Aurelia Butler

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SINGAPORE (Reuters) – The dollar was firm on Tuesday while the yen struggled on the weaker side of the 156 level, though trade was mostly rangebound as investors generally stuck to their views of the expected timing and extent of Federal Reserve rate cuts this year.Cryptocurrencies rallied, led by a surge in ether on growing anticipation of an impending approval of spot ether exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).Against the yen, the dollar rose 0.07% to 156.37 in the early Asian session.The yen has traded in a tight range over the past few sessions as fears of further intervention from Japanese authorities deterred traders from pushing the currency to new lows. However, the still-stark interest rate differentials between the U.S. and Japan maintained the appeal of the yen as a funding currency.Elsewhere, the euro edged 0.03% higher to $1.0860, while sterling similarly tacked on 0.03% to $1.27095.With little on the U.S. economic data calendar this week to guide the direction of currency moves, focus turns to a slew of Fed speakers for clues on the U.S. rate outlook and how soon an easing cycle could begin.Several officials on Monday called for continued policy caution, even after data last week showed a welcome easing in consumer price pressures in April.”I think all the comments from various officials will deliver more of the same messages, and the main message will be for the FOMC to continue a patient approach on interest rate cuts,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY).Still, the cautious Fed rhetoric has so far done little to significantly alter the market pricing for rate cuts, with investors betting on two cuts this year beginning September.The New Zealand dollar was little changed at $0.6107, while the Aussie ticked 0.1% higher to $0.6674, ahead of minutes of the Reserve Bank of Australia’s May meeting due later on Tuesday.Against a basket of currencies, the dollar steadied at 104.61.In the cryptoverse, ether jumped more than 5% to an over one-month high of $3,691.80, after having surged nearly 14% in the previous session – its largest daily percentage gain since November 2022.Bitcoin similarly charged more than 3% higher to break above the $70,000 level. It last bought $71,259.Analysts said the latest crypto rally came on the back of speculation that an approval of spot ether ETFs by the U.S. SEC could be imminent, following in the footsteps of the listing of bitcoin ETFs earlier this year.”It’s absolutely flown,” said Tony Sycamore, a market analyst at IG. “I think it’s partly to do with that speculation, but also to do with that core (U.S.) inflation data last week that’s boosted risk sentiment and obviously brought rate cuts back into play.”With the SEC approval in January and then the halving out of the way, it was lacking a little bit of a catalyst in terms of what would be the next key driver for crypto, and I think it was always going to revert back to macro. And the macro has been really, really good since last Wednesday.” More

TOKYO (Reuters) – Japanese Finance Minister Shunichi Suzuki said on Tuesday he was concerned about the negative aspects of the current weakness in the yen and its impact on incentives to increase wages. “One of our major goals is to achieve wage increases that exceed the rise in prices,” Suzuki said. “On the other hand, if prices continue to remain high, it will be difficult to reach this target even if wages rise.” More

BENGALURU (Reuters) – The Bank of Korea will keep its key policy rate unchanged for an 11th straight meeting on Thursday and through next quarter, followed by a half point cut in Q4 after the likely start of policy easing from many global peers, a Reuters poll found.South Korea’s economy grew at the fastest pace in over two years last quarter thanks to strong exports, suggesting the economy may not need an immediate rate cut from the central bank.Bolstering the higher-for-longer rate view was elevated inflation and a weak currency.Already down nearly 5% for the year, any further weakening of the won, would likely drive up import costs and exacerbate inflationary pressures.All 43 economists in the May 14-20 Reuters poll expected the central bank to leave the base rate on hold at 3.50% on May 23.Median forecasts showed interest rates remaining unchanged through the third quarter before a 50 basis-point cut by end-2024. In an April survey, the consensus view predicted 25 basis-point cuts in Q3 and Q4.”Considering the uncertainty of the timing of the Federal Reserve’s interest rate cut and the higher dollar exchange rate level, the monetary policy committee will also maintain its cautious stance in lowering interest rates,” said Jihee Min, fixed income analyst at Mirae Asset Securities.The BOK, among the first to kick-off its policy tightening cycle in August 2021, was expected to lag its global peers on the timing of the first cut.The European Central Bank and the Fed were expected to ease in June and September, respectively.Although median forecasts showed interest rates on hold until end-Q3, a strong minority of 17 of 39 economists forecast a cut to 3.25% by the end of next quarter.Among those who provided forecasts until end-2024, a slim majority, or 19 of 37, expected interest rates at 3.00%, while the rest said 3.25%.”The BOK is likely to signal that a rate cut is unlikely in the next three months but still possible by the end of 2024,” noted Bum Ki Son, analyst at Barclays.”Growth momentum remains two-tiered with strong net exports, versus a still-soft domestic outlook. The soft domestic demand growth outlook and relatively muted perceived growth still suggest that the next move will be a cut.”Last month the BOK said the economy could grow at a faster pace this year than its earlier projection of 2.1%. A separate Reuters poll in April showed the economy expanding 2.2% in 2024.(For other stories from the Reuters global economic poll:) More

WASHINGTON (Reuters) – U.S. Federal Deposit Insurance Corp Chair Martin Gruenberg said on Monday he planned to step down, finally succumbing to a months-long scandal over sexual harassment and other misconduct at the top bank regulator. Gruenberg, whose five-year term ends in 2028, said he would step down once a successor is confirmed. The White House will soon put forward a nominee to replace him, deputy press secretary Sam Michel said in a statement. The pending departure of Gruenberg, a Democrat and Wall Street critic who had been a senior leader at the FDIC for nearly two decades, comes at a critical time for the agency – just a year after three major banks failed and as many lenders continue to struggle amid elevated Federal Reserve interest rates.The FDIC is also working with other bank regulators on several efforts to tighten regulations, including a contentious plan to boost big bank capital requirements.With Gruenberg staying on until a replacement is announced, Democrats can claim a moral victory while allowing the agency to continue with its regulatory agenda, said Todd Baker, a senior fellow at Columbia University’s law and business schools.”It’s a stalemate and it achieves most of the goals of the administration – that is, to retain control over the FDIC’s agenda,” he added. Gruenberg had clung to his job since November when a Wall Street Journal report exposed widespread misconduct at the FDIC, despite outcry from multiple congressional Republicans and some Democrats. The newspaper report was confirmed by a damning external review this month. But on Monday, Democratic Senator Sherrod Brown, who chairs the Senate Banking Committee, said there must be “fundamental changes” at the agency and called for Gruenberg to be replaced, in a key development that piled pressure on the FDIC chair. Analysts said it was unclear how long it could take the White House to get a new nominee through the thinly divided Senate, while Brown’s Republican counterpart, Senator Tim Scott, and other Republicans called for Gruenberg to go immediately. “We’re skeptical that Gruenberg will be able to hang on,” Ian Katz, managing director of policy research firm Capital Alpha Partners, wrote in a note. “This is like trying to contain a raging fire.”Should Gruenberg leave the agency without a confirmed replacement, leadership of the FDIC would fall to Travis Hill, the agency’s vice chair and a Republican. The agency would then be deadlocked 2-2.Gruenberg, 71, had been at the FDIC since 2005 and is the longest-serving FDIC board member in the agency’s 89-year history. During that time he served as its chair twice – once under President Barack Obama and the second under Joe Biden. Last week, Gruenberg testified alongside several other banking regulators before Congress. He vowed to take steps to address longstanding cultural issues at the agency, as well as his own personal conduct, after the review found multiple instances in which he lost his temper with subordinates.But Republicans and Democrats alike expressed skepticism that Gruenberg would be able to overhaul the agency. He was sworn in to his current five-year term as chair of the FDIC in January 2023. He had also served as chairman from November 2012 to mid-2018.”After chairing last week’s hearing, reviewing the independent report, and receiving further outreach from FDIC employees to the Banking and Housing Committee, I am left with one conclusion: there must be fundamental changes at the FDIC. Those changes begin with new leadership,” Brown said in his statement.(This story has been refiled to remove duplication of paragraph 7) More

Productivity in professional and financial services and in information technology grew by 4.3% between 2018 and 2022 compared with gains of 0.9% across construction, manufacturing and retail, food and transport, PwC said.The data suggested that the rise of artificial intelligence could help countries to break out of a rut of low productivity growth which would boost economic growth, wages and living standards, PwC said in a report published on Tuesday.Carol Stubbings, leader of PwC Global Markets and Tax & Legal Services, said highly productive sectors had faster growth in job ads for people with AI skills than without, suggesting AI played a role in these sectors’ higher productivity.The trend of productivity growth generated by the technology was likely to accelerate as companies increasingly deployed generative AI which can be used by non-AI specialists, she said.”The challenge with AI, and particularly generative AI, is the speed of the change,” Stubbings said.Last week the head of the International Monetary Fund Kristalina Georgieva said AI was hitting the global labour market “like a tsunami” and was likely to have an impact on 60% of jobs in advanced economies in the next two years.The PwC report tracked and analysed over half a billion job ads from 15 rich countries and used data from the Organisation for Economic Co-operation and Development.It said jobs that require AI skills – including AI-specialist and non-specialist roles – carried a average premium of 25% in the U.S. and 14% in Britain. More

The decision effectively delays the completion of the process following a 2022 law on the subject, which paved the way for subsequent regulation by the central bank.In a congressional hearing last year, the bank’s director of regulation, Otavio Damaso, had projected regulation to be wrapped up by June 2024.After launching a public consultation on the matter in December 2023, which concluded in January, the central bank said it would now open a new consultation in the second half of this year.The central bank told Reuters that the first public consultation aimed to gather input from society, also addressing issues not covered by the 2022 law, such as the asset segregation of virtual asset service providers.This required “reasonable dedication from the teams involved in the regulatory work,” it said, adding that the diversity of activities conducted by entities in the virtual assets sector and the various structures of these entities necessitated this preliminary effort.”The second public consultation, now focused on regulatory texts, aims to use the initial input to, once again with broad support from society, establish a robust regulatory framework,” said the central bank. More

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