Latest news with #Holzmann
Yahoo
6 days ago
- Business
- Yahoo
Dollar Falls on Dovish Fed Comments
The dollar index (DXY00) on Wednesday fell by -0.61% to a 1-week low. Hawkish comments from ECB Governing Council member Holzmann on Wednesday boosted EUR/USD to a 1-week high, undercutting the dollar, as he stated there is no need for the ECB to cut interest rates further. The dollar was also under pressure from increased expectations for a Fed rate cut after the recent weaker-than-expected US payroll and PMI reports. Losses in the dollar accelerated Wednesday on dovish comments from Minneapolis Fed President Neel Kashkari and Fed Governor Lisa Cook, who signaled their support for interest rate cuts. More News from Barchart Dollar Little Changed on Weak US Service Sector News Dollar Recovers with Bond Yields Dollar Weakens on Dovish Fed Comments Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! Also, questions about the Fed's credibility continue to weigh on the dollar after Fed Governor Adriana Kugler resigned last Friday, which could prompt President Trump to nominate a new governor who is more dovish and could undermine Fed Chair Powell's influence. Minneapolis Fed President Neel Kashkari said, 'The economy is slowing and in the near term it may become appropriate to start adjusting the federal funds rate lower.' Fed Governor Lisa Cook said last Friday's US July jobs report is 'concerning' and that 'the revisions are somewhat typical of turning points' in the US economy. In recent tariff news, President Trump announced today that he will double tariffs on US imports from India to 50% from the current 25% tariff, due to India's purchases of Russian oil. On Tuesday, Mr. Trump said that US tariffs on semiconductor and pharmaceutical imports would be announced 'within the next week or so.' Last Thursday, President Trump raised tariffs on some Canadian goods to 35% from 25% and announced a 10% global minimum, along with tariffs of 15% or higher for countries with trade surpluses with the US, effective after midnight on August 7. According to Bloomberg Economics, the average US tariff will rise to 15.2% if rates are implemented as announced, up from 13.3% earlier, and significantly higher than the 2.3% in 2024 before the tariffs were announced. Federal funds futures prices are discounting the chances for a -25 bp rate cut at 95% at the September 16-17 FOMC meeting and 68% at the following meeting on October 28-29. EUR/USD (^EURUSD) Wednesday rose by +0.75% to a 1-week high. The euro rallied Wednesday on hawkish comments from ECB Governing Council member Holzmann, who said he sees no reason for the ECB to cut interest rates again. Gains in the euro accelerated Wednesday after the dollar tumbled on dovish comments from Minneapolis Fed President Neel Kashkari and Fed Governor Lisa Cook, who signaled their support for interest rate cuts. On the bearish side for the euro was Wednesday's Eurozone economic news that showed German June factory orders unexpectedly posted their biggest decline in 5 months. Also, the euro is struggling due to concerns that President Trump's tariff policies will curb economic growth in the Eurozone. Eurozone June retail sales rose +0.3% m/m, right on expectations. German June factory orders unexpectedly fell -1.0% m/m, weaker than expectations of a +1.1% m/m increase and the biggest decline in 5 months. ECB Governing Council member Holzmann said, 'In my view, there is no longer any reason for the ECB to lower interest rates further and we should wait and see what economic developments arise, particularly outside Europe, and how we respond to them.' Swaps are pricing in a 12% chance of a -25 bp rate cut by the ECB at the September 11 policy meeting. USD/JPY (^USDJPY) Wednesday fell by -0.37%. The yen strengthened against the dollar Wednesday after Japan's nominal wages in June accelerated from May, a hawkish factor for BOJ policy. Higher T-note yields on Wednesday limited gains in the yen. Also, the yen has negative carryover from Tuesday when the minutes of the June 16-17 BOJ meeting showed policymakers were concerned about ending its QE program too quickly. Japan's June labor cash earnings rose +2.5% y/y from +1.4% y/y in May, although weaker than expectations of +3.1% y/y. December gold (GCZ25) on Wednesday closed down -1.30 (-0.04%), and September silver (SIU25) closed up +0.079 (+0.21%). Precious metals settled mixed on Wednesday. The decline in the dollar index to a 1-week low on Wednesday was bullish for metals. Also, dovish Fed comments on Wednesday from Minneapolis Fed President Neel Kashkari and Fed Governor Cook were bullish for precious metals as they signaled their support for interest rate cuts. Demand for precious metals as a store of value has increased after recent weaker-than-expected US economic news may prompt the Fed to cut interest rates as soon as next month. The chance of a Fed interest rate cut at the September FOMC meeting has risen to 95% on Wednesday from 40% last Friday. Gains in precious metals prices were limited, and gold turned lower Wednesday on hawkish comments from ECB Governing Council member Holzmann, who said there is no longer any reason for the ECB to lower interest rates further. Also, strength in stocks and higher T-note yields on Wednesday weighed on precious metals. Precious metals still have safe-haven support on concerns that President Trump's tariff policies will weigh on global economic growth prospects. Finally, precious metals continue to receive safe-haven support from geopolitical risks, including the conflicts in Ukraine and the Middle East. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
Business Times
16-06-2025
- Business
- Business Times
EU interest rate tightening may not affect Singapore directly: Austrian central bank governor
[SINGAPORE] Europe's return to conventional monetary policy will not affect Singapore directly through interest rates, but indirectly through the Republic's investments overseas, said Professor Robert Holzmann, the governor of Austria's central bank, on Monday (Jun 16). 'The effects will be more through the asset channel, not through our interest rate policy,' he told The Business Times after delivering a lecture at the Singapore Management University's School of Economics. Between 2009 and 2021, central banks in advanced economies used unconventional monetary policy – such as negative interest rates and asset-purchasing programmes – to avoid deflation and get inflation back up towards long-term targets, he noted. But this had adverse outcomes such as hurting banks' profits, and unwelcome implications, including the creation of zombie firms kept alive by easy money. Since 2022, to combat rising inflation, many central banks have shifted back to the conventional monetary policy of raising interest rates, he said. This often forces other countries to raise their own interest rates, which could constrain growth. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up But for Singapore – which uses exchange rates rather than interest rates as a policy tool – Europe's interest rate policy may not have 'any large or measurable effects' by itself, he told BT. Rather, the effect will be through assets. Higher interest rates in Europe mean that European assets offer higher returns. As a result, investors, including in Singapore – might reallocate some money from other markets into European assets, in the name of diversification and risk management. 'I think the diversification possibilities for Singapore would increase, and as a result of it, Singapore would profit,' said Prof Holzmann. 'Because if you have only one asset in the world you want to buy, you're always subject to a monopoly. If you have two or three assets, perhaps other assets coming to the table, you can profit because you have better risk management.' As interest rates rise, Singapore benefits as it has high reserves, he said. And investments by Singapore's retirement fund, for instance, would also gain value: 'You will get higher than before.' Cooperation on digital currency Separately, Prof Holzmann noted that the governors of the central banks of Singapore, Austria and other states meet every two months at the Bank for International Settlements to discuss topics of shared interest. Digital money, for instance, 'is definitely something which will interest Singapore in the future, and vice versa', he said. 'I think we're at the beginning of a revolution. We don't know yet how to proceed.' Checking on new products and ideas is thus useful, he added, citing experimentation efforts with digital transfers in Hong Kong and Thailand.


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.