Latest news with #dollar
Yahoo
2 hours ago
- Business
- Yahoo
Dollar mixed after four-day rally, Fed meeting in focus
By Stefano Rebaudo (Reuters) -The U.S. dollar struggled for direction on Wednesday after a four-day winning streak, as investors shifted their focus to the outcome of the Federal Reserve's policy meeting later in the session and to upcoming economic data. Meanwhile, the euro was poised to record its first monthly drop since December 2024,, following a sharp reaction to a U.S.-European Union trade deal earlier this week. Investors were hesitant to place bets before crucial economic reports and central bank meetings in Canada, Japan and the United States. 'Markets will be paying attention to (Fed Chair) Jerome Powell's remarks, regarding any signs of internal dissent within the committee and the chair's stance amid ongoing tensions with the White House,' said Julien Lafargue, chief market strategist at Barclays Private Bank and Wealth Management. 'A rate cut in September remains a strong base case, much will depend on incoming data, starting with the U.S. jobs report due this Friday,' he added. The U.S. central bank, to President Donald Trump's chagrin, will likely leave interest rates unchanged on Wednesday. The dollar index was up 0.02% at 98.774. It hit a 5-week high at 98.923 on Tuesday and was on course to post its first month of gains this year. Analysts noted the selloff in U.S. assets — including Treasuries and the dollar — began in early April, when the U.S. appeared poised to launch a trade war against its major allies. Trade agreements struck with Japan last week and the EU over the weekend signalled a renewed U.S. commitment to global engagement, easing investor concerns. Investors' focus is now on negotiations between China and the U.S. after officials agreed to seek an extension of their 90-day tariff truce. China and the U.S remain important trade and economic partners, the Chinese commerce minister told a U.S. business delegation on Wednesday, according to his ministry. The euro was down 0.03% to $1.1540 after dropping for the first two days of the week and hitting a one-month low of $1.15185 on Tuesday. The euro is up 11.7% since the start of the year but on course for its first monthly drop in 2025. "The stark divergence in growth news between the U.S. and Europe should underpin the euro bearish momentum," said Francesco Pesole, forex strategist at ING. Data showed on Wednesday that the German economy contracted in the second quarter, while France's economy beat forecasts. Some analysts expressed concern about the economic impact of tariffs and their implications for the European Central Bank's rate outlook. However, markets adjusted their expectations for the ECB's easing path, pushing back the timing of a potential rate cut to March 2026 last week, following the U.S.-Japan trade deal and an ECB hawkish tilt after its policy meeting. 'On a comparative basis, the outcome (of trade negotiations) is welcome, if not wholly reassuring (for the euro area),' said Modupe Adegbembo, economist at Jefferies. 'The EU has successfully avoided escalation and has not lost significant ground relative to other major exporters,' Adegbembo added, noting the 5% baseline tariff is more favourable than the 30% applied to Chinese goods and is on par with Japan's 15%. The yen firmed 0.33% to 147.98 against the dollar. The spotlight will be on comments from BoJ Governor Kazuo Ueda as investors hope the recent trade deal between Japan and the U.S. paves the way for the central bank to raise rates. Analysts flagged that a divergence in tone from Ueda this week relative to Deputy Governor Shinichi Uchida last week, who was perceived as being hawkish, could be a catalyst for further yen selling over the near-term. Sign in to access your portfolio
Bloomberg
3 hours ago
- Business
- Bloomberg
Dollar Set for Longest Winning Run Since February on Strong Data
The dollar headed for its longest run of daily gains since February after the latest data underscored the strength of the US economy. The Bloomberg Dollar Spot Index rose 0.3% to the highest level since June 23, with the gauge on course for its fifth straight advance.
Reuters
4 hours ago
- Business
- Reuters
Emerging market revival hopes run into dollar difficulties
LONDON, July 30 (Reuters) - Emerging markets are basking in the glow of their surprise rally this year, but major investors warn things may get tougher as countries finally learn their U.S. tariff fates and the dollar snaps out of its slump. U.S. President Donald Trump's return with a re-energised Make America Great Again mantra had economists fearing the worst for developing economies. But, much like his first term, it has so far done the opposite. MSCI's 47-country emerging market stocks index (.MSCIEF), opens new tab is up 17%, twice as much as the S&P 500 (.SPX), opens new tab. Most major EM currencies have seen double-digit gains and the IMF has just revised up its growth forecasts. Analysts say the dollar's 10% January-to-June dive has played a key role - as it did when it dropped 8% during the first six months of Trump's first term and emerging stocks rallied nearly 25%. But July will be the greenback's first monthly rise of the year and the 'Magnificent Seven' big tech stocks that have sucked money out of EM - and everything else - are now up almost twice as much as the EM index since Trump's "Liberation Day" tariff announcement on April 2. "It is almost as if we are watching the same movie as 2017," David Lubin, a former head of emerging market economics at investment bank Citi now at the Chatham House think tank, said referring to Trump's first term in charge. "The first year is a weak dollar environment, which is the kind of macro backdrop that suits emerging markets," Lubin said, explaining that only after that did things turn difficult. This year has seen 25% jumps in Chinese stocks and local Brazilian bonds, a 40% leap in Ghana's currency, and just this week the premium, or 'spread', investors demand to buy EM corporate debt has hit its lowest since the 2008 global crisis. With multi-trillion dollar money managers like BlackRock, PIMCO and sovereign wealth funds all now upbeat, analysts at Bank of America believe buying EM is now such a "consensus" trade that it is almost a worry. They say it is likely to get even more entrenched if the dollar falls back another 2.5%-3%, although with Friday's tariffs deadline looming for India, Brazil and others - China's truce has been extended again - the main risk to the bulls is growth. All in all it is a pivotal juncture for EM, which hopes to reverse its long-waning appeal. COVID, conflicts and rising global interest rates mean dedicated emerging market bond funds have attracted zero inflows over the last six years, and as far back as 2013 in the case of local currency funds, JPMorgan's head of EM fixed income strategy, Jonny Goulden, estimates. A study by the bank this week showed that while foreign direct investment into EMs recovered briefly post-COVID, since 2022 it has declined unabated. Equity investors have had it even worse. MSCI's EM share index is up just 15% since the 2007-2008 financial crash, whereas big all-world indexes (.MIWD00000PUS), opens new tab and Nasdaq (.NDX), opens new tab are up over 150% and 700% respectively. Yerlan Syzdykov, the head of emerging markets at Europe's biggest fund manager Amundi, says a number of major pension funds and sovereign funds are now mandating EM money managers as they look to diversify from the U.S a bit. He remains upbeat on Brazil and Mexico, where interest rates are coming down and the likes of Egypt, Turkey and Pakistan, which are still overcoming difficulties, whereas the Gulf region could be a "reversal trade" if oil prices start dropping again. Founder and CIO of EM-focused Gramercy, Robert Koenigsberger, sees "a tremendous amount of FOMO (fear of missing out)" around EM at the moment. But he too wants to see the final tariff lists, given that Brazil has been threatened with a 50% rate. Veteran equity investor Mark Mobius says high tariffs will make it "more difficult, if not impossible" for countries to pursue export-led development models, although young populations can pick up slack and new technologies provide vast opportunities. JPMorgan meanwhile is sticking with its call to remain cautious on EM debt. Its economists see the average effective U.S. tariff rate rising 18-20% compared to 2-3% at the start of the year and still see a 40% chance of a U.S. recession. U.S. downturns tend to cause global selloffs that drive EM sovereign debt 'spreads' 125-200 basis points wider. That might not follow this time if U.S. bond markets also sell off, but if it did, it would undo all the improvement since mid-2023. "EM assets and most other financial markets have a well-defined playbook around a recession," Goulden said. "And it's not a positive one."
Yahoo
a day ago
- Business
- Yahoo
Morning Bid: Dollar rejuvenated
By Mike Dolan LONDON (Reuters) - What matters in U.S. and global markets today By Mike Dolan, Editor-At-Large, Finance and Markets The dollar is on course for its best week of the year, as unfolding U.S. trade deals are succeeding in raising tariffs without attracting much retaliation or causing major economic damage so far. A weekend agreement by the European Union to accept a 15% U.S. tariff hike, with promises of hefty spending on U.S. energy and arms to boot, saw the dollar notch its best day since May against the euro. Sustained dollar gains are a mixed blessing for Wall Street stocks and for President Donald Trump's administration, as it sees dollar depreciation as an integral part of tackling trade deficits and boosting competitiveness. I'll review today's market news and then look at whether the dollar's considerable tariff risk premium may be dissipating as trade deals get done. * The dollar rebound comes as the Federal Reserve starts its two-day policy meeting, though with no change in rates expected this week as eyes drift to its September gathering instead. A big week for labor market data kicks off with the release of U.S. June job openings, and then we'll see June goods trade, which will figure into the week's second-quarter U.S. GDP report. * In the thick of the corporate earnings season - with four big tech megacaps reporting this week and the likes of UPS, Merck and Boeing out later today - Wall Street indexes eked out new records on Monday. U.S. futures were positive again ahead of Tuesday's bell, with European and Chinese stocks rebounding too and only Japan bucking the trend. * Treasury markets were steady after hefty debt auctions on Monday. The Treasury announced plans to borrow $1.007 trillion in the third quarter, largely in line with forecasts though likely frontloaded with bill sales. Details of the quarterly refunding will be released on Wednesday. Along with the Fed meeting, bonds kept a close eye on higher crude oil prices after Trump set a new deadline of "10 or 12 days" for Russia to make progress toward ending the war in Ukraine or face more sanctions on both Moscow and buyers of its oil exports. Today's Market Minute * U.S. and Chinese trade negotiators met for a second day of talks in Stockholm to defuse the bilateral trade war between the world's two biggest economies. The meetings are expected to agree another 90-day extension of a tariff truce struck in mid-May. * South Korea's Finance Minister Koo Yun-cheol said he would seek a mutually beneficial trade deal when he meets U.S. Treasury Secretary Scott Bessent for talks this week. * U.S. President Donald Trump unexpectedly shortened his deadline for hitting Russia with the most severe sanctions on its oil exports to date. While the market has called the president's bluff thus far, the sheer scale of the threat may force investors to start pricing in this meaningful tail risk, writes ROI energy columnist Ron Bousso. * The earnings season is ramping up, and investors are once again focusing on whether companies will beat or miss expectations. However, Panmure Liberum investment strategist Joachim Klement claims the major driver of share prices can be found in the bond market. Chart of the day Dollar selling has abated in recent weeks, but the weekend U.S.-EU trade deal has catapulted it higher across the board as investors start to remove a tariff risk premium dogging the currency all year. The dollar's DXY index surged more than 1% on Monday, its biggest one day gain in more than two months, and has added to that on Tuesday. After just two days, it's on course for its best week of the year. Today's events to watch * U.S. June goods trade balance (8:30ED AM T), June retail/wholesale inventories (8:30 AM EDT) May house prices (9:00 AM EDT), July consumer confidence (10:00 AM EDT) June JOLTS job openings data (3:00 PM EDT) Dallas Federal Reserve July service sector survey (3:30 PM EDT) * International Monetary Fund releases its update World Economic Outlook (9:00 AM EDT) * U.S. and Chinese negotiators meet for a second day in Stockholm * Federal Reserve's Federal Open Market Committee starts its two-day meeting on interest rates, decision Wednesday * U.S. corporate earnings: UPS, Merck, Boeing, PayPal, Starbucks, Visa, Corning, UnitedHealth, Procter & Gamble, Stanley Black & Decker, Sysco, Incyte, Norfolk Southern, Booking, Ecolab, Carrier, PPG, Regency Centers, Caesars, Royal Caribbean, American Tower, CBRE, Teradyne, Mondelez, BXP, Seagate, DTE * U.S. Treasury sells $44 billion of 7-year notes, $30 billion of 2-year floating rate notes Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. (by Mike Dolan; editing by Sharon Singleton) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
a day ago
- Business
- Reuters
Pound at 10-week low against dollar after US-EU trade deal
LONDON, July 29 (Reuters) - The pound fell to a 10-week low against a stronger dollar on Tuesday, while staying just off a two-year low against the euro, as markets continue to digest the announcement of the trade deal between the European Union and the United States. The pound was last a touch higher against the dollar at $1.33570, but had earlier fallen to $1.3316, its lowest level since May 23. The dollar was broadly stronger on Tuesday, continuing a rally after Sunday's news that the United States and the EU struck a framework trade pact, the latest in a flurry of deals to avert a global trade war. Investors are also looking ahead to a U.S. Federal Reserve and Bank of Japan meeting this week. The euro slid 0.1% against the pound to 86.71 pence, coming off a two-year high of 87.44 hit on Monday when the euro fell 0.78% against sterling , its largest one-day drop since mid-April. "That reflected positioning," said Chris Turner, global head of markets at ING, of Monday's fall in euro/sterling. Money markets show that traders believe the European Central Bank is probably closer to the end of its rate-cutting cycle than the Bank of England, which would favour the euro over sterling. In addition, the fiscal outlook in the euro zone appears healthier than that of the UK, where the government may be forced to raise taxes or borrow more this year. "Those two opposing stories have made euro/sterling quite a popular trade, and part of that unwound in a bit of hurry yesterday," said Turner. The fact that Britain secured a deal for a 10% tariff compared with the EU's deal for a 15% rate could be giving sterling a boost against the euro, he said. A survey on Tuesday showed British shop prices rose by the most in more than a year in the 12 months to July and food prices grew more strongly, adding to other inflation signals and underscores the BoE's interest rate dilemma. Last week soft British retail sales and business activity data weighed on the pound. Elsewhere, data showed British lenders approved more mortgages than expected last month, adding to signs that the housing market has recovered from a dip after the expiry of a tax break for home buyers, and consumers also upped their borrowing, data showed on Tuesday. "Overall, today's money and credit data give a tentative sign of consumer spending picking up a little, and of business sentiment improving, however, growth will still be weak in Q2. For now, the MPC is likely to focus on that weaker growth outlook, meaning a rate cut in August is the odds-on bet," said Thomas Pugh, chief economist at RSM UK.
