Connect with us

Trading

U.S. AND U.K. BENCHMARK INTEREST RATES TO REMAIN UNCHANGED

Published

on

U.S. And U.K. Benchmark Interest Rates To Remain Unchanged

The highlights of the economic calendar during previous week were Fed’s, BoE’s and BoJ’s March meetings, the release of U.S. initial jobless claims and producer price inflation reports, as well as Greece’s return to financial markets.

Fed’s March Minutes

The Federal Reserve’s March meeting minutes released on April 9, 2014, reported that policymakers decided to keep the benchmark interest rate to near zero levels, until inflation moves higher. The board of governors unanimously agreed to set a threshold that would increase interest rates, once the unemployment rate reaches 6.5%, provided that figure is followed by a 2.5% inflation rate.

Currently, unemployment rate is at 6.7%, not far from the threshold set, though inflation rate remains well below 2.5%. The Fed’s decision to set a rate-increase threshold, left markets feeling that interest rates will remain low for some time to come, even after winding down the bond-buying programme.

U.S. Initial Jobless Claims and Producer Price Index

On Thursday, April 10, the U.S. Labor Department reported that the number of people filing for unemployment assistance in the week ending April 5, declined by 32,000 to 300,000, which is the lowest level since May, 2007. Previous week’s claims were revised up to 332,000. Economists had anticipated initial jobless claims to fell to 320,000. The four-week average of jobless claims declined to 316,250 from 321,000 the week before, the lowest since late September 2013.

Continuing jobless claims also dropped to 2.77 million, the lowest since January 2008. These figures reflect the fewest number of American citizens filing for unemployment benefit since before the last recession, indicating a progress in the labour market.

U.S. And U.K. Benchmark Interest Rates To Remain Unchanged

U.S. And U.K. Benchmark Interest Rates To Remain Unchanged

A day after, official data released by the Bureau of Labor Statistics reported that the Producer Price Index, which measures the change in selling prices, increased by 0.5% in March, following a 0.1% decline in February. The median estimate was calling for a 0.1% rise. Core producer price inflation, excluding energy, trade and food, rose 0.6% in March, against the forecasts anticipating a 0.2% increase, following a 0.2% fall the previous month.

BoE’s March minutes

On Thursday,10, the Bank of England said that is keeping the benchmark interest rate at 0.50%, where it has been since March 2009, as officials try to measure the amount of spare capacity in the  economy. The specific decision was broadly anticipated among economists. The BoE also stated that is maintaining the asset purchase programme at £375 billion.

The meeting took place amid signs that the country’s economic recovery is strengthening, following data published earlier on the week, showing that industrial production rose beyond economists’ expectations in February. The Monetary Policy Committee stated that it will not contemplate increasing borrowing costs at least until the unemployment rate drops to 7% – currently at 7.2%.          It is anticipated that the BoE will rise its interest rate by 25 basis points by May 2015.

Greece back to markets

Meanwhile in the euro zone, Greece made a successful return to financial markets on Thursday, April 10, raising €3 billion in its first bond auction since 2010, when the country entered the bailout programme. Greece auctioned €3 billion of five-year benchmark bonds at a yield of 4.95%, with the orders exceeding €20 billion. Traders looked optimistically to Greece’s return to bond markets, as a further sign that euro zone’s economic recovery is gaining pace.

U.S. Dollar

Despite the upbeat official data on initial jobless claims on Thursday, 10, the numbers did little to boost the dollar. Traders continued to avoid the currency, following the Fed’s minutes indicating that an interest rate rise is unlikely to occur for some time. While on Friday, the greenback gained strength against other major currencies, as the release of better-than-expected inflation data supported demand for the currency. The U.S. dollar rose against the euro, with EUR/USD declining 0.15% to 1.3867.

Euro and Sterling

On Thursday, the euro found support from Greece’s successful return to bond markets, ending a four-year exile from them. During the U.S. trading session, the EUR/USD was up 0.27% at 1.3893. Elsewhere, EUR/USD hit 1.3875, the highest since March 24 and was last trading at 1.3869.

Following the release of BoE minutes to left the interest rate unchanged at 0.50%, the sterling lowered against the dollar on Thursday, with GBP/USD down 0.02% at 1.6790. The cable remained also slightly lower against the euro, with EUR/GBP gaining 0.21% to 0.8266. On Friday, the sterling followed the same course against the dollar, with GBP/USD dropping 0.34% to 1.6727.

Yen

The greenback was down against the yen on Thursday, 10, with USD/JPY declining 0.55% at 101.43. On Friday, however, the dollar traded higher against the yen, after the release of the Bank of Japan’s March minutes saying that BoJ will continue to seek quantitative and qualitative easing measures, thus fuelling concerns for implementation of additional stimulus measures in the near future.  USD/JPY rose to 101.86 during Asian trade.

AUD/CAD/NZD

On Thursday, the dollar was mixed against its counterparts in Australia, Canada and New Zealand. AUD/USD traded up 0.37% at 0.9425, USD/CAD gained 0.39% at 1.0923, and NZD/USD fell 0.20% at 0.8697. The Aussie found support by official data released earlier reporting that the number of individuals employed in Australia rose by 18,100 in March, well above the forecasts for a 5,000 increase. The country’s unemployment rate dropped to 5.8% in March, from 6.1% in February.

On Friday, the U.S. dollar traded higher against all its cousins, with AUD/USD sliding 0.27% to 0.9389, NZD/USD falling 0.15% to 0.8667 and USD/CAD up 0.39% to 1.0977.

The U.S. Dollar Index tracking the performance of the dollar versus six other majors, dropped by 0.20% at 79.44 on Thursday, while gained 0.15% to 79.60 on Friday.

Gold

Gold prices gained more than 1% on Thursday, after the release of Fed’s minutes. Gold futures for June delivery rose 1.13% to $1.320.60 on the Comex division of the New York Mercantile Exchange, the highest since March 24, 2014. The precious metal remained supported on Friday, trading near three-week highs with gold futures for June delivery trading at $1,322.10 a troy ounce, up 0.12%.

Trading

FTSE Russell to include 11 stocks from China’s STAR Market in global benchmarks

Published

on

FTSE Russell to include 11 stocks from China's STAR Market in global benchmarks 1

SHANGHAI (Reuters) – Index provider FTSE Russell will add 11 stocks from China’s STAR Market to its global benchmarks, according to a post on its website from Friday.

The move marks the first time shares from Shanghai’s Nasdaq-style STAR Market for stocks in China have been included in a global index.

The 11 stocks include Raytron Technology Co Ltd, Zhejiang HangKe Technology Co Ltd, Montage Technology Co Ltd, Advanced Micro-Fabrication Equipment Inc China.

(Reporting by Josh Horwitz and Samuel Shen in Shanghai; Editing by William Mallard)

Continue Reading

Trading

UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims

Published

on

UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims 2

(Reuters) – The Association of British Insurers (ABI) said on Saturday insurers are likely to pay up to 2.5 billion pounds ($3.50 billion) for UK’s COVID-19 insurance claims incurred in 2020.

The latest estimates include 2 billion pounds for COVID-19 business interruption claims and 500 million pounds for COVID-19 related protection insurance claims, travel insurance claims and other general insurance products.

ABI’s Director General Huw Evans said in a release that the pandemic illustrated some uncomfortable gaps between what people expected to be covered for and what their policy was designed for.

“We need to learn lessons from this unprecedented event and redouble our efforts to improve consumers’ trust in insurance products,” he added.

The insurance trade body said 123,000 claims have been settled with payment so far and a further 9,000 have received partial payments as of mid-January 2021.

($1 = 0.7139 pounds)

 

(Reporting by Maria Ponnezhath in Bengaluru; Editing by Marguerita Choy)

 

Continue Reading

Trading

Oil extends losses as Texas prepares to ramp up output after freeze

Published

on

Oil extends losses as Texas prepares to ramp up output after freeze 3

By Devika Krishna Kumar

NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs, as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather and power outages.

Brent crude futures ended the session down $1.02, or 1.6%, at $62.91 a barrel while U.S. West Texas Intermediate (WTI) crude fell $1.28, or 2.1%, to settle at $59.24.

For the week, Brent gained about 0.5% while WTI fell about 0.7%.

This week, both benchmarks had climbed to the highest in more than a year.

“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.

Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.

U.S. energy firms this week cut the number of oil rigs operating for the first time since November, according to Baker Hughes data.

Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.

Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.

“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.

Oil prices fell despite a surprise drop in U.S. crude stockpiles last week, before the big freeze hit. Inventories fell 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]

“Vaccines and the impressive rollouts we’ve seen have delivered strong gains, as have the efforts of OPEC+ – Saudi Arabia, in particular – and the big freeze in Texas, which gave oil prices one final kick this week,” Craig Erlam, senior market analyst at OANDA, said.

“With so many bullish factors now priced in, it seems we’re seeing some of these positions being unwound.”

The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.

“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.

(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Marguerita Choy, David Gregorio and Nick Macfie)

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. 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 may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. 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 sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Latest Articles

Former Bank of England Governor Carney joins board of digital payments company Stripe 4 Former Bank of England Governor Carney joins board of digital payments company Stripe 5
Finance36 mins ago

Former Bank of England Governor Carney joins board of digital payments company Stripe

By Kanishka Singh (Reuters) – Mark Carney, former head of the UK and Canadian central banks, has joined the board...

Airbus CEO urges trade war ceasefire, easing of COVID travel bans 6 Airbus CEO urges trade war ceasefire, easing of COVID travel bans 7
Top Stories39 mins ago

Airbus CEO urges trade war ceasefire, easing of COVID travel bans

By Tim Hepher PARIS (Reuters) – The head of European planemaker Airbus called on Saturday for a “ceasefire” in a...

Why a predictable cold snap crippled the Texas power grid 8 Why a predictable cold snap crippled the Texas power grid 9
Top Stories41 mins ago

Why a predictable cold snap crippled the Texas power grid

By Tim McLaughlin and Stephanie Kelly (Reuters) – As Texans cranked up their heaters early Monday to combat plunging temperatures,...

UK could declare Brexit 'water wars' - The Telegraph 10 UK could declare Brexit 'water wars' - The Telegraph 11
Top Stories44 mins ago

UK could declare Brexit ‘water wars’ – The Telegraph

(Reuters) – Britain could restrict imports of European mineral water and several food products under retaliatory measures being considered by...

Commerzbank to lose 1.7 million clients by 2024 - Welt am Sonntag 12 Commerzbank to lose 1.7 million clients by 2024 - Welt am Sonntag 13
Banking47 mins ago

Commerzbank to lose 1.7 million clients by 2024 – Welt am Sonntag

FRANKFURT (Reuters) – Commerzbank expects to lose 1.7 million customers by 2024 as part of its current restructuring, resulting in...

Bitcoin and ethereum prices 'seem high,' says Musk 14 Bitcoin and ethereum prices 'seem high,' says Musk 15
Top Stories49 mins ago

Bitcoin and ethereum prices ‘seem high,’ says Musk

(Reuters) – Billionaire CEO Elon Musk said on Saturday the price of bitcoin and ethereum seemed high, at a time...

Sunak to raise business tax to pay for COVID-19 support - The Sunday Times 16 Sunak to raise business tax to pay for COVID-19 support - The Sunday Times 17
Business54 mins ago

Sunak to raise business tax to pay for COVID-19 support – The Sunday Times

(Reuters) – British finance minister Rishi Sunak is set to increase a tax on business to pay for an extension...

FTSE Russell to include 11 stocks from China's STAR Market in global benchmarks 18 FTSE Russell to include 11 stocks from China's STAR Market in global benchmarks 19
Trading23 hours ago

FTSE Russell to include 11 stocks from China’s STAR Market in global benchmarks

SHANGHAI (Reuters) – Index provider FTSE Russell will add 11 stocks from China’s STAR Market to its global benchmarks, according...

Foxconn chairman says expects "limited impact" from chip shortage on clients 20 Foxconn chairman says expects "limited impact" from chip shortage on clients 21
Business23 hours ago

Foxconn chairman says expects “limited impact” from chip shortage on clients

TAIPEI (Reuters) – The chairman of Apple Inc supplier Foxconn said on Saturday he expects his company and its clients...

Bitcoin, ether hit fresh highs 22 Bitcoin, ether hit fresh highs 23
Top Stories24 hours ago

Bitcoin, ether hit fresh highs

SINGAPORE (Reuters) – Bitcoin hit a fresh high in Asian trading on Saturday, extending a two-month rally that saw its...

Newsletters with Secrets & Analysis. Subscribe Now