Latest news with #Holzmann
Globe and Mail
28-04-2025
- Business
- Globe and Mail
Dollar Gains on Hopes of De-Escalation of US-China Trade Conflict
The dollar index (DXY00) today is up by +0.25%. The dollar is trading higher today in hopes of de-escalating the US-China trade war. Bloomberg reported that the Chinese government is considering suspending the 125% tariffs on some US imports, including medical equipment and industrial chemicals like ethane. The dollar also garnered support after the University of Michigan US Apr consumer sentiment index was unexpectedly revised upward. Gains in the dollar are limited as T-note yields are lower after Thursday's dovish Fed comments from Cleveland Fed President Hammack and Fed Governor Waller bolstered speculation the Fed could cut interest rates as soon as June. The University of Michigan US Apr consumer sentiment index was unexpectedly revised upward by +1.4 points to 52.2 from the previously reported 50.8, stronger than expectations of 50.5. The University of Michigan US Apr 1-year inflation expectations indicator was revised lower to +6.5% from the previously reported +6.7%, weaker than expectations of an upward revision to +6.8%. The markets are discounting the chances at 8% for a -25 bp rate cut after the May 6-7 FOMC meeting, down from a 30% chance last week. EUR/USD (^EURUSD) today is down by -0.21%. The euro is under pressure today from a stronger dollar. Also, dovish comments today from ECB Governing Council member Holzmann weighed on the euro and boosted the chances for an ECB rate cut to 100% at its June meeting when he said he sees a disinflationary impact in the Eurozone from US tariffs. ECB Governing Council member Holzmann said that "so far, the net impact from the US tariff announcements seems to be rather deflationary than inflationary." Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the June 5 policy meeting. USD/JPY (^USDJPY) today is up by +0.72%. The yen fell to a 1-1/2 week low against the dollar today on signs of de-escalation of the US-China trade war, which reduced safe-haven demand for the yen after Bloomberg reported that the Chinese government is considering suspending the 125% tariffs on some US imports. Also, today's rally in the Nikkei Stock Index to a 3-1/2 week low curbed safe-haven demand for the yen. Losses in the yen are limited after today's news that Japan's Tokyo Apr CPI rose more than expected, a hawkish factor for BOJ policy. Also, lower T-note yields today are limiting losses in the yen. Japan Apr Tokyo CPI rose +3.5% y/y, stronger than expectations of +3.3% y/y and the biggest increase in 2 years. Apr Tokyo CPI ex-fresh food and energy rose +3.1% y/y, stronger than expectations of +2.8% y/y and the biggest increase in 14 months. June gold (GCM2 5) today is down -53.60 (-1.60%), and May silver (SIK2 5) is down -0.563 (-1.68%). Precious metals prices today are sharply lower due to a stronger dollar. Also, hopes for a de-escalation of the US-China trade war have sparked long liquidation pressures in precious metals today after Bloomberg reported that the Chinese government is considering suspending the 125% tariffs on some US imports, including medical equipment and industrial chemicals like ethane. In addition, today's news showing Japan's Apr Tokyo CPI rose more than expected may prompt the BOJ to keep raising interest rates, a negative factor for precious metals. Lower T-note yields today are supportive of precious metals. Also, geopolitical risks in the Middle East are boosting safe-haven demand for precious metals as the Israel-Hamas and the US-Houthi conflicts continue.
CNBC
24-04-2025
- Business
- CNBC
European Central Bank's Holzmann says rate cuts must wait for more tariff certainty
Austrian central bank chief Robert Holzmann on Thursday said euro zone interest rates should be held until more clarity emerges on the path of U.S. tariffs and European Union countermeasures. "We have not seen this uncertainty now for years... unless the uncertainty subsides, by the right decisions, we will have to hold back a number of our decisions, and hence, we don't know yet in what direction monetary policy should be best moved," Holzmann told CNBC's Carolin Roth in an interview at the IMF World Bank Spring Meetings. Holzmann is widely viewed as one of the most hawkish voting members of the European Central Bank, in favor of a slow approach to easing monetary policy as inflation eases. The ECB's Governing Council voted unanimously to cut by a quarter percentage point at its April meeting, its seventh reduction in the current cycle, but Holzmann confirmed he took the decision with caution and had seen a need to wait for more data. He told CNBC that there was a "broad consensus" around lowering rates, but some disagreement at the margins. "My assessment is that at this time, it wasn't clear yet to what extent [tariff] countermeasures were being taken. Because with countermeasures in Europe, prices may have increased. Without countermeasures, quite likely the price pressure is downward. And for the time being, we don't know yet the direction," he said. Under President Donald Trump's market-rocking tariff policies, the European Union is facing blanket 20% duties on its U.S. exports, along with the 25% U.S. tariffs on aluminum, steel and autos that most countries have been slapped with. Trump on April 9 announced a 90-day pause on the universal tariffs, prompting the EU to pause its own initial tranche of counter measures while negotiations take place. Holzmann told CNBC that while various scenarios remained possible with regard to prices and the movement of rates, for the time being the direction was downward. "Before looking at data in detail, the question is, what kind of political decisions will be taken? Is it that we will have some tariff increases? Is it that we will have strong tariff increases? Is it that we will have retribution by high counter tariffs?" "This high uncertainty, what we currently have, you can find everywhere. You can find it at the level of growth. You find it at the level of exchanges, in financial markets indicators. So at the moment, we look at everything and try to make sense out of it. But for the time being, it's too early to say, this is the data to look at. We need the decisions." In an interview with CNBC earlier this week, European Central Bank President Christine Lagarde said monetary policy had done its job and the disinflation process in the euro zone was "nearing completion." "We need to continue checking the data," she added, saying the central bank would be "data dependent to the extreme." Overnight index swap pricing on Thursday suggested market expectations for another 25-basis-point rate cut at the ECB's next meeting in June, taking its key rate to 2%, and another cut of the same size before the end of the year. "There may be further cuts this year, but the number is still outstanding," Holzmann said Thursday.
Globe and Mail
02-04-2025
- Business
- Globe and Mail
Dollar Falls Ahead of President Trump's Tariff Plans
The dollar index (DXY00) Wednesday fell by -0.42% and posted a 1-1/2 week low. The dollar is under pressure because of concerns that US tariffs will start a trade war that derails the economy. Also, a recovery in stock prices on Wednesday reduced liquidity demand for the dollar. Losses in the dollar were limited after the US Mar ADP employment and Feb factory orders reports rose more than expected, which is a hawkish factor for Fed policy. The US Mar ADP employment change rose +155,000, stronger than expectations of +120,000. US Feb factory orders rose +0.6% m/m, stronger than expectations of +0.5% m/m. Market attention this week will include Thursday's March ISM services index (expected to fall -0.5 to 53.0), and on Friday, March nonfarm payrolls are expected to increase by +138,000, and the March unemployment rate is expected to be unchanged at 4.1%. Also, March average hourly earnings are expected to be +0.3% m/m and +4.0% y/y, unchanged from February. Finally, on Friday, Fed Chair Powell is scheduled to speak to the Society for Advancing Business Editing and Writing Conference on the economic outlook. The markets are discounting the chances at 14% for a -25 bp rate cut after the May 6-7 FOMC meeting. EUR/USD (^EURUSD) Wednesday rose by +0.54% and posted a 1-1/2 week high. The euro moved moderately higher on Wednesday as dollar weakness sparked some short covering in the euro. Gains in the euro accelerated due to hawkish comments from ECB Governing Council member Holzmann, who said he was against an ECB interest rate cut at the April 17 policy meeting. Limiting gains in the euro is the concern that US tariffs will ignite a trade war that derails the global economy. Also, lower German bund yields today have weakened the euro's interest rate differentials after the 10-year German bund yields fell to a 4-week low. ECB Governing Council member Holzmann said he's against an ECB interest rate cut at this month's policy meeting, 'as we are neutral and inflation is converging to target, there is no reason to become accommodative.' Swaps are discounting the chances at 74% for a -25 bp rate cut by the ECB at the April 17 policy meeting. USD/JPY (^USDJPY) Wednesday rose by +0.23%. The yen on Wednesday gave up an early advance and turned lower after T-note yields erased an early decline and moved higher, sparking long liquidation in the yen. The yen was also under pressure due to a fall in Japanese government bond yields after the 10-year JGB bond yield today fell to a 4-week low, weakening the yen's interest rate differentials. June gold (GCM2 5) Wednesday closed up +20.20 (+0.64%), and May silver (SIK2 5) closed up +0.341 (+0.99%). Precious metals settled moderately higher on Wednesday, with June gold posting a contract high. Wednesday's fall in the dollar index to a 1-1/2 week low is bullish for metals. Also, trade war concerns continue to fuel safe-haven demand for precious metals ahead of President Trump's announcement on new reciprocal tariffs later Wednesday. In addition, geopolitical risks in the Middle East are boosting safe-haven demand for precious metals as Israel continues airstrikes across Gaza, ending a two-month ceasefire with Hamas, and as the US continues to launch strikes on Yemen's Houthi rebels. Fund buying of gold supports prices after long gold positions in ETFs rose to a 1-1/2 year high Tuesday. Silver also has support on concern about retaliatory tariffs on silver exports from Canada and Mexico, where the US gets 70% of its silver. Falling inflation expectations are bearish for gold as they curb demand for gold as an inflation hedge after the US 10-year breakeven inflation rate Wednesday fell to a 1-1/2 week low. Also, hawkish comments Wednesday from ECB Governing Council member Holzmann were bearish for precious metals when he said he was against an ECB interest rate cut at this month's policy meeting. Silver prices are also undercut by concerns that US tariffs will lead to a trade war that derails economic growth and industrial metals demand.
Reuters
02-04-2025
- Business
- Reuters
ECB's Holzmann sees no reason to cut as rates no longer a drag
FRANKFURT, April 2 (Reuters) - European Central Bank policymaker Robert Holzmann said there was no reason to cut interest rates further as they were no longer curbing economic growth in the euro area and inflation continued to decline as expected. In an interview with Reuters, Holzmann welcomed data published on Tuesday that showed euro zone inflation, including in the closely watched services sector, easing last month. The data fuelled market bets on a sixth consecutive rate cut at the ECB's next meeting on April 16, which would take the rate it pays on bank deposits from 2.5% to 2.25%. But Holzmann, who alone dissented to the ECB's latest rate cut in March, expressed caution, arguing the economy did not need to be stimulated. "We had assumed inflation would come down," the Austrian central bank governor said. "As we are neutral and inflation is converging to target, there is no reason to become accommodative." The ECB estimates the neutral rate, which neither stifles nor spurs economic growth, to be in a range between 1.75% and 2.25%, but there was considerable uncertainty about whether that rate could be estimated in real time with any precision. Consumer price growth in the 20 nations sharing the euro eased to 2.2% in March, just above the ECB's 2% target, from 2.3% in February, thanks a big drop in energy costs and slowing service inflation.
Reuters
20-03-2025
- Business
- Reuters
ECB to discuss defence spending support in the future, Holzmann says
LONDON, March 20 (Reuters) - The European Central Bank will have a discussion at some point in the future about whether it can play a role in the bloc's plans to ramp up defence spending, policymaker Robert Holzmann said on Thursday. The European Union is planning a joint push to raise defence spending by 800 billion euros ($867.84 billion) as it seeks to protect the region and support Ukraine amid signals from the United States that Washington plans to dial down its military backing. Asked whether he saw a role for the ECB to finance defence spending through bond purchases, Holzmann told an event in London: "we have not discussed it yet, we alluded to it." Responding to a follow-up question on when a discussion may happen, Austria's central bank head said it would take place in "future", without specifying a time frame. The ECB has used various bond buying programmes since the peak of the euro zone debt crisis and during the COVID-19 pandemic to help keep government borrowing costs in check. ECB President Christine Lagarde recently played down the likelihood the bank would play a direct role in the financing effort, saying this was not the purpose of the ECB. Germany 's parliament has also approved a massive spending plan including easing constitutionally enshrined borrowing rules to rapidly raise defence spending. The anticipated surge in borrowing has sent European government borrowing costs sharply higher this month. ($1 = 0.9218 euros)
