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CNBC
2 days ago
- Business
- CNBC
Euro hits fresh highs on peace talks in Ukraine, BoE in focus
The euro hit a fresh 1½-week high against a weakening dollar on Thursday as investors monitored Ukraine peace talks and shifted their focus to the Bank of England's policy meeting later in the session. The U.S. dollar remained under pressure amid growing concerns over partisanship creeping into key U.S. institutions. Initial U.S. jobless claims, due later in the session, will be closely watched following last week's disappointing nonfarm payrolls report, which triggered a dovish repricing of the Federal Reserve easing path and a slide in the greenback. The euro rose 0.14% to $1.1677, its highest level since July 28, with a possible peace deal in Ukraine seen as a positive driver for the single currency. Ukrainian President Volodymyr Zelenskiy said he planned contacts with Germany, France and Italy on Thursday to discuss progress toward peace. "Sectors to benefit (from a peace deal) should be European consumers, growth-sensitive and construction-related sectors," said Mohit Kumar, economist at Jefferies. "It should also be positive for Eastern Europe as most of the reconstruction efforts would likely flow through Eastern European economies." Sterling was steady ahead of a BoE policy announcement, with markets widely expecting another rate cut. Markets will watch the expected three-way voting split for any signal that the central bank might change its guidance on a "gradual and careful" easing path. "We suspect conviction levels are low in the supposed consensus view that rates can only go down and pressure affected currencies," said Geoff Yu, strategist at BNY, after warning that markets may be too complacent about stagflation risks. "The Bank of England will kick off what we expect to be a new run of cuts through August and September in Europe, but over-committing to easing risks policy error and prolonging stagflation," he added. The Swiss franc rose 0.20% to 0.8047 versus the dollar , even as Swiss President Karin Keller-Sutter returned from Washington empty-handed after a trip aimed at averting a crippling 39% tariff on the country's exports to the U.S. "While we still believe that a deal will ultimately be reached, it is likely to be far more expensive than Switzerland had hoped," said Michael Pfister, strategist at Commerzbank. Last week, U.S. 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. The dollar index, which measures the greenback against a basket of major peers, dropped to a fresh 1-1/2-week low at 98.00, down 0.20% on the day. Fed funds futures 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. 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. China's yuan firmed slightly, supported by a stronger official midpoint and upbeat Chinese trade data.
Reuters
2 days ago
- Business
- Reuters
Sterling rises before BoE meet, 'gradual and careful' guidance under scrutiny
Aug 7 (Reuters) - Sterling rose against a weakening dollar on Thursday with the markets watching whether the Bank of England will maintain its 'gradual and careful' language on the pace of policy easing at its meeting due later in the day. That slow and steady path no longer looks so clear, with inflation above the BoE's projections and forecast by some economists to reach 4%, double the bank's target, in the coming months. Markets expect a 25-basis point rate cut, while pricing a total of 86 bps of rate cuts by December 2026. "Recent Monetary Policy Committee (MPC)-speak has leaned dovish, although it has been light," said Jamie Searle, rate strategist at Citi. "The tail risk is that this MPC has shown in recent years that it isn't afraid to surprise." The pound was up 0.18% versus the dollar at $1.3380, its highest since July 30. . 'Our view remains that the UK economy is likely to grow around 1-1.2% for the next three years, versus Office for Budget Responsibility (OBR) forecasts of 1.7-1.9%,' said Mohit Kumar, economist at Jefferies. 'Lower growth implies that the BoE would need to do more than currently priced in (in terms of rate cuts), and the fiscal picture is worse than (what) the current official estimates show,' he said. Finance Minister Rachel Reeves is expected to raise taxes again in a budget statement towards the end of 2025 in order to meet her own targets for fixing the public finances. A survey showed on Wednesday that activity in Britain's construction sector fell by the most in more than five years. The single currency rose 0.15% at 87.42 pence per euro , its highest since July 28. It hit last week 87.69, its highest level since May 2023 as the European Central Bank is almost done with its monetary easing cycle. The euro hit a fresh 1-1/2-week high against a weakening dollar on Thursday as investors monitored Ukraine peace talks. 'While we are bracing for a 7-2 split vote, we would not be overly surprised if (Swati) Dhingra and/or (Alan) Taylor voted for a 50-bp cut, as they did in May,' said Matthew Ryan, head of market strategy at global financial services firm Ebury, adding that such a move would likely trigger a sell-off in the pound.
Wall Street Journal
3 days ago
- Business
- Wall Street Journal
U.S. Treasury Yields Rise by More Than German Bund Yields
1016 GMT – U.S. and eurozone government bond yields both rise in midday European trading. U.S. Treasury yields rise by a greater amount, however. While a weak U.S. labor market accentuates growth fears, fiscal issues keep inflation fears alive. There is little immediate input for bonds from the Federal Reserve or the European Central Bank for now. 'On central banks, our view remains unchanged, and we see two rate cuts from the Fed…, one from the ECB and two from the Bank of England,' Jefferies' Mohit Kumar says in a note. The 10-year Treasury yield is up 4.2 basis points at 4.237%, while the 10-year German Bund yield rises 2.5 basis points to 2.649%, according to Tradeweb. ( 0610 GMT – German Bunds continue to trade in their summer range, though volatility could decline amid a thin data calendar, says Commerzbank Research's Erik Liem in a note. 'A quiet day appears to lie ahead,' the rates strategist says. German new orders will set the tone with the European opening, while the data calendar remains largely depleted ahead of Thursday's likely Bank of England interest-rate cut, he says. Germany's 2.5 billion euro auction of May 2038- and July 2042-dated Bunds, with results at 0930 GMT, could weigh on Bunds in the morning, Liem says. The 10-year Bund yield is flat at 2.622% after opening, according to LSEG. (
Time of India
24-07-2025
- Automotive
- Time of India
US-Japan deal brings tariff clarity: 15% cap averts August duties; EU and China face pressure as next deadlines loom
A landmark trade deal between the US and Japan has set a new benchmark for global tariff negotiations, as economists say the 15% cap agreed for auto and goods tariffs could become the new normal in ongoing trade talks with other key US partners. Under the agreement, tariffs on Japanese auto imports to the US will drop from 27.5% to 15%, while levies on other goods that were set to rise to 25% from August 1 will also be cut to 15%, Reuters reported. The deal, which includes investment and lending commitments, is one of the most significant trade pacts signed by US President Donald Trump, who has imposed a series of steep tariffs on dozens of trading partners this year The deal relieves markets and raises pressure on other major economies, including the European Union and China, both of which face looming August deadlines to conclude similar agreements or risk the reimposition of punitive tariffs. 'Average tariffs for the US were around 2.5% for 2024; currently, they stand around 17%,' said Mohit Kumar of Jefferies, referencing the spike in duties following Trump's 'Liberation Day' trade policy shift in April. 'Our base case remains that when the dust settles, we could see average tariffs around 15%, though recent deals suggest that this number could be slightly higher,' Kumar was quoted as saying by Reuters. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like You Won't Believe the Price of These Dubai Apartments Binghatti Developers FZE Get Offer Undo 'While a negative from a macro point of view, the world can live with 15% or so tariffs.' Markets cheer clarity, automakers lead gains Relieved by the clarity brought by the US-Japan pact, Japan's Nikkei 225 index rose 3.5%, while European automakers with major US exposure also rallied. Volvo Car surged over 10%, while Porsche, BMW, Mercedes-Benz and Volkswagen gained between 4% and 7%. 'It looks like the benchmark for major economies is going to be 10–15%, and a somewhat higher level for smaller economies,' said Derek Halpenny, head of research at MUFG in London. Deutsche Bank's Jim Reid noted the move 'helped to ease investor fears that tariffs are about to snap back higher on August 1,' but cautioned that significant threats remain. 'The threat of much higher tariffs still remains for several large economies, including the 30% on the EU, 35% on Canada and 50% on Brazil,' he said, quoted Reuters. EU and China next in line The European Union, which negotiates on behalf of its 27 member states, faces the threat of 30% US tariffs by August 1. While EU negotiators initially aimed for a 10% rate, expectations have now shifted toward a higher outcome. China, too, is on the clock. Without a deal by August 12, tariffs could snap back to 145% on the US side and 125% on the Chinese side—raising the stakes dramatically for both economies. 'The US-Japan deal will put more pressure on other major Asia exporters to secure better deals,' ING noted in a research comment. 'We've already seen trade deals with the Philippines and Indonesia. Before August 1, there should be more deals struck with Asian exporters.' The deal also helped ease longer-term US inflation expectations, suggesting that successful trade pacts could help the Federal Reserve regain room to cut interest rates later this year. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
CNBC
24-07-2025
- Business
- CNBC
Dollar gains on euro and yen following trade deal progress
The dollar edged higher against the euro and yen on Thursday following progress in U.S. trade talks with key partners. The Japanese central bank's deputy governor, Shinichi Uchida, said a trade deal with Washington had reduced economic uncertainty, comments that fueled optimism in the market about the potential resumption of interest rate hikes. Still, some analysts think the yen faces persistent headwinds due to domestic political uncertainty following Sunday's upper house election. The European Union is nearing a deal that would impose a broad 15% tariff on EU goods entering the United States, roughly in line with economists' expectations. Meanwhile, risk assets rallied as the trade deals eased fears over the economic fallout of a global trade war. The risk-sensitive Australian dollar rose to an eight-month high of $0.661 on Thursday. The euro fell 0.2% at $1.175, not far from a high of $1.1830 it hit earlier this month, which marked its strongest level in more than three years. "We maintain our view that we would see some wobbles in risky assets in August as we see some slowdown in the (U.S.) employment data," said Mohit Kumar, economist at Jefferies. "As of now, there has been very little tariff impact on the hard data. But that does not mean it's not coming," he added, arguing it would take at least three months to see the fallout of trade duties on hard economic figures. Against the yen, the dollar nudged up to 146.57, or 0.06%, as it sought to prevent a fall against the Japanese currency to a fourth straight session. Olivier Korber, forex strategist at Societe Generale, expects the yen to strengthen further, citing support from the trade deal and prospects for higher interest rates. "The local press reported that he (Prime Minister Shigeru Ishiba) should decide if he will resign in late August and, if that were to happen, a new party leader would probably be selected in September," Korber said. "This would ensure a smoother political transition, thus limiting market uncertainty," he added. Ishiba denied on Wednesday he had decided to quit after a source and media reports said he planned to announce his resignation to take responsibility for a bruising upper house election defeat. Trade negotiations aside, market focus is also on a rate decision from the European Central Bank later in the day. Expectations are for policymakers to keep rates unchanged, though markets will look out for what they say about the outlook for monetary policy. Investors generally expect one more ECB rate cut by the end of the year, most likely in December. Data showed that German business activity continued to grow marginally in July. Currencies mostly shrugged off news that U.S. President Donald Trump, a vocal critic of Federal Reserve Chair Jerome Powell, will visit the central bank on Thursday, a surprise move that escalates tensions between the administration and the Fed.
