Aurelia Butler

SINGAPORE (Reuters) – The resurgent dollar headed towards a second straight week of gains on Friday as a hotter-than-expected U.S. economy has pushed back investors’ and policymakers’ expectations of the trajectory of Federal Reserve rate cuts this year.The greenback’s 0.17% gain for the week was somewhat capped by a slight stall in its rally since Thursday following a rare trilateral warning from finance chiefs in the United States, Japan and South Korea over the latter two’s sliding currencies, raising the risk of a potential joint intervention.That’s as Asian currencies, in particular, come under immense pressure from the dollar’s strength.”It is symbolic that they made that joint statement,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY) (CBA).”Given the recent developments, the prospect of a joint Asian FX intervention is definitely rising. I’m not sure about whether or not the U.S. will be involved in that intervention, because ultimately, a stronger U.S. dollar will just help the FOMC’s inflation fight.”The yen was last little changed at 154.61 per dollar, languishing near a 34-year low and not far from the 155 level which traders see as a new line in the sand that would prompt an intervention from Tokyo.The Japanese currency was eyeing a weekly loss of more than 0.8% and was down 2% for the month thus far, ahead of the Bank of Japan’s (BOJ) monetary policy meeting next week.BOJ Governor Kazuo Ueda said on Thursday the central bank may raise interest rates again if the yen’s declines significantly push up inflation, highlighting the impact currency moves may have on the timing of the next policy shift.Elsewhere, sterling fell 0.08% to $1.2427, leaving it on track to lose 0.18% for the week. The euro eased 0.06% to $1.0637 and was set to clock a marginal weekly loss.While expectations of a first Fed rate cut have been pushed back to later this year, traders expect the European Central Bank to begin its rate easing cycle in June, which will likely keep the common currency weak for some time.”Once the ECB starts cutting, it’ll be apparent that global central banks will face divergent monetary policy easing cycles, and that will just exacerbate the strength in the dollar against the euro and other major currencies,” said CBA’s Kong.Fed funds futures now show just about 40 basis points (bps)worth of cuts priced in for the U.S. central bank this year – a significant pullback from the 160 bps of easing expected at the start of the year.The shift in rate expectations has come on the back of a slew of resilient U.S. economic data which has repeatedly surpassed expectations, alongside still-sticky inflationary pressures.That’s also resulted in Fed policymakers pushing back on bets for U.S. rate cuts beginning as early as June, and Chair Jerome Powell early this week similarly said monetary policy needs to be restrictive for longer.”Although policy easing may arrive a bit later than previously expected, we still believe the FOMC will start cutting rates before the year is out,” said economists at Wells Fargo. “We expect inflation to trend lower throughout the year, but progress will likely be gradual.”Against a basket of currencies, the greenback rose 0.05% to 106.22, hovering near a more than five-month high of 106.51.The Australian dollar fell 0.15% to $0.6411 and eyed a weekly drop of more than 0.8%.Data on Thursday showed domestic employment fell in March after an enormous gain the month before while the jobless rate resumed its uptrend, a sign that the relatively-tight labour market was still on track to loosen, albeit at a slower pace.The New Zealand dollar edged down 0.1% to $0.5895, and was similarly on track to lose 0.7% for the week. More

LOS ANGELES (Reuters) -Netflix on Thursday unexpectedly announced that it will stop reporting subscriber numbers each quarter, a decision seen as a sign that years of customer gains in the streaming wars are coming to an end. Shares of the streaming video pioneer fell after it reported a large batch of new customers in the first quarter but gave a revenue forecast that missed analyst targets. The stock was trading at $585.41 after-hours, down 4.2% from its closing price.Netflix (NASDAQ:NFLX) said its ad-supported streaming plans helped attract 9.3 million new customers, nearly double the consensus forecast of analysts polled by LSEG. That brought its global total to 269.6 million at the end of March.Netflix executives have urged investors to focus on revenue and operating margins when assessing the company’s progress, rather than customer additions. Netflix said it will stop disclosing subscriber additions each quarter starting with the first quarter of 2025, and instead will announce them only when major milestones are reached.”This change is really motivated by wanting to focus on what we see are the key metrics that we think matter most to business,” co-Chief Executive Greg Peters said in a post-earnings video. Analysts said the decision to end quarterly reporting of subscriber numbers would likely rankle investors and make it harder for Wall Street analysts to model the company’s business, going forward. They also said it was unclear what would drive new sign-ups once Netflix has pulled in as many users as possible from its crackdown on password sharing.”It might be a few more quarters of paid sharing benefits, but we don’t really know what the next catalyst will be after that for a member addition,” said Magalie Grossheim, senior equity research analyst at M Science. “I think that’s probably contributing also to why they’re deciding to stop reporting those numbers.”Other companies similarly have stopped reporting familiar metrics — monthly active users, in the case of Meta’s Facebook (NASDAQ:META) and social platform X, previously known as Twitter — as growth slowed.”The movement to no longer disclose quarterly subscriptions from next year will not go down well, more so given (subscriber) growth that the streaming king has seen over the last year,” said PP Foresight analyst Paolo Pescatore.Netflix shares have jumped 89% in the past year as it forged ahead of competitors such as Walt Disney (NYSE:DIS), which is still losing money on its streaming business.In a letter to shareholders, Netflix said it would fuel future growth by working to improve the variety and quality of its entertainment and scale its advertising business.Netflix, which once eschewed commercials, is preparing to host its second annual presentation to advertisers in New York. Co-CEO Ted Sarandos said he was “really excited” to share the upcoming slate, which includes new seasons of the period drama “Bridgerton,” the post-apocalyptic drama “Sweet Tooth,” and upcoming unscripted events such as a roast of retired NFL quarterback Tom Brady.”This is an opportunity to re-engage with advertisers and look at the fundamentals of what our offering is,” including improvements in measurement, Peters said.Netflix began offering subscribers ad-supported plans, at a cost less than half commercial-free options, in November 2022. That provided a low-cost option for those affected by Netflix’s 2023 crackdown on password sharing, as it sought to convert users of accounts of friends or family into paying subscribers.The company said the ad-supported service now accounts for 40% of all sign-ups in markets where it offers the plan.Netflix earnings per share for January through March came in at $5.28, beating analyst expectations of $4.52. Revenue rose 14.8% to nearly $9.4 billion during the period, when the service debuted titles such as sci-fi drama series “3 Body Problem” and crime thriller “Griselda.” Operating income totaled $2.6 billion, a year-over-year increase of 54%.Looking ahead, the company projected revenue of $9.49 billion for the current quarter, shy of analyst expectations of $9.537 billion. To satisfy its large global audience, Netflix has been broadening its programming. It is expanding its sports offering with a $5 billion, 10-year deal to stream WWE’s wrestling show, “Raw,” starting in January 2025.Sarandos challenged recent reports that Netflix aimed to make fewer, better films under its newly installed film chief, Dan Lin.”Just to be clear, there is no appetite to make fewer films,” Sarandos said. “But there is an unlimited appetite to make better films, always. Even though we have made and are making great films, we want to make them better – of course.” More

(Reuters) -Federal Reserve policymakers have coalesced around the idea of keeping borrowing costs where they are until perhaps well into the year, given slow and bumpy progress on inflation, and a still-strong U.S. economy.On Thursday New York Fed President John Williams became the latest U.S. rate-setter to embrace the “no rush” on rate cuts view articulated in February by Fed Governor Christopher Waller and since echoed by many of his colleagues. “I definitely don’t feel urgency to cut interest rates” given the strength of the economy, Williams said at the Semafor’s World Economy Summit in Washington. “I think eventually…interest rates will need to be lower at some point, but the timing of that is driven by the economy.” Cleveland Fed President Loretta Mester, in comments late on Wednesday, also said the Fed will likely cut rates “at some point,” steering clear of the later “this year” language she – and Williams – had previously used. Speaking in Fort Lauderdale, Florida on Thursday, Atlanta Fed President Raphael Bostic offered “the end of the year” as his view of the likely timing for a first rate cut, saying “I’m comfortable being patient.”Minneapolis Fed President Neel Kashkari told Fox News Channel he also wants to be “patient,” with the first rate cut “potentially” not appropriate until next year. As recently as a few weeks ago many policymakers signaled they expected hotter-than-expected inflation in early 2024 would give way to cooler readings in the face of the Fed’s tight monetary policy, necessitating several rate cuts before the end of the year to prevent policy from slowing the economy too much.But strong growth in jobs, a third-month-in-a-row upside surprise on inflation in March, and robust retail spending among other recent economic indicators have convinced more central bankers that rate cuts ought to wait. Earlier this week Fed Vice Chair Philip Jefferson omitted any reference to the appropriate timing for rate cuts, and Fed Chair Jerome Powell said it’s likely to take longer to get enough confidence on inflation’s decline to reduce borrowing costs. As San Francisco Fed President Mary Daly put it on Monday, “the worst thing to do is act urgently when urgency is not required.”With Fed rhetoric shifting and the labor market data showing few signs of cracks, financial markets have also moved to price in fewer and later rate cuts. Futures contracts that settle to the Fed’s policy rate now reflect expectations that the first reduction comes in September, versus June just a few weeks ago. The odds of a second rate cut by the end of the year have dropped to about 50-50, based on the CME FedWatch Tool. A Reuters poll released on Thursday showed economists are on the same page. Inflation by the Fed’s targeted measure, the personal consumption expenditures price index, was 2.5% in February, and Fed policymakers say they expect the March reading of core PCE – a gauge of where inflation is heading – to be even higher. The Fed targets 2% inflation.That has even raised questions of whether the Fed may have to hike rates again to ensure price pressures ebb. Williams said that appears unlikely but noted that it was impossible to rule out. Bostic, in an appearance in Miami late on Thursday, said that stalled progress on inflation, while not his expectation, would mean “I’d have to be open to increasing rates.”Fed policymakers next meet April 30-May 1 and are expected keep the policy rate in the 5.25%-5.5% range, where it has been since last July. More

“If it seems that the level of restrictiveness that we’re at today is not enough to do the job or get the job done, I’d have to be open to increasing rates.”Progress toward the Fed’s 2% inflation goal has slowed in recent months, and U.S. central bankers have generally said that means they will likely hold rates at current levels for longer, with no urgency to cut them. Bostic himself has embraced that view, and currently projects one rate cut late in 2024 rather than the two rate cuts he had previously expected when inflation was coming down more rapidly.On the other hand, Bostic said, if inflation falls more quickly than he now expects, “maybe we pull forward” rate cuts so as to make sure policy does not get overly restrictive. Risks to the economic outlook today are “broadly balanced,” he said. More

WASHINGTON (Reuters) -The International Monetary Fund urged Asian central banks on Thursday to focus on domestic inflation and avoid tying their policy decisions too closely to anticipated moves by the U.S. Federal Reserve.Receding expectations for a near-term interest cut by the U.S. central bank have fed steady dollar gains that have pushed down some Asian currencies such as the Japanese yen and the South Korean won.The IMF’s staff analysis showed that U.S. interest rates have a “strong and immediate” impact on Asian financial conditions and exchange rates, Krishna Srinivasan, director of the lender’s Asia and Pacific Department, said in a briefing on the region’s outlook.”Expectations about Fed easing have fluctuated in recent months, driven by factors that are unrelated to Asian price stability needs,” he said.”We recommend Asian central banks to focus on domestic inflation, and avoid making their policy decisions overly dependent on anticipated moves by the Federal Reserve,” he said.”If central banks follow the Fed too closely, they could undermine price stability in their own countries.”The remarks underscore the dilemma some Asian central banks face as the recent Fed-driven currency market swings complicate their policy path.Bank of Korea Governor Rhee Chang-yong told a separate IMF seminar on Wednesday that fading Fed rate-cut chances have caused headwinds for the won, and complicated the South Korean central bank’s decision on when to start reducing borrowing costs.In a sign Asian central banks won’t get much respite from the dollar’s ascent, New York Federal Reserve President John Williams said on Thursday the strong state of the U.S. economy meant there was no pressing case for an imminent rate cut.Srinivasan, who spoke during the IMF and World Bank spring meetings in Washington, said many Asian countries have seen their currencies depreciate against the dollar, reflecting the interest-rate differential with the U.S.He said the yen’s recent falls, while “quite significant,” also reflected the divergence between U.S. and Japanese rates.”When you have that kind of volatility, central banks should focus on fundamentals,” such as domestic inflation, he said.In its World Economic Outlook, released earlier this week, the IMF expects Asia’s economy to expand 4.5% this year, down from 5.0% last year but an upward revision of 0.3 percentage points compared to the October forecast.It expects the region to grow by 4.3% in 2025.The outlook for China’s economy was critical for Asia with a more protracted slowdown in the world’s second-largest economy among the key risks to the region’s growth outlook, Srinivasan said.While an increase in government spending could benefit China’s economy, policies that boost its supply capacity would “reinforce deflationary pressures and could provoke frictions,” he said.Also among risks to Asia were trade curbs adopted at a rapid pace, he said.”Few regions have benefited as much from trade integration as Asia,” Srinivasan added. “Hence, geoeconomic fragmentation continues to be a large risk.” More

(Reuters) – A look at the day ahead in Asian markets.Asian markets will hope to end a bruising week on a positive note on Friday, but fraying global sentiment and a reluctance to take on much risk ahead of the weekend amid persistent Middle East tensions could limit any upside.Headlines from the great and the good of global finance gathered in Washington continue to keep traders on edge, especially regarding exchange rates and central banks’ policy path relative to an increasingly hawkish Fed.The world’s biggest exercise in democracy gets underway on Friday too, as the first of seven phases opens in India’s general election, with 166 million voters across 21 states and territories casting their vote.Asia’s economic calendar, meanwhile, sees the release of first quarter GDP from Malaysia and Japanese inflation for March. The latter could determine whether the dollar, currently around 154.50 yen, makes another push to break above 155.00.Bank of Japan Governor Kazuo Ueda said on Thursday the central bank may raise interest rates again if the yen’s declines significantly push up domestic inflation.The IMF on Thursday urged Asian central banks to focus on domestic inflation and avoid tying their policy decisions too closely to anticipated moves by the U.S. Federal Reserve.On Wednesday, the United States, Japan and South Korea issued a joint statement to “consult closely” on the yen and won’s recent weakness against the dollar.The greenback is firm, rallying 3% in the last few weeks to its highest since November. U.S. bond yields are ticking higher again and will post their third weekly rise in a row, with the 2-year Treasury yield back up at 5%. The two- and 10-year yields are up 40-45 basis points in the last few weeks. That’s a tightening of financial conditions that emerging markets are struggling to handle. Asian stocks are eyeing their biggest weekly fall since January, with the MSCI Asia ex-Japan index down 2.3% this week and off 5% from its high last week. Japan’s Nikkei, which hit an all-time high above 41,000 points in late March, is off 7% since then and on Thursday hit a two-month low. A flat close or fall on Friday will seal its worst week since December 2022.The Nasdaq and S&P 500, meanwhile, have fallen five days in a row, their worst runs since October and December 2022, respectively. Figures on Thursday, meanwhile, could help soothe fears that the yuan’s weakness will accelerate capital flight out of the country – foreign investors increased their holdings of China’s onshore yuan bonds in March for a seventh straight month.Here are key developments that could provide more direction to markets on Friday:- Japan CPI inflation (March)- Malaysia GDP (Q1)- India general election opens (By Jamie McGeever; Editing by Josie Kao) More

The EIB and Ukraine’s government said a new memorandum of understanding (MoU) had been signed “to accelerate deployment of financial support and project execution on the ground”.Ukraine, which is facing renewed pressure in its more than 2-year war with Russia, has been frustrated that only a fraction of the tens of billions of dollars and euros pledged by Western allies has been utilised so far.”The memorandum signed today calls for the rapid implementation of ongoing EIB projects in Ukraine,” the statement said after the MoU was signed by Ukrainian Prime Minister Denys Shmyhal and EIB President Nadia Calviño at IMF meetings in Washington. It highlighted that the country has access this year to 500 million euros in EIB loan funds and 60 million euro in EU grants.The EIB is also looking to spend at least 2 billion euros of the EU’s 50 billion euro “Ukraine Facility” fund on “critical public sector projects” in the country such as housing, schools and hospitals and repairing and modernising the country’s damaged power grid and railways.Some of the money will be used for rebuilding work already done this year. Additionally, the MoU also opens up Europe’s advisory services programme JASPERS (Joint Assistance to Support Projects in European Regions) which was deployed in Greece after its economic collapse almost 15 years ago. In Ukraine’s case it will “help prepare significant investments and improve capabilities to meet EU standards”, the statement said. ($1 = 0.9398 euros) More

WASHINGTON (Reuters) – The world’s poorest countries are facing debt distress and fiscal crises as foreign investment wanes and the gap with richer economies widens, risking political destabilization and unrest, the United Nations Development Program chief said on Thursday.UNDP Administrator Achim Steiner told Reuters that most Group of 20 major economies are heading for a soft landing, but 50 low-income countries with 3.3 billion people are unable to service their debts or are at risk of getting to that point.Many of those countries faced a net outflow of funds to private and government creditors, with debt service payments outpacing foreign investments and virtually no ability to borrow on capital markets, Steiner said.”Not only is it leaving countries stuck – they’re on a hard landing or very much stuck in the status quota – they’re beginning to not invest in what is going to drive development tomorrow,” Steiner said in an interview.Wealthier countries were investing heavily at the same time, which heightened the risk of a more pronounced divergence than even 20 years ago, he said.The World Bank this week warned of a historic reversal of development, noting that half of the world’s 75 poorest countries have a widening income gap with the wealthiest economies for the first time this century.Steiner said the worsening outlook for poorer countries and growing geo-economic divisions could usher in a period of heightened social unrest that could ultimately have consequences for developed countries.”Essentially we enter into a period of political destabilization,” he said, noting that countries could face problems importing food or fuel, banking sectors could be strained and citizens could lose confidence in government.For example in Sri Lanka, public anger boiled over after the country defaulted on some bond coupon payments, forcing then-President Gotabaya Rajapaksa to flee the country, Steiner noted.He said people were also losing confidence in the global economic system generally, and while deepening problems in the poorest countries would not affect financial markets in advanced economies, they could lead to wars and other big risks.Despite his worries, Steiner said institutions like the United Nations, International Monetary Fund and World Bank still serve an important purpose, although they need to become more equitable and sustainable and keep pace with a changing world.”We need a place where we can interact,” he said. “Especially in this day and age, we need this architecture – these platforms – more than ever,” he said. “The challenges and risks we face are by definition only solvable globally.”One of the biggest hurdles is attracting more private investment to Africa and other developing regions, Steiner said, noting that a dearth of information means concerns about risk than are often greater than warranted.UNDP last year called for the big three credit rating agencies to expand their presence in Africa and provide more relevant country-focused data for African countries.Private investors had also failed to participate meaningfully in urgently needed debt restructuring, a main reason why recent sovereign debt cases had been dragged out. More