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Showing posts with label Forex. Show all posts
Showing posts with label Forex. Show all posts
July 18, 2018

Dollar benefits from Powell's optimism, hits six-month peak vs. yen

Dollar benefits from Powell's optimism, hits six-month peak vs. yen
Dollar benefits from Powell's optimism, hits six-month peak vs. yen

By Shinichi Saoshiro

TOKYO (Reuters) - The dollar rose across the board on Wednesday, climbing to a six-month high against the yen, after Federal Reserve Chairman Jerome Powell gave an upbeat outlook for the U.S. economy and reinforced views that the Fed was on track to steadily hike interest rates.

In closely watched congressional testimony on Tuesday, Powell said he saw the United States on course for years more of steady growth, while largely discounting the risks associated with a trade war.

The dollar was up 0.05 percent at 112.955 yen after going as high as 113.08, its strongest since January 9.

The euro dipped 0.05 percent to $1.1653 (EUR=) after losing 0.4 percent overnight.

An easing of risk aversion was reflected on Wall Street, which rose overnight and supported Asian stocks on Wednesday after Powell's optimistic analysis of the U.S. economy.

"The dollar stands to gain further, particularly against the yen, with risk aversion in the equity markets petering out," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

"And while long-term Treasury yields are not rising prominently, this is a reflection of investor demand for U.S. assets that generates a degree of dollar-buying."

The 10-year Treasury yield (US10YT=RR) firmed this week but it has been on a steady decline from a seven-year high above 3 percent set in May.

The two-year Treasury yield (US2YT=RR), most sensitive to the market's views on changes in Fed policy, has risen to a decade-high.

As a result the U.S. yield curve was the flattest in 11 years and close to inverting, a phenomenon in which the two-year yield becomes higher than the longer-dated Treasury yield.

An inverted yield curve is sometimes seen as a sign of waning confidence towards the economy and a signal for a recession.

"The correlation between the yield curve and the dollar has been relatively unstable. Taking this into account, currencies are unlikely to show a strong reaction if the curve does invert," said Tohru Sasaki, head of market research at JPMorgan Chase (NYSE:JPM) Bank.

The pound was little changed at $1.3110 after slipping 1 percent the previous day.

On top of the dollar's broad strength, sterling has come also under pressure from disquiet over British politics.

The currency fell to a three-week low of $1.3068 overnight as investors expected more Brexit challenges after Theresa May's government only narrowly won a parliamentary vote on post-Brexit trade with the European Union.

The dollar index against a basket of six major currencies (DXY) edged up 0.1 percent to 95.038 after rising roughly 0.5 percent the previous day.

The Australian dollar was a shade lower at $0.7384 , extending the retreat from Tuesday when it lost 0.45 percent against a broadly stronger greenback.
July 17, 2018

Dollar pares gains before Fed chairman's testimony

Dollar pares gains before Fed chairman's testimony
FILE PHOTO: Bundles of banknotes of U.S. Dollar are pictured at a currency exchange shop in Ciudad Juarez

By Daniel Leussink

TOKYO (Reuters) - The dollar pared gains against its major peers on Tuesday, edging lower as investors awaited Federal Reserve Chairman Jerome Powell's first congressional testimony for any clues on the pace of U.S. interest rate rises.

Powell will testify on the economy and monetary policy before the U.S. Senate Banking Committee at 1400 GMT on Tuesday, followed by a testimony at the same time on Wednesday to the House of Representatives Financial Services Committee.

"It seems that the markets are focusing on whether or not the trade war between the U.S. and China may affect the outlook for the Fed's tightening," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

"Powell, who is Republican and close to the Trump administration, will not stress much about the negative side of the U.S.-China trade war," said Yamamoto, who expects dollar-yen to gradually strengthen to 115.

Powell is likely to reaffirm the Fed's gradual monetary tightening policy in his testimony, although any suggestion of caution on trade could put a dent in the market's appetite for risk.

On Tuesday, the dollar traded basically flat at 94.51 (DXY) against a basket of six major currencies, paring small gains booked during early morning trade.

The U.S. currency strengthened 0.1 percent against the yen to 112.4 yen , ticking up to a six-month high of 112.80 yen reached on July 13. Japanese markets reopened after a holiday on Monday.

The dollar's gains have this year been capped by worries over the intensifying trade dispute between the United States and China, although the concerns have not derailed the greenback's solid performance so far.

The International Monetary Fund had warned on Monday that escalating and sustained trade conflicts following U.S. tariff actions threaten to derail economic recovery and depress medium-term growth prospects.

"Back in the 1980s or 1990s, when Japan had trade conflicts with the U.S. in the automotive and the semiconductor space... the U.S. made huge downward pressure on the U.S. dollar," said Osamu Takashima, head of G10 FX strategy, Japan at Citigroup (NYSE:C) Global Markets Japan.

"This time, the relations between China and the U.S. is probably more complicated," he said.

On Tuesday, the Australian dollar traded nearly flat, edging 0.02 percent lower to $0.7419.

The New Zealand dollar gained 0.8 percent to $0.6833, its highest level since hitting 0.6835 per dollar on July 11.

The euro (EUR=) and British pound were also barely changed against the greenback. The single currency added 0.01 percent to $1.17125, while the pound was up 0.04 percent at $1.3242.

"It seems that the dollar-yen is kind of immune to the Chinese risk at the moment," said Mizuho Securities' Yamamoto.

But "there is a risk that if the Shanghai Composite Index remains weak and the renminbi keeps depreciating, it will cap the Australian dollar's top side," he said.
July 16, 2018

Dollar settles after biggest weekly rise in a month

Dollar settles after biggest weekly rise in a month
FILE PHOTO: U.S. Dollar banknotes are seen in this photo illustration

By Saikat Chatterjee

LONDON (Reuters) - The dollar edged down on Monday, having notched up its biggest weekly gain in a month last week as investors raised their long bets to the highest level since early 2017, although concerns the economic rebound may be fading has prompted caution about the outlook.

Against a basket of its rivals (DXY), the greenback fell 0.2 percent to 94.60 after rising 0.7 percent last week, its biggest weekly rise since mid-June.

"Currency markets are treading water but with recent European economic data turning higher, we believe there is more upside to euro/dollar from current levels," said Alvin Tan, a currency strategist at Societe Generale (PA:SOGN) in London who expects the single currency to strengthen to $1.22 by end-2018.

In early London trading on Monday, the euro (EUR=EBS) edged 0.1 percent higher to $1.1698 after weakening half a percent last week.

Latest positioning data, however, continued to signal a bullish outlook for the greenback, with net long positions in the dollar registering another increase prompting net long bets to reach their highest levels since early 2017.

A strong rebound in U.S. economic data in the second quarter and the threat of trade protectionism has fueled a near 6 percent rise in the greenback over the last three months but concerns the economic rebound may be fading is prompting some investors to grow cautious about the dollar's outlook.

"This unexpected U.S. exceptionalism had been one major obstacle for broader 2018 expectations of modest broad dollar index," JP Morgan strategists said in a note.

The risk of a further escalation in trade conflict and a softness in Chinese data has kept the dollar supported with investors whittling down their positions in Asian currencies in favor of the euro and the Swiss franc.

China's economy expanded at a slower pace in the second quarter as Beijing's efforts to contain debt hurt activity, while June factory output growth weakened to a two-year low in a worrying sign for investment and exporters as a trade war with the United States intensified.

The Australian dollar edged 0.2 percent higher at 0.7433 cents per dollar. Volumes were lower as Japanese markets were out on a holiday.

In terms of economic data, U.S. Federal Reserve Chairman Jerome Powell's semi-annual testimony on the economy and monetary policy before the Senate Banking Committee on Tuesday will be keenly watched by investors.
July 15, 2018

U.S. President Trump has 'low expectations' for Helsinki summit

U.S. President Trump has 'low expectations' for Helsinki summit
© Reuters. U.S. President Trump has 'low expectations' for Helsinki summit

By Jeff Mason and Alistair Smout

TURNBERRY, Scotland (Reuters) - U.S. President Donald Trump said he had low expectations for the Monday summit with Kremlin chief Vladimir Putin just days after 12 Russian intelligence officers were charged by a federal grand jury for hacking the Democrats ahead of the 2016 election.

The summit, which comes at one of the most crucial junctures for the West since the 1991 fall of the Soviet Union, has perturbed some European allies who fear Putin might seek a grand deal that undermines the U.S.-led transatlantic alliance.

Trump, who has been preparing for the summit by playing golf at his Trump Turnberry course on the western coast of Scotland, told CBS in an interview that "nothing bad" would come out of the summit with Putin.

"I go in with low expectations," Trump told CBS in Turnberry. "I'm not going with high expectations."

A U.S. federal grand jury charged 12 Russian intelligence officers on Friday with hacking Democratic computer networks in 2016, in the most detailed U.S. accusation yet that Moscow meddled in the election to help Republican Trump.

Trump has repeatedly said the investigation into suspected Russian interference in the 2016 U.S. election - which he casts as a "rigged witch hunt" - makes it hard for him to do substantive deals with Moscow.

But the charges shine an even brighter spotlight on Trump's treatment of Putin, who has repeatedly denied that Russia sought to skew the election that Trump, a Republican, unexpectedly won.

When asked by CBS if he would ask Putin to extradite the Russians to the United States, Trump said he hadn't thought of that idea but that he might. Russia's constitution forbids the extradition of its own citizens.

"I hadn't thought of that," Trump said. "But certainly, I'll be asking about it. But again, this was during the Obama administration. They were doing whatever it was during the Obama administration."

When Trump meets Putin, he sits down with a disciplined, detail-oriented and experienced Russian leader who has played on the world stage for more than 18 years, in contrast to the U.S. president's 18 months in office.

Trump, a 72-year-old former New York real estate developer who praises his own deal-making skills, and Putin, a 65-year-old former KGB spy who cultivates a macho image as a man of action, are due to have some time alone at the summit.

"I think it's a good thing to meet," Trump said. "Nothing bad is going to come out of it, and maybe some good will come out."

Trump has said he wants to raise nuclear arms control, Ukraine and Syria with Putin, who has served as Russia's preeminent leader since Boris Yeltsin resigned on the last day of 1999.

German Foreign Minister Heiko Maas warned Trump against making any unilateral deals with Russia that come with a cost for the United States' Western allies.

Trump was seen playing golf on Sunday at his course by two Reuters reporters. On Saturday, he also played golf.

Putin on Saturday held several meetings in the Kremlin before attending the opera at the Bolshoi Theatre. He is due to attend the soccer World Cup final between France and Croatia at the Luzhniki stadium in Moscow on Sunday.

Trump says to run for reelection, had Brexit chat with Queen Elizabeth

Trump says to run for reelection, had Brexit chat with Queen Elizabeth
Trumps depart London for Blenheim Palace in Woodstock, Britain

LONDON (Reuters) - U.S. President Donald Trump said he intends to run for re-election in 2020 because "everybody wants me to" and there are no Democratic candidates who could defeat him, the Mail on Sunday newspaper reported.

Asked by British journalist Piers Morgan in an interview given on Friday whether he was going to run in 2020, Trump was quoted by the Mail on Sunday as saying: "Well I fully intend to. It seems like everybody wants me to."

Trump said he did not see any Democrat who could beat him: "I don't see anybody. I know them all and I don't see anybody."

Before leaving Britain for a summit in Finland with Russian President Vladimir Putin, Trump breached British royal protocol by publicly disclosing the details of a conversation he had with Queen Elizabeth about the complexities of Brexit.

When asked if he discussed Brexit with the monarch when they met for tea at Windsor Castle on Friday, Trump said:

"I did. She said it's a very - and she's right - it's a very complex problem, I think nobody had any idea how complex that was going to be... Everyone thought it was going to be 'Oh it's simple, we join or don't join, or let's see what happens.'"

Speaking of the 92-year-old queen, Trump was quoted as saying: "She is an incredible woman, she is so sharp, she is so beautiful, when I say beautiful - inside and out. That is a beautiful woman."

Asked if Trump felt the queen had liked him, he said: "Well I don't want to speak for her, but I can tell you I liked her. So usually that helps. But I liked her a lot."

"Just very elegant. And very beautiful. It was really something special," Trump said of the meeting. "She is so sharp, so wise, so beautiful. Up close, you see she's so beautiful. She's a very special person."

During an uproarious trip to Europe, Trump has harangued members of the NATO military alliance, scolded Germany for its dependence on Russian energy, and shocked Britain by publicly criticizing Prime Minister Theresa May's Brexit strategy.

Trump later apologized to May for the furor over his withering public critique, blaming "fake news" and promising instead a bilateral trade agreement with Britain after it leaves the European Union in March 2019.

Of his upcoming meeting with Putin on Monday, Trump was more guarded.

"I think we could probably get along very well. Somebody said are you friends or enemies? I said well it's too early to say," Trump was quoted as saying by the Mail on Sunday.

"Right now I say we're competitors but for the United States, and frankly the UK and other places, to get along with Russia and China and all of these other places... that's a good thing, that's not a bad thing. That's a really good thing."
July 13, 2018

Euro, yuan dive as U.S.-China trade concern boosts dollar

Euro, yuan dive as U.S.-China trade concern boosts dollar
FILE PHOTO: A bank employee holds a pile of 500 euro bank notes in Madrid

By Tommy Wilkes

LONDON (Reuters) - The euro fell to a nine-day low on Friday after data showing a record Chinese trade surplus stirred worries about a deeper United States-China trade conflict, encouraging investors into the safety of the dollar.

The Chinese yuan, which has suffered in the past six weeks on concern that U.S. tariffs on Chinese goods will eventually hit its economy, reversed earlier gains in Asia and fell half a percent in offshore markets .

U.S. Treasury Secretary Steven Mnuchin said on Thursday that the United States and China could reopen trade talks, briefly easing concerns about the trade dispute.

But data showing China's trade surplus with the United States swelled to a record in June as exports grew could further inflame tensions. Trump this week pledged to impose tariffs on $200 billion more of Chinese imports and Beijing has vowed to retaliate.

"The trade conflict is dominating concerns in the market," said Esther Reichelt, an analyst at Commerzbank (DE:CBKG) in Frankfurt. "These are sentiment-driven moves."

The single currency dropped to as low as $1.1613 (EUR=), down 0.4 percent. The dollar index reached a two-week high at 95.232 (DXY).

The safe-haven yen fell to another six-month low at 112.775 yen , however, suggesting investors were not panicking.

The dollar has advanced roughly 2 percent versus the yen this week, the biggest weekly gain since mid-September.

INFLATION GAIN

The dollar's broad rally on Friday was also fueled by U.S. consumer prices data a day earlier. That showed a steady buildup of inflation pressure that could allow the Federal Reserve to raise interest rates as many as four times in 2018.

While rising inflation is largely expected by markets, it will reinforce the view of a "widening in monetary policy divergence" between the Federal Reserve and other central banks, said Piotr Matys, FX strategist at Rabobank.

"The latest set of inflation data confirms that the Fed will stay well ahead of other central banks," he said. "We believe the dollar has the potential to extend its rally."

European Central Bank minutes published on Thursday also weighed on the euro, showing that members remain dovish and are a long way from normalizing policy.

U.S. President Donald Trump's comments on Britain's Brexit plan killing hopes of a U.S. trade deal also knocked sterling lower, pushing the dollar up further.

Sterling slid more than half a percent to $1.3103 .

The Australian dollar - seen as a proxy for China risk given Australia's reliance on Chinese demand for its big mining exports - tumbled half a percent to $0.7375 . The currency has had a turbulent week, sinking more than 1 percent since Monday.
July 12, 2018

Dollar holds firm against yen, major peers on strong U.S. inflation

Dollar holds firm against yen, major peers on strong U.S. inflation
© Reuters. Dollar holds firm against yen, major peers on strong U.S. inflation

By Daniel Leussink

TOKYO (Reuters) - The dollar steadied near a six-month high against the Japanese yen and held firm against its major peers on Thursday after the latest U.S. economic data reaffirmed expectations that the Federal Reserve will hike interest rates two more times this year.

While financial markets remained vexed by risks of a full-scale Sino-U.S. trade war, investors' focus was drawn to the U.S. Labor Department's expectation-beating inflation report which boosted confidence in the world's top economy.

The dollar edged up 0.1 percent, trading at 112.07 yen after breaking through the 112-barrier for the first time since Jan. 10 in U.S. trade. The dollar had gained as much as 1.3 percent on Wednesday to 112.175 yen.

The dollar's index against a basket of six major currencies (DXY) held firm near a one-week high of 94.769 reached overnight, trading at 94.725.

"The market is reacting to what is known," said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank.

"The world economy is in a decent state and the U.S. economy is extremely strong, which means interest rates will continue to be raised. Investors are focusing on signs of the strength of the U.S. economy," she said.

U.S. producer prices rose in June, with gains in the cost of services and motor vehicles, leading to the biggest annual increase in 6-1/2 years.

As the dollar held firm, the euro (EUR=) lacked momentum, trading at $1.1675, edging further off a 3-1/2-week high off $1.17905 touched on Monday.

On Wednesday, nervousness in broader currency markets over an escalation in the U.S.-China trade war was slightly more contained than in equity markets, where there were hefty falls globally after Washington threatened 10 percent tariffs on $200 billion worth of Chinese imports.

"If the U.S. levies tariffs on $200 billion worth of Chinese imports, China can't levy tariffs on a similar amount, but it is likely there will be some kind of sanctions," said Kazushige Kaida, head of foreign exchange at State Street Bank.

"If that continues to escalate, not only the U.S. will be hit on a macro-economic level, but China's macro-economy, and countries with macro-economic ties to China, will be impacted as well."

The Canadian dollar weakened against the dollar as broad-based gains for the greenback offset an interest rate hike and the prospect of further tightening by the Bank of Canada.

The Canadian dollar was nearly flat in Asia on Thursday at C$1.3215 per U.S. unit, after having fallen about 0.75 percent the previous day.
July 11, 2018

Yen gains, Aussie hit as U.S. announces $200 billion China tariff list

Yen gains, Aussie hit as U.S. announces $200 billion China tariff list
Yen gains, Aussie hit as U.S. announces $200 billion China tariff list

By Hideyuki Sano

TOKYO (Reuters) - The dollar fell from seven-week highs against the yen and the Australian dollar stumbled after Washington announced a plan to slap tariffs on $200 billion of imports from China, escalating tensions between the world's two biggest economies.

The news, first reported by Bloomberg in early Asian trade when the currency market's liquidity falls to the lowest levels of the day, prompted knee-jerk selling of riskier assets against less vulnerable currencies.

The dollar dropped to 110.85 yen in early Asian trade from around 111.25 yen in late U.S. trade. It had hit a seven-week high of 111.355 yen earlier on Tuesday.

The yen tends to be bought at times of economic and political stress because Japan's status as the world's largest credit nation suggests any repatriation by Japanese investors were likely to exceed those from Japan by foreign investors.

The Australian dollar slipped to $0.7424 from this week's high of $0.7480, which was its highest levels in more than three weeks.

U.S. Trade Representative Robert Lighthizer said the United States would impose tariffs of 10 percent on additional Chinese imports worth $200 billion, just days after its tariffs on $34 billion Chinese goods took effect.

Administration officials said a two-month process would allow the public to comment on the proposed tariffs before the list is finalised.

The move came after U.S. President Donald Trump said last week the United States may ultimately impose tariffs on more than $500 billion worth of Chinese goods - roughly the total amount of U.S. imports from China last year.

"Because Trump talked about the $500 billion figure, it was not a complete surprise. Yet markets will inevitably react to these types of news headlines," said Kyosuke Suzuki, director of forex at Societe Generale (PA:SOGN).

"Since the new tariffs won't be in place for two months, markets could soon calm down, although we will have to see how share markets, especially Chinese shares, will react to this," he said.

The offshore Chinese yuan fell to 6.6633 per dollar from around 6.6310 before the news, though it still kept some distance from 11-month low of 6.7344 touched last week.
July 10, 2018

British pound frail after key eurosceptic ministers quit

British pound frail after key eurosceptic ministers quit
FILE PHOTO: Illustration photo of a British Pound Sterling note

By Hideyuki Sano and Daniel Leussink

TOKYO (Reuters) - The British pound was frail on Tuesday after the departure of two key eurosceptic ministers raised worries about a "hard Brexit" while the yen retreated against the dollar as investors bid up riskier assets.

Sterling stood at $1.3248 , having fallen to as low as $1.3189 on Monday, after Prime Minister Theresa May's foreign minister and Brexit negotiator quit in protest at her plans to keep close trade ties with the European Union.

The currency regained some ground after several Conservative lawmakers said May is likely safe from a leadership challenge despite the resignation of Boris Johnson and Brexit minister David Davis.

Still, after two years of wrangling, their departures shatter May's own proclamation of cabinet unity last Friday in what she believed was an agreement on Britain's biggest foreign and trading policy shift in almost half a century.

Simon Derrick, London-based chief currency strategist at BNY Mellon, said the next few weeks could prove decisive, noting that financial markets have a poor track record of pricing in UK political risks, not to mention the 2016 Brexit referendum.

"Current thinking is that May would win a party confidence vote. However, there is a risk that were May to make further compromises in the negotiations with Brussels, more hard line Conservative MPs might be theoretically prepared to abstain or even vote against her in a no confidence vote in Parliament," he said.

Markets still expect it is likely the Bank of England (BOE) will hike rates at its next policy meeting on Aug. 2, but analysts said a full-blown political crisis could dent those expectations.

"Uncertainty is conquering the market at the moment regarding the possibility of a rate hike in August," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

"If there were some negative comments about a possible rate hike from BOE officials ahead of the August (Monetary Policy Committee meeting), then we will see a big fall in sterling," he said.

Against the euro, the pound hit a four-month low of 89.025 pence per euro on Monday, and last stood at 88.68 (EURGBP=D3).

The dollar's index against a basket of six major currencies (DXY), (=USD) fell to as low as 93.711 on Monday, its lowest since mid-June, and last stood at 94.098.

The dollar was not helped by Friday's data showing U.S. wage growth remained tame despite a tight labor market.

That kept the euro firm, trading at $1.1751 (EUR=), not far from three-week highs of $1.17905 touched on Monday.

The common currency strengthened to one-month high of 1.16565 Swiss franc (EURCHF=) on Monday. Against the yen, it traded at 130.515 yen (EURJPY=), retreating slightly after hitting a seven-week high of 130.57 yen.

The Japanese currency weakened against the dollar as investors appeared to be putting aside concerns of the trade conflict between the U.S. and China for now.

The dollar changed hands at 111.045 yen , above the 111-yen handle for the first time since last Tuesday.

The Chinese yuan tacked on 0.1 percent in offshore trade to 6.6114 against the dollar.

"It seems the market has digested the potential negative outcome stemming from the U.S.-China trade war, although I am not sure the market has really priced in the worst scenario," said Mizuho Securities' Yamamoto.

The Australian dollar inched up 0.2 percent to $0.7479, extending its recovery from $0.7311 touched on Monday last week.

Turkey's lira on Tuesday made up some of the previous day's losses, trading 0.8 percent higher at $4.6954 .

The currency had hit as low as $4.7506 after President Tayyip Erdogan on Monday named his son-in-law as Treasury and Finance minister in the new cabinet.
July 09, 2018

EU rivals gaining on Britain as top spot for investment in finance: EY

EU rivals gaining on Britain as top spot for investment in finance: EY
FILE PHOTO: The Canary Wharf financial district is seen at dusk in London

By Emma Rumney

LONDON (Reuters) - Britain's lead as the top European destination for international investment in financial services is starting to narrow as continental rivals vying for its business are boosted by Brexit, according to a report published on Monday.

The report, by accounting and consulting firm EY, found that the UK hosted just 14 more foreign investment projects in financial services last year than second-placed Germany, down from a gap of 67 in the previous year.

The number of projects in the UK fell 26 percent in 2017, compared to an increase of 64 percent in Germany, 123 percent in France and 13 percent across Europe as a whole.

Britain's EU neighbors have looked to capitalize on uncertainty over its future access to European markets to encourage financial firms to set up shop in their own countries, in a challenge to its long-established reputation as the European capital for the sector.

Omar Ali, EY's UK financial services leader, said Britain hung on to the top spot as factors like its talent, infrastructure and robust regulatory and legal systems were hard to replicate overseas.

"But we can't ignore the drop in investment and forward-looking sentiment - investors are sending a clear message that answers are needed on future trading arrangements, access to skills and the UK's future approach to the economy."

UK financial services attracted 78 foreign investment projects last year, down from a record 106 in 2016, EY said. Germany, in second place, won 64, while France saw 49, up from 39 and 22 respectively.

Ireland saw its number increase from 12 to 28, while Luxembourg attracted 17 projects compared to 2 in 2016.

For global financial firms that rely on Britain's membership of the EU to run their European operations, slow progress in Brexit negotiations has stoked fears that their access to the bloc could be restricted or even shut off altogether after March 2019, when Britain leaves.

This has prompted many to enact plans for a worst-case scenario, which usually involve shifting some of their British operations on to the continent to protect them even if Britain crashes out of the bloc with no deal.

Some banks, including Barclays (L:BARC) and JPMorgan (N:JPM), have already started moving some of their staff elsewhere.

"The question is, will this be a temporary shift or the start of a more sustained trend?" Ali said.

A survey conducted by EY as part of the report found that two-thirds of global financial firms hadn't changed their investment plans following the Brexit vote, and 75 percent said they had no plans to relocate to the continent.

Retaining strong trading arrangements with the EU was cited by 39 percent of investors as key to ensuring the UK remains attractive in future, with 33 percent saying the same for trade deals with new countries and 31 percent highlighting incentives for foreign investors.

Dollar sags after soft U.S. wages data, Brexit woes weigh on pound

Dollar sags after soft U.S. wages data, Brexit woes weigh on pound
Dollar sags after soft U.S. wages data, Brexit woes weigh on pound

By Shinichi Saoshiro

TOKYO (Reuters) - The dollar struggled near 3-1/2-week lows against its peers on Monday after U.S. jobs data showed slower-than-expected wages growth, while the pound retreated as a key member of Britain's cabinet resigned over Prime Minister Theresa May's Brexit plan.

The dollar index against a basket of six major currencies (DXY) was 0.1 percent lower at 93.962. (DXY).

It had lost nearly 0.5 percent on Friday and stooped to 93.921, its lowest since June 14, after closely-watched U.S. wages indicators disappointed the market.

Data on Friday showed average U.S. hourly earnings gained five cents, or 0.2 percent in June after increasing 0.3 percent in May. This pointed to moderate inflation pressures that dented expectations that the Federal Reserve would raise interest rates a total of four times in 2018.

Nonfarm payrolls did rise by a stronger-than-expected 213,000 in June, Friday's data also showed, although this had little impact on currencies.

"The wages component has been the focal point for the market for a while now, rather than the nonfarm payrolls, and the dollar slipped accordingly. The flattening of the U.S. yield curve, perhaps reflecting worries about the economic impact of trade conflicts, is also a key factor weighing on the dollar," said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.

The 10-year Treasury yield (US10YT=RR) fell to its lowest level in nearly six weeks on Friday. As a result the spread between the two- and 10-year yields was at its flattest in 11 years.

The dollar was little changed at 110.42 yen after losing 0.2 percent on Friday.

The euro was 0.1 percent higher at $1.1752 (EUR=). The single currency had risen 0.45 percent on Friday, when it brushed $1.1768, its strongest since mid-June.

The pound was effectively flat at $1.3295 .

Sterling had climbed to $1.3328 earlier in the session, its highest since June 14, before pulling back after sources told Reuters British Brexit Secretary David Davis had resigned in a blow to Prime Minister Theresa May.

"The latest headlines are negative for the pound, but there are underlying expectations for the Bank of England to raise rates and that could help limit potential losses," Ishikawa at IG Securities said.
July 06, 2018

Dollar steady after U.S. tariffs kick in; China's response, U.S. jobs data eyed

Dollar steady after U.S. tariffs kick in; China's response, U.S. jobs data eyed
FILE PHOTO: Euro, Hong Kong dollar, U.S. dollar, Japanese yen, British pound and Chinese 100-yuan banknotes are seen in a picture illustration

By Shinichi Saoshiro

TOKYO (Reuters) - The dollar stood little changed against its peers on Friday and investor caution prevailed with U.S. tariffs on Chinese goods taking effect and market participants turning their attention to the closely-watched U.S. jobs report due later in the day.

The first salvos of a trade conflict between the world's biggest economic powers were fired on Friday with U.S. tariffs on $34 billion in Chinese goods coming into effect.

Focus now shifts to retaliatory measures China could employ - Beijing said on Friday it had no choice but to fight back against U.S. bullying on trade - and the potential volatility that could cause in the global financial markets.

But the immediate response among major currencies was limited.

"The tariffs did come into effect. But it will take three, six or 12 months before their impact becomes visible, and overall moves in key currency pairs have been subdued with the non-farm jobs report looming ahead," said Bart Wakabayashi, Tokyo branch manager for State Street Bank and Trust.

The dollar index against at basket of six major currencies was mostly steady at 94.388 (DXY) after slipping to 94.177, its lowest since June 26, the previous day.

The Australian dollar, considered a liquid proxy to China-related trades, edged up 0.15 percent to $0.7398 after the region's financial markets greeted the tariff activation with a degree of calm.

Against the safe-haven yen, the greenback inched up 0.05 percent to 110.735 yen .

"Participants will be looking to shift their attention from trade matters to the U.S. non-farm payrolls and if the jobs report is strong, dollar/yen stands poised to rise and break out of its recent range," said Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo.

The euro was steady at $1.1694 (EUR=) after rising 0.3 percent overnight, when it touched $1.1721, its strongest since June 26. It was on track to end the week little changed.

The single currency gained on Thursday on strong German industrial orders and as Washington softened its trade rhetoric toward European Union automakers.

The U.S. Labor Department is expected to report nonfarm payrolls increased 195,000 in June after surging by 223,000 in May. Monthly average hourly earnings likely rose 0.3 percent, which would lift the annual increase to 2.8 percent from 2.7 percent in May.

The pound was effectively flat at $1.3224 . It had risen to a nine-day peak of $1.3275 on Thursday after Bank of England Governor Mark Carney said he was confident an economic slowdown was temporary, but the rise faded on nervousness before Friday's government meeting on Brexit policy. [GBP/]

China's yuan was 0.2 percent weaker at 6.6506 per dollar but still some distance from an 11-month low of 6.7204 set on Tuesday.

The yuan had retreated to the 11-month low amid trade concerns before pulling back on assurances by China's central bank.

Major currencies in holding pattern ahead of U.S. tariff deadline, jobs data

Major currencies in holding pattern ahead of U.S. tariff deadline, jobs data
FILE PHOTO: Illustration photo of U.S. Dollar and China Yuan notes

By Shinichi Saoshiro

TOKYO (Reuters) - Major currencies trod water early on Friday as investor caution prevailed ahead of Washington's implementation of its threatened tariffs on Chinese goods and the U.S. jobs report due later in the day.

The United States is due to begin collecting tariffs on $34 billion in Chinese goods at 0401 GMT on Friday. Focus has shifted to how China will retaliate and the potential volatility that could cause in the global financial markets.

"As Wall Street's gains have shown, the markets have been able to price in the tariff implementation for the most part. But there is always the risk of President Trump tweeting something out of the blue, and we also have to worry about the subsequent tariffs," said Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo.

U.S. President Donald Trump warned that subsequent rounds of tariffs could apply to more than $500 billion of Chinese goods - roughly the amount that the United States imported from China last year as the world's two largest economies hurtled toward the start of a trade war.

The dollar index against at basket of six major currencies was a shade lower at 94.362 (DXY) after slipping to 94.177, its lowest since June 26, the previous day.

The greenback had come under pressure from a buoyant euro. The euro gained on Thursday on strong German industrial orders and as Washington softened its trade rhetoric towards European Union automakers.

The single currency was steady at $1.1694 (EUR=) after rising 0.3 percent overnight, when it touched $1.1721, its strongest since June 26. It was on track to end the week little changed.

The dollar was 0.1 percent lower at 110.570 yen , having been caught in a relatively narrow 111.14-110.27 range through the week.

"Participants will be looking to shift their attention from trade matters to the U.S. non-farm payrolls and if the jobs report is strong, dollar/yen stands poised to rise and break out of its recent range," Ishizuki at Daiwa said.

The U.S. Labor Department is expected to report nonfarm payrolls increased 195,000 in June after surging by 223,000 in May. Monthly average hourly earnings likely rose 0.3 percent, which would lift the annual increase to 2.8 percent from 2.7 percent in May.

The pound was effectively flat at $1.3225 . It had risen to a nine-day peak of $1.3275 on Thursday after Bank of England Governor Mark Carney said he was confident an economic slowdown was temporary, but the rise faded on nervousness before Friday's government meeting on Brexit policy. [GBP/]

China's yuan was little changed in offshore trade after dipping 0.2 percent the previous day .

The yuan had retreated to an 11-month low earlier in the week amid trade concerns before pulling back on assurances by China's central bank.
July 05, 2018

Britain can strike trade deal with U.S. under new Brexit plan: PM May's spokeswoman

Britain can strike trade deal with U.S. under new Brexit plan: PM May's spokeswoman
British Prime Minister Theresa May arrives at an European Union summit in Brussels

LONDON (Reuters) - A spokeswoman for British Prime Minister Theresa May said on Thursday it was wrong to suggest that a new Brexit customs proposal would prevent Britain from striking a new trade deal with the United States.

The Spectator magazine reported earlier that papers given to ministers before a meeting on Friday had suggested that Britain would remain closely aligned with the European Union on customs and this would make it hard to strike trade deals with the United States.

"It is categorically untrue to suggest that we will not be able to strike a trade deal with the U.S." the spokeswoman said. "The PM has always been clear that we will seek a comprehensive and ambitious trade deal with the U.S. that reflects the strength of our trading and investment relationship."
July 04, 2018

Canadian dollar hovers near three-week high as oil prices rise

Canadian dollar hovers near three-week high as oil prices rise
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Wednesday while holding near its strongest level in nearly three weeks, as oil prices rose and investors braced for a potential interest rate hike next week from the Bank of Canada.

At 3 p.m. EDT (1900 GMT), the Canadian dollar was trading nearly unchanged at C$1.3142 to the greenback, or 76.09 U.S. cents.

The price of oil, one of Canada's major exports, was driven higher by a threat to supply from an Iranian commander and a drop in U.S. crude inventories for a second week in a row.

U.S. crude oil futures (CLc1) rose 0.3 percent to $74.33 a barrel.

"Right now we have many problems on the oil supply side ... and we may see high prices for a few more months," said Hendrix Vachon, senior economist at Desjardins.

The higher price of oil and an expectation in the market that the Bank of Canada will raise interest rates next week have boosted the loonie, Vachon said.

Money markets see about a 70 percent chance of a rate increase at the July 11 announcement.

Expectations have been raised by hawkish comments last week by Bank of Canada Governor Stephen Poloz and recent domestic data that showed business optimism and stronger-than-expected growth in Canada's economy.

Independence Day celebrations in the United States discouraged traders on Wednesday from taking big positions in major currencies, not least until there is some clarity about where the escalating U.S.-China trade tensions are heading. Washington is due to impose tariffs on Chinese imports at the end of the week.

Canada has its own trade dispute with the United States and is also contending with slow-moving talks to revamp the North American Free Trade Agreement.

Also, reduced Canadian oil supplies after a production problem at the Syncrude oil sands facility in Alberta could hurt the country's economic growth in the third quarter.

Canadian government bond prices were lower across the yield curve, with the two-year (CA2YT=RR) down 2.5 Canadian cents to yield 1.909 percent and the 10-year (CA10YT=RR) falling 17 Canadian cents to yield 2.158 percent.

On Tuesday, the 10-year yield touched its highest intraday level in more than two weeks, at 2.204 percent.

Canada's employment report for June and trade data for May are due out on Friday.

China's Yuan Shakeout Fails to Trigger Panic Among Traders

China's Yuan Shakeout Fails to Trigger Panic Among Traders
© Bloomberg. Genuine bundles of Chinese one-hundred yuan banknotes are arranged for a photograph at the Counterfeit Notes Response Center of KEB Hana Bank in Seoul, South Korea, on Monday, Aug. 14, 2017. China's factory output and investment slowed somewhat in July, according to data released today, yet the yuan appeared not to take the data as negative, if in fact it's paying attention to it at all. Photographer: SeongJoon Cho/Bloomberg

The last time China’s currency sank as quickly as it has in recent weeks, panic ensued: traders rushed to hedge their yuan positions or speculate on further declines, global markets plunged, and policy makers in Beijing responded with heavy-handed intervention.

Now -- almost three years after China’s shock 2015 devaluation -- the response to yuan weakness is proving decidedly more subdued. While gauges of trader angst have ticked up, they’re a far cry from levels reached in 2015 and early 2016.

“I don’t see panic,” said Ryan Lam, the head of research at Shanghai Commercial Bank.

That could change, of course, if China’s economy shows further signs of deterioration amid the trade fight with the U.S. But for now, traders appear to have faith that the yuan’s slump won’t spiral out of control. That sentiment was underscored on Tuesday as the currency rebounded from an 11-month low, buoyed by reassurances from Chinese central bankers that they will keep their nation’s currency stable and not deploy it as a weapon in the trade conflict with the U.S.

Below are six charts showing how key yuan indicators have evolved since the devaluation rocked assets around the world:

The offshore yuan’s three-month risk reversal -- a gauge of traders’ willingness to bet against the yuan in the options market -- is still well below levels reached in 2015 and 2016. While yuan options volume has jumped, bearish positioning has yet to reach extremes.

The yuan’s one-month implied volatility shows traders are pricing in the prospect of larger swings in the currency, but the metric has been higher than current levels several times over the past few years.

Action in the forwards market is markedly different than in the wake of the 2015 devaluation, with 12-month forward points declining to multi-year lows. That suggests there’s been no rush to finance bearish bets.

Funding costs in the offshore yuan market remain low, suggesting the PBOC hasn’t tried to tighten cash supply this time around, a form of intervention. Mopping up liquidity is one way to burn yuan bears by making it expensive to short the currency.

The offshore yuan has been trading basically in line with the onshore exchange rate, reflecting limited bearish bets in the overseas market. The gap was more than six times larger at the start of 2016.

Foreign investors increased their holdings of onshore Chinese bonds for a record 16 straight months in June. Expectations that they’ll keep buying has helped bolster confidence in the yuan, according to Christy Tan, head of markets strategy at National Australia Bank in Singapore. Foreign purchases briefly declined after the yuan devaluation three years ago.
July 03, 2018

Dollar dips, euro steadies after German coalition partners resolve row

Dollar dips, euro steadies after German coalition partners resolve row
FILE PHOTO: Arrangement of various world currencies including Chinese Yuan, US Dollar, Euro, British Pound, pictured in Warsaw

By Shinichi Saoshiro

TOKYO (Reuters) - The dollar eased marginally against its peers on Tuesday, as the euro steadied after partners in Germany's coalition settled a row over migration that had threatened to topple Chancellor Angela Merkel's government.

The euro was little changed at $1.1630 (EUR=) after shedding 0.45 percent overnight.

The single currency had slipped on Monday after German Interior Minister Horst Seehofer offered to resign, but it later steadied when his Christian Social Union (CSU) party reached a deal with Merkel's Christian Democrats (CDU) over illegal immigration, and the resignation threat was withdrawn.

"Concerns toward the euro have ebbed for the time being. But the underlying immigration and refugee theme will continue to remain a potential risk factor," said Shin Kadota, senior strategist at Barclays (LON:BARC) in Tokyo.

The dollar remained broadly supported, meanwhile, as trade tensions propped up the greenback against commodity currencies, like the Australian dollar, and emerging market currencies whose economies are most vulnerable to a downturn in trade.

The dollar index against a basket of six major currencies inched down 0.1 percent to 94.913 (DXY) after gaining about 0.45 percent the previous day.

"There's a strong element of 'risk off' generated by trade concerns behind the dollar's latest rise. That said, the dollar has managed to gain only as emerging market and commodity currencies have slid due to risk aversion," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

"A currency of a country with a large current account deficit is not usually a choice destination during risk aversion, but the dollar is high in liquidity, which is a draw."

The Chinese yuan remained volatile on the back of nervousness ahead of July 6, when U.S. tariffs on Chinese exports are due to take effect.

The yuan earlier fell to 6.7204 per dollar , its weakest since August 2017, before recovering to 6.7035 in what traders described as efforts by state-owned banks to prop up the currency.

Commodity-linked currencies such as the Australian dollar, which is sensitive to shifts in sentiment toward China, have also felt pressure from trade conflict concerns.

The Aussie was down 0.15 percent at $0.7330 and near a 1-1/2-year low of $0.7311 plumbed on Monday after the Reserve Bank of Australia (RBA) kept interest rates unchanged and signaled a steady outlook for some time to come.

In a widely expected move the RBA left its cash rate at 1.5 percent on Tuesday following its policy meeting.

The dollar was a shade lower at 110.850 yen after edging up 0.2 percent the previous day, supported by robust U.S. economic data, higher Treasury yields and a bounce in shares on Wall Street.

Dollar supported by sagging euro, bubbling trade tensions

Dollar supported by sagging euro, bubbling trade tensions
FILE PHOTO: Illustration photo of a U.S. Dollar note

By Shinichi Saoshiro

TOKYO (Reuters) - The dollar held firm on Tuesday, as political uncertainty in Germany weighed on the euro, after German Chancellor Angela Merkel's interior minister offered to quit in an escalating row with a key coalition partner over migration policy.

The euro was little changed at $1.1641 (EUR=) after shedding 0.45 percent overnight.

Trade tensions also supported the dollar against commodity currencies, like the Australian dollar, and emerging market currencies whose economies are most vulnerable to a downturn in trade.

The dollar index against a basket of six major currencies was 0.15 percent lower at 94.882 (DXY) after gaining about 0.45 percent the previous day.

"There's a strong element of 'risk off' generated by trade concerns behind the dollar's latest rise. That said, the dollar has managed to gain only as emerging market and commodity currencies have slid due to risk aversion," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

"A currency of a country with a large current account deficit is not usually a choice destination during risk aversion, but the dollar is high in liquidity, which is a draw."

Commodity-linked currencies such as the Australian dollar fell to a 1-1/2-year low on Monday and the Chinese yuan has retreated to nine-month lows amid nervousness ahead of July 6, when U.S. tariffs on Chinese exports are due to take effect.

The Reserve Bank of Australia (RBA) holds its monthly policy meeting on Tuesday and is considered certain to keep rates at 1.5 percent, where they have been since mid-2016.

Focus was on whether the RBA makes a mention of the recent U.S.-China trade tensions.

The Aussie was flat at $0.7340 after dropping to $0.7311 overnight, its lowest since January 2017.

The dollar was steady at 110.895 yen after edging up 0.2 percent the previous day, supported by robust U.S. economic data, higher Treasury yields and a bounce in shares on Wall Street.
July 02, 2018

Mexico peso firms sharply as exit polls show Lopez Obrador win

Mexico peso firms sharply as exit polls show Lopez Obrador win
Bundles of Mexican Peso banknotes are pictured at a currency exchange shop in Ciudad Juarez

MEXICO CITY (Reuters) - Mexico peso firmed sharply after exit polls showed leftist outsider Andres Manuel Lopez Obrador handily won Mexico's presidential election on Sunday.

The peso extended gains after his rivals conceded, strengthening more than 1 percent against the dollar and leading gains among major currencies.
June 22, 2018

Malaysia picks ex-deputy governor who probed 1MDB to helm central bank


FILE PHOTO: A general view of the headquarters of Malaysia's central bank, Bank Negara Malaysia, in Kuala Lumpur January 29, 2013. REUTERS/Bazuki Muhammad/File Photo

By Joseph Sipalan

KUALA LUMPUR (Reuters) – Malaysia has named Nor Shamsiah Mohd Yunus, a former central bank deputy who was involved in investigating the 1MDB scandal, as the new governor of Bank Negara Malaysia, a spokesman for the prime minister said on Friday.

Her appointment comes after the exit of Muhammad Ibrahim less than halfway through his five-year term, seen as a fallout from the scandal after the finance ministry said funds from a central bank deal with the previous government were used to pay some of 1MDB’s debts.

After a shock election result last month put former premier Mahathir Mohamad back in power, his administration has reopened investigations into alleged corruption and money laundering at 1Malaysia Development Berhad. Officials seen as close to the previous government led by Najib Razak have been replaced.

The new central bank governor takes over at a time when there are uncertainties over the economic policies of Mahathir’s administration, which effectively scrapped a consumption tax and introduced fuel subsidies within a month of assuming power.

Foreign investors have pulled out of Malaysian equities and ratings agencies have expressed concerns over the country’s fiscal strength.

“Nor Shamsiah’s appointment implies continuity in the direction and conduct of monetary policy,” analysts at Nomura said.

The ringgit currency strengthened slightly on news of her appointment.

A finance ministry statement on Nor Shamsiah’s appointment is expected later on Friday.

CONTINUITY

Nor Shamsiah joined Bank Negara Malaysia (BNM) in 1987 after getting an accounting degree from the University of South Australia, and was appointed to two three-years terms, in 2010 and 2013, as a deputy governor. She left the central bank when her second term ended in November 2016, six months after Muhammad became governor.

Past BNM statements have said Nor Shamsiah has extensive experience in the development of prudential regulation, legislation, policies and guidelines for the financial sector. The central bank also said she was involved in the financial sector resolution initiatives during the 1997-98 Asian financial crisis.

She assisted with the 1MDB investigation when Muhammad’s predecessor as governor, Zeti Akhtar Aziz, who retired after 16 years at the helm in 2016, was in charge. After again becoming prime minister, Mahathir appointed Zeti as a member of his advisory council.

On June 6, Mahathir accepted the resignation of Muhammad as central bank governor. Analysts linked his exit to revelations last month that about $500 million raised from a land sale by the government to the central bank was used to pay 1MDB’s liabilities last year.

In late May, the central bank defended the deal, saying it had initiated the purchase of the land and that it was conducted as an arms-length transaction and complied with all governance requirements.

In an email to staff on June 6, Muhammad said the central bank did not know the funds from the land deal would be used to settle 1MDB debt.

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