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CNA
4 hours ago
- Business
- CNA
US dollar falls ahead of Trump's tariff deadline
LONDON/NEW YORK :The dollar slid on Tuesday, with the yen one of the major gainers versus the greenback, as investors tracked talks ahead of an August 1 deadline that could bring steep tariffs on products of U.S. trading partners that fail to strike deals. Trading was mostly subdued, with the Japanese currency advancing for a second straight session following results from a weekend upper house election in Japan that had already been priced in. The focus has shifted to how quickly Tokyo can strike a trade deal with Washington as well as on Prime Minister Shigeru Ishiba's future at the helm. In late morning trading, the dollar fell 0.7 per cent to 146.36 yen, having fallen more than 1 per cent on Monday following the weekend election and a public holiday. The U.S. currency has retreated for two straight sessions against the yen. With little over a week to go before August 1, U.S. Treasury Secretary Scott Bessent said on Monday the administration is more concerned with the quality of trade agreements than their timing. Asked whether the deadline could be extended for countries engaged in productive talks with Washington, Bessent said President Donald Trump would make that decision. "Markets through that noise (August 1 tariff deadline) until something actually definitive happens," said Brad Bechtel, global head of FX, at Jefferies in New York. "And a lot of the data has actually been looking okay even with all the tariffs, at least those that have been implemented already." Uncertainty over the eventual state of tariffs globally has been a huge overhang for the foreign exchange market, leaving currencies trading in a tight range for the most part, even as stocks on Wall Street have scaled fresh highs. The dollar index, a gauge of its value against a basket of currencies, slipped 0.3 per cent to 97.545, having weakened around 0.6 per cent on Monday. The euro edged up 0.2 per cent to $1.1725, with the European Central Bank also in the mix this week for central bank meetings. It is not expected to adjust euro zone interest rates, however. A deal between the European Union, which could face 30 per cent tariffs from August 1, and the United States remains elusive. EU diplomats said on Monday they were exploring a broader set of possible counter-measures given fading prospects for an agreement. "The Trump administration has shown little tolerance for retaliatory measures, and there is a risk this could spiral (even if temporarily) into a tit-for-tat tariff escalation," wrote Francesco Pesole, currency strategist, at ING in a research note. "The euro's ability to maintain preference over the dollar amid tariff tensions will depend on the extent of any escalation and whether the EU emerges as a relative loser while other countries secure significant deals with the U.S.," he added. Also weighing on investors' minds were worries about Federal Reserve independence, given Trump has repeatedly railed against Chair Jerome Powell and urged him to resign because of the central bank's reluctance to cut interest rates. "Our base case remains that solid U.S. data and a tariff-driven rebound in inflation will keep the FOMC on hold into 2026, and that the resulting shift in interest rate differentials will drive a continued rebound in the dollar in the next few months," said Jonas Goltermann, deputy chief markets economist at Capital Economics. "But that view is clearly at the mercy of the White House's whims." Currency bid prices at 22 July 02:52 p.m. GMT Descripti RIC Last U.S. Pct YTD Pct High Low on Close Change Bid Bid Previous Session Dollar 97.596 97.847 -0.25 per cent -10.04 per cent 97.994 97.5 index 95 Euro/Doll 1.1716 1.1699 0.15 per cent 13.17 per cent $1.1717 $1.1 ar 678 Dollar/Ye 146.41 147.3 -0.59 per cent -6.95 per cent 147.93 146. n 42 Euro/Yen 171.54 172.31 -0.45 per cent 5.1 per cent 172.93 171. 37 Dollar/Sw 0.7959 0.798 -0.26 per cent -12.29 per cent 0.7988 0.79 iss 59 Sterling/ 1.3495 1.3492 0.03 per cent 7.91 per cent $1.3499 $1.3 Dollar 463 Dollar/Ca 1.364 1.3681 -0.3 per cent -5.14 per cent 1.3695 1.36 nadian 36 Aussie/Do 0.654 0.6525 0.27 per cent 5.74 per cent $0.6545 $0.6 llar 505 Euro/Swis 0.9323 0.9329 -0.05 per cent -0.73 per cent 0.9337 0.93 s 14 Euro/Ster 0.868 0.8665 0.17 per cent 4.92 per cent 0.8683 0.86 ling 64 NZ 0.5985 0.5968 0.33 per cent 7.01 per cent $0.5989 0.59 Dollar/Do 42 llar Dollar/No 10.1145 10.1541 -0.39 per cent -11.01 per cent 10.1956 10.1 rway 142 Euro/Norw 11.8498 11.8698 -0.17 per cent 0.69 per cent 11.92 11.8 ay 49 Dollar/Sw 9.5401 9.5745 -0.36 per cent -13.41 per cent 9.6069 9.53 eden 96 Euro/Swed 11.1782 11.1985 -0.18 per cent -2.52 per cent 11.2265 11.1 en 767
Reuters
a day ago
- Business
- Reuters
Yen gains broadly as Japan's Ishiba stays on; dollar weakens
NEW YORK, July 21 (Reuters) - The yen climbed across the board on Monday after beleaguered Japanese Prime Minister Shigeru Ishiba vowed to hang on as leader even though his ruling coalitionlost its majority in Sunday's upper house elections, an outcome that was not exactly a shock and has been mostly priced in. Investors braced for market disquiet ahead of a deadline on U.S. tariff negotiations. Japanese markets were closed for a public holiday, leaving the yen as the main indicator of possible investor angst. The dollar, on the other hand, fell against most currencies, in line with the decline in U.S. Treasury yields, analysts said. In afternoon trading, the Japanese currency gained 1% to 147.315 yen per dollar, although not far off from the 3-1/2-month low of 149.19 yen hit last week as investors fretted about Japan's political and fiscal outlook. The yen also nudged 0.4% higher against the euro to 172.27 and against sterling to 198.64, up 0.4%. Ishiba's Liberal Democratic Party returned 47 seats, short of the 50 it needed to ensure a majority in Japan's 248-seat upper chamber, where half the seats were up for grabs. He vowed to stay on in his role even as some of his own party discussed his future and the opposition weighed a no-confidence motion. "The elections were not as awful an outcome for the Prime Minister Shigeru Ishiba as analysts had predicted. The PM's party managed to minimize seat losses and Ishiba was not forced to resign his position," said Juan Perez, director of trading at Monex USA in Washington. "This overall plays as a welcome tune for Japanese yen developments since the reality is far more optimistic than anticipated with the PM promising to stay in power and work out differences in coming up with fiscal policy." The election result, while not entirely a shock to markets, also comes at a tricky time for a country trying to get a tariff deal with U.S. President Donald Trump before an August 1 deadline. Investor focus has also been firmly on Trump's global tariff salvos, with a Financial Times report last week indicating the U.S. president was pushing for steep new tariffs on European Union products. U.S. Commerce Secretary Howard Lutnick said on Sunday he was confident the United States can secure a trade deal with the EU, but said August 1 was a hard deadline for tariffs to kick in. EU diplomats said the bloc was exploring a broader set of counter measures against the U.S. as prospects for an acceptable trade agreement fade, even though a negotiated solution was still their preferred option. The euro was up 0.4% at $1.1681, while sterling last fetched $1.3488, up 0.6%. The European Central Bank is due to meet this week and is expected to hold rates steady after a string of cuts, while investor attention has been on whether the Federal Reserve succumbs to pressure from Trump to cut interest rates. In the United States, Trump appeared near the point of trying to dismiss Fed Chair Jerome Powell last week, but backed off with a nod to the market disruption that would likely follow. The U.S. central bank is widely expected to hold rates steady at its July meeting. U.S. Treasury Secretary Scott Bessent on Monday said the entire Fed needed to be examined as an institution and whether it had been successful. Speaking with CNBC, he cited what he called "fear-mongering over tariffs" despite the emergence thus far of little, if any, inflationary effect. "If this were the (Federal Aviation Administration) and we were having this many mistakes, we would go back and look at why. Why has this happened?" he said. "All these PhDs over there, I don't know what they do." Traders are fully pricing in a Fed rate cut by the October meeting with the odds of a second rate cut this year not fully priced in yet. The dollar index , which measures the U.S. currency against six others, was down 0.5% at 97.969. "I think the dollar topped out last week, while foreign currencies have bottomed, so foreign currencies have come back stronger here," said Marc Chandler, chief market strategist, at Bannockburn Forex in New York. "I think the dollar is very much connected to interest rates. The 10-year yield is off more than six basis points." In cryptocurrencies, bitcoin fell more than 1% to $116,788 , with investors profiting from recent gains in the run-up to the signing into law the GENIUS Act last Friday.
CNA
a day ago
- Business
- CNA
Yen gains broadly as Japan's Ishiba stays on; dollar weakens
NEW YORK :The yen climbed across the board on Monday after beleaguered Japanese Prime Minister Shigeru Ishiba vowed to hang on as leader even though his ruling coalition lost its majority in Sunday's upper house elections, an outcome that was not exactly a shock and has been mostly priced in. Investors braced for market disquiet ahead of a deadline on U.S. tariff negotiations. Japanese markets were closed for a public holiday, leaving the yen as the main indicator of possible investor angst. The dollar, on the other hand, fell against most currencies, in line with the decline in U.S. Treasury yields, analysts said. In afternoon trading, the Japanese currency gained 1 per cent to 147.315 yen per dollar, although not far off from the 3-1/2-month low of 149.19 yen hit last week as investors fretted about Japan's political and fiscal outlook. The yen also nudged 0.4 per cent higher against the euro to 172.27 and against sterling to 198.64, up 0.4 per cent. Ishiba's Liberal Democratic Party returned 47 seats, short of the 50 it needed to ensure a majority in Japan's 248-seat upper chamber, where half the seats were up for grabs. He vowed to stay on in his role even as some of his own party discussed his future and the opposition weighed a no-confidence motion. "The elections were not as awful an outcome for the Prime Minister Shigeru Ishiba as analysts had predicted. The PM's party managed to minimize seat losses and Ishiba was not forced to resign his position," said Juan Perez, director of trading at Monex USA in Washington. "This overall plays as a welcome tune for Japanese yen developments since the reality is far more optimistic than anticipated with the PM promising to stay in power and work out differences in coming up with fiscal policy." The election result, while not entirely a shock to markets, also comes at a tricky time for a country trying to get a tariff deal with U.S. President Donald Trump before an August 1 deadline. TARIFF UNCERTAINTY Investor focus has also been firmly on Trump's global tariff salvos, with a Financial Times report last week indicating the U.S. president was pushing for steep new tariffs on European Union products. U.S. Commerce Secretary Howard Lutnick said on Sunday he was confident the United States can secure a trade deal with the EU, but said August 1 was a hard deadline for tariffs to kick in. EU diplomats said the bloc was exploring a broader set of counter measures against the U.S. as prospects for an acceptable trade agreement fade, even though a negotiated solution was still their preferred option. The euro was up 0.4 per cent at $1.1681, while sterling last fetched $1.3488, up 0.6 per cent. The European Central Bank is due to meet this week and is expected to hold rates steady after a string of cuts, while investor attention has been on whether the Federal Reserve succumbs to pressure from Trump to cut interest rates. In the United States, Trump appeared near the point of trying to dismiss Fed Chair Jerome Powell last week, but backed off with a nod to the market disruption that would likely follow. The U.S. central bank is widely expected to hold rates steady at its July meeting. U.S. Treasury Secretary Scott Bessent on Monday said the entire Fed needed to be examined as an institution and whether it had been successful. Speaking with CNBC, he cited what he called "fear-mongering over tariffs" despite the emergence thus far of little, if any, inflationary effect. "If this were the (Federal Aviation Administration) and we were having this many mistakes, we would go back and look at why. Why has this happened?" he said. "All these PhDs over there, I don't know what they do." Traders are fully pricing in a Fed rate cut by the October meeting with the odds of a second rate cut this year not fully priced in yet. The dollar index, which measures the U.S. currency against six others, was down 0.5 per cent at 97.969. "I think the dollar topped out last week, while foreign currencies have bottomed, so foreign currencies have come back stronger here," said Marc Chandler, chief market strategist, at Bannockburn Forex in New York. "I think the dollar is very much connected to interest rates. The 10-year yield is off more than six basis points." In cryptocurrencies, bitcoin fell more than 1 per cent to $116,788, with investors profiting from recent gains in the run-up to the signing into law the GENIUS Act last Friday. Currency bid prices at 21 July 07:54 p.m. GMT Descripti RIC Last U.S. Pct YTD Pct High Low on Close Change Bid Bid Previous Session Dollar 97.87 98.402 -0.53 per cent -9.79 per cent 98.507 97.6 index 98 Euro/Doll 1.169 1.1631 0.51 per cent 12.92 per cent $1.1717 $1.1 ar 615 Dollar/Ye 147.34 148.74 -0.98 per cent -6.4 per cent 148.51 147. n 1 Euro/Yen 172.25 172.97 -0.42 per cent 5.53 per cent 172.83 171. 93 Dollar/Sw 0.7982 0.8019 -0.46 per cent -12.04 per cent 0.8021 0.79 iss 67 Sterling/ 1.3486 1.341 0.58 per cent 7.84 per cent $1.351 $1.3 Dollar 405 Dollar/Ca 1.3684 1.3726 -0.3 per cent -4.83 per cent 1.3731 1.36 nadian 72 Aussie/Do 0.6523 0.6509 0.25 per cent 5.45 per cent $0.6538 $0.6 llar 5 Euro/Swis 0.933 0.9317 0.14 per cent -0.67 per cent 0.9334 0.93 s 14 Euro/Ster 0.8666 0.8661 0.06 per cent 4.75 per cent 0.8673 0.86 ling 51 NZ 0.597 0.5961 0.2 per cent 6.74 per cent $0.5984 0.59 Dollar/Do 39 llar Dollar/No 10.1656 10.1576 0.02 per cent -10.62 per cent 10.2129 10.1 rway 413 Euro/Norw 11.882 11.8169 0.55 per cent 0.96 per cent 11.8933 11.8 ay 18 Dollar/Sw 9.5816 9.6426 -0.63 per cent -13.03 per cent 9.6812 9.55 eden 14 Euro/Swed 11.2018 11.2214 -0.19 per cent -2.32 per cent 11.2539 11.1 en 899
Reuters
5 days ago
- Business
- Reuters
Institutional investors warm to crypto but demand still nascent
NEW YORK, July 17 (Reuters) - Bitcoin's surge to a record this week has reignited questions about the role institutional investors are playing in pushing it higher, with analysts suggesting their role is still in its infancy. The world's largest cryptocurrency earlier this week surged to a record above $123,000, receiving a boost on the expectation of pro-crypto policies from Washington. While buzz around digital assets has increased, there is room for demand from institutional investors to grow as pension funds and other long-term buyers add bitcoin to their portfolios, analysts say. "We're still in the early innings when it comes to institutional ownership," said Adrian Fritz, head of research at 21Shares, a digital assets investment firm, adding that retail investors still dominate crypto markets. Less than 5% of all spot bitcoin Exchange Traded Fund assets are held by long-term investors such as pension funds and endowments, with another 10% to 15% owned by hedge funds or wealth management firms, Fritz calculates. The latter group of wealth managers, however, often buy these funds on behalf of high-net worth retail clients, and the bulk of ETF ownership remains retail, he said. There is a correlation between soaring retail purchases of crypto ETFs and crypto-related stocks and a run-up in prices, according to estimates from Vanda, a financial research firm. The data shows retail buyers bought heavily in late 2024 when prices surged after Donald Trump - who has vowed to be a "crypto president" won the U.S. election - as well as during the recent rally. Crypto buyers have been aided by a series of bills U.S. lawmakers are expected to pass this week, the most consequential of which - known as the Genius Act - will define the rules around stablecoins, a fast-growing area of the crypto market. The Republican-controlled U.S. House of Representatives cleared key procedural hurdles on crypto legislation on Wednesday, paving the way for the first U.S. federal law for digital assets. Some large U.S. lenders, including Bank of America (BAC.N), opens new tab and Citigroup (C.N), opens new tab, are also working on launching stablecoins. Another bill will provide regulatory clarity by formally establishing definitions of digital commodities and spelling out the roles of agencies in overseeing digital assets. This could make it easier for institutions that have long avoided the sector to invest. Simon Forster, global co-head of digital assets at trading platform operator and data provider TP ICAP, predicts the number of institutions active in crypto will grow by 2026, including pensions and other buy-and-hold firms. "By definition, they will be the slowest (to enter crypto)," Fritz said. Analysts say data, although patchy given how opaque crypto markets remain, points to the growing role of bitcoin treasury companies in boosting demand. These are listed companies such as Strategy (MSTR.O), opens new tab and GameStop (GME.N), opens new tab, that initially focused on software and videogame retailing respectively but now emphasize owning and making money on bitcoin positions held on their balance sheets in place of cash, gold or ultra-short Treasury securities. Strategy's shares have soared in the past year, far outpacing the rise in bitcoin, with many investors seeing the stock as a way to get exposure to crypto while investing in mainstream financial markets. Juan Leon, research analyst at Bitwise Asset Management, said these companies' ability to buy bitcoin suggests they represent a bigger source of recent demand than pension, endowment and hedge funds that are major players in stock and bond markets. Strategy and GameStop did not respond to requests for comment. Since July last year, public companies worldwide collectively have increased their bitcoin holdings by 120% and now hold just over 859,000, or 4%, of the total 21 million bitcoin that will ever be in existence, said Simon Peters, crypto analyst at investment platform eToro. Companies are also selling common stock, preferred shares and convertible securities to raise funds to spend on boosting their bitcoin holdings, in a bid to replicate Strategy's outsized stock gains. The new wave of U.S. legislation could also pave the way for more listed companies to allocate a portion of their cash reserves to crypto tokens, said Susannah Streeter, head of money and markets at Hargreaves Lansdown. Analysts warn, however, that a drop below $90,000 for bitcoin could put half of these corporate treasuries underwater. Demand for crypto ETFs has also been rising in recent months. Global net inflows into crypto exchange-traded products hit $4 billion last week, the highest so far this year, according to data from crypto firm Bitwise. Among the big institutional investors to have made public their investments in crypto ETFs in the past 18 months are the State of Wisconsin Investment Board, Abu Dhabi's Mubadala sovereign wealth fund and hedge fund Millennium Management, regulatory filings show. So far this year, bitcoin has gained around 25%, compared with the S&P 500 index's (.SPX), opens new tab 6.5% gain. Ether , another cryptocurrency has climbed 2%, while XRP is up nearly 40%. The crypto sector's market capitalization now stands at $3.8 trillion, up nearly 66% since before the U.S. election in November, according to CoinMarketCap.
CNA
6 days ago
- Business
- CNA
Dollar gains on euro as traders bet on less dovish Fed
NEW YORK :The dollar gained against the euro on Wednesday as traders bet that the Federal Reserve may be less likely to cut rates two times this year following an uptick in consumer prices in June, even though producer price inflation data on Wednesday was steady. U.S. producer prices were unexpectedly unchanged in June as an increase in the cost of goods because of tariffs on imports was offset by weakness in services. Tuesday's release showed U.S. consumer prices increased by the most in five months in June amid higher costs for some goods, suggesting U.S. President Donald Trump's tariffs were starting to have an impact on inflation. 'Yesterday's reaction to the inflation data was very positive for the U.S. dollar overall,' said Eric Theoret, FX strategist at Scotiabank in Toronto. 'We're seeing an extension of the month-to-date move.' Fed funds futures traders are now pricing in 44 basis points of cuts by year-end, little changed after Wednesday's data but down from around 48 basis points before Tuesday's consumer price data. The dollar is also likely benefiting from traders that have been short the currency having to exit or cover positions as it rebounds from its recent lows. 'This is a market where you've got sentiment and positioning leaning pretty hard the other way, so I think from that perspective, it's also a bit vulnerable,' said Theoret. The euro was last down 0.23 per cent on the day at $1.1572, the lowest since June 23. Against the Japanese yen, the dollar weakened 0.03 per cent to 148.81. It earlier reached 149.18 yen, the highest since April 3. Sterling fell 0.04 per cent to $1.3373 and reached $1.3361, the lowest since May 20. Investors continue to focus on tariffs ahead of an August 1 deadline when many trading partners face higher trade levies. Trump on Tuesday said the U.S. would impose a 19 per cent tariff on goods from Indonesia under a new agreement with the Southeast Asian country and more deals were coming, while offering fresh details on planned duties on pharmaceuticals. In Japan, investors are focused on a potential power shift in upper house elections this weekend that could strain already frail finances, with long-dated yields soaring to all-time highs as the vote nears. A longer-term negative for the U.S. dollar is also the likelihood that Fed Chair Jerome Powell's successor after his term ends in May could be more inclined to lower interest rates. Trump has railed against Powell for months for not easing rates and the Trump administration has also criticised cost overruns on a $2.5 billion renovation of the Fed's Washington headquarters.
