 2024, but are still holding below previous records scaled around 2022-2023. Below is a breakdown of the key trends and data points covering the U.S. natural gas market so far this year and going forward. Over the first 8 months of 2025, total U.S. LNG exports climbed by 22% or by 12.4 million tons from the same months in 2024 to a record 69 million tons, according to commodities intelligence firm Kpler. Europe accounted for over two thirds of U.S. export volumes, followed by Asia. The top three markets were the Netherlands, France and Spain, which together accounted for 28% of total U.S. LNG shipments so far this year. Europe has accounted for over half of U.S. LNG exports since 2022, when Russia's invasion of Ukraine triggered sanctions on Moscow and disrupted commodities flows to Europe. Declines in European wind and hydro power electricity generation this year have also helped underpin gas use, while several European nations lifted imports of U.S. LNG in an attempt to reduce trade deficits with the U.S. once President Donald Trump returned to office. All told, Europe's imports of U.S. LNG from January through August are up 61% compared to the first eight months of 2024. Higher global natural gas prices - in part due to higher LNG demand from Europe - sparked gas rationing in other regions, especially in Asia where purchases of U.S. LNG have dropped 35% compared to the year before. Declines in gas use across Asia and alongside strong U.S. LNG sales to Europe helped lift the U.S. share of global LNG exports to a record 24.5% so far this year, compared to a 21% share in 2024, Kpler data shows. U.S. LNG export prices averaged $8.34 per thousand cubic feet over the first five months of 2025, according to data from the U.S. Energy Information Administration (EIA). That price was 38% more than in the same months in 2024, and marks the highest average LNG price for that period since 2023. Most major domestic gas consumers have also faced steep price climbs in 2025. Electric power generators - the largest single gas consumers accounting for around 31% of total U.S. gas use - saw prices rise by 52% during January to May compared to the same months in 2024. Industrial gas users, which account for 24% of U.S. gas use, faced a 32% price rise, while residential users (19% of gas use) and commercial users (12% of gas use) saw prices climb by 6% and 8% respectively compared to the year before. The overall average price across all major U.S. gas consumers was 27% higher at around $8.81 per thousand cubic feet. While overall U.S. gas consumption from all major usage segments hit a new high so far this year, rising gas prices have sparked shifts in gas use patterns. The key electric power segment made its first year-over-year reduction to gas consumption since 2021 during January to May. The 4,704 billion cubic feet of gas used by electric power firms was 4% less than during the same months in 2024, EIA data shows, and was a result of higher production from cheaper coal plants and higher supplies of renewable power. All other major gas consumers boosted gas use this year from the year before, although by widely varying degrees. Industrial gas users lifted consumption by 1.5%, while commercial users boosted consumption by 11%. Residential gas consumers - which use gas mainly for heating - lifted use by 11.4% from the year before, although the trend in residential gas use remains downward as more homes boost energy efficiency and install heat pumps that run on electricity. Gas demand from LNG exporters continues to grow at a much faster pace than all other gas use segments, and will remain a key driver of U.S. gas market sentiment and price action. Between 2019 and 2024 gas demand for LNG exports rose by 140%, EIA data shows. That growth rate compared to a 20% rise in demand from the electric power sector, a 2% rise in gas demand from industry, and declines in gas use among residences and offices of 12% and 5% respectively over that same period. Total gas demand from the LNG export sector surpassed that of commercial users in 2021 and was nearly equal to that used by residences in 2024, EIA data shows. Gas demand for LNG exports is on track to surpass the gas demand from residences in 2025, which would mean that the LNG export sector would emerge as the third largest U.S. gas consumer after electric power and industry this year. As a result, even if gas demand from offices and homes continues to decline, sustained strength in U.S. LNG exports has the potential to set the tone for the overall U.S. domestic gas market, and could keep prices trending higher. The opinions expressed here are those of the author, a columnist for Reuters. Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, opens new tab and X, opens new tab.
