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☆ Dollar steady, with Fed pause eyed in busy central bank week
▼ + stars: | 2023-06-12 | by ( ) www.cnbc.com time to read: +3 min

Policy meetings of the Fed, the European Central Bank and the Bank of Japan will set the tone for the week, as markets seek clues from policymakers on the future path of interest rates. The U.S. dollar index clocked a loss of nearly 0.5% last week, its worst weekly drop since mid-April, and was last marginally higher at 103.58. "Outside of the decisions that the central banks make at this meeting, what will be of particular interest is their forward guidance," economists at ANZ wrote in a note. "Central banks have raised rates aggressively over the past 12-15 months and given the lagged effects with which monetary policy affects demand, are central banks teeing up for a pause, following the RBNZ's example?" "We change our BOJ call to no YCC revision at this week's meeting," said Societe Generale's Jin Kenzaki, referring to the central bank's controversial yield curve control policy.

Persons: Alvin Tan, Jin Kenzaki Organizations: European Central Bank, Bank of Japan, Asia FX, RBC Capital Markets, Money, U.S, Reuters, ECB, ANZ, Reserve Bank of New Locations: Asia, Australia, Reserve Bank of New Zealand

☆ Morning Bid: Markets in a spin ahead of interest rate decisions
▼ + stars: | 2023-06-12 | by ( ) www.reuters.com time to read: +3 min

It's a big week for markets with interest rate decisions from the three major central banks coming one after another. And one take away from last week's surprise rate increases in Canada and Australia, is not to take anything for granted. The European Central Bank is tipped to deliver a quarter-point rate hike on Thursday, while on Friday the Bank of Japan is expected to maintain ultra-loose monetary policy. Last week's rate decisions support this idea -- the Bank of Canada hiked rates last Wednesday to a 22-year high of 4.75%, having held rates steady since January. A day earlier, Australia's central bank raised rates by a quarter point to an 11-year high and warned of further tightening ahead.

Persons: Sergio Ermotti, Dhara Ranasinghe, Ed Osmond Organizations: Wall, U.S . Federal Reserve, European Central Bank, Bank of, Bank of Canada, Citi, Federal Reserve, U.S . Treasury, Treasury, UBS, Credit Suisse, Thomson Locations: U.S, Dhara, It's, Canada, Australia, Bank of Japan, Europe, Swiss, Switzerland

☆ Bank of Japan set to keep ultra-low rates, may signal inflation overshoot
▼ + stars: | 2023-06-11 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

[1/2] Visitors are seen at the headquarters of Bank of Japan in Tokyo, Japan, January 17, 2023. Ueda told parliament on Friday that corporate price-setting behaviour was showing changes that could work to push up inflation more than expected. While the BOJ will not produce fresh inflation forecasts next week, it may signal that inflation is overshooting initial projections - possibly at Ueda's post-meeting briefing, the sources said. "The BOJ must be vigilant to both the risk of an inflation overshoot, and the risk of a deep overseas slump hitting Japan's economy." With droves of companies continuing to hike prices, the BOJ is widely expected to upgrade its inflation forecasts at its next quarterly review in July, analysts say.

Persons: Issei Kato, BOJ, Ueda, Kazuo Ueda, Leika Kihara, Takahiko Wada, Kim Coghill Organizations: Bank of Japan, REUTERS, Thomson Locations: Tokyo, Japan, TOKYO

☆ Morning Bid: Central bank bonanza, stocks on a roll
▼ + stars: | 2023-06-11 | by ( Lewis Krauskopf | ) www.reuters.com time to read: +2 min

Asian markets will turn their attention to a series of central bank meetings after ending last week on a buoyant note. Even beaten-up China stocks managed to end higher on Friday, buoyed the automobile and technology sectors, even as disappointing inflation data weighed on investor sentiment. Reuters Graphics Reuters GraphicsBut investors will largely be girding for the run of major central bank meetings later in the week. A day after its U.S. counterparts, the European Central Bank is expected to raise rates by another 25 basis points, with traders seeking clues about next steps. Ahead of the central bank bonanza, the U.S. dollar had slid back after strengthening in May.

Persons: Lewis Krauskopf, Kazuo Ueda, Diane Craft Organizations: Japan's Nikkei, Reuters Graphics Reuters, Federal, European Central Bank, Bank of Japan, U.S ., India CPI, Thomson, Reuters Locations: Lewis, China, Japan, India, U.S

☆ Morning Bid: Fresh lira low, focus on Fed
▼ + stars: | 2023-06-09 | by ( ) www.reuters.com time to read: +3 min

A look at the day ahead in European and global markets from Kevin BucklandAnother day, another market-positive appointment from Turkish President Tayyip Erdogan, and yet, another record low for the lira. Erdogan is making all the right noises to signal a return to more orthodox policy, picking U.S. banking executive Hafize Gaye Erkan as head of the central bank. Even so, the lira is seemingly in freefall, reaching an unprecedented 23.54 per dollar in Asian hours and extending this month's drop to 12%. ECB Vice President Luis de Guindos has a chance to air his views at an event in Madrid. Reuters GraphicsKey developments that could influence markets on Friday:Sweden GDP and industrial productionItaly industrial outputECB Vice President Luis de Guindos speaks at conference in MadridReporting by Kevin Buckland; Editing by Edmund KlamannOur Standards: The Thomson Reuters Trust Principles.

Persons: Kevin Buckland Another, Tayyip Erdogan, Erdogan, Hafize Gaye Erkan, Mehmet Simsek, Rodrigo Catril, Luis de Guindos, Kazuo Ueda, Kevin Buckland, Edmund Klamann Organizations: Reuters Graphics Reuters, Federal Reserve, ECB, Bank of Japan, Fed, SEC, Reuters, Thomson Locations: freefall, Europe, Canada, Australia, Madrid, Sweden, Italy

☆ BOJ set to keep ultra-low rates, may signal inflation overshoot
▼ + stars: | 2023-06-09 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

Persons: Issei Kato, BOJ, Ueda, Kazuo Ueda, Leika Kihara, Takahiko Wada, Kim Coghill Organizations: Bank of Japan, REUTERS, Thomson Locations: Tokyo, Japan, TOKYO

☆ BOJ's Ueda flags shift in corporate pricing, upward inflation bias
▼ + stars: | 2023-06-09 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

However, he stressed anew the central bank's resolve to keep monetary policy ultra-loose, to ensure companies raise wages enough to more than offset the burden on households from rising inflation. "There's still some distance to sustainably and stably achieve our 2% inflation target. As such, we will patiently maintain our monetary easing policy," Ueda told parliament. By supporting the economy, the central bank aims to generate a positive cycle in which inflation-adjusted wages will start increasing, he added. The central bank will scrutinise various data in producing fresh quarterly inflation forecasts in July, he added.

Persons: Ueda, Kazuo Ueda, There's, Leika Kihara, Christopher Cushing, Sam Holmes, Sonali Paul Organizations: Bank of Japan, Thomson Locations: Ueda TOKYO

☆ Dollar retreats on jump in US jobless claims; eyes on Fed
▼ + stars: | 2023-06-09 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

The two-year yield , which typically moves in step with interest rate expectations, steadied at 4.5210%. So that'll show up in payrolls numbers and jobless claims and these sorts of numbers," said Jarrod Kerr, chief economist at Kiwibank. The Fed takes centre stage, with money markets leaning toward a pause, though have priced in a 25% chance that the U.S. central bank delivers a 25bp rate hike. "A slowing U.S. economy gives the Fed room to pause after 500bp of consecutive interest rate rises," said Guillermo Felices, global investment strategist at PGIM Fixed Income. The Canadian dollar last bought C$1.3365, not far from its one-month high of C$1.3321 hit on Wednesday, while the Aussie similarly stood near a roughly one-month peak at $0.6711.

Persons: Jarrod Kerr, Guillermo Felices, Thursday's, Rae Wee, Sam Holmes Organizations: U.S, Treasury, Federal Reserve, European Central Bank, Bank of Japan, Fed, Reuters, ECB, Canadian, Thomson Locations: SINGAPORE, Asia, U.S, Kiwibank

☆ Take Five: Skip, stop or go?
▼ + stars: | 2023-06-09 | by ( ) www.reuters.com time to read: +5 min

REUTERS/Leah Millis/File PhotoJune 9 (Reuters) - It's a week of the central bank heavies with the U.S. Federal Reserve, European Central Bank and Bank of Japan meeting. The Fed is tipped to stop with rate hikes (for now), the ECB, to keeping going (for now), while the BOJ remains in stop mode (for now). U.S. inflation numbers, Chinese data and a crunch moment for UBS and Credit Suisse means there's plenty happening. 1/ A LOT GOING ONMarkets get not one but two headline events with U.S. May inflation data out on Tuesday as the Fed kicks off its two-day meeting. For now, markets price in just one more increase this year, an outlook investors seem comfortable with, judging by the recent strong performance of U.S. stocks.

Persons: Leah Millis, Li Gu, Kevin Buckland, Ira Iosebashvili, Yoruk, Noele, Kazuo Ueda, Ueda, culls, Dhara Ranasinghe, Rae Wee, John O'Donnell, John Stonestreet Organizations: Federal Reserve, REUTERS, U.S . Federal Reserve, European Central Bank and Bank of Japan, ECB, UBS, Credit Suisse, U.S, Reuters, Reuters Graphics Reuters, Thomson Locations: Washington , U.S, Li, Shanghai, Tokyo, New York, Amsterdam, Zurich, China, China's, Swiss, Singapore, Frankfurt

☆ Analysis: Trauma of Japan's deflation battle keeps BOJ wary of policy shift
▼ + stars: | 2023-06-08 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

Having taken part in Japan's battle with deflation as BOJ board member from 1998 to 2005, Ueda knows all too well the danger of a premature exit from ultra-loose policy. Wary of a wobbly recovery, he opposed the BOJ's decision in 2000 to raise short-term rates to 0.25% from zero. On the surface, conditions for phasing out a portion of the BOJ's massive stimulus appear to be falling in shape. To be sure, Ueda has left scope to tweak YCC in case inflation continues to overshoot the BOJ's forecasts. In a group interview last month, Ueda said the BOJ could tweak YCC "if the balance between the benefit and cost of our policy shifts."

Persons: Ueda, Kazuo Ueda, Haruhiko Kuroda, Leika Kihara, Sam Holmes Organizations: REUTERS, Bank of Japan, Companies, Thomson Locations: Japan, Tokyo, TOKYO, U.S, China

The Bank of Japan is the only major central bank that now has negative rates following aggressive tightening globally to combat inflation. It has hinted that it will alter yield curve control -- where it guides short-term rates at -0.1% and 10-year Japan government bond yield around zero -- at some point. Japanese investors hold around $1.84 trillion in foreign assets, according to Deutsche Bank. "Recent inflows into Japanese markets are mainly driven by the foreign investors," Murao said. "We do not really have a global champion such as Google, Amazon, or Meta in the Japanese markets," Murao added.

Persons: Florence Lo, Yuichi Murao, Murao, I've, Amanda Cooper, Dhara, Christina Fincher Organizations: REUTERS, Nomura Asset Management, Reuters, The Bank of Japan, Nomura, Management, Equity, Treasury, Nikkei, Deutsche Bank, Apple, Visa, Toyota, Sony, PlayStation, Thomson Locations: Japan, Tokyo

☆ Japan central bank's ETF holdings under scrutiny as govt seeks revenue
▼ + stars: | 2023-06-07 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

Due to Japan's ageing population, people aged 60 years or more hold roughly 60% of total household financial assets. "The government must look into whether it's permissible to buy (the BOJ's ETF holdings) at book value for the purpose of securing sources of revenue," Finance Minister Shunichi Suzuki told parliament. The BOJ's ETF holdings as of March 2023 stood at 37 trillion yen ($265.75 billion) in book value, and 53 trillion yen in market value, according to the central bank's earnings data. BOJ Governor Kazuo Ueda told the same parliament session that it was premature to debate specifics on how the central bank could unload its ETF holdings. Ueda also said that in principle, the central bank plans to sell the ETFs at market value, instead of book value.

Persons: Fumio Kishida, Shunichi Suzuki, Kazuo Ueda, Ueda, Leika Kihara, Simon Cameron, Moore Organizations: Finance, Thomson Locations: TOKYO

The S&P 500 index (.SPX) rose 0.2%, the Dow Jones Industrial Average (.DJI) added 0.12%, and the Nasdaq Composite Index (.IXIC) climbed 0.28%. The pan-European STOXX 600 index (.STOXX) rose 0.37%, while MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was little changed. With major share markets all in the black, investors might think that stocks are set to rise further. Government bond yields - a proxy for borrowing rates - eased earlier after a European Central Bank (ECB) survey showed euro zone consumers had lowered their inflation expectations. Australia's central bank hiked rates by a quarter-point to 4.1% - an 11-year high - and warned that further increases might be required to ensure inflation is brought back under control.

Persons: Brendan McDermid, James Rossiter, Bitcoin, Nansen, Brent, Nell Mackenzie, Marc Jones, Dhara Ranasinghe, Mark Potter Organizations: New York Stock Exchange, REUTERS, Fed, ECB, SEC, Dow Jones, Nasdaq, Federal Reserve, Bank of America Securities, Treasury, European Central Bank, Canada, Securities Senior Global, U.S . Federal Reserve, Bank of, Aussie, Reserve Bank of, U.S . Securities, Exchange Commission, U.S, Thomson Locations: New York City, U.S, Asia, Pacific, Japan, Government, Australia's, Bank of Japan, Reserve Bank of Australia, Binance, Saudi Arabia

☆ Japan's Nikkei closes at 33-year high; firm Wall Street lifts appetite
▼ + stars: | 2023-06-05 | by ( ) www.reuters.com time to read: +2 min

The Nikkei index (.N225) jumped 2.2% to end at 32,217.43, its highest close since July 1990 and posted its biggest daily gain since Jan. 18. "The market was supported by the gains in the U.S. market on Friday. That helped keep the money flowing into risk assets in Japan," said Shigetoshi Kamada, general manager at the research department at Tachibana Securities. Hence, when U.S. shares rise, there is no reason for not buying Japanese stocks, Kamada added. All but one of the Tokyo Stock Exchange's 33-sector sub-indexes rose, with machineries (.IMCHN.T) rising 3.12% to lead the gains.

Persons: Shigetoshi Kamada, Kamada, Fanuc, Junko Fujita, Janane Venkatraman, Sohini Organizations: Nikkei, Bank of Japan, Tachibana Securities, The Bank of, Reserve, Tokyo, Screen Holdings, Tokyo Stock, Utilities, Tokyo Electric Power Holdings, Thomson Locations: TOKYO, U.S, Japan, The Bank of Japan, Washington, Philadelphia

☆ BOJ's Ueda keeps free hand, says no time frame for achieving price goal
▼ + stars: | 2023-06-02 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

The BOJ's target remained elusive until last year, when supply constraints and a spike in commodity costs caused by the COVID-19 pandemic and the war in Ukraine drove up Japan's core consumer inflation near 4%. "The time it takes for the impact of monetary policy to appear on the economy could move around a lot depending on circumstances. We therefore do not have any time frame in mind," Ueda said on Friday. Given it will take more time to achieve our price target, we will maintain the easy policy," he said, when asked by an opposition lawmaker on the likelihood of selling the BOJ's holdings. "Given uncertainty over the outlook, clarifying a set time frame for achieving our price target could have unexpected impact on financial markets," Ueda said.

Persons: Kazuo Ueda, Haruhiko Kuroda, Ueda, We'll, Leika Kihara, Chang, Ran Kim, Shri Navaratnam, Kim Coghill, Simon Cameron, Moore Organizations: Bank of Japan, Monetary, Thomson Locations: TOKYO, Ukraine

☆ IMF urges BOJ to keep ultra-low rates, but be ready to shift course
▼ + stars: | 2023-06-01 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

It won't happen overnight" as the public must be convinced Japan won't fall back to deflation, Gourinchas said, adding it was "too early" for the BOJ to tighten policy. While it was appropriate to keep interest rates ultra-low, the BOJ must keep in mind the experience of other central banks that are still struggling to tame high inflation. So, there is a need to be vigilant and to be ready to tighten monetary policy if inflation remains too elevated." He also said it would be "very difficult" to tighten monetary policy while maintaining YCC, due to the challenge of determining the appropriate level for two rate targets. And then, if the need arises to tighten monetary policy, it can do so as part of the usual tightening of the policy rate," he said.

Persons: Pierre, Olivier Gourinchas, Gourinchas, Kazuo Ueda, Leika Kihara, Sam Holmes Organizations: Bank of Japan, Monetary Fund's, Reuters, Thomson Locations: Japan, TOKYO

☆ Forward guidance could become trap for central banks-economist
▼ + stars: | 2023-05-31 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

But by incentivising central banks to commit to keep rates low for long, forward guidance becomes a constraint when they need to swiftly tighten policy to rein in inflation, he said. "Recent experience suggests forward guidance can become a trap," Orphanides said. "Compared to forward guidance, clearer communication of a central bank's reaction function would avoid the trap and improve policy outcomes," he added. BOJ Governor Kazuo Ueda, who was present at the conference, said the very nature of forward guidance meant central banks took the risk of falling behind the curve whenever they were using the tool. Central banks around the world followed in the footsteps of the BOJ in introducing unconventional monetary easing steps, including forward guidance, to combat the 2007-2008 global financial crisis.

Persons: Athanasios Orphanides, Orphanides, it's, Kazuo Ueda, Leika Kihara, Jacqueline Wong Organizations: Bank of Japan, Massachusetts Institute of Technology, U.S . Federal Reserve, European Central Bank, Thomson Locations: TOKYO, Central, United States, Europe

[1/2] Japanese Yen and U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/IllustrationLONDON/SINGAPORE, May 30 (Reuters) - The yen strengthened on Tuesday on news of a meeting of Japan's finance ministry and central bank, while elsewhere the dollar rose to a two-month high against a basket of its peers after the U.S. debt ceiling deal. The dollar was last down 0.18% against the Japanese yen at 140.18 after the country's finance ministry said senior officials from the Ministry of Finance, Bank of Japan and Financial Services Agency will meet from 5:30 p.m. (0830 GMT). Japanese central bank policy has been a major focus for investors in the past year after the BOJ last year intervened to strengthen the yen. Kenneth Broux, head of corporate research for FX and rates at Societe Generale, said FX intervention at current levels was unlikely.

"We expect inflation to quite clearly slow below 2%" toward the middle of the current fiscal year, Ueda told parliament. "Inflation is likely to rebound thereafter ... though there is high uncertainty" on the outlook, he added. Positive signs included a likely big increase in pay in this year's annual wage negotiations, which could help shake off Japan's deflationary mindset. The BOJ will review its quarterly growth and inflation forecasts at the July 27-28 policy meeting. Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Muralikumar Anantharaman & Shri NavaratnamOur Standards: The Thomson Reuters Trust Principles.

☆ Dollar eases as deal over US debt ceiling lifts risk appetite
▼ + stars: | 2023-05-30 | by ( Ankur Banerjee | ) www.reuters.com time to read: +3 min

A handful of hard-right Republican lawmakers said on Monday they would oppose a deal to raise the United States' $31.4 trillion debt ceiling. "Still, a higher debt ceiling and some reduction in spending in the FY24 budget are the middle ground." "Outside of any volatility generated by the debt ceiling issues, expectations for Fed rate hikes are likely to keep the dollar bid in the near term." Longer-dated U.S. Treasuries rallied in Asia on Tuesday on the debt ceiling deal. Until then, higher U.S. Treasury yields and weak expectations for BoJ tightening can push USD/JPY higher."

☆ Dollar eases as deal over U.S. debt ceiling lifts risk appetite
▼ + stars: | 2023-05-30 | by ( ) www.cnbc.com time to read: +3 min

☆ BOJ's Ueda vows to maintain easy policy, rules out chance of early exit
▼ + stars: | 2023-05-19 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

The recent rise in Japanese inflation above the BOJ's 2% target is driven mostly by cost-push factors rather than strong domestic demand, Ueda said, adding that responding to such price increases with tighter monetary policy would hurt the economy. "The cost of prematurely shifting policy, and nipping the bud towards achieving 2% inflation, is extremely large," Ueda said. "It's appropriate to take time judging (when to) tweak ultra-easy policy toward a future exit." The remarks came in the wake of data showing Japan's core consumer inflation hit 3.4% in April, staying well above the BOJ's 2% target, on rising food and services prices. Instead of focusing only on the side effects, the BOJ must carefully weigh the balance between the benefits and costs of its measures in determining policy, Ueda said.

☆ Academics weigh in on how BOJ's Ueda can exit easy policy
▼ + stars: | 2023-05-19 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

At the meeting on Monday, Ueda - himself a Massachusetts Institute of Technology (MIT)-educated academic - said the BOJ will maintain ultra-loose policy as it would take time for inflation to sustainably hit its 2% target, the minutes showed. Keeping long-term interest rates low for too long would also expose Japan to speculative market attack, Kiyotaki said. University of Tokyo professor Tsutomu Watanabe said Japan's inflation expectations have heightened to levels close to those in the United States and Europe, the minutes showed. But Shinichi Fukuda, also an University of Tokyo academic, said achieving wage growth alone won't fix economic woes. "Japan is no longer in a state of deflation thanks to the BOJ's extraordinary monetary easing.

☆ Take Five: More drama on the horizon
▼ + stars: | 2023-05-19 | by ( ) www.reuters.com time to read: +5 min

LONDON, May 19 (Reuters) - There's no shortage of events, data and high drama for markets in the days ahead. 1/ USA WATCHCritical U.S. inflation data will allow investors to gauge whether the Federal Reserve will be able to pause its interest rate hiking cycle, as many on Wall Street expect. The personal consumption expenditures (PCE) price index, tracked by the Fed, is due on Friday for April. That was the smallest rise since July and, with the consumer price index slowing in April to below 5% on annual basis, hope for peak rates has grown. Yet this narrative could lose steam if Wednesday's April inflation data shows price rises are moderating.

The Bank of Japan (BOJ) headquarters is seen beyond the cherry blossoms in Tokyo on March 20, 2023. The S&P 500 and Nasdaq Composite jumped on Thursday to notch their highest closing levels since August 2022 as Wall Street traders kept focused on debt ceiling negotiations. Leaders from the Group of 7 will be gathering in Hiroshima, Japan for the G-7 summit that kicks off today. Japan stocks were on course to seeing its best week since October as the Nikkei 225 rose 0.67%, maintaining the highest levels since 1990 and the Topix climbed 0.37% in early trade — marking its sixth winning streak. Japan's core inflation in April rose 3.4% year-on-year, maintaining levels above the central bank's target.

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