Aurelia Butler

SINGAPORE (Reuters) – The yen was headed for its best week in more than a year on Friday, helped by Tokyo’s suspected intervention this week to pull the Japanese currency away from 34-year lows, which also left the dollar broadly on the back foot.The yen rose to a session-high of 152.895 per dollar in early Asia trade and was set to clock a weekly gain of more than 3%, its largest since December 2022. It was last more than 0.4% stronger at 152.96 per dollar.Traders were left on tenterhooks for any further huge swings in the yen after Tokyo is suspected to have intervened to support its currency this week to the tune of some 9.16 trillion yen ($59.79 billion), as suggested by data from Bank of Japan (BOJ).Japan’s latest forays into the currency market came during periods of thin liquidity, with the country out for a holiday on Monday while the second attempt happened late on Wednesday after Wall Street had closed.”Calculated and opportunistic market action for maximum effect is preferred. And the (Ministry of Finance) is practiced in this. What’s more, the element of unknown and surprise are key advantages that the BOJ and MoF will want to retain,” said Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank.The yen has strengthened nearly eight yen against the dollar since the start of the week, when it first slid past the key 160 per dollar level which some have said could be the line in the sand for authorities.Elsewhere, the dollar lost ground against most of its peers and was headed for its worst week in nearly two months, in part due to the sharp rise in the yen this week.Traders are now looking to U.S. nonfarm payrolls data due later on Friday to guide the dollar’s next moves, after Federal Reserve Chair Jerome Powell told markets this week that the central bank’s next move in interest rates would likely be down, and not up as some had feared.The Fed held interest rates steady at the conclusion of its two-day monetary policy meeting, as expected, and signalled it is still leaning towards eventual rate cuts, even if they may take longer to come than initially expected.The euro ticked up 0.05% to last trade at $1.0730, and was eyeing a weekly gain of 0.35%. Sterling steadied at $1.25365 and was similarly set to rise more than 0.3% for the week.Against a basket of currencies, the dollar, which has struggled to regain its footing in the wake of the less-hawkish-than-feared Fed comments, was little changed at 105.32.The dollar index was on track to lose 0.7% for the week, its worst performance since March.”Recent Fed speech has acknowledged the lack of progress on inflation and the desire to maintain the current level of policy rates for longer. That said, it does seem clear the Committee remains biased to cut rates, but any policy easing will be determined by how inflation develops over the next few months,” said Tai Hui, APAC chief market strategist at J.P. Morgan Asset Management.”We now expect the Committee to reduce rates 1-2 times this year, with risks skewed to fewer cuts.”Down Under, the Australian dollar edged 0.07% higher to $0.6570, and was on track to gain nearly 0.6% for the week.The New Zealand dollar tacked on a marginal 0.03% to $0.5963, and was eyeing a 0.4% weekly gain.($1 = 153.2100 yen) More

(Reuters) -Shares in Hugo Boss slumped nearly 10% on Thursday, hitting their lowest level since 2022 after the premium apparel brand flagged weaker demand in China and concern about U.S. consumer sentiment ahead of the presidential election.The German fashion house is on an expansion mission, increasing marketing spend and opening 102 new points of sale in 2023, but its shares have fallen this year as it warned of slower sales growth.In the Americas region, Hugo Boss first-quarter sales were up 11% compared to the same quarter last year, but slowing compared with a growth of 18% in the previous quarter.Demand in key markets such as China and Britain has continued to deteriorate, while the U.S. consumer may also be impacted by uncertainties such as the upcoming presidential election, Chief Financial Officer Yves Mueller said.Hugo Boss shares were 8% down at 46.57 euros by 1124 GMT, bringing losses so far this year to around 30%. The stock had gained earlier after the company reported better than expected first-quarter operating profit.Investors may be worried investments Hugo Boss has been making are not supported by strong growth anymore, putting pressure on profit margins, said Jelena Sokolova, an analyst at Morningstar.Hugo Boss had warned in March its target of reaching 5 billion euros in annual revenues in 2025, with the Asia-Pacific and Americas regions each delivering 1 billion euros, might be delayed. In the first quarter, usually a slower period for retailers, overall sales were 1.014 billion euros, up 6% from a year ago.Sales in China fell from the same period a year earlier, though, due to “muted” demand. Hugo Boss still aims to increase the Greater China region’s contribution to group sales, which now stands around 8%, Mueller said. The German fashion house posted a 6% rise in first-quarter earnings before interest and taxes to 69 million euros ($74 million), edging the 65 million expected by analysts.”We think that the sales mix and the source of the beat are not the best of quality,” JP. Morgan analysts wrote in a note to clients. ($1 = 0.9335 euros) More

BENGALURU (Reuters) – Australia’s central bank will hold its key policy rate at 4.35% for a fourth straight meeting on Tuesday and at least until end-September, according to a Reuters poll of economists who forecast just one interest rate cut this year.That change in expectations from two 25 basis point cuts in an April survey follows news inflation fell less than expected last quarter and the labour market remains tight.Although inflation slowed to 3.6% from 4.1% previously, it was not expected to fall below the Reserve Bank of Australia’s 2-3% target range until 2025, suggesting the central bank will have to hold rates higher for longer.”Services inflation is still a serious problem that has to be dealt with. And the most painless remedy for a central banker is higher for longer cash rates,” said Craig Vardy, head of fixed income at BlackRock (NYSE:BLK) Australasia.”They were late to start hiking, have not hiked as high as other major central banks, so expecting them to start cutting prematurely was odd from our point of view. If they were to cut, and then have to reverse course soon after, it would have destroyed their credibility.” The RBA in recent months has sought to manage rate cut expectations, maintaining a “not ruling anything in or out” stance. That has led financial markets to factor in an extended pause, an even more hawkish stance than economists in the poll.All but one of 37 economists in the April 30-May 2 poll expected the RBA to hold its official cash rate at 4.35% at the end of its two-day policy meeting on May 7. One expected a 25 basis points hike.”We expect they (RBA) will remain on hold, but they will probably maintain and possibly amp up their rhetoric about the risk of a hike. I don’t think the (inflation) surprise we saw in March was enough to tip the balance to them hiking, but you cannot rule it out completely,” said Luci Ellis, chief economist at Westpac.All major local banks – ANZ, CBA, NAB, and Westpac – predicted no rate change until at least end-September and all four saw just one 25 basis point cut in November.Median forecasts showed rates at 4.10% by end-year, 25 basis points higher than the April poll. The RBNZ was predicted to cut rates by 50 basis points this year, a separate Reuters poll showed.Even with the U.S. Federal Reserve expected to hold rates higher for longer, the Australian dollar and the New Zealand dollar were forecast to gain over 2% against the greenback in the next six months, another Reuters poll found.The Australian and New Zealand dollars were forecast to trade around $0.67 and $0.61 by end-October.Analysts forecast the Aussie and kiwi dollars will recover all their year-to-date losses, 4% and 6% respectively, 12 months from now, a significant change from last month’s poll. “In the near term we’ll see both Aussie and kiwi remain under a little bit of pressure as we see indications of higher for longer from the U.S. Federal Reserve. Once we get through the next two or three months, we expect both the Aussie and kiwi will start to rally,” said Ben Picton, senior strategist at Rabobank. More

WASHINGTON (Reuters) – The Internal Revenue Service said on Thursday that it plans to sharply increase audit rates for big corporations, partnerships and multimillionaires over the next three years as it ramps up enforcement spending and hiring to boost collections.Releasing an update of its strategic operating plan for spending $60 billion in funding from the 2022 Inflation Reduction Act, the IRS said it was targeting a near tripling of the audit rate on corporations with assets over $250 million to 22.6% in the 2026 tax year from 8.8% in 2019.For complex partnerships with assets over $10 million the IRS said it intends to increase audit rates by nearly 10-fold, to 1% in tax year 2026 from 0.1% in 2019. The IRS also said it is targeting a 50% increase in audit rates for individuals with total positive annual income of over $10 million, to 16.5% in the 2026 tax year from 11% in 2019.At the same time, the IRS emphasized that it would not increase audit rates on individuals and small businesses earning under $400,000, in keeping with President Joe Biden’s pledge not to increase taxes on that population.The IRS said it intends to spend $7.25 billion of the Inflation Reduction Act funds in fiscal 2024, up from $3.4 billion in fiscal 2023. The agency’s initial strategic operating plan called for fiscal 2024 spending at $5.8 billion.The IRS plans to spend $9.3 billion in fiscal 2025, $7.3 billion in fiscal 2026 and a total of $57.82 billion over the decade though fiscal 2031, according to the document.”The changes outlined in this report are a stark contrast to the years of under-funding that deteriorated taxpayer service and tax enforcement, frustrating taxpayers, the tax community and IRS employees alike,” IRS Commissioner Danny Werfel said in a statement.The Inflation Reduction Act funding was initially approved at $80 billion over a decade to modernize the IRS’s antiquated computer systems, improve taxpayer services and ramp up enforcement to close the “tax gap” between taxes owed and those collected, estimated at $7 trillion over 10 years.The provision in the clean energy and healthcare bill that Democrats passed without Republican votes was meant to make up for a decade of IRS budget cuts passed by Republican-led Congresses. Republicans have railed against the IRS spending as harassment of Americans over their taxes and have successfully chipped away at the funding. A top-line spending deal is set to cut the funding by $20 billion this year.The IRS said it hired 13,661 people in fiscal 2023 using the Inflation Reduction Act funds, including 10,518 taxpayer services staff and 495 enforcement staff. It plans to increase these hires to 16,314 in fiscal 2024, including 4,088 enforcement staff.The report showed that the hiring would support a total IRS workforce of about 93,000, by 2028, up from 88,411 estimated for fiscal 2024. That would be somewhat short of Werfel’s goal for an IRS workforce of over 100,000 within the next three years. More

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(Reuters) – A look at the day ahead in Asian markets.The dovish waves from Fed Chair Jerome Powell’s press conference on Wednesday continue to wash over world markets, putting Asian stocks on the cusp of a second straight weekly gain and highs not seen in well over a year.Investor sentiment is positive and risk appetite looks strong going into the Asian open on Friday, after world stocks rose and U.S. bond yields and the dollar fell the previous day.The upbeat mood may be strengthened by the first quarter results from Apple (NASDAQ:AAPL) after the U.S. close on Thursday, as the world’s second most valuable company reported a smaller than expected decline in revenue and Chief Executive Tim Cook said he expects a return to sales growth in the current quarter. The regional economic and corporate calendar is light on Friday – the Australian services PMI, consumer inflation from Thailand and retail sales from Singapore are the highlights.Perhaps the most important news for world markets on Friday, apart from the U.S. employment figures for April, will come from Tbilisi, where the Asian Development Bank is hosting its 57th annual meeting. Japan’s Finance Minister Shunichi Suzuki and Bank of Japan governor Kazuo Ueda are scheduled to hold a press conference on the sidelines of the meeting and if they do face reporters, they will be grilled about Japan’s apparent intervention in the currency market this week buying yen. Japan likely intervened early on Monday and early on Thursday local time buying yen to stem its rapid decline that culminated in a fresh 34-year low of 160.00 per dollar.  Estimates suggest Tokyo spent just under $60 billion in the two yen-buying forays, around the same amount used in the three interventions over September and October 2022, the last time authorities waded into the market.The targeted action, when market liquidity was particularly thin, appears to have worked, for now at least – the yen hit 153.00 per dollar on Thursday, its strongest since April 15 and up 4.5% from that historic low on Monday.In Asian equities, meanwhile, Hong Kong stocks go into Friday’s session at a six-month high, having leaped 2.5% on Thursday thanks to gains in local technology, property and financial stocks. Beijing’s pledge this week to step up economic support has helped underpin sentiment. The Hang Seng is now up eight days in a row, its best stretch in five and a half years. It still has some way to go to beat that run though – in late 2018 and early 2019 the index rose 14 days in a row, and only had one ‘down’ day in 22. Mainland China markets are closed on Friday, the last of a three-day holiday. Here are key developments that could provide more direction to markets on Friday:- Australia services PMI (April)- Thailand consumer inflation (April)- Japan finance minister, central bank governor press conference (Reporting and Writing by Jamie McGeever; Editing by Josie Kao) More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Turkey has halted trade with Israel as it again accused the country of stoking a “humanitarian disaster” in Gaza, marking the latest sign of deepening tensions between the two nations. Ankara’s trade ministry late on Thursday said all export and import transactions related to Israel had been stopped and would not resume until the Jewish state “allows an uninterrupted and sufficient flow of humanitarian aid to Gaza”. Ankara in April sanctioned exports in 54 important categories of goods but this latest move will disrupt bilateral trade worth more than $7bn a year. A Turkish official described the curbs as a temporary measure meant to put pressure on Israel, but said they could also be reversed if Ankara’s conditions were met. Israel Katz, Israeli foreign minister, said earlier in the day, following a Bloomberg report that Ankara had cut off trade, that he had urgently instructed officials to “create alternatives for trade with Turkey”. “This is how a dictator behaves, disregarding the interests of the Turkish people and businessmen, and ignoring international trade agreements,” Katz wrote on X, referring to Recep Tayyip Erdoğan, president of Turkey. Israel’s foreign ministry did not respond to questions over whether Ankara had formally notified Israel that it was making such a move.Erdoğan has been ratcheting up his criticism of Israel in recent months, accusing it of acts of “genocide” over its war with Hamas and calling Prime Minister Benjamin Netanyahu the “butcher of Gaza”.Turkey has also diverged from its western allies in declining to identify Hamas as a terrorist organisation and allowing its members to live in the country. Erdoğan hosted Hamas’s leader, Ismail Haniyeh, for meetings in Turkey last month. Ankara this week also said it would attempt to join South Africa’s case against Israel at the International Court of Justice.Turkey’s trade with Israel was $7.1bn last year, down from $9.5bn in 2022, according to Trade Data Monitor, a customs database. Turkish exports accounted for about three-quarters of that. A free trade agreement between the two countries came into force in 1997.Erdoğan has been facing significant pressure domestically to step up measures against Israel, particularly after local elections in March when his party suffered its biggest defeat since its founding two decades ago. Many candidates had said in their campaigns that the Erdoğan government had not taken sufficient action against Israel over the war in Gaza.Erdoğan had pursued a policy of rapprochement with Israel prior to the start of the war on October 7, part of a wider effort to improve relations in the region and boost Turkey’s flagging economy. He met Netanyahu for the first time last September at a UN General Assembly meeting. Turkey and Israel expelled each other’s ambassadors in 2018 after Israeli soldiers killed scores of protesters in Gaza. The two countries restored diplomatic relations in 2022. More