By Saqib Iqbal Ahmed and Karen Brettell
NEW YORK (Reuters) – The dollar was boosted by safety buying on Wednesday as investors turned more cautious on worries about the economic impact of the COVID-19, and after the U.S. Federal Reserve expressed concerns about the pace of the economic recovery.
Stocks and Treasury yields slipped while the safe-haven U.S. dollar drew buyers. [.N]
“There are a lot of concerns about the effectiveness of the vaccine roll out in the United States,” said Minh Trang, senior FX trader at Silicon Valley Bank. “Today is a solid risk-off day for sure.”
The Federal Reserve left its key overnight interest rate near zero and made no change to its monthly bond purchases, pledging again to keep those economic pillars in place until there is a full rebound from the pandemic-triggered recession.
That has not happened, and the Fed in a policy statement flagged a potential slowing in the pace of the recovery.
“If anything the dollar is finding support from the Fed’s more cautious message. I would say that the Fed having noted the recent moderation in the pace of the recovery is adding to concerns about the near-term outlook,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Global coronavirus cases surpassed 100 million on Wednesday, according to a Reuters tally, as countries around the world struggle with new virus variants and vaccine shortfalls.
The U.S. Dollar Currency Index gained 0.53% to 90.636, after earlier reaching 90.896, its highest level since Jan. 18.
The euro was 0.48% lower on the day at $1.2101.
The single currency was further pressured after the German government on Wednesday slashed its growth forecast for Europe’s largest economy to 3% this year, a sharp revision from last autumn’s estimate of 4.4%, caused by a second coronavirus lockdown.
The risk-sensitive Australian dollar sank 1.08% to $0.7664 after earlier falling to $0.7642, the lowest level since Jan. 4.
Silicon Valley Bank’s Trang cited the historically elevated level of bearish bets against the greenback as part of the reason for the U.S. currency’s strength as investors rush to trim those wagers.
Despite the dollar’s recent rebound from multi-year lows, bearish bets on the U.S. currency are at a decade-high.
“Anytime you see that kind of buildup and you see a certain reversal, you will see a substantial move,” Trang said.
Sterling rose to a fresh eight-month high against the euro on Wednesday as Britain’s faster COVID-19 vaccine rollout than the European Union’s offered support to the pound.
Meanwhile bitcoin fell in a volatile session and slipped below $30,000 for the first time since Jan. 22. It later recovered to $30,686, down 5.59% on the day. It is down 27% from a record $42,000 reached on Jan. 8, but up around 174% since its recent run up began in mid-October.
(Reporting by Saqib Iqbal Ahmed and Karen Brettell in New York; Editing by Matthew Lewis)
Running boom to help Puma recover after slow start
By Emma Thomasson
BERLIN (Reuters) – German sportswear company Puma expects the financial impact from coronavirus lockdowns to last well into the second quarter, but believes global growth in running should help to support a strong improvement after that.
“We clearly see a running boom in the whole world,” Chief Executive Bjorn Gulden told journalists, noting that yoga and other outdoor activities are also doing well. He expects the healthy living trend to continue even after the pandemic.
Gulden said his optimism is underlined by the fact that orders for 2021 are up almost 30% compared to a year ago, with bookings for running products particularly high.
However, there is still uncertainty about when lockdowns in Europe will end, with about half of the stores selling its products currently closed in its home region.
For the full year, Puma expects at least a moderate increase in sales in constant currency, with an upside potential, and a significant improvement for both its operating and net profit compared with 2020.
Shares in Puma were down 2.9% at 1100 GMT.
“The wording on outlook looks softer than we had anticipated, even by Puma’s cautious standards,” said Jefferies analyst James Grzinic.
Gulden noted that a shortage of shipping containers bringing products made in Asia would impact margins, with freight rates likely to double in the next 12 months.
Puma will put a stronger focus on the women’s market in future, Gulden said, creating shoes better modelled to female feet for running and soccer and capitalising on partnerships with celebrities like singer Dua Lipa and model Cara Delevingne.
Gulden admitted Puma had been slow in creating its own app, but it plans to launch one towards the end of the year, further supporting online sales, which grew by 63% in 2020.
Rival Nike in December raised its full-year sales forecast after demand for outdoor sportswear drove an 84% surge in online sales.
Gulden said he is hopeful that the Olympics will go ahead in Japan and the European soccer championship will also take place after both were postponed from 2020.
($1 = 0.8226 euros)
(Reporting by Emma Thomasson; Editing by Mark Potter and Keith Weir)
ExxonMobil to sell some UK, North Sea assets to HitecVision for over $1 billion
(Reuters) – Exxon Mobil Corp said on Wednesday it would sell its non-operating interest in its UK and North Sea exploration and production assets to private-equity fund HitecVision for more than $1 billion.
Exxon has been looking to sell its oil and gas assets since late 2019, seeking to free up cash to focus on a handful of mega-projects.
The deal includes ownership interests in 14 producing fields operated primarily by Shell as well as interests in the associated infrastructure. Exxon could also receive about $300 million in contingent payments based on a potential for increase in commodity prices.
Exxon’s share of production from these fields was about 38,000 barrels of oil equivalent per day in 2019, the company said.
Exxon said it would retain its non-operated share in upstream assets in the southern part of the North Sea as well as its interest in the Shell Esso gas and liquids (SEGAL) infrastructure, which supplies ethane to the company’s Fife ethylene plant.
HitecVision, in partnership with Eni, had bought Exxon’s Norwegian North Sea assets for $4.5 billion in 2019.
Initially, Exxon hoped to raise more than $2 billion from the sale, which was planned for late 2019. In June 2020 sources told Reuters that the portfolio was more likely to fetch $1 to $1.5 billion given the oil price weakness last year.
(Reporting by Arathy S Nair in Bengaluru; Editing by Anil D’Silva)
JPMorgan’s blockchain payments test is literally out of this world
By Anna Irrera
LONDON (Reuters) – Stuck in space with bills to pay? Don’t worry, the satellites could take care of it.
JPMorgan Chase & Co has recently tested blockchain payments between satellites orbiting the earth, executives at the bank told Reuters, showing that digital devices could use the technology behind virtual currencies for transactions.
The so-called Internet of Things (IoT), where devices connect to one another, is most associated with consumer electronics, including smart speakers like Amazon Echo and Google Home, and banks want to be ready to process payments when these smart devices start doing transactions autonomously.Umar Farooq, the CEO of JPMorgan’s blockchain business Onyx, thought space was a cool place to try it out.
“The idea was to explore IoT payments in a fully decentralised way,” Farooq said. “Nowhere is more decentralised and detached from earth than space.”
“Secondly we are nerdy and it was a much more fun way to test IoT,” he said.
To run the space experiment, the bank’s blockchain team did not send its own satellites into space, but worked with Danish company GOMspace, which allows third parties to run software on its satellites.
Farooq said the satellite test showed blockchain networks could power transactions between every day objects.
The test also showed it could be possible to create a marketplace where satellites send each other data in exchange for payments, as more private companies launch their own devices into space, Tyrone Lobban, head of blockchain launch, at Onyx said.
Back on earth, examples of IoT payments that could become a reality sooner include a smart fridge ordering and paying for milk on an ecommerce site, or a self-driving car paying for gas Farooq said.
Blockchain, which first emerged as the software underpinning cryptocurrencies, is a shared digital ledger of transactions. Financial companies have invested millions of dollars to find uses for the technology hoping it can reduce costs and simplify more complex IT processes, such as securities settlement or international payments.
But so far, blockchain has yet to have widespread impact in financial services.
JPMorgan has been one of the most active banks in blockchain, announcing it had created its own distributed ledger called Quorum in 2016, which was sold to blockchain company Consensys last year. The bank also developed a digital coin called JPM Coin and in 2020 created Onyx.
Onyx has more than 100 employees and its blockchain applications are close to generating revenues for the bank, it said.
Among the division’s applications is Liink, a payments information network involving more than 400 banks, a project to replace paper checks and IoT experiments, Farooq said.
(Reporting by Anna Irrera. Editing by Jane Merriman)
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