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☆ Take Five: Sell in May?
▼ + stars: | 2023-05-05 | by ( ) www.reuters.com time to read: +5 min

The services component of the price data can gauge demand, but consumer and producer price data broadly paint a picture of deflation. April inflation data is out Thursday. At 10.1%, UK inflation is the highest in Western Europe. Reuters Graphics Reuters Graphics4/ SELL IN MAYConventional wisdom has it that May is the ideal point to take profit on equities and lay low until later in the year. "Sell in May and go away" is based on the premise that the best six-month period of the year for stock market returns is November to April, while the leanest is May to October.

☆ Dollar gains, euro dips after cautious ECB
▼ + stars: | 2023-05-04 | by ( Karen Brettell | ) www.reuters.com time to read: +3 min

SINGAPORE, May 4 (Reuters) - The dollar gained against the euro after the European Central Bank eased its pace of rate hikes, a day after the Federal Reserve hiked rates by 25 basis points and indicated that it may pause further increases. The Fed on Wednesday dropped from its policy statement language saying that it "anticipates" further rate increases would be needed. The dollar index was last up 0.30% on the day at 101.52. The greenback was last down 0.17% against the Norwegian crown at 10.73 after Norway's central bank raised interest rates by 25 basis points as expected. ========================================================Currency bid prices at 10:18AM (1418 GMT)Reporting by Rae Wee Editing by Shri NavaratnamOur Standards: The Thomson Reuters Trust Principles.

☆ Euro falls after dovish ECB
▼ + stars: | 2023-05-04 | by ( Alun John | ) www.reuters.com time to read: +4 min

The ECB eased the pace of its interest rate hikes on Thursday with a 25-basis-point increase to its three policy rates, the smallest since it started lifting them last summer. "The ECB is clearly striking a more balanced tone and the market is pricing a bit of that, the euro is depreciating and pricing for interest rate hikes at future meetings is coming down, but just a little bit." The Fed has guided markets away from the possibility of rate cuts this year, though markets are pricing them in nonetheless. The Norwegian crown took a short trip after Norway's central bank raised interest rates by 25 basis points as expected. It initially softened sharply against the euro and dollar, but recovered.

The narrowing rate differentials between the U.S. and Europe, as markets price in more European rate increases than in the U.S., has been boosting European currencies in recent months. The Fed has guided markets away from the possibility of rate cuts this year, though markets are pricing them in nonetheless. The European Central Bank announces its rate decision later in the day. "So I think central banks, including the Fed, are at or very near the peak in their cash rates." The Norwegian crown took a short trip after Norway's central bank raised interest rates by 25 basis points as expected.

☆ Dollar falls after Fed signals pause; banking woes dent confidence
▼ + stars: | 2023-05-04 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

"Additional tightening may be needed ... but the FOMC does not appear to be pre-committing to another rate hike on June 14." The U.S. dollar index was last 0.12% lower at 101.11, after dropping more than 0.6% in the previous session. "There are a lot of concerns in the U.S. around the banking sector and the crunch on credit. "So I think central banks, including the Fed, are at or very near the peak in their cash rates." The European Central Bank (ECB) comes under the spotlight next, where expectations are for ECB policymakers to raise interest rates for the seventh meeting in a row later on Thursday.

Unlike much of the past 15 years, euro strength is on the ECB's side as it meets on Thursday. Indeed, ECB President Christine Lagarde and chief economist Philip Lane littered speeches with warning shots about an excessive euro strength when the euro last snarled up to this extent in October 2020. Lagarde's predecessors Mario Draghi and Jean-Claude Trichet similarly weighed in with verbal intervention to cool periodic 10% surges in the trade-weighted euro over its history. Euro strength has built on belated ECB interest rate hikes since July - up some 350 basis points to 3.0% so far and expected to go up at least another 25 bps this week. So should euro strength be finally embraced by ECB as way of slaying the inflation beast?

☆ Stocks ease; Aussie dollar soars after surprise hike
▼ + stars: | 2023-05-02 | by ( Amanda Cooper | ) www.reuters.com time to read: +4 min

"No one is going to want to do too much before we get to that FOMC decision. "One of the things that sticks out to me is that they're still saying they might need to increase interest rates," said Commonwealth Bank of Australia strategist Joe Capurso. "So as well as the increase today, that's supporting the Aussie dollar," he said. The U.S. dollar was steady against a basket of major currencies , while the euro eased 0.1% to $1.097. But markets are still anxious about what may be the next crisis, even if the initial response has been positive.

☆ Morning Bid: RBA shock hike starts huge week for central banks
▼ + stars: | 2023-05-02 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Asia markets correspondent Kevin Buckland. The Reserve Bank of Australia kicked off a string of major central bank meetings this week by surprising markets with a quarter-point rate hike, when most had been positioned for a pause. The debate among policy makers is whether to opt for another half-point hike or slow to a quarter-point pace. The Fed, meanwhile, is widely expected to hike rates by a final quarter point and then signal a pause. Money markets are still betting on a Fed rate cut before the end of the year.

☆ Yen sinks to 15-year low vs euro as dovish BOJ contrasts with ECB
▼ + stars: | 2023-05-02 | by ( Kevin Buckland | ) www.reuters.com time to read: +3 min

TOKYO (Reuters) - The yen continued its steep descent on Tuesday, reaching a 15-year low to the euro, as the implications of a steadfastly dovish Bank of Japan kept foreign exchange markets busy engaging in so called ‘carry-trades’. FILE PHOTO: Japanese Yen and U.S. dollar banknotes are seen in this illustration taken March 10, 2023. The euro was steady at 150.965 yen after earlier touching 151.03 for the first time since September 2008. The greenback was about flat at 137.375 yen, and earlier rose to 137.58 for the first time since March 8. At the RBA, traders are laying 87% odds for no change to policy, although about 11 bps of tightening is priced for the August meeting.

Growth came mostly from exports, the result of a revival in global trade as China re-opened for business after the pandemic. But national data showed price growth remained stubbornly high, probably leaving the ECB with no choice but to keep raising interest rates. Friday's inflation data showed progress was slow. IMF CALLS FOR MORE RATE HIKESMoney markets currently price in another 70 basis points of ECB rate hikes by October, possibly followed by cuts as early as the start of next year. It also said European Union finance ministers should tighten fiscal policy in concerted action to bring down high inflation, which would probably depress consumption further.

☆ Bernstein predicts crypto will emerge as an alternative financial system amid bank busts, and says to buy bitcoin
▼ + stars: | 2023-04-27 | by ( Tanaya Macheel | ) www.cnbc.com time to read: +3 min

Bitcoin was originally designed, after the 2008 financial crisis, as digital cash that doesn't rely on banks. "To rescue the ship, the Fed will have to resort to dollar debasement and monetary printing again, bringing back the role of Bitcoin as digital gold." The shift back to the digital gold narrative has started, since the recent deposit runs and bank failures on regulated U.S. banks, triggered by high interest rates. A couple weeks later its gold correlation surpassed its Nasdaq correlation. "The safe haven signal will lead to a new crypto cycle, pushing digital wallets as on-chain savings accounts," the analysts said.

CHICAGO, April 26 (Reuters) - Former U.S. Treasury Secretary Lawrence Summers said the odds that the U.S. government could face a technical debt default due to legislation around its borrowing limit were at around 2%-3%, but that any default would be fixed quickly. A standoff between Republicans and Democrats over raising the U.S. borrowing limit has started to impact money markets, with incoming tax receipts recently indicating that the deadline to raise the $31.4 trillion borrowing limit could be sooner than expected. "I think the odds on a technical default associated with the debt limit legislation over the next few months are 2% or 3%, and if it happens it will be repaired fairly quickly," Summers said at a Morningstar investment conference in Chicago. On the other hand, the White House has called on Congress to raise the debt limit without conditions, as it did three times under Biden's Republican predecessor, Donald Trump. JPMorgan warned last week that there was a "non-trivial" risk of a technical default on U.S. Treasuries, and that the debate over the debt ceiling would likely run "dangerously close" to its final deadline.

CHICAGO, April 26 (Reuters) - A U.S. default is highly unlikely, but negotiations around the debt ceiling are expected to be protracted, Daniel Ivascyn, chief investment officer at U.S. bond giant Pacific Investment Management Co (PIMCO), said on Wednesday. Speaking at a Morningstar investment conference in Chicago, Ivascyn said prolonged uncertainty around the U.S. debt ceiling could be a headwind for the economy, tightening credit conditions and accelerating the current economic slowdown. On Wednesday, former U.S. Treasury Secretary Lawrence Summers said the odds that the U.S. government could face a technical debt default were at around 2% to 3%, but that any default would be fixed quickly. "You're introducing a debt ceiling standoff at a time where there's just lots of other uncertainty," Ivascyn said, adding this could translate into a further reduction in risk-taking from households and corporates, which could exacerbate economic weakness. Ivascyn said he was seeking to maintain high liquidity to withstand potentially more volatility in financial markets caused by the borrowing limit standoff.

☆ Dollar snaps five-week losing streak as bets on U.S. rate hike in May firm
▼ + stars: | 2023-04-21 | by ( ) www.cnbc.com time to read: +3 min

Bundles of U.S. 100 dollar banknotes arranged at the Shinhan Bank headquarters, a unit of Shinhan Financial Group Co., in Seoul, South Korea, Sept. 14, 2022. The dollar slipped against the Japanese yen in early Asia trade, though it rose against most major currencies, with the U.S. dollar index edging 0.06% higher to 101.84. Rising expectations that the Fed will raise interest rates by 25 basis points in May have lent some support to the greenback. "The U.S. economy is heading to recession," said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia. "I don't think Ueda is going to change policy at his first meeting next week," said CBA's Capurso.

☆ Bank reserves could fall by $2.5 trillion as the Fed reduces its balance sheet, Fitch Ratings says
▼ + stars: | 2023-04-21 | by ( Filip De Mott | ) www.businessinsider.com time to read: +2 min

Bank reserves could fall between $900 billion to $2.5 trillion by year's end, Fitch Ratings said. That's as the Fed's quantitative tightening dries up liquidity in the banking system. "System-wide banking liquidity indicators are still robust, but our baseline projection is for reserves to fall significantly by USD900 billion to USD2.5 trillion by year-end," the ratings agency said. When it began trimming its balance sheet in June, the Fed held almost $9 trillion in such assets. "QT will also put downward pressure on bank deposits, boosting the system-wide loans-to-deposits ratio," Fitch said.

☆ Dollar snaps five-week losing streak as bets on US rate hike in May firm
▼ + stars: | 2023-04-21 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

The dollar slipped against the Japanese yen in early Asia trade, though it rose against most major currencies, with the U.S. dollar index edging 0.06% higher to 101.84. Rising expectations that the Fed will raise interest rates by 25 basis points in May have lent some support to the greenback. "I don't think Ueda is going to change policy at his first meeting next week," said CBA's Capurso. In other currencies, the Aussie was last 0.07% lower at $0.6738, while the kiwi fell 0.12% to $0.61705. Data out on Thursday showed that New Zealand's consumer price inflation was lower than expectations in the first quarter, though it remained near historic highs.

☆ ECB market rate bets: still some unfinished business for the hawks
▼ + stars: | 2023-04-19 | by ( Stefano Rebaudo | ) www.reuters.com time to read: +4 min

Having firmly scaled-back rate expectations amid last month's market turmoil, investors no longer expect borrowing costs to stay higher for longer and are cautious about pricing in a deposit rate above 4%. The November 2023 ECB euro short-term rate (ESTR) forward rose to 3.65% on Wednesday, implying expectations for a deposit rate of around 3.75%. Citi meanwhile argued that the June ESTR or money market contract was less appealing from a hedging standpoint while markets were pricing a peak of 3.75%. bundfuturevolBut Bund futures volumes declined after March 15 as markets once more revised their rate expectations upwards. This means that the smaller the gap between the current benchmark rate and the expected rate, the lower the volatility, and vice versa.

chartEither way, extremely low U.S. volatility generally bodes well for other stock markets. And worrying UK inflation figures may extend a dark shadow over Asia. Figures on Wednesday showed that Britain was the only country in western Europe with double-digit inflation in March, prompting several banks to raise their UK rate outlook. UK money markets are pricing in a further 75 basis points of tightening this year, taking the base rate up to 5%. Meanwhile, Australia's central bank governor Philip Lowe addresses the media on Thursday and India's central bank releases the minutes of its last policy meeting.

☆ Dollar bounces as expectations of Fed rate hike climb
▼ + stars: | 2023-04-17 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

While U.S. retail sales fell more than expected in March, so-called core retail sales, which excludes automobiles, gasoline, building materials and food services, slipped just 0.3% last month, data released on Friday showed. So I think that will increase (expectations) for the Fed to continue raising interest rates," said Tina Teng, market analyst at CMC Markets. The two-year U.S. Treasury yield , which typically moves in step with interest rate expectations, stood at 4.1161%, after hitting a roughly two-week top of 4.137% on Friday. Some hawkish Fed speak also aided the higher interest rate expectations, with Fed Governor Christopher Waller and Atlanta Fed President Raphael Bostic suggesting that the Fed could hike another 25 bps next month. The offshore yuan fell roughly 0.1% to 6.8786 per dollar.

☆ Dollar rebounds on higher expectations for Fed hike in May
▼ + stars: | 2023-04-17 | by ( ) www.cnbc.com time to read: +3 min

The dollar bounced from a one-year low on Monday as resilience in core U.S. retail sales, a rise in short-term inflation expectations and impressive Wall Street bank earnings raised market expectations for an interest rate hike in May. Against a basket of currencies, the U.S. dollar index rose 0.15% to 101.82, standing some distance away from Friday's one-year low of 100.78. So I think that will increase (expectations) for the Fed to continue raising interest rates," said Tina Teng, market analyst at CMC Markets. Short-term inflation expectations have also increased, with the University of Michigan's preliminary April reading showing that one-year inflation expectations rose to 4.6% from 3.6% in March. Some hawkish Fed speak also aided the higher interest rate expectations, with Fed Governor Christopher Waller and Atlanta Fed President Raphael Bostic suggesting that the Fed could hike another 25 bps next month.

☆ Dollar set for longest stretch of weekly losses since 2020
▼ + stars: | 2023-04-14 | by ( Amanda Cooper | ) www.reuters.com time to read: +4 min

The dollar index , which measures the performance of the U.S. currency against six others, slid to a roughly one-year low of 100.78. This would mark a fifth straight weekly loss, the longest such stretch since July 2020. Out of the G10 currencies, investors hold the largest bearish position in the dollar against the euro. The New Zealand dollar rose 0.1% to $0.63035, after jumping 1.3% on Thursday. The Japanese yen rose marginally, leaving the dollar 0.2% down on the day at 132.27, while the offshore yuan rose 0.4% to 6.8463 per dollar.

☆ Dollar sinks to one-year low as cooling inflation raises Fed pause expectation
▼ + stars: | 2023-04-14 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

[1/2] Dollar banknotes are seen through a printed stock graph in this illustration taken February 7, 2018. The greenback took another leg down on Friday and the U.S dollar index , which measures the currency against six major peers, slid to a roughly one-year low of 100.78. Meanwhile, the euro rose to a fresh one-year top of $1.1075, pushing past its previous high from Thursday. The New Zealand dollar similarly gained 0.19% to $0.6309, after jumping 1.3% on Thursday. Elsewhere in Asia, Japan's yen rose marginally to 132.47 per dollar, while the offshore yuan gained more than 0.5% to 6.8327 per dollar.

☆ Dollar slides to one-year low as cooling inflation raises Fed pause expectation
▼ + stars: | 2023-04-14 | by ( ) www.cnbc.com time to read: +3 min

In this photo illustration, 100 U.S. dollar notes and 100 yuan notes are displayed. The greenback took another leg down on Friday and the U.S dollar index , which measures the currency against six major peers, tumbled to a roughly one-year low of 100.78. Meanwhile, the euro rose to a fresh one-year top of $1.1075, pushing past Thursday's previous high. The New Zealand dollar similarly gained 0.21% to $0.6310, after jumping 1.3% on Thursday. Elsewhere in Asia, Japan's yen rose more than 0.1% to 132.39 per dollar, while the offshore yuan gained 0.3% to 6.8495 per dollar.

☆ Factbox: Wall St banks expect one more Fed rate-hike as recession looms
▼ + stars: | 2023-04-13 | by ( ) www.reuters.com time to read: 1 min

April 13 (Reuters) - Most major U.S. banks expect the Federal Reserve to raise interest rates by another 25 basis points next month, following evidence of sticky inflation and a strong labor market. Money markets are currently pricing in a roughly 65% chance of a 25bps hike from the Fed in May. Such a hike will bring the Fed Funds rate increase for this cycle to 5%, taking the rate to the 5% to 5.25% range. Traders expect a pause thereafter and see rate cuts beginning in the second half of the year. Following are forecasts from some big U.S. banks and their global counterparts:Compiled by Broker Research team in Bengaluru; Editing by Devika SyamnathOur Standards: The Thomson Reuters Trust Principles.

☆ Dollar, stocks slip after Fed minutes spur recession fears
▼ + stars: | 2023-04-12 | by ( Herbert Lash | ) www.reuters.com time to read: +6 min

Fed staff assessing the potential fallout of banking stress projected a "mild recession" later this year. But the minutes showed policymakers ultimately agreed to higher interest rates as data at the time showed few signs of inflation pressures abating. Money markets initially trimmed expectations for a Fed rate hike in May, pricing in a 65.2% chance of a 25-basis-point move, CME Group's FedWatch Tool showed. MSCI's gauge of stocks across the globe (.MIWD00000PUS) closed down 0.08%, while the pan-European STOXX 600 index (.STOXX) rose 0.13%. The dollar fell with an index measuring the U.S. currency against six peers down 0.558%.

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