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SINGAPORE (Reuters) – The dollar was supported by rising U.S. yields and the blowtorch was on low-yielding currencies on Tuesday such as China’s yuan and Japan’s yen, which was pinned to its lowest since 1986.Benchmark 10-year Treasury yields rose nearly 14 basis points to 4.479% overnight, with analysts attributing the move to expectations of Donald Trump winning the U.S. presidency and raising tariffs and government borrowing.As the dollar rose, the euro handed back part of a small rally as the first round of France’s election turned out more or less in line with polling. The single currency last bought $1.0735.”Trump’s better (debate) showing over (President Joe) Biden added to expectations that inflation may pick up pace, yield curves will steepen further and that the USD may continue to trade at a premium,” said OCBC currency strategist Christopher Wong.The yen sank to 161.72 per dollar on Monday, its weakest in nearly 38 years, extending a downward slide driven mainly by a wide gap in interest rates between the U.S. and Japan.The yen traded at 161.55 per dollar in Asia on Tuesday and was sinking on crosses as yen bears were wary that the dollar/yen pair was at risk of intervention by Japanese authorities.Against the euro, the yen touched a lifetime low of 173.67 on Monday and was near that level on Tuesday.In bonds, at the 10-year tenor, the gap between U.S. and Japanese rates was 340 bps and almost 440 bps at the two-year tenor.China’s yuan, which hit a seven-month low on the dollar last week and has hardly moved since, faces similar pressure with U.S. 10-year yields more than 220 bps higher than Chinese government bond yields.Robust manufacturing data in China and an announcement from the central bank that it would be borrowing bonds – likely to sell them and steady falling yields, traders said – gave only the briefest fillip to the currency on Monday.It was last at 7.3043 in offshore trade on Tuesday, within a whisker of its June trough.The New Zealand dollar slipped 0.3% in early trade and at $0.6075 was testing support at its 200-day moving average. Sterling was steady at $1.2641.The Australian dollar hovered within its recent range at $0.6650 with traders focused on central bank minutes to gauge how seriously policymakers are considering interest rate hikes.Swaps markets pricing implies a one-in-three chance of a rate hike as soon as next month.”We know they were talked about, the question is, what is the trigger,” said ING economist Rob Carnell. “We are leaning towards forecasting a hike at the August meeting.” More
The consumer price index (CPI) rose 2.4% higher in June from a year earlier, slower than the 2.7% rise in May and the weakest since July 2023, according to Statistics Korea.It was also well below the median 2.7% rise tipped in a Reuters survey of economists.Consumer inflation is expected to stabilise to the lower-to-mid 2% level in the second half, the country’s vice finance minister said, vowing continued policy measures to keep prices under control.The Bank of Korea (BOK) said in its assessment it sees the fact that inflation has come down to the mid-2% level as a positive and that it will watch to see if inflation converges with its 2% target.The index fell 0.2% on a monthly basis, after a 0.1% rise in the previous month, marking the first decline in seven months.By product, prices of agricultural goods fell 5.3% over the month while petroleum goods lost 2.9%, dragging the index lower. BOK governor Rhee Chang-yong said last month the pace of consumer inflation is likely to continue to slow, feeding expectations the central bank will start cutting interest rates towards the end of this year.The BOK extended its interest rate pause for an 11th straight meeting in May. The bank next meets on July 11.The core CPI, excluding volatile food and energy items, was 2.2% higher in June than a year before, in line with May. More
Western automakers are under pressure to expand their range of chemical battery technologies to meet the needs of all market segments amid fierce competition from their often cheaper Chinese rivals. “This decision is an effective and cutting-edge response to market volatility and change in technologies,” Ampere said in a statement, adding that LFP batteries would equip “several” models of the Renault (EPA:RENA) and Alpine brands over the next years. The company also pledged to work towards the development of so-called cell-to-pack battery solutions aimed at boosting the range of its EVs, together with South Korea’s LGES. In a separate statement, LGES said early on Tuesday it had signed a deal to supply 39 gigawatt hours of LFP pouch-type batteries to Renault to power about 590,000 vehicles, adding the battery cells would be produced in Poland. The deal marks the first LFP battery supply deal for EV use for the South Korean battery maker, LGES said. Automakers are expanding their use of different types of battery chemistry, such as LFP, in a bid to cut costs to make affordable EVs and avoid supply chain concerns around materials like cobalt.LGES said the value of the contract had not been confirmed but the contract period was between the end of 2025 and Dec. 31, 2030. Shares of LGES rose as much as 4.3% on Tuesday morning after the announcement of the deal, but as of 0011 GMT they were trading only 0.4% higher. South Korea’s benchmark KOSPI index was down 0.3%. More
(Reuters) – A look at the day ahead in Asian markets.Asia lagged what was a pretty solid start to the new quarter for global stocks on Monday, and the steep rise in U.S. Treasury yields suggests it will be difficult session again on Tuesday for regional equities and emerging assets more broadly.The 10-year U.S. yield jumped 13 basis points to 4.50% on Monday – the highest yield and biggest one-day rise in a month – as investors repriced the potential inflationary impact from mooted fiscal, tariff, and immigration policies under a Donald Trump presidency.Wall Street, European, and world stocks powered through that headwind, Japanese stocks got a lift from the yen’s slide back through 161.00 per dollar, and Chinese stocks drew strength from a positive surprise in domestic manufacturing sector data. But broad measures of Asian and emerging equities flatlined and they may struggle to rebound meaningfully, if at all, in the face of such a sharp rise in dollar-denominated borrowing costs. There isn’t anything on the local economic and policy calendar that looks like giving markets a significant steer on Tuesday, with only South Korea inflation and retail sales from Hong Kong scheduled for release.It’s ‘Groundhog Day’ for yen traders, on intervention watch again with the yen mired at 38-year lows against the dollar. Japanese authorities have not shown their hand yet – could they be waiting for the July 4 U.S. holiday to catch the market off-guard and get maximum impact?Chinese markets opened the new quarter with a spring in their step after the release on Monday of surprisingly upbeat manufacturing purchasing managers index.The ‘unofficial’ S&P Global PMI for May pointed to the fastest pace of manufacturing sector growth in more than three years, contrasting with the National Bureau of Statistics’ ‘official’ PMI on Sunday that showed a contraction in factory activity. But figures on Monday also showed that new home prices in June rose at the slowest rate in five months, suggesting recent government efforts to support the country’s ailing property sector are having only a limited impact so far.Perhaps rattled by the economy, Beijing is taking new steps to boost the inflow of foreign capital into the country and halt the recent plunge in domestic interest rates. Tuesday’s main data point in Asia will be South Korean inflation for June. Prices are forecast to have risen 0.1% on a monthly basis and 2.7% on an annual basis, according to a Reuters poll. Both readings would be unchanged from May.The last time annual headline inflation was this low was last July, while core inflation of 2.2% in May was the lowest since December 2021. More numbers like that and Bank of Korea could soon cut interest rates.Here are key developments that could provide more direction to markets on Tuesday:- South Korea inflation (June)- Hong Kong retail sales (June)- Japan money supply (June) More
Annual shop price inflation slowed to 0.2% in June from 0.6%in May, the smallest increase since October 2021, the British Retail Consortium said on Tuesday.Prices for non-food goods fell by 1.0% in annual terms after a 0.8% drop in May – helped by promotions on TV sets timed to coincide with the Euro 2024 soccer tournament – while food inflation slowed for a 14th month in a row to 2.5% from 3.2%%.”This will be of help to shoppers as they plan their household budgets for essential goods and services,” said Mike Watson, head of retailer and business insight at NielsenIQ, which provides data for the BRC.”With uncertainty around discretionary spending, we expect the intense competition across the marketplace to keep price increases as low as possible this summer.”Sunak has sought to claim credit for the fall in headline inflation which topped 11% in 2022 and returned in May to the Bank of England’s 2% target. But opinion polls suggest his Conservative Party will lose heavily to the opposition Labour Party in Thursday’s election.The BoE is assessing whether price pressures have abated sufficiently for it to cut interest rates for the first time since 2020. However, with inflation in the services sector running at nearly 6%, it remains unclear when it might make its move.Investors are putting a roughly 60% chance on the BoE cutting Bank Rate to 5.0% from 5.25% on Aug. 1.BRC Chief Executive Helen Dickinson said investment by retailers to improve their operations and supply chains was limiting price rises. She urged the next government to fix cost burdens such as the business rates tax on commercial property and an apprenticeship levy that employers say is inflexible. More
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