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☆ Dollar retreats as investors come to terms with higher-for-longer U.S. rates
▼ + stars: | 2023-02-23 | by ( Rae Wee | ) www.reuters.com time to read: +2 min

Nearly all Fed policymakers favoured a scale down in the pace of interest rate hikes at the U.S. central bank's last policy meeting, minutes from the Jan. 31-Feb. 1 FOMC meeting showed on Wednesday. However, they also indicated curbing unacceptably high inflation would be the "key factor" in how much further rates need to rise. "Many central banks around the world ... are trying to put an emphasis in their determination to combat inflation expectations," said Christopher Wong, a currency strategist at OCBC. The kiwi continued to draw some support from the Reserve Bank of New Zealand's hawkish rate rise on Wednesday, after the central bank signalled further tightening ahead to tame high inflation. "The easy part of the short USD trade is over," said Galvin Chia, emerging markets strategist at NatWest Markets.

☆ Dollar firms as investors brace for higher-for-longer rates scenario
▼ + stars: | 2023-02-23 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

However, they also indicated curbing unacceptably high inflation would be the "key factor" in how much further rates need to rise. The dollar paused its ascent on Thursday after gaining broadly on the back of the release. "The meeting minutes were pretty much within expectations ... the markets are now pricing for higher-for-longer rates," said Tina Teng, market analyst at CMC Markets. "The resilience (of the U.S. economy) prompts the Fed to keep raising interest rates ... pushing up the U.S. Against a basket of currencies, the U.S. dollar index stood at 104.50, and was attempting to break a more than one-month peak of 104.67 hit last week.

LONDON/SINGAPORE, Feb 22 - The dollar rose slightly on Wednesday, continuing to trade near six-week highs on the back of strong economic data. Survey data released on Tuesday showed U.S. business activity unexpectedly rebounded in February to reach its highest in eight months. On Wednesday, the euro was down 0.15% at $1.063, just above Friday's six-week low of $1.061. EuroThe dollar index was up 0.13% at 104.28, not far off the six-week high of 104.67 hit at the end of last week. Themos Fiotakis, head of FX strategy at Barclays, said he still expcts the dollar to fall by the end of the year.

☆ Dollar, sterling underpinned by upbeat PMI surveys; kiwi jumps
▼ + stars: | 2023-02-22 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

The dollar rose against most major currencies after the upbeat data save for sterling , which jumped 0.6% on Tuesday. The euro , however, failed to benefit from the data as it slid 0.36% in the previous session. Against the Japanese yen , the dollar rose to a two-month high of 135.23 in the previous session, and slipped marginally to 134.91 in early Asia trade on Wednesday. The two-year yields jumped to an over three-month high of 4.738% in the previous session, and last stood at 4.6933%. The kiwi rose 0.39% to $0.6238, after earlier jumping roughly 0.5% to an intra-day high of $0.6248 immediately after the RBNZ's cash rate decision.

☆ New Zealand hikes rates to over 14-year highs, flags more to come
▼ + stars: | 2023-02-22 | by ( ) www.cnbc.com time to read: +1 min

New Zealand's central bank raised interest rates by 50 basis points to a more than 14-year high of 4.75% on Wednesday, and said it expects to keep tightening further as inflation remains too high, a hawkish signal that sent the local dollar surging. The RBNZ continues to expect the official cash rate (OCR) to peak at 5.5% in 2023, according to the monetary policy statement accompanying the rate decision. That would mark the most aggressive policy tightening streak since the official cash rate was introduced in 1999. "While there are early signs of price pressure easing, core consumer price inflation remains too high, employment is still beyond its maximum sustainable level, and near-term inflation expectations remain elevated," the central bank said in a statement. The decision was largely in line with a Reuters poll.

☆ NZ cenbank hikes 50bps, flags more to come as inflation 'too high'; kiwi gains
▼ + stars: | 2023-02-22 | by ( Lucy Craymer | ) www.reuters.com time to read: +3 min

The RBNZ continues to expect the cash rate to peak at 5.5% in 2023, according to the monetary policy statement (MPS) accompanying the rate decision. That would mark the most aggressive policy tightening streak since the official cash rate was introduced in 1999. "While there are early signs of price pressure easing, core consumer price inflation remains too high, employment is still beyond its maximum sustainable level, and near-term inflation expectations remain elevated," the central bank said in a statement. The New Zealand dollar rose as high as $0.6246 after the decision, reflecting the hawkish tone of the statement, having traded as low as $0.6206 earlier. New Zealand's annual inflation is currently running near three-decade highs of 7.2%, well above the central bank's medium term target of 1%-3%.

Feb 22 (Reuters) - A look at the day ahead in Asian markets from Jamie McGeever. Wall Street and world stocks had their worst day this year after purchasing managers index data showed that the U.S. services sector is roaring back to life. Stocks slumped, volatility and the dollar rose, the two-year Treasury yield neared November's post-2007 peak, the implied U.S. terminal rate rose to a new high of 5.36%, and a potential 50 basis point rate hike next month is coming on traders' radar. As analysts at Schroders put it: "A new regime in policy and market behavior is unfolding before our eyes." If the dollar and U.S. yields continue to rise, one of this year's consensus trades and the allocation of hundreds of billions of dollars to emerging markets will have to be revised.

☆ Dollar edges down from six-week peak, Swedish crown jumps
▼ + stars: | 2023-02-20 | by ( Samuel Indyk | ) www.reuters.com time to read: +3 min

The U.S. dollar index , which measures the dollar against six other major currencies, slipped 0.2% to 103.81. Hawkish comments from Fed officials have also underpinned the U.S. dollar, as they signalled interest rates would need to rise to quash inflation. The euro fell 1.1% against the Swedish crown to 11.05 crowns while the dollar was down 1% to 10.3405. The euro was little changed against the dollar at $1.0690, just above Friday's six-week low of $1.06125. The Australian dollar rose 0.6% to $0.6918 ahead of minutes from the Reserve Bank of Australia's latest policy meeting on Tuesday.

☆ Dollar edges lower from six-week peak, Swedish crown jumps
▼ + stars: | 2023-02-20 | by ( Samuel Indyk | ) www.reuters.com time to read: +3 min

The U.S. dollar index , which measures the dollar against six other major currencies, slipped 0.1% to 103.91. Hawkish comments from Fed officials have also underpinned the U.S. dollar, as they signalled interest rates would need to rise to quash inflation. The euro fell 1.1% against the Swedish crown to 11.059 crowns while the dollar was down 0.8% to 10.3604. The euro was little changed against the dollar at $1.0687, just above Friday's six-week low of $1.06125. "Euro rates are probably likely to stay at higher levels, whereas we think dollar rates will more easily turn lower," Turner added, which he said could support the euro in the first half of the year.

It hit a six-week high of 104.67 on Friday. Hawkish comments from Fed officials have also underpinned the U.S. dollar, as they signalled interest rates would need to go higher in order to successfully quash inflation. The RBNZ is expected to scale down its tightening campaign only slightly, with a half-point interest rate increase to 4.75%. "With inflation so high ... not staying the course could mean even higher interest rates are required down the track," said analysts at ANZ. The offshore yuan was last marginally higher at 6.8643 per dollar, while the onshore yuan last bought 6.8580 per dollar.

☆ Dollar steady as robust U.S. data keep Fed hawks in control
▼ + stars: | 2023-02-20 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

Hawkish comments from Fed officials have also underpinned the U.S. dollar, as they signalled interest rates would need to go higher in order to successfully quash inflation. The kiwi fell 0.07% to $0.6238, with eyes on the Reserve Bank of New Zealand's (RBNZ) interest rate decision on Wednesday. The RBNZ is expected to scale down its tightening campaign only slightly, with a half-point interest rate hike to 4.75%. "With inflation so high ... not staying the course could mean even higher interest rates are required down the track," said analysts at ANZ. The offshore yuan was last marginally lower at 6.8741 per dollar, while the onshore yuan last bought 6.8657 per dollar.

☆ Dollar buoyant as robust U.S. data keep Fed hawks in control
▼ + stars: | 2023-02-20 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

"For the week ahead, the dollar can track higher given the recent run of economic data which supports the narrative of higher-for-longer interest rates," said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA). Hawkish comments from Fed officials have also underpinned the U.S. dollar, as they signalled that interest rates will need to go higher in order to successfully quash inflation. The kiwi slipped 0.17% to $0.6232, with eyes on the Reserve Bank of New Zealand's (RBNZ) interest rate decision on Wednesday. The RBNZ is expected to scale down its tightening campaign only slightly, with a half-point interest rate hike to 4.75%. "With inflation so high ... not staying the course could mean even higher interest rates are required down the track," said analysts at ANZ.

☆ Disasters lower outlook for New Zealand interest rate rise
▼ + stars: | 2023-02-20 | by ( Lucy Craymer | ) www.reuters.com time to read: +3 min

Then on Feb. 12 to 15 a cyclone hit the North Island, which includes Auckland. When Cyclone Gabrielle hit, picking had just begun on pip-fruit farms, whose production is worth about NZ$1 billion a year. That would normally be a reason for a central bank to lift interest rates further, but some economists expect the RBNZ to look past the sudden rise as being temporary. Still, Kiwibank chief economist Jarrod Kerr said the central bank should pause hikes until the effect of the cyclone can be understood. After the Christchurch earthquake, the central bank cut its policy rate due to concerns about the economy.

The 2% inflation target is key to the Federal Reserve's vision for stable prices in the U.S. economy, according to the Federal Reserve Bank of St. Louis. But, "the 2% inflation target, it's relatively arbitrary," Josh Bivens, director of research at the Economic Policy Institute, told CNBC. "We led the way in inflation targeting," Arthur Grimes, professor of wellbeing and public policy at Victoria University, told CNBC. Canada announced its inflation target in 1991, and the United Kingdom followed suit in 1992. Then, Sweden and Finland declared inflation targets in 1993, according to the Organization for Economic Cooperation and Development.

Feb 20 (Reuters) - A look at the day ahead in Asian markets from Jamie McGeever. U.S. markets are closed on Monday for Presidents Day so Asian activity and volumes will be lighter than usual. This could give traders some rare breathing space to reflect on the scorching rise in U.S. market-based rates and yields. The People's Bank of China is scheduled to set its lending benchmark interest rates on Monday morning. chartThe Reserve Bank of New Zealand is expected to scale back its tightening on Wednesday, and raise rates by half a percentage point to 4.75%.

☆ Take Five: A year of war in Ukraine
▼ + stars: | 2023-02-17 | by ( ) www.reuters.com time to read: +5 min

LONDON, Feb 17 (Reuters) - The coming week will mark a year since Russia invaded Ukraine. The war goes on, but the world, and the markets, are in a very different place from last February. 1/A YEAR OF WARSenior politicians and military leaders from around the globe meet in Germany this weekend, days before the anniversary on Feb. 24 of Russia's invasion of Ukraine - Europe's biggest conflict since World War Two. Moscow is ramping up its spring offensive, while Ukraine - armed with heavier and longer-range firepower from the West - gathers strength for a counter push. On the same day as the Ukraine anniversary - Feb. 24 - Ueda should offer clues on timing when he testifies with his two would-be deputies to the lower house.

☆ RBNZ to hike rates 50bps on Feb. 22, another 50bps due by mid-year
▼ + stars: | 2023-02-16 | by ( Devayani Sathyan | ) www.reuters.com time to read: +4 min

The RBNZ has already raised rates by a total of 400 basis points since October 2021. The remaining five economists expected a second successive 75-basis point move at the Feb. 22 policy meeting. But nearly half of respondents, 45%, predicted a lower peak rate. Inflation was expected to fall to 5.1% this year and 2.6% in 2024, a Reuters poll showed last month. A recent RBNZ survey expected price pressures to slow to 3.30% in the next two years.

☆ Central banks hike rates again, but a pause is coming
▼ + stars: | 2023-02-02 | by ( ) www.reuters.com time to read: +5 min

REUTERS/Joshua RobertsLONDON, Feb 2 (Reuters) - Major central banks are steadily moving closer to a pause in their aggressive interest rate hiking campaigns. The European Central Bank and the Bank of England raised rates on Thursday, but markets suspect a peak is nearing. Overall, 10 big developed economies have raised rates by a combined 2,965 basis points in this cycle to date, with Japan the holdout dove. Canada's central bank has raised its policy rate at a record pace of 425 basis points in 10 months. The central bank raised its forecast for its peak interest rate to 5.5%, up from a previous forecast of 4.1%.

☆ The mouse that roared: New Zealand and the world's 2% inflation target
▼ + stars: | 2023-01-30 | by ( Lucy Craymer | ) www.reuters.com time to read: +5 min

Since it's arrival in 1990, the 2% inflation target phenomenon has sailed from Wellington around the globe to become the accepted norm among central banks, large and small, for grounding public expectations for what inflation ought to be. The adoption of the inflation target was followed by aggressive monetary tightening, with 90-day rates climbing to 15% in 1990. A year later, inflation had fallen to 2% and New Zealanders' inflation expectations adjusted quickly to the new paradigm. Initially there was debate about whether interest rates or money supply should be the target, but it was decided it was better to target the ultimate goal: inflation. "They did all the hard work and I just got all the glory and the title of being the most despised man in New Zealand," Douglas said.

By announcing an inflation goal, central bankers feel they build credibility for themselves and focus the planning of households and firms in ways that help keep inflation controlled. Those decades, up to the end of the first year of the coronavirus pandemic in 2020, saw inflation largely contained. Achieving that target is just core to our overall monetary policy," Brainard said, a sentiment echoed in central bank headquarters from Frankfurt to London to Tokyo. "Let me be quite clear, there are no ifs or buts in our commitment to the 2% inflation target," Bank of England Governor Andrew Bailey said last year. Should inflation prove stickier than expected, achieving the central bank's 2% inflation goal could mean even more losses.

☆ New Zealand's top PM contender wants to change central bank mandate, Ardern's policies
▼ + stars: | 2023-01-25 | by ( Lucy Craymer | ) www.reuters.com time to read: +3 min

WELLINGTON, Jan 25 (Reuters) - New Zealand's main opposition party leader and top prime ministerial contender, Christopher Luxon, wants to change the central bank's mandate and reverse some of former leader Jacinda Ardern's polices if he is elected. Luxon's conservative, centre-right National Party is leading over the governing centre-left Labour Party in opinion polls. There is a general election set for October and with inflation tracking near three-decade highs the cost of living is the key election issue. Luxon said if elected prime minister, he would change the mandate of New Zealand's central bank to focus solely on inflation, provide tax relief and widen immigration settings in an effort to dampen price inflation. Critics say the dual focus has contributed to inflation tracking at near three-decade highs, which has led to aggressive interest rate increases.

Her successor as Labour leader and prime minister faces a stern test in a general election in October, with support for the party falling and the country expected to fall into a recession next quarter. Despite her high global profile, Ardern's Labour Party has slid in the polls, hurt by rising living costs, growing crime and concern about social issues. That meant that even with traditional coalition partner the Green Party, polling at 9%, Labour could not hold a majority. Ardern most likely stepped down to give the Labour Party a chance to refresh and reposition itself ahead of an election in October, experts said. CONSERVATIVES BUOYEDThe conservative National Party may be buoyed by Ardern's resignation.

Reuters GraphicsOn a monthly basis, data showed that seven out of the 10 major central banks lifted rates in December. This compares to the monthly peak of 550 bps in September, though not all central banks meet on a monthly basis. "Most emerging market central banks are close to having completed their rate hike cycle," said Charles-Henry Moncheau, chief investment office at Syz Group. Central banks in Korea, South Africa, Thailand, Malaysia and Israel did not hold rate setting meetings in December. Emerging markets interest ratesReporting by Karin Strohecker and Vincent Flasseur in London, editing by Tomasz JanowskiOur Standards: The Thomson Reuters Trust Principles.

☆ Central banks ramp up rates again but the pace slows
▼ + stars: | 2022-12-15 | by ( ) www.reuters.com time to read: +5 min

LONDON, Dec 15 (Reuters) - Central banks in Britain, Norway, Switzerland, the euro zone and the United States have all raised interest rates this week. The central bank raised its forecast for its peak interest rate to 5.5%, up from a previous forecast of 4.1%. Money markets moved after the statement to forecast UK interest rates will top out at around 4.5% in August. Markets anticipate an 80% chance of a 50 bps hike when the Riksbank meets next in February. But market players do not expect any significant change from the world's lone major central bank dove.

☆ New Zealand economy grows strongly in Q3, but recession clouds ahead
▼ + stars: | 2022-12-14 | by ( Lucy Craymer | ) www.reuters.com time to read: +1 min

WELLINGTON, Dec 15 (Reuters) - New Zealand's economy grew strongly in the third quarter as its international borders fully reopened and travel spending rose sharply, while increased spending in the construction sector boosted building and engineering activity. Official data out on Thursday showed gross domestic product (GDP) rose 2.0% in the September quarter, more than double forecasts for a 0.9% gain and improving on the revised 1.9% rise seen in the second quarter. Annual growth jumped to 6.4%, as healthcare, travel and construction all saw significant growth, while gains were influenced down by the timing of various lockdowns in comparative periods. The strong growth looks set to fade, however, with expectations the central bank’s aggressive tightening cycle will push the economy into a recession next year. On Wednesday, the Treasury forecast the country would see three quarters of negative growth starting in the second quarter of next year, while the Reserve Bank of New Zealand is even more pessimistic, having forecast a year-long recession beginning in the second quarter of next year.

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