Business
Dollar drops as traders prepare for Yellen to talk up stimulus
By Tommy Wilkes
LONDON (Reuters) – The dollar dropped on Tuesday as investors prepared for U.S. Treasury Secretary nominee Janet Yellen to talk up the need for major fiscal stimulus and commit to a market-determined exchange rate when she testifies later in the day.
The dollar’s fall came after a 2% rise so far in 2021, a gain which caught off guard many investors who had bet on a further decline following its weakness in 2020.
The dollar has been helped in January by rising U.S. Treasury yields and some investor caution about the strength of the global economic recovery from the coronavirus pandemic. But most analysts are sticking with their calls for a weaker dollar from here.
“On fiscal policy, Yellen is to suggest that the US `act big’ and make use of the low borrowing costs. On the dollar, it should be reiterated that the new administration is committed to the market-determined exchange rate. Both are in line with our weak USD outlook,” ING analysts wrote.
President-elect Joe Biden has proposed a $1.9 trillion fiscal stimulus package.
The Wall Street Journal on Monday reported Yellen, who is appearing before the Senate Finance Committee, will affirm a more conventional commitment to market-set currency rates in her Senate testimony on Tuesday.
That contrasts with outgoing President Donald Trump, who often railed against dollar strength.
The dollar index, which measures the currency against a basket of other currencies, dropped 0.3% to 90.472, but it was still above the its more than two-and-a-half-year low of 89.206 touched at the start of this month.
With the dollar weakening, the euro gained, rising 0.5% to $1.2132.
The single currency was unaffected by Italian Prime Minister Giuseppe Conte’s facing a confidence vote to stay in office. The result vote is due after 1800 GMT.
More volatile and commodity-linked currencies, such as the Australian dollar, also benefited from the weaker U.S. currency, with the Aussie up 0.3% at $0.7707.
Rising commodity prices in recent months have boosted currencies of countries with large commodity exports, such as Australia and Canada.
“We continue to see scope for further gains in commodity-related currencies in the year ahead, which should benefit as well from the strengthening global recovery once vaccines are rolled out more widely,” said Lee Hardman, an analyst at MUFG.
Sterling rose 0.2% to $1.3620.
The dollar rose against the yen and was last up 0.3% to 104.02 yen, although still consolidating in a narrow range after reaching a one-month high of 104.40 last week.
Emerging-market currencies were mostly higher but were some way off recent highs.
(Editing by Gareth Jones, Larry King)
Business
Hyundai Motor revises down fourth-quarter operating profit after costly Kona EV recall
SEOUL (Reuters) – South Korea’s Hyundai Motor Co revised down its fourth-quarter operating profit by nearly a fifth after a costly $900 million recall to replace battery systems in some 82,000 electric vehicles globally.
It said on Thursday that the quarter’s profit came in at 1.3 trillion won ($1.2 billion), down from the 1.6 trillion won it had initially reported in late January.
The recall mostly concerns the Kona EV, Hyundai’s biggest-selling electric car which was first recalled late last year for a software upgrade after a spate of fires.
Hyundai’s Kona EV uses batteries manufactured by LG Chem Ltd’s wholly owned battery division LG Energy Solution.
($1 = 1,123.5800 won)
(Reporting by Heekyong Yang and Joyce Lee; Editing by Himani Sarkar and Edwina Gibbs)
Business
Ladbrokes owner holds off on dividend even as profit jumps
(Reuters) – Ladbrokes owner Entain said COVID-19 uncertainties kept it from declaring a dividend despite a jump in 2020 earnings and that it was expecting online volumes to ease when shops re-open after surging during lockdowns.
Entain, which rejected MGM’s $11 billion takeover offer in January, posted an 11% rise in 2020 core earnings to 843.1 million pounds as it benefited from a 50% jump in online profit.
However, the company said given the ongoing uncertainty as a result of COVID-19, the board does not consider it prudent to pay a dividend at this time.
While the pandemic led to the cancellation of sporting and other events and hindered betting in physical shops, a surge in online betting during lockdowns encouraged the FTSE 100 firm to bump up its profit outlook twice last year.
Entain said it had started the year with good momentum in line with expectations and hope to see normality returning over the coming months.
The company also said while it was expecting online volumes to ease when shops in core online territories re-open, the trends seen during the pandemic could remain positive for the global online gaming market. ($1 = 0.7165 pounds)
(Reporting by Muvija M and Chris Peters in Bengaluru)
Business
Exxon and Macquarie in $11.7 billion U.S. lawsuit over gas contract
HOUSTON (Reuters) – Exxon Mobil Corp is suing Australia’s Macquarie Energy in a Texas court in a $11.7 billion lawsuit over missed deliveries during last month’s winter freeze in the central United States.
The lawsuit filed by Exxon’s natural gas business said the massive storm and state declarations of emergencies prevented it from fulfilling its supply commitment to Macquarie Energy, the second largest U.S. gas marketer.
Exxon is asking the Texas court to rule that the massive storm, caused when an arctic air mass swept the central United States, was a natural disaster.
Such a ruling would allow Exxon to break its contract with Macquarie without a penalty, overriding a demand from the Australian company that Exxon cover the wholesaler’s $11.7 billion in damages for missed deliveries.
U.S. gas demand and prices soared last month when freezing temperatures hit as far south as Texas, where 4.3 million homes lost power.
A Macquarie spokesperson in Australia declined immediate comment. Exxon did not reply to a request for comment after normal business hours.
The cold sent spot gas at a west Texas hub to $203.50 per million British thermal units (mmBtu) on Feb. 16. It also prompted Texas and Louisiana to declare emergencies and direct gas supplies to the states’ power generators.
Australia’s Macquarie was one of the largest winners in the cold snap, benefiting from record U.S. natural gas prices. It could collect a $317 million profit from a weather related gas binge, analysts said.
Macquarie had rejected Exxon’s own declaration of a natural disaster, the lawsuit said, but the Australian company later issued its own force majeure declaration over gas it had agreed to provide Exxon in Texas.
(Reporting by Gary McWilliams; editing by Jane Wardell)
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