Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Trading

Dollar holds firm as traders trim US rate cut bets

Dollar holds firm as traders trim US rate cut bets

By Tom Westbrook and Amanda Cooper

SINGAPORE/LONDON (Reuters) -The dollar headed for its largest weekly rise in a month-and-a-half on Friday as surprisingly strong U.S. economic data has left markets on edge about the outlook for U.S. inflation and interest rates.

May figures showed U.S. business activity accelerated to the highest level in just over two years and manufacturers reported surging input prices, prompting a pullback in U.S. interest rate cut expectations and a rise in government bond yields.

The dollar is up almost 1% this week on the Japanese yen to 157.11 yen, even though Japanese government bond yields have climbed too, scaling decade highs and clearing 1% at the 10-year tenor. [JP/]

Japan’s core inflation slowed for a second straight month in April, meeting market expectations – and staying above the central bank’s target – at 2.2%.

“It’s having very little effect on the yen,” said Martin Whetton, head of financial markets strategy at Westpac in Sydney. “The carry of holding dollars is far juicier,” he said, while policymakers’ rhetoric has also made traders nervous about inflation and the risk rate cuts would be distant or small.

Minutes from the Federal Reserve’s last meeting published this week showed a live debate among policymakers as to whether current rates were sufficiently restrictive to cool inflation.

Traders have pushed out the timing of the first Fed rate cut to December.

Just 36 basis points’ worth of cuts are priced in for 2024 now, down from 50 bps – equivalent to two quarter-point cuts – a week ago.

Thursday’s business surveys from S&P Global supported the conviction among many traders that the Fed may keep rates higher for longer.

“Expansive growth is usually a good thing. But not for traders who are positioned for Fed cuts. And with PMIs pointing to firmer growth and potentially another round of inflation, hopes of beloved cuts have quickly evaporated, and – dare we say? – concerns of another hike may be brewing,” City Index strategist Matt Simpson said.

The euro was helped off a nine-month low to the pound on Thursday when a key European wage indicator picked up.

However the moves were modest and the European Central Bank published a blog post highlighting one-off factors contributing to the wage rise. Rates markets still price a near 90% chance the ECB cuts rates next month.

The euro was up 0.1% at $1.08225, but was down 0.5% for the week. Sterling held around two-month highs, trading at $1.2699, shrugging off weak British retail sales.

China started a second day of war games around Taiwan. China’s yuan held steady in the offshore market around 7.2584.

The New Zealand dollar has been underpinned by a hawkish shift in outlook from the Reserve Bank of New Zealand but remains 0.55% weaker on the week at $0.6120.

The U.S. dollar index, which measures the dollar against a basket of six major currencies, was last up nearly 0.6% on the week to 105.1, on course for its largest one-week rise since mid-April.

Later in the day, investors will be on the look-out for U.S. durable goods orders and speeches from ECB and Federal Reserve policymakers – notably Fed Governor Christopher Waller on longer-term rates.

(Additional reporting by Tom Westbrook in Singpoare; Editing by Shri Navaratnam)

Editor-in-Chief since 2011.

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post