Asia FX muted, dollar flat amid mixed U.S., Chinese economic cues

Asia FX muted, dollar flat amid mixed U.S., Chinese economic cues

By Ambar Warrick -- Most Asian currencies traded in a flat-to-low range on Wednesday as data showed a somewhat mixed recovery in the Chinese economy, while the dollar stuck to a near one-month low after consumer inflation eased as expected.

The Chinese yuan fell 0.2% after data showed industrial production grew less than expected in February, as the manufacturing sector struggled to recover from COVID-era lows.

But retail sales surged as expected, while higher-than-expected fixed asset investment showed that certain facets of the economy were recovering after the lifting of anti-COVID measures earlier this year.

Still, weakness in the manufacturing sector, which usually acts as a bellwether for China’s economy, showed that a bigger recovery was still a long way off. A recovery in China bodes well for the broader Asian economy, given the country's position as a dominant trading partner for the region.

Broader Asian currencies were muted as data released overnight provided mixed cues on the U.S. economy. The Japanese yen fell 0.2% against the dollar, while the Philippine peso added 0.3%, leading gains across Southeast Asia.

U.S. consumer price index inflation (CPI) eased as expected in February. But stickier-than-expected core CPI inflation showed that price pressures still remained relatively elevated, which could put more pressure on the Federal Reserve to tighten monetary policy.

Markets are betting that the Fed will have limited economic headroom to raise rates, given the increased pressure on the banking sector. The U.S. government intervened in the sector after the collapse of several regional banks last week.

The dollar index and dollar index futures traded sideways on Wednesday, and were nursing steep losses over the past few sessions.

U.S. producer price inflation and retail sales data is due later in the day, and is expected to provide more cues on the economy ahead of a Fed meeting next week. The central bank is expected to raise rates by 25 basis points.

The Indian rupee fell 0.2% after data released on Tuesday showed that wholesale inflation in the country grew much less than expected in February. The reading, coupled with earlier data that showed an easing in consumer inflation, drove up bets that the Reserve Bank will eventually hold on future interest rate hikes.

The South Korean won rose 0.1% as data showed the country's massive trade deficit narrowed slightly in February.


2023-03-15 13:45:00     Come from :

Crypto exchange Binance to halt sterling transfers

Crypto exchange Binance to halt sterling transfers

By Elizabeth Howcroft and Tom Wilson

LONDON (Reuters) -Binance is halting its sterling deposits and withdrawals, a company spokesperson said on Tuesday, a month after the crypto exchange ceased dollar transfers.

Binance has been informed by its partner for sterling transfers, Paysafe, that it would halt its services from May 22, the spokesperson said, impacting all Binance customers.

Sterling transfers for new users were stopped on Monday, it said.

"Binance will ensure that affected users are still able to access their GBP balances," the spokesperson said, adding that the change "affects less than 1% of Binance users".

Binance, the world's largest crypto platforms with more than 128 million customers, did not give detail on the number of clients the move would impact.

Paysafe did not immediately respond to a request for comment from Reuters. The company offers the service via UK payments network Faster Payments, which also had no immediate comment.

The cessation of sterling transfers, first reported by crypto news outlet The Block, comes after Binance last month suspended all dollar bank transfers amid a growing crackdown on crypto by U.S. authorities.

A spokesperson for Skrill, the Paysafe unit that works with Binance, told crypto website Decrypt that "the UK regulatory environment in relation to crypto is too challenging to offer this service at this time and so this is a prudent decision on our part taken in an abundance of caution."

Britain's financial watchdog said last year that it lacked powers to stop Binance from accessing the Faster Payments network via PaySafe.

The UK's Financial Conduct Authority warned consumers in June 2021 that Binance did no hold "any form" of permission to offer services regulated by Britain.


2023-03-14 19:00:00     Come from : Reuters

Dollar stabilizes as shock from banking crisis recedes

Dollar stabilizes as shock from banking crisis recedes

By Geoffrey Smith -- The dollar stabilized and the euro weakened in early trading on Tuesday in Europe, as the shock from the collapse of three U.S. banks in a week began to recede.

The signs of stress in the U.S. financial system have caused a sharp reappraisal of the outlook for interest rates across the U.S. and Europe since Thursday, with two-year yields in the U.S. falling by the most in any three days since the 1987 market crash. Whereas there was a broad consensus for a 25 basis point rate hike from the Federal Reserve next week, with 50 basis points seen as the next most likely outcome, most of the market now expects no change. Analysts at Nomura went as far as to predict the Fed will cut the target range for fed funds by 25 basis points.

Nomura's view remains a minority one, not least because U.S. inflation is still running well above target. The U.S. consumer inflation report for February is due at 8:30 ET (12:30 GMT) and is expected to show only a relatively modest drop to 6.0% from 6.4% in January. The monthly price dynamic is expected to weaken slightly to 0.4% from 0.5% in January. 

By 04:00 ET (08:00 GMT), the dollar index, which tracks the greenback against a basket of advanced economy currencies, was up 0.3% at 103.52. The dollar's gains came largely against the euro, which has outperformed since Thursday simply because the European Central Bank has all but committed itself to a hike of 50 basis points at its policy meeting on Thursday. That means that the key variable at the ECB meeting will be President Christine Lagarde's guidance for future meetings, which many now expect to be less hawkish than her most recent public comments. 

In her recent appearances, Lagarde has appeared to side more with hawks pushing for more 50 basis point steps later in the year. This now seems less likely, according to Berenberg Bank Chief Economist Holger Schmieding, not least because events in the banking system will cause financial conditions to tighten both in the U.S. and the Eurozone. 

"If the markets do more, the ECB has to do less," Schmieding said in a note to clients. 

The euro was down 0.3% at $1.0692, giving up some of the 2% rally over the last three days. The pound also weakened slightly after gaining nearly 3% against the dollar over the last week. By 04:00 ET, it was down 0.3% at $1.2148.

Sterling was still supported by labor market data showing a bigger-than-expected increase in employment in the three months through January that kept the jobless rate at a historically low level of 3.7%. Growth in average earnings weakened from the record levels it has posted in the previous two months. 

The Bank of England's next policy meeting is next week, a day after the Fed's. However, the pound has some event risk this week, with the government's new budget for the coming year due to be presented to parliament on Wednesday.


2023-03-14 16:35:00     Come from :

Asia FX sinks as U.S. bank rout batters sentiment ahead of CPI data

Asia FX sinks as U.S. bank rout batters sentiment ahead of CPI data

By Ambar Warrick -- Asian currencies retreated on Tuesday as concerns over a banking crisis in the U.S. battered sentiment, with a mild recovery in the dollar also pressuring markets ahead of key inflation data due later in the day.

China’s yuan sank 0.4%, while the Japanese yen lost 0.5% as most regional currencies came under pressure from uncertainty over how U.S. monetary policy will proceed in the face of a potential banking crash.

Asian currencies had initially benefited from expectations that the Federal Reserve will curb its pace of interest rate hikes to stem further damage to the economy from high interest rates, which factored heavily in the collapse of Silicon Valley Bank (NASDAQ:SIVB).

But markets turned uncertain over such a notion ahead of consumer price index data due later in the day, which is expected to show U.S. inflation remained sticky in February. Any signs of stubborn inflation give the Fed more impetus to raise interest rates.

The dollar had plummeted against a basket of currencies after the government intervened in the banking sector. But the greenback recouped some losses on Tuesday, with the dollar index and US Dollar Index Futures rising 0.3% each.

Still, Fed Fund futures prices show that markets have abandoned expectations that the Fed will hike interest rates by 50 basis points next week, with a majority of traders pricing in a 25 bps hike.

Some analysts, including those at Goldman Sachs and Nomura also raised the possibility of no rate hike action by the Fed, due to market sentiment remaining fragile in the wake of the SVB collapse.

Broader Asian currencies retreated amid uncertainty over the Fed. The South Korean won sank 0.8%, while the Taiwan dollar lost 0.4%.

The Australian dollar fell 0.2% after a private survey showed that consumer sentiment remained near pandemic-era lows in March. A separate survey also showed that business sentiment worsened amid high inflation and rising interest rates.

Losses in the Indian rupee were somewhat limited on Tuesday, with currency trading down 0.1%. The rupee was supported by a sharp drop in oil prices, given that high oil imports account for a bulk of India’s current account deficit.

Data on Monday showed that Indian CPI inflation eased less than expected in February, with a similar trend expected from wholesale inflation due later in the day.


2023-03-14 14:02:00     Come from :

Dollar weakens as banking turmoil could stay Fed's hand

Dollar weakens as banking turmoil could stay Fed's hand

By Peter Nurse - The U.S. dollar slipped lower in early European trade Monday as traders reassessed the likelihood of another rate hike by the Federal Reserve later this month given the ongoing U.S. banking crisis.

At 03:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.6% lower at 103.528, trading near a one-month low.

The U.S. authorities decided to step in over the weekend and cover all depositors at Silicon Valley Bank, which had to cease trading last week, as well as depositors at SignatureBank, which was wrapped up over the weekend.

Both the U.S. Treasury and Federal Reserve were keen to make sure the second- and third-largest failures in U.S. banking history wouldn’t have wider repercussions, announcing emergency funding measures for the sector.

The news also raised expectations that the Fed would hold back from increasing interest rates by an outsized 50 basis points next week, given the strain on the U.S. banking system.

Influential investment bank Goldman Sachs said on Sunday that they no longer expect the U.S. central bank to deliver a rate hike at its meeting on March 22, having previously predicted a 25-basis-point increase.

“Pressure on the U.S. banking system is questioning whether the Fed can push ahead with such an aggressive tightening cycle,” said analysts at ING, in a note. “One would normally think that a sell-off in equities is dollar bullish, perhaps not, however, if the epicentre for current stress is the U.S. banking system.”

Elsewhere, EUR/USD rose 0.8% to 1.0730, hovering near a one-month high with the single currency benefiting from the dollar selloff.  

Additionally, the European Central Bank meets later this week, and is widely expected to raise interest rates by 50 basis points as inflation data last week pointed to underlying price pressure remaining elevated.

GBP/USD rose 0.6% to 1.2105, helped by the news HSBC (LON:HSBA) has agreed with the Bank of England to buy the U.K. operations of Silicon Valley Bank, helping to make sure there is no contagion from the collapse of the U.S. lender late last week.

The U.K. government also presents the Budget on Wednesday, and Chancellor Jeremy Hunt is expected to prioritize keeping public finances steady given his predecessor’s difficulties.

USD/JPY fell 0.2% to 134.60, not far off a one-month high, the AUD/USD rose 1.4% to 0.6670, on track for its biggest one-day percentage jump since Jan. 6, and USD/CNY edged lower to 6.9033.


2023-03-13 16:22:00     Come from :

Asia FX firms, dollar slumps as SVB turmoil clouds rate hike outlook

Asia FX firms, dollar slumps as SVB turmoil clouds rate hike outlook

By Ambar Warrick -- Most Asian currencies rose on Monday, while the dollar tumbled to near three-week lows as a potential banking crisis in the U.S. saw markets drastically alter their expectations for more interest rate hikes by the Federal Reserve this year. 

Most regional currencies also sharply reversed losses from last week, with China’s yuan up 0.3% as it moved further away from the key 7 level. Sentiment towards China was boosted by the government retaining its key financial officials, as well as promises of more supportive measures for the economy from top officials.

The offshore yuan jumped 0.8%.

Other Asian currencies also advanced, with South Korea’s won leading gains across the region with a 1.4% bounce. The Japanese yen jumped 0.6%, while the Malaysian ringgit led gains across Southeast Asia with a 0.8% rise.

The Indian rupee lagged its peers, keeping to a small range ahead of key consumer price index inflation (CPI) data due later in the day. Price pressures are expected to have increased in February from the prior month. 

On the other hand, the dollar fell sharply against a basket of currencies, with the dollar index and dollar index futures falling 0.7% and 0.6%, respectively. Both instruments were also close to three-week lows.

Inversion in the U.S. yield curve also lessened after the Fed loosened some borrowing measures for banks over the weekend, after the failure of Silicon Valley Bank (NASDAQ:SIVB). The central bank said it will have an emergency meeting later on Monday.

Fed Funds futures prices showed that investors were now pricing in a greater chance of a 25 basis point (bps) hike by the Fed next week, down from earlier expectations for a 50 bps hike. 

SVB’s failure highlights the deepening economic cracks caused by a sharp increase in U.S. interest rates, after the Fed embarked on its most aggressive tightening spree in 50 years. 

But markets are now betting that the Fed will soften its hawkish rhetoric to avoid further pressure on the banking system. Goldman Sachs analysts said they no longer expect the Fed to hike rates when it meets on March 22, and that the outlook for future rate hikes was now uncertain. 

Analysts at ING said that turmoil in the U.S. banking sector greatly reduced the chance of a 50 bps hike next week, but that a 25 bps raise may still be on the cards. 

The U.S. rate hike outlook was also dented by data last week that showed some easing in wage growth. Focus this week is on a CPI reading for February. 


2023-03-13 13:59:00     Come from :

Dollar slumps, rate hikes in question as Fed limits SVB fallout

Dollar slumps, rate hikes in question as Fed limits SVB fallout

By Ambar Warrick dollar fell sharply against a basket of currencies on Monday as markets reassessed their outlook for future interest rate hikes by the Federal Reserve, amid growing expectations that the central bank will reconsider its hawkish rhetoric in the face of a looming banking crisis. 

Traders were now pricing in a greater chance that the Fed will raise rates by 25 basis points bps when it meets next week, a sharp reversal in the 50 bps expectations being priced in earlier. The trend comes as the collapse of Silicon Valley Bank (NASDAQ:SIVB) highlighted the deepening economic cracks caused by a sharp increase in interest rates over the past year.

The dollar weakened sharply against a basket of currencies, with the dollar index and dollar index futures down 0.7% and 0.8%, respectively. The two were trading at over two-week lows.

Short-term Treasury yields also plummeted from recent highs, while long-term yields firmed on the prospect of a potential pause in further interest rate hikes.  

The U.S. Treasury and the Fed had over the weekend announced emergency funding measures for the banking sector, after the sudden collapse and regulatory seizure of SVB last week. 

The White House also said it will ensure that depositors in the bank are made whole, and that SVB customers will have access to their deposits starting Monday. 

But markets now questioned the scope for further monetary tightening in the U.S., given that more rate hikes are likely to cause more economic damage.

Goldman Sachs (NYSE:GS) analysts said that they no longer expect the Fed to hike rates this month, and expressed uncertainty over the path of monetary policy given the recent stress on the banking sector. 

Analysts at ING said that a 50 bps hike when the Fed meets on March 22 appeared unlikely, but said that a 25 bps raise was still on the cards. 

The Fed convened an emergency, closed-door meeting later on Monday, the results of which are expected to provide more insight on the central bank’s actions going forward.

Focus this week is also on consumer price index inflation data for February, after jobs data released last week showed some cooling in wage growth.


2023-03-13 12:08:00     Come from :