Aurelia Butler

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TOKYO (Reuters) – The dollar steadied on Wednesday after hitting a four-week high against peer currencies overnight as market players awaited key U.S. inflation data and the Federal Reserve’s updated interest rate projections due later in the day.The U.S. dollar has rebounded after Friday’s stronger-than-expected jobs report raised the prospect of inflation remaining sticky while growth stays strong, making the U.S. central bank less likely to cut rates in the coming months.Markets are currently pricing in a roughly 56% chance of a cut in September, according to the CME FedWatch tool, down from 77.8% one week ago.Investors will have a chance to assess the inflation situation when U.S. Consumer Price Index numbers are released at 1830 GMT on Wednesday, just hours before the Fed concludes its two-day policy meeting.Economists polled by Reuters expect headline consumer price inflation to ease to 0.1% from 0.3% last month, and core price inflation to remain steady on the month at 0.3%.Meanwhile, the Fed is widely seen holding rates at 5.25% to 5.5%, putting the focus on policymakers’ updated economic projections known as the “dot plot” and Chair Jerome Powell’s press conference for clues of how soon cuts could begin.”Consensus seems to be that the number of cuts in 2024 will be downgraded from three currently to two” in the latest dot plot, said Kieran Williams, head of Asia FX at InTouch Capital Markets.Powell is likely to strike a relatively dovish tone at the press conference, however, given disappointing growth indicators since the last Fed meeting, Williams said.The dollar index, which measures the greenback against a handful of other major peers, was little changed at 105.27, after touching its strongest level since May 14 at 105.46 overnight.The euro was mostly flat at $1.07375. It fell on Tuesday to $1.07195, its lowest level since May 2, as investors continued to react to French President Emmanuel Macron’s call for a snap election following gains by the far right in European Parliament elections.Sterling was unchanged at $1.2735. UK gross domestic production figures for April are due later on Wednesday.Japanese wholesale prices rose 2.4% in the year to May, Bank of Japan data showed on Wednesday, beating market forecasts for a 2% increase.The yen held steady at 157.16 per greenback after slipping to its lowest since June 3 at 157.40 the previous day.The Bank of Japan (BOJ) will also meet this week, where it is widely expected to keep interest rates steady and consider whether to offer clearer guidance on how it plans to reduce its huge balance sheet.”The BOJ will have to walk a tightrope in its policy meeting this week to avoid inadvertently stoking JPY outflows, while also supporting growth and preventing disorderly JGB markets,” said Wei Liang Chang, currency and credit strategist at DBS.While Japan’s central bank will likely discuss bond buying cuts to pre-empt yen selling pressure, dollar/volatility this week largely depend on Wednesday’s U.S. CPI and Fed meeting, he added.”The hurdle for another upside surprise to U.S. rates and the USD looks quite high though, and we do not expect a retest of the 160 level in USD/JPY.”The yen’s decline to a 34-year low of 160.245 per dollar at the end of April triggered several rounds of official Japanese intervention totalling 9.79 trillion yen ($62.31 billion).In cryptocurrencies, bitcoin last rose 0.08% to $67,339.00.($1 = 157.1100 yen) More

The G7 – comprising the United States, Japan, Canada, Germany, France, Italy and Britain – is set to meet in Italy this week where leaders will discuss issues such as climate change, migration and heavy debt loads in developing countries.Calculating that eradicating global hunger would require $31.7 billion annually and that the G7’s share of debt relief for the poorest countries would land at a further $4 billion, Oxfam said these together accounted for just 2.9% of the $1.2 trillion estimated spent by the G7 on the military last year.”Governments are finding their pockets run deep to fund war today, but when it comes to stopping starvation they are suddenly broke,” Oxfam International’s inequality policy chief, Max Lawson, said in a statement.Some 167 million people worldwide are suffering crisis-level hunger or worse, according to the IPC, a worldwide benchmark for world hunger, which has warned that lack of funds is preventing it from meeting growing demands and will force it to reduce the scope of its work.Oxfam called on the G7 to halt arms exports that may be used in war crimes, boost taxes for billionaires, provide debt relief to poor countries to free up budgets for development, and fulfill outstanding aid and climate pledges.It calculated that the seven countries owed some $15 trillion to states in the so-called Global South in outstanding aid commitments and unfulfilled pledges for climate financing, including the “loss and damage” fund.”Families are struggling to get food on the table, our tax systems are making the rich richer, and the solution is glaringly obvious,” Lawson said. “We’re talking about a small commitment with the potential for huge impact.” More

SINGAPORE (Reuters) – Demand for gold in Asia is surging despite prices hovering near the record highs it hit in May, industry officials say, as buyers snap up the metal to hedge against geopolitical and economic uncertainty. Spot gold is trading a little over $2,300 per ounce, up about 12% year-to-date and only about 6% shy of the record high it hit last month.Lower confidence in other investment options, such as real estate and equities, is also a factor behind the demand for gold, analysts say.”When the macro-economic backdrop returns to normal, when real estate and equities are more interesting, I think that price sensitivity will return,” Ruth Crowell, chief executive of the London Bullion Market Association, told Reuters.In Japan, there are more gold bulls than bears despite record high prices, according to Bruce Ikemizu, chief director of the Japan Bullion Market Association. Chinese investors grappling with currency devaluation, a protracted real estate downturn and trade tensions are also finding value in gold, experts said. China’s purchases of gold coins and bars surged 27% in the first quarter of this year.”The trend in the market has been that if the consumer wants to buy gold, they will. The price doesn’t matter,” Albert Cheng, CEO of the Singapore Bullion Market Association, told Reuters on the sidelines of the Asia Pacific Precious Metals Conference. Elsewhere in Asia, retail investors have been pouring money into the safe-haven asset, with the metal finding increased acceptance among younger buyers.In Thailand, there were queues outside gold stores as soon as there were headlines on higher prices, said Nuttapong Hirunyasiri, the CEO of MTS Gold Group. Vietnam is seeing investors flocking to stock up, despite domestic prices trading at stubbornly high premiums to global prices.On the other hand, India and Australia remain sensitive to high prices. Indian gold prices have traded at a discount to international prices for five straight weeks, reflecting tepid demand in the second largest bullion consumer, while the Perth Mint’s gold product sales in May fell 30% on a monthly basis. [GOL/AS]India’s gold imports in 2024 are expected to fall by nearly a fifth, as record high prices have pushed retail consumers to exchange old jewellery for new items instead of buying afresh. More

BRASILIA (Reuters) – The Brazilian government will not insist on a highly contested measure tightening rules for tax credits after the Senate sent it back, but there is still no decision on a replacement measure, two sources close to the presidential palace told Reuters on Tuesday.The Finance Ministry had included the measure last week in an executive order outlining tighter rules for the use of tax credits by companies. The measure triggered a strong backlash from the most affected industries, including the powerful agribusiness sector.An executive order takes immediate effect but needs to be voted on by lawmakers within four months to remain valid. By sending it back to the government, in effect the order is canceled.The measure had aimed to raise as much as 29.2 billion reais ($5.52 billion) to offset a revenue loss of 26.3 billion reais from tax benefits passed by Congress for the payrolls of some economic sectors and small cities.The government needs to find alternatives to compensate for the lost revenue, because the Supreme Court has ruled that Congress must approve compensation for maintaining payroll benefits.No alternative has been decided so far, the sources said. It will be up to President Luiz Inacio Lula da Silva’s economic team to rework a proposal that is more palatable to Congress and the industries.As of Monday, Finance Minister Fernando Haddad was still betting that he would be able to negotiate the tighter tax credit rules with Congress, one of the sources said. But after a conversation with Senate President Rodrigo Pacheco on Monday, Lula was convinced the measure would have no chance of succeeding, the source said.Later on Tuesday, Haddad told reporters that his ministry has no plan B for the measure and that the Senate has assumed part of the responsibility for finding a solution. More

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(Reuters) -Oracle on Tuesday forecast revenue for fiscal 2025 to grow in double digits, above analysts’ estimates, indicating strong demand for its AI-powered cloud services, sending the company’s shares up 9% after the bell.The company also announced a partnership with ChatGPT-maker OpenAI and Google (NASDAQ:GOOGL) Cloud to extend its own cloud infrastructure to customers.”I expect that each successive quarter should grow faster than the previous quarter — as OCI (Oracle (NYSE:ORCL) Cloud Infrastructure) capacity begins to catch up with demand,” CEO Safra Catz said.”In Q4 alone, Oracle signed over 30 AI sales contracts totaling more than $12.5 billion, including one with OpenAI to train ChatGPT in Oracle Cloud.”AI investments play a crucial role in Oracle’s efforts to catch up with cloud giants such as Microsoft (NASDAQ:MSFT), which is seeing rapid growth of its own Azure cloud due to its tie-up with OpenAI.Oracle has also spent billions of dollars on hardware from chip giant Nvidia (NASDAQ:NVDA).The company’s total revenue grew 3% to $14.29 billion in the fourth quarter, but missed LSEG estimates of $14.55 billion.”In the cloud market, Oracle is doing well as the fourth-largest provider, but that business has to grow far bigger to help overall growth achieve double digits,” said Gil Luria, research analyst at D.A. Davidson.Oracle reported total revenue growth of 6% for fiscal 2024. For FY25, analysts expect 9% growth.The company expects first-quarter revenue to grow between 5% and 7%, while analysts estimate a 7.6% rise.”In Q3 and Q4, Oracle signed the largest sales contracts in our history, driven by enormous demand for training AI large language models in Oracle Cloud,” Catz said.Remaining performance obligations — the most popular measure of booked revenue — came at $98 billion in the fourth quarter, up 44% from a year ago.It posted adjusted earnings per share of $1.63 per share, compared with estimates of $1.65 per share. More

WASHINGTON (Reuters) – The World Bank on Tuesday said the U.S. economy’s stronger-than-expected performance has prompted it to lift its 2024 global growth outlook slightly but warned that overall output would remain well below pre-pandemic levels through 2026.The World Bank said in its latest Global Economic Prospects report that the global economy would avoid a third consecutive drop in real GDP growth since a major post-pandemic jump in 2021, with 2024 growth stabilizing at 2.6%, unchanged from 2023.That’s up 0.2 percentage point from the World Bank’s January forecast, largely on the strength of U.S. demand.”In a sense, we see the runway for a soft landing,” World Bank Deputy Chief Economist Ayhan Kose told Reuters in an interview, noting that sharply higher interest rates have brought down inflation without major job losses and other disruptions in the U.S. or other major economies.”That’s the good news. What is not good news is that we may be stuck in the slow lane,” Kose added.The World Bank forecast global growth of 2.7% in both 2025 and 2026, a level well below the 3.1% global average in the decade prior to COVID-19. It also is forecasting that interest rates in the next three years will remain double their 2000-2019 average, keeping a brake on growth and adding debt pressure to emerging market countries that have borrowed in dollars.Countries representing 80% of the world’s population and GDP output will see weaker growth through 2026 than they had prior to the pandemic, the report said. “Prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities and costly climate events,” said World Bank Chief Economist Indermit Gill, adding that those countries will continue to require international assistance to fund their needs.The report contains an alternative “higher-for-longer” interest rate scenario, in which persistent inflation in advanced economies keeps interest rates about 40 basis points above the lender’s baseline forecast, cutting 2025 global growth to 2.4%.U.S. BUOYANTStrong demand and higher inflation readings in the U.S. have delayed expectations for Federal Reserve rate cuts, and the U.S. economy is defying predictions of a downturn for the second year in a row, according to the report. The World Bank is now forecasting 2.5% U.S. growth for 2024 – matching the 2023 pace – and up sharply from the January forecast of 1.6%.Kose said the U.S. upgrade accounts for about 80% of the added global growth since the January forecast.The World Bank also upgraded China’s 2024 growth forecast to 4.8% from 4.5% in January, largely on the back of increased exports that have offset soft domestic demand. But it forecast China’s growth will fall to 4.1% in 2025 amid weak investment and consumer confidence and an ongoing property-sector downturn.India also saw a forecast upgrade for 2024 to 6.6% from 6.4% in January amid strong domestic demand.The World Bank cut Japan’s 2024 growth forecast to 0.7% from 0.9% due to weak consumption growth and slowing exports and stabilizing demand for tourism. It left its 2024 eurozone forecast unchanged at 0.7% amid the bloc’s continued difficulties with high energy costs and weaker industrial output.CONFLICT RISKSIn addition to the higher-for-longer rate scenario, the World Bank said the biggest downside risks to the global outlook included greater spillovers from armed conflicts in Gaza and Ukraine.A wider war in the Middle East could cause further disruptions to shipping and push up oil prices and inflation. Likewise, more uncertainty about the path of Russia’s invasion in Ukraine could also disrupt markets for oil and grains, while choking investment into neighboring countries, the bank said.Increasing trade restrictions driven by geopolitical rivalries also could hamper the recovery of global trade volume growth, which was barely perceptible last year at about 0.1%. The World Bank forecast a rebound to 2.5% in 2024, up from 2.3% in the January forecast.But it said rising protectionism and industrial policies in many countries could lead to more inefficiencies in global supply chains and reduce investment into emerging market and developing countries.The World Bank also said a deeper downturn in China, the world’s second-largest economy, would hamper growth, especially in commodity exporters and trade-intensive economies.On the upside, the World Bank said that the U.S. could continue to surpass expectations, boosting global growth with lower inflation if elevated productivity and labor supply due to immigration prove persistent. Lower inflation globally, supported by productivity gains, improved supply chains and easing commodity prices, could prompt central banks to cut interest rates more quickly than now expected, boosting credit growth, the bank added. More