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☆ Analysis: Forex derivatives nudged out into the open as regulations increase costs
▼ + stars: | 2023-06-20 | by ( Laura Matthews | ) www.reuters.com time to read: +6 min

REUTERS/Dado Ruvic/IllustrationNEW YORK, June 20 (Reuters) - Foreign-exchange investors are moving more of their over-the-counter (OTC) derivatives trades to lookalike products on exchanges to avoid higher costs due to recent global regulations, helping inject transparency into a multitrillion-dollar market that is largely hidden from the public eye. The gradual behavioral change in FX derivatives trading is being caused by increasing margin and collateral costs, said Joe Midmore, chief commercial officer at OpenGamma, a derivatives analytics firm. OTC derivatives are privately negotiated contracts while cleared derivatives, though bilaterally negotiated, are booked with a clearinghouse such as a listed exchange. "They will also incur the operational, legal and custody costs of setting up margin facilities as well as the capital costs of posting margin," Houston said. "There is inherently risk involved in lots of people transacting derivatives with each other," said Riddle.

Persons: Dado Ruvic, Ben Feuer, Joe Midmore, ”, Michael Riddle, Paul Houston, Houston, ForexClear, James Pearson, Tom Arnold, Joe Spiro, Peter Vassallo, Riddle, Laura Matthews, Shankar Ramakrishnan, Megan Davies, Matthew Lewis Organizations: REUTERS, Societe Generale, Banking Supervision, International Organization of Securities Commissions, CME, CME Group, FX, Reuters Graphics British, Financial, ForexClear, BNP, Management, Thomson Locations: Saudi, New York, Hazeltree

☆ Turkey's Erdogan says he agrees to monetary policy turnaround under new Finance Minister Simsek
▼ + stars: | 2023-06-14 | by ( Natasha Turak | ) www.cnbc.com time to read: +2 min

Turkey's President Recep Tayyip Erdogan has named former economy chief Mehmet Simsek as his new treasury and finance minister. Turkish President Recep Tayyip Erdogan on Wednesday appeared to make a crucial shift regarding the future of his inflation-ridden country's monetary policy. Newly appointed Finance Minister Mehmet Simsek, who previously served as deputy prime minister and finance minister between 2009 and 2018, is widely respected by investors. The president was referring to his opposition to raising interest rates, which he said was not changed. "But upon the thinking of our treasury and finance minister," Erdogan added, "we have accepted that he will take steps swiftly, comfortably with the central bank."

Persons: Recep Tayyip Erdogan, Mehmet Simsek, Erdogan Locations: Turkey

☆ Asia shares near month high ahead of central bank meetings
▼ + stars: | 2023-06-12 | by ( Ankur Banerjee | ) www.reuters.com time to read: +3 min

SINGAPORE, June 12 (Reuters) - Asian shares started tentatively on Monday as investors braced for central bank meetings from Europe, Japan and the United States this week, along with U.S. inflation data that will likely influence the Federal Reserve's monetary policy path. China stocks (.SSEC) eased 0.01%, while Hong Kong's Hang Seng Index (.HSI) opened up 0.3%. Markets are pricing for a 71% probability the U.S. central bank will stand pat when it meets on June 13-14, according to CME FedWatch tool. While doubts persist among investors which path the Fed will take this week, they are more certain the European Central Bank, which meets on Thursday, will raise rates and remain hawkish. The yen eased 0.01% to 139.39 per dollar ahead of the Bank of Japan's (BOJ) policy meeting on Friday.

Persons: Hong, HSI, Lagarde, Mohit Kumar, Kumar, Sterling, Brent, Jacqueline Wong Organizations: Federal, Japan's Nikkei, Reserve Bank of Australia, Bank of Canada, Citi, European Central Bank, Jefferies, ECB, Bank of Japan's, Reuters, Thomson Locations: SINGAPORE, Europe, Japan, United States, Asia, Pacific, China, Turkish

☆ Morning Bid: Markets drift ahead of central bank extravaganza
▼ + stars: | 2023-06-12 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Ankur BanerjeeAfter surprise interest rate hikes from the Reserve Bank of Australia and Bank of Canada, investors are a bit nervy heading into a week that brings us three major central banks meetings. Last week's moves have inflamed uncertainty in investor minds about whether the U.S. Federal Reserve will skip or surprise on Wednesday. CME Fedwatch tool showed the probability of the Fed standing still is over 70%, but with inflation data due on Tuesday there may just be a late sting in the tail. No such surprises are expected from the European Central Bank or Bank of Japan, with markets widely expecting the ECB to hike and stay hawkish, and the BOJ to stick to its ultra-loose monetary policy. Reuters GraphicsReuters GraphicsWith not a lot on the data calendar, stocks in Asia are muted, while the U.S. dollar is steady.

Persons: Ankur Banerjee, BioNTech, Crispin Odey, Nicola Sturgeon, Christopher Cushing Organizations: Ankur, Reserve Bank of Australia, Bank of Canada, Fed, ECB, U.S . Federal Reserve, CME, European Central Bank, Bank of Japan, Reuters Graphics Reuters, U.S ., Nikkei, Odey, Management, Scottish First, Scottish National Party ., Thomson Locations: Asia, Germany, Britain, Denmark, Czech Republic, Turkey, Singapore

☆ Dollar eases after jump in U.S. jobless claims; Fed in focus
▼ + stars: | 2023-06-09 | by ( ) www.cnbc.com time to read: +2 min

An employee deals with U.S. one-hundred dollar banknotes at a bank on June 16, 2022 in Hai an, Nantong City, Jiangsu Province of China. The dollar retreated on Friday, dragged down by lower U.S. Treasury yields after a spike in weekly jobless claims raised hopes that a peak in U.S. interest rates was near, as the focus turned to the upcoming week packed with central bank meetings. Against the Japanese yen , the greenback dipped to a one-week low of 138.765, tracking a slide in U.S. Treasury yields. The benchmark 10-year Treasury yield last stood at 3.7317%, after falling 7 basis points on Thursday. So that'll show up in payrolls numbers and jobless claims and these sorts of numbers," said Jarrod Kerr, chief economist at Kiwibank.

Persons: Jarrod Kerr, Tayyip Erdogan, Hafize Gaye Erkan, Mohammed Elmi Organizations: U.S, Treasury, Federated Hermes Locations: Hai, Nantong City, Jiangsu Province, China, Asia, U.S, Kiwibank, United States

☆ Asia shares buoyed by Fed pause bets; dollar heavy
▼ + stars: | 2023-06-09 | by ( Kevin Buckland | ) www.reuters.com time to read: +4 min

Japanese and Australian bond yields followed those on U.S. Treasuries lower, and the dollar remained on the defensive early in the Asian session. MSCI's broadest index of Asia-Pacific shares (.MIAP00000PUS) added 0.6%, and at one point touched its strongest level since Feb. 16. Traders now lay 1-in-4 odds for the Fed to raise rates by a quarter point on June 14, versus 75% probability of a pause. "I wouldn't go all in and say we're going to get a rate hike, but I think we should be at least 50% priced," said Tony Sycamore, an analyst at IG Markets in Sydney. The dollar added 0.15% to 139.135 yen , after earlier slipping to a one-week low of 138.765.

Persons: Hong, Tony Sycamore, Jerome, Powell's, Powell, undertightening, Tayyip Erdogan's, WTI fututes, Kevin Buckland, Stephen Coates Organizations: Federal Reserve, Japan's Nikkei, Nasdaq, Fed, Bank of Canada, Reserve Bank of Australia, IG Markets, New, U.S, West Texas, Brent, Thomson Locations: TOKYO, Asia, Pacific, Sydney, Tokyo, New York, U.S, United States, Iran

☆ 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

☆ Dollar steady as traders consider Fed, global rates outlook
▼ + stars: | 2023-06-08 | by ( ) www.cnbc.com time to read: +3 min

The increased expectations that U.S. and global interest rates may have further to rise has come on the back of surprise rate increases by the Bank of Canada (BoC) and the Reserve Bank of Australia (RBA) this week. The Canadian dollar was last steady at C$1.3365 to the greenback, after rising to a one-month top of C$1.3321 in the previous session. The U.S. dollar index dipped slightly to 104.02, though strayed not too far from an over two-month high hit last week, on the back of higher Treasury yields. Money markets are pricing in a 29% chance that the Fed raises rates by 25bps at its policy meeting next week. "Markets have raised their FOMC rate hike expectations following a surprise Bank of Canada rate hike," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

Persons: Edward Moya, Carol Kong, Ray Attrill Organizations: Treasury, U.S . Federal Reserve, Bank of Canada, BoC, Reserve Bank of Australia, Wednesday, Canadian, U.S, European Central Bank, 25bps, of Canada, Commonwealth Bank of Australia, National Australia Bank Locations: Chicago, Asia

The currency later recouped some of its losses, standing at 23.33 against the dollar by 0542 GMT, after touching a record low of 23.39 overnight during illiquid trading hours. "There is no air of panic in the markets as in previous times when there were such high losses. The central bank's net forex reserves hit an all-time low of negative $4.4 billion last month as demand surged through the elections. Investors are now awaiting the appointment of a new central bank governor to succeed Sahap Kavcioglu, who has spearheaded Erdogan's rate-slashing drive since 2021. Erdogan is considering appointing Hafize Gaye Erkan, a U.S.-based senior finance executive, as central bank governor, Reuters reported on Monday.

Persons: Tayyip Erdogan's, Erdogan, Mehmet Simsek, Simsek, Erik Meyersson, SEB, Meyersson, Sahap Kavcioglu, Hafize Gaye Erkan, Ali Kucukgocmen, Jonathan Spicer, Gareth Jones Organizations: Lira, Reuters, Thomson Locations: ISTANBUL, Ankara, U.S

☆ Goldman Sachs expected the Turkish lira to plunge over 3 months. It happened in just 3 days
▼ + stars: | 2023-06-08 | by ( Lee Ying Shan | ) www.cnbc.com time to read: +1 min

The Turkish lira has extended its post-election freefall this week, already surpassing a Goldman Sachs forecast for a significant weakening of the currency over the next few months. The U.S. investment bank at the weekend projected that the lira still had room to plunge further to deeper lows: to 23 against the greenback in three months, compared to a previous estimate of 19 against the dollar. Around the time of the report's release, the embattled currency was trading just above 20 to the dollar. But it has since weakened sharply — past Goldman's forecast to stand above 23 against the dollar — all within the span of a few days. The lira was last trading at a fresh all-time low of 23.29 against the greenback on Thursday afternoon.

Persons: Goldman Sachs, Mehmet Simsek Locations: U.S

☆ TRYing times: The slide and fall of the Turkish lira
▼ + stars: | 2023-06-07 | by ( Marc Jones | ) www.reuters.com time to read: +5 min

The central bank is however widely expected to get a new head in the coming days. Turkey's economy is no stranger to boom-and-bust cycles, oscillating between double-digit growth and contraction rates in recent years. 3/INFLATION PALPITATIONSA tumbling lira will fan fears over a fresh spike in inflation in the country which only last year saw it top 80%. "It's just so inevitable," Abrdn's head of local currency emerging market debt, Kieren Curtis, said referring to the lira's slump this week. He did add however that the compensation would be paid to depositors in lira rather than dollars or euros and that bill would be split between the Treasury and Central Bank.

Persons: Goldman Sachs, Ulrich Leuchtmann, Hasnain Malik, Erdogan, Tellimer's Malik, Kieren Curtis, Frank Gill, Tayyip Erdogan's, Karin Strohecker, David Evans Organizations: Wall, JPMorgan, FX, Reuters Graphics Reuters, International Monetary Fund, P Global, Treasury, Central Bank, Reuters, Thomson Locations: Ankara, Turkey, Commerzbank, Frankfurt, Tellimer

☆ Turkish Lira Tumbles to New Low as Devaluation Pressure Mounts
▼ + stars: | 2023-06-07 | by ( Jared Malsin | Chelsey Dulaney | ) www.wsj.com time to read: 1 min

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Persons: Dow Jones

☆ World shares muted, lira plunges to record low
▼ + stars: | 2023-06-07 | by ( Samuel Indyk | ) www.reuters.com time to read: +4 min

Meanwhile, Turkey's lira plunged to a record low against the greenback as authorities appeared to loosen stabilising measures after the government signalled a pivot to more orthodox policies. Spanish stocks (.IBEX) outperformed after shares in the world's biggest fast fashion company Inditex (ITX.MC) jumped almost 7% following first quarter results. That left the MSCI's broadest index of world shares (.MIWD00000PUS) up just under 0.1% but close to its highest level in 13 months reached on Monday. The dollar fell 0.1% against a basket of currencies, while the Turkish lira weakened over 7% to a record low of 23.17 per dollar, its biggest one-day sell-off since the 2021 crash. Bitcoin was trading at about $26,900, consolidating after a sharp rebound on Tuesday from as low as $25,350.

Persons: Ben Laidler, Ipek Ozkardeskaya, eToro's Laidler, Laidler, Solana, Samuel Indyk, Kevin Buckland, Xie Yu, Robert Birsel, Louise Heavens Organizations: REUTERS, Staff LONDON, U.S, Federal Reserve, greenback, Nikkei, Fed, Wall, ICE, Treasury, Swissquote Bank, Data, Saudi, Brent, Texas, U.S . Securities, Exchange Commission, SEC, Thomson Locations: Frankfurt, Germany, Asia, Pacific, Japan, Hong Kong, Taiwan, U.S, London, Turkish, China, Cardano, Polygon

☆ Dollar eases as chances for a U.S. rate rise ebb
▼ + stars: | 2023-06-07 | by ( Amanda Cooper | ) www.reuters.com time to read: +4 min

LONDON, June 7 (Reuters) - The dollar dipped on Wednesday as chances faded for a rate hike next week by the Federal Reserve, while the Canadian dollar touched one-month highs as traders amped up bets for the country to raise rates and the Turkish lira hit record lows. "Over the last month or so, we've seen the market slowly pricing out the risks of a 2023 interest rate cut. Nonetheless, traders were attaching a higher chance that the BoC would raise Canadian interest rates again later on Wednesday. Against the dollar, sterling rose 0.3% to $1.2456, while the Japanese yen rose 0.2% to 139.40 and the euro rose 0.2% to $1.0718. Elsewhere, the Turkish lira slid as much as 7.6% to a record low of 23.16 per U.S. dollar.

Persons: Philip Lowe, Jane Foley, we've, Foley, Siong Sim, bitcoin, Coinbase, Binance, Zhao, Binance's, Rae Wee, Clarence Fernandez, William Maclean Organizations: Federal Reserve, Australian, Reserve Bank, U.S ., Rabobank, BoC, U.S, Canadian, Fed, Bank of Singapore, U.S . Securities, Exchange Commission, SEC, Thomson Locations: U.S, CHINA, China, Turkish, Singapore

☆ Dollar adrift as traders assess Fed options; Aussie buoyant
▼ + stars: | 2023-06-07 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

In the broader currency market, the U.S. dollar dipped in early Asia trade, as traders pared back their expectations of a rate hike at next week's FOMC meeting. Against the greenback, sterling rose 0.08% to $1.2432, while the kiwi gained 0.08% to $0.6084. "We don't think the FOMC will hike next week ... but risks again are skewed to the upside," said Kong. The U.S. dollar index slipped 0.03% to 104.05, while the euro rose 0.07% to $1.0698. CRYPTO SHAKEOUTIn the cryptoverse, bitcoin , the world's biggest cryptocurrency, was last marginally higher at $27,273, after jumping nearly 6% on Tuesday.

Persons: Philip Lowe, Carol Kong, Lowe, CRYPTO, Coinbase, Binance, Changpeng Zhao, Tony Sycamore, Rae Wee, Shri Navaratnam Organizations: Federal Reserve, Australian, Reserve Bank of Australia's, Commonwealth Bank of Australia, U.S, Fed, The U.S, European Central Bank, U.S . Securities, Exchange Commission, SEC, IG Markets, Thomson Locations: SINGAPORE, Asia, U.S, The, Turkish

☆ Turkish lira crashes as new government sets sights on ‘rational’ policies
▼ + stars: | 2023-06-07 | by ( ) edition.cnn.com time to read: +3 min

Markets are also waiting for the appointment of a new central bank governor to replace Sahap Kavcioglu, who spearheaded interest rate cuts under Erdogan’s unorthodox policies. Bankers say the lira’s continued gradual depreciation will lead to improved market conditions and halt a decline in central bank reserves. But it sparked a record lira crisis in 2021 and sent inflation to a 24-year high above 85% last year. Erdogan is considering appointing Hafize Gaye Erkan, a senior finance executive in the United States, as central bank governor, Reuters reported Monday. Erkan would be the country’s fifth central bank chief in four years, after Erdogan fired previous governors as part of frequent policy shifts.

Persons: Tayyip Erdogan, Erdogan, Mehmet Simsek, Simsek, Sahap Kavcioglu, ”, Tim Ash, “, Hafize Gaye Erkan, Erkan, Paul McNamara Organizations: BlueBay Asset Management, Bankers, Reuters, Simsek, GAM Locations: Turkish, United States, Ankara, Turkey

☆ Turkey’s Lira Falls to New Low as a New Economic Policy Forms
▼ + stars: | 2023-06-07 | by ( Patricia Cohen | ) www.nytimes.com time to read: +2 min

A change in the country’s economic policy could reverse what several economists argue has been an unsustainable and reckless course. The president has repeatedly flouted conventional economic wisdom by maintaining that high interest rates fuel inflation. Most economists argue the opposite: Higher interest rates makes borrowing more expensive, which slows down investment and spending and, in turn, reins in price increases. When central bankers resisted pressure to lower interest rates, Mr. Erdogan fired them. That is why the government did everything it could to protect the lira’s value before the presidential election, Mr. Tastan said.

Persons: Mr, Erdogan, Goldman Sachs, Kadri Tastan, Tastan, “, ” Organizations: German Marshall Fund Locations: Turkey, Brussels

☆ What Turkey’s new cabinet says about where the country is headed
▼ + stars: | 2023-06-07 | by ( Gul Tuysuz | ) edition.cnn.com time to read: +8 min

The cabinet appointments hint at a return to orthodox economic policy while holding course on foreign policy as the president heads into his third decade in power. Erdogan’s unorthodox economic policies over the past few years have led to a cost-of-living crisis and a plummeting Turkish lira. Shadow diplomatThe new foreign minister is a well-known figure to Turks and international players who have negotiated with Turkey of late. Hakan Fidan, who had served as head of Turkish Intelligence Agency (MIT) since 2010, has been in every room and every discussion that has been pivotal to Turkish foreign policy over the last few years. He’s been ever-present but rarely heard – a shadow diplomat in Erdogan’s foreign policy arsenal who has charted rough waters in Syria, Libya and beyond.

Persons: Recep Tayyip Erdogan, Mehmet Simsek, –, Nureddin Nebati, ” Simsek, Erdogan, Simsek, Mehmet Celik, Cevdet Yilmaz, Omer Bolat, ” Celik, Hakan Fidan, He’s, Fidan, Ibrahim Kalin, “, ” Fidan, ”, Suleyman Soylu, Istanbul Ali Yerlikaya, Hulusi Akar, Mevlut Cavusoglu, They’ve Organizations: Istanbul CNN —, Reuters, Daily, Trade, CNN, NATO, Turkish Intelligence Agency, MIT, Kurdistan Workers ’ Party, EU, Defense, Development Party, AK Party Locations: Istanbul, Turkish Republic, Turkish, “ Turkey, Daily Sabah, Turkey, Syria, Libya, Greece, West, Celik, Damascus, Ankara, Sweden, Yerlikaya

Markets are also waiting for the appointment of a new central bank governor to replace Sahap Kavcioglu, who spearheaded rate cuts under Erdogan's unorthodox policies. "I think we are seeing the impact of Simsek pushing (the Turkish central bank) for rational policy." Bankers say the lira's continued gradual depreciation will lead to improved market conditions and halt a decline in central bank reserves. But it sparked a record lira crisis in December of 2021 and sent inflation to a 24-year high above 85% last year. Erdogan is considering appointing Hafize Gaye Erkan, a senior finance executive in the United States, as central bank governor, Reuters reported on Monday.

Persons: Tayyip Erdogan, Erdogan, Mehmet Simsek, Simsek, Sahap Kavcioglu, Tim Ash, Hafize Gaye Erkan, Erkan, Paul McNamara, Huseyin Hayatsever, Jonathan Spicer, Ali Kucukgocmen, Tom Hogue, Christina Fincher Organizations: BlueBay Asset Management, Bankers, Reuters, Simsek, GAM, Thomson Locations: ANKARA, Turkish, United States, Ankara, Turkey, Jorgelina, Rosario, London

☆ Dollar edges up as markets weigh chances of Fed rate hike
▼ + stars: | 2023-06-05 | by ( Iain Withers | ) www.reuters.com time to read: +2 min

Markets now put the probability of a 25 basis point hike at the meeting on June 13-14 at 29.1%, down from 2-in-3 odds a week earlier. U.S. services data due later on Monday could give further clues, though analysts said core inflation data due next week was more likely to move the needle. "...the lack of other key inputs before next week's CPI [inflation data] could keep the dollar capped," currency analysts at ING said in a note. The Australian dollar fell 0.2% to $0.65905, ahead of a decision by the central bank on Tuesday on whether to raise rates that analysts said was on a knife-edge. The fall came despite the appointment of Mehmet Simsek as Turkey's finance minister, who won markets' confidence during previous stints in government between 2009 and 2018.

Persons: Christine Lagarde, Tayyip Erdogan's, Mehmet Simsek, Iain Withers, Kevin Buckland, William Maclean, Jason Neely Organizations: U.S . Federal Reserve, CPI, ING, European Central Bank, Thomson Locations: U.S, Turkish, Tokyo

☆ Turkish lira slips despite appointment of well-regarded finance minister
▼ + stars: | 2023-06-05 | by ( ) www.reuters.com time to read: +1 min

June 5 (Reuters) - Turkey's lira slid almost 1% on Monday in thin trading during the Asian day to weaken past 21 per dollar, in a shaky initial reaction to the appointment of highly-regarded Mehmet Simsek as finance minister. The lira hit 21.1 to the dollar, not far above a record low of 21.8 made last week. Simsek, 56, won markets' confidence during terms as finance minister and deputy prime minister between 2009 and 2018. Turkey's annual consumer price inflation hit a 24-year peak beyond 85% last year, and stood at 44% in April in a sign that further monetary tightening was required, according to Elmi. "A simple return to credible economic policy could see a marked change in Turkey's investment appeal," he said.

Persons: Mehmet Simsek, Tayyip Erdogan's, Mohammed Elmi, Tom Westbrook, Shri Navaratnam, Jamie Freed Organizations: Federated Hermes, Thomson Locations: Turkey

☆ Goldman Sachs sees Turkish lira slip to 28.00 versus dollar in 12 months
▼ + stars: | 2023-06-04 | by ( ) www.reuters.com time to read: +1 min

LONDON, June 4 (Reuters) - Goldman Sachs revised its Turkish lira forecast in the wake of President Tayyip Erdogan't cabinet revamp, saying it now expected the currency to weaken to 28 to the dollar in 12 months compared with a previous prediction of 22. The bank said it expected the lira to weaken to 23.00, 25.00 and 28.00 to the dollar in three, six and 12 months respectively. This compared to a previous forecast of 19.00, 21.00 and 22.00 respectively. Depending on events, the 28.00 to the dollar level could be reached in less than a year, the analysts said. Equally, a larger-than-expected rate adjustment could mean that the Lira may need to weaken by less than forecast, they added.

Persons: Goldman Sachs, Tayyip Erdogan't, Erdogan, Mehmet Simsek, Karin Strohecker, Emelia Sithole Organizations: Thomson

LONDON/TOKYO, May 31 (Reuters) - The U.S. dollar rose strongly on Wednesday to a more than two-month high after data showed European inflation is cooling quicker than expected and China's recovery is sputtering. That helped the dollar index , which measures the greenback against six major peers, climb to 104.63, its highest since March 16. Data on Wednesday showed inflation in France and some of Germany's biggest states is slowing quickly. Euro zone-wide inflation data is due out tomorrow. "European inflation is rolling back now and you're taking back some of the previously anticipated hikes from the ECB," said Carl Hammer, chief strategist at European bank SEB.

Persons: Carl Hammer, SEB, Hammer, Shusuke Yamada, Bart Wakabayashi, Sterling, Tayyip Erdogan, Harry Robertson, Kevin Buckland, Mark Potter, Helen Popper Our Organizations: U.S, Analysts, European Central Bank, ECB, U.S ., Bank of America, State, Thomson Locations: TOKYO, France, U.S, China, COVID, Tokyo

☆ Yen firms on policymaker meeting, dollar swings after debt deal
▼ + stars: | 2023-05-30 | by ( Alun John | ) www.reuters.com time to read: +3 min

[1/2] Japanese Yen and U.S. dollar banknotes are seen in this illustration taken March 10, 2023. The yen strengthened on news of the meeting, and held onto those gains, with the dollar last down 0.2% at 140.16 yen having earlier risen as high as 140.93, its highest since November 2022. That helped the dollar index , which measures the U.S. currency against six major peers, hit 104.53 in European trading its highest in 10 weeks, though then retreated to 104.02. "It seems to be win-win on almost any scenario for the dollar right now," said Jane Foley head of FX strategy at Rabobank. That, alongside a rethinking of market positioning - people had been dumping a lot of long dollar positioning since the end of last year - was supporting the dollar, she said.

But the dollar and European stocks slipped, dented by uncertainty about whether Congress will approve the deal after a handful of hard-right Republican lawmakers said on Monday they would oppose the bill, though it is expected to pass. The pan European STOXX 600 index (.STOXX) fell 0.2% after recording on Friday its biggest weekly decline in two months. U.S. 10-year bond yields dropped 9.7 basis points to 3.72%, while 30-year yields fell 8 bps to 3.89%. The dollar index , which measures the greenback against six peers, fell 0.26% at 104.03 after rising to a two-month high in earlier trading. Elsewhere, euro zone bond yields fell after Spanish inflation data came in lower than expected, raising hopes that the European Central Bank may raise interest rates less than previously feared.

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