Aurelia Butler

SINGAPORE (Reuters) – The dollar was on the front foot on Monday and kept the yen pinned near a multi-decade low, though the threat of currency intervention from Japanese authorities prevented the greenback from heading further north.The yen last stood at 151.25 per dollar, having bottomed at a four-month trough of 151.86 last week that left it within striking distance of a 32-year low near 152 per dollar hit in 2022.Japan’s top currency diplomat said on Monday the yen’s current weakness did not reflect fundamentals, adding to the rhetoric of government officials who have stepped up warnings in recent days over the currency’s decline.The moves have come in the wake of the Bank of Japan’s (BOJ) landmark interest rate hike at its March policy meeting, as the decision had been well telegraphed. Crucially, traders also reckoned rates in Japan will continue to remain low for some time yet and therefore maintain the stark rate differentials with the United States. “Japanese officials’ verbal intervention is making 152 a very strong near-term resistance for dollar/yen,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY).”Markets are fully aware of a potential actual FX intervention from authorities, so I think that’s keeping dollar/yen from moving substantially higher.”I think there is still a high risk that they will come in to prop up the yen if dollar/yen were to surge materially perhaps to 155. That’s still seen as a line in the sand.”A shift in the global rate outlook following a flurry of central bank meetings has breathed new life into the dollar, on expectations that the Federal Reserve is likely to keep rates higher for longer while its peers elsewhere begin easing rates.Bets for a June rate cut by the European Central Bank and the Bank of England have substantially risen after the Swiss National Bank became the first major central bank to do so last week.That’s kept pressure on their respective currencies, with the euro last down 0.03% to $1.08045, languishing near a three-week low.Sterling eased 0.02% to $1.25985, having slid more than 1% last week following dovish signals from the BoE. The Financial Times also reported on Friday that Governor Andrew Bailey said rate cuts “were in play” this year.”The BoE and ECB have galvanised expectations they will also go in June, with the BoE meeting in May even showing signs it could be a live meeting,” said Chris Weston, head of research at Pepperstone.In comparison, while market expectations are also for a Fed easing cycle to begin in June, a run of resilient U.S. economic data has raised doubts the central bank is indeed on course for three rate cuts this year.The dollar index was last 0.03% higher at 104.46, having clocked a weekly gain of nearly 1% last week.Elsewhere, the Australian dollar edged 0.05% lower to $0.65115, while the New Zealand dollar fell 0.13% to $0.5987.The two have also been partly pressured by a slide in the yuan, given both are often used as liquid proxies for the Chinese currency.The weakening of the yuan past a key threshold on Friday had prompted state-owned banks to step in to defend the currency, though with little success as the onshore yuan still finished the domestic session at its weakest level in four months.The yuan has been pressured by growing market expectations of further monetary easing to prop up the world’s second-largest economy.In the offshore market, the yuan was last marginally lower at 7.2761 per dollar. More

(Reuters) – A look at the day ahead in Asian markets.Investors in Asia may favor playing it conservative ahead of a slew of economic indicators in coming days, especially with Japan’s stock market notching consecutive record highs and market closures on Friday for many centers, including Hong Kong.Japan’s Nikkei 225 was hardly unique last week, extending its rally on Thursday and Friday. While dovish central bank signals emanated from the Federal Reserve, Swiss National Bank and Bank of England, it was the Bank of Japan that kicked off the hectic central bank news cycle by ending its long-held policy of yield curve control and negative interest rate in a signal of confidence in Japan’s economic recovery. But Wall Street and other exchanges paused on Friday to digest their record runs and Japan could be due for its own moment of consolidation in the coming days. Japan does get revised January leading indicators on Monday and services PPI data, while Tokyo CPI is due on Thursday. Consumer price inflation data is also due from Malaysia and Singapore on Monday.YUAN’S SLIDE COULD FURTHER DISRUPTOf more concern for the region’s currencies is Friday’s sell-off in the China’s yuan to a four-month low on the weaker side of the 7.2 per dollar level. It ended the U.S. session at 7.2759 amid growing market expectations that Beijing will have to deliver further monetary easing to shore up economic growth. The yuan swoon hit China’s stock market [.SS] and pressured the Philippine peso, Indian rupee, Indonesian rupiah, Korean won and Thai baht. Meanwhile, Premier Li Qiang on Sunday said China will carefully study issues of market access and cross-border data flows and will soon issue new regulations in these areas. “We cordially welcome companies from all countries to invest in China and deepen their foothold in China,” Li told an audience of global CEOs and Chinese policymakers.Profit taking on Friday capped the advances of stock indexes on Wall Street and in Europe, a day after they notched all-time highs. The S&P 500 closed 0.14% lower and the Nasdaq rose a similar amount.Switzerland’s surprise rate cut on Thursday cemented the notion that, BOJ aside, developed country central banks would be easing interest rates soon. That thinking obviously includes the Fed, which on Wednesday left the fed funds rate alone at 5.25% to 5.50% but indicated it was still prepared to lower rates by 75 basis points this year, despite a worrying uptick in U.S. inflation and economic growth solid enough perhaps to dodge a soft landing. Many markets in Europe and in the U.S. will be closed on Friday, for Good Friday. As it happens, since it’s not a U.S. public holiday, the most important data of the week, the February personal consumption expenditures inflation index, lands when markets are closed. But Asia will be the first markets to trade on it the following Monday.Meanwhile there is not as much incentive to buy during a holiday-shortened week. Hong Kong’s stock exchanges are also closed but Japan’s are open.Here are key developments that could provide more direction to markets in the coming week:- Malaysia CPI (Feb)- Singapore CPI (Feb)- Japan revised leading indicators (Jan) – Japan services PPI (Feb) (This story has been corrected to say that markets closed on Friday for Hong Kong, not China, in paragraphs 1 and 15) More

SYDNEY (Reuters) – Asian shares inched higher on Monday as investors hoped U.S. inflation data this week would not derail the outlook for lower interest rates, while the risk of currency intervention from Japan stalled the yen’s decline for the moment.The U.S. core personal consumption expenditure (PCE) price index is seen rising 0.3% in February, which would keep the annual pace at 2.8%. Anything higher would be taken as a setback to hopes for a Federal Reserve rate cut in June. Many markets are closed for Easter on Friday, when the PCE data is due for release, so the full reaction will have to wait until next week.Fed Chair Jerome Powell was sufficiently dovish last week to leave futures implying around a 74% chance of a June easing, up from 55% a week earlier.Powell will participate in a moderated discussion at a policy conference on Friday, while Fed governors Lisa Cook and Christopher Waller are also appearing this week.Europe has its own inflation tests with consumer price data out from France, Italy, Belgium and Spain, ahead of the overall EU CPI report on April 3. Sweden’s central bank meets on Wednesday and is generally expected to keep rates at 4.0%, though a surprise easing by the Swiss National Bank (SNB) last week has markets anticipating a dovish statement.Expectations for falling borrowing costs globally has been a boon for equities, with the S&P 500 up almost 10% for the year to date. Early Monday, S&P 500 futures and Nasdaq futures were trading little changed.MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1%, to just below eight-month highs. Japan’s Nikkei dipped 0.4%, having spiked 5.6% last week to a fresh all-time peak as the yen weakened. (T)While the Fed sounded dovish last week, it was hardly alone, with the Swiss central bank (SNB) actually cutting rates while the Bank of England (BoE) and European Central Bank (ECB) left markets looking for easings from June onwards.The People’s Bank of China (PBOC) also surprised markets on Friday by letting the yuan fall past 7.2 per dollar to four-month lows amid talk it was set to ease policy further.JAPAN JAWBONES THE YEN”We think the dollar’s rebound reflects the more explicitly dovish stance of other major central banks – in particular the SNB and the BoE,” said Jonas Goltermann, deputy chief markets economist at Capital Economics.”The PBOC’s apparent decision to let the renminbi weaken sharply has added to the overall dollar-positive tone,” he added. “Overall, the greenback heads into the Easter holiday period firmly on the front foot, and continued solid U.S. economic data is likely to keep it that way.” Even a shift away from super-easy policies by the Bank of Japan (BOJ) could not dent the dollar, as investors assumed it was not the start of a series of hikes and futures imply a rate of just 20 basis points by year end.On Monday, the dollar was holding at 151.30 yen, having climbed 1.6% last week to a peak of 151.86. Markets are wary of testing 152.00 as that is a level that has drawn Japanese intervention in the past. [USD/]Indeed, Japan’s top currency official on Monday warned the yen’s current weakness did not reflect fundamentals and excessive moves were unwelcome.The euro was pinned at $1.0808, having been dragged down in the wake of the Swiss franc after the SNB’s shock rate cut. The strength of the dollar took some shine off gold which stood at $2,168 an ounce, after hitting a record peak of $2,217.79 last week. [GOL/]Oil prices were underpinned by Ukraine’s attacks on Russian refineries, along with data showing a fall in U.S. rig counts. [O/R]Brent rose 21 cents to $85.64 a barrel, while U.S. crude edged up 23 cents to $80.86 per barrel. [O/R] More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Britain’s democracy is under threat from Chinese cyber attacks, MPs will be told on Monday, after the hacking of voter details and the targeting of a number of China hawks in parliament.Oliver Dowden, deputy prime minister, will brief MPs on the cyberthreat from China and is expected to announce reprisals against those believed to be involved, according to government insiders.Dowden will point the finger at Beijing over the hacking of the details of British voters in a “complex cyber attack” on the Electoral Commission, according to those close to the security probe.The China link to the Electoral Commission hack was first reported by the Sun newspaper. Downing Street did not immediately comment.The commission, which oversees UK elections, said last year that “hostile actors” first breached its network in August 2021, but nobody has been held responsible until now. The news comes as another Chinese company considers investing in a new UK gigafactory, producing batteries for electric vehicles, in spite of ministerial concerns of Britain becoming “over-reliant” on Chinese technology.Britain’s tense relationship with Beijing will take a new turn at lunchtime on Monday when four members of the Inter-Parliamentary Alliance on China — which takes a hawkish stance — are given a security briefing on cyber attacks by individuals or entities linked to the Chinese state.Sir Iain Duncan Smith, a former Tory leader, Tim Loughton, a former Tory minister, Stewart McDonald, a Scottish National party MP and Lord David Alton, a crossbench peer, will be briefed by parliament’s head of security, according to government officials.Downing Street declined to comment, but senior Westminster officials believe that the briefing — followed by Dowden’s statement to MPs on Monday afternoon — will warn of a broader cyberthreat from China, beyond the targeting of a handful of parliamentarians.Duncan Smith told the Financial Times: “The UK government has been very weak on China. The US has sanctioned around 12 officials in Xinjiang and 42 officials in Hong Kong — all very senior people in the Chinese regime. “The UK has only sanctioned three people in Xinjiang and none in Hong Kong — and we used to run the place. It beggars belief.”Tory MPs are expected to urge Lord David Cameron, the foreign secretary, to take a tougher line on China on Monday evening, at a meeting of the backbench 1922 committee.Meanwhile, Chinese battery company EVE is in early-stage talks to invest in a UK plant, according to British officials involved in plans for a new gigafactory at Coventry Airport, confirming a report in the Sunday Times.Although an investment would further increase the UK’s domestic supply of electric car batteries, crucial for the survival of the automotive industry, it would also increase the country’s reliance on Chinese technology at a time of rising tensions between China and the West.Envision, which is Chinese, owns the AESC business that makes batteries for Nissan in Sunderland and will supply batteries for the new Tata gigafactory in Somerset. Kemi Badenoch, the business secretary, has previously warned that the UK must not become “overly reliant” on Chinese battery technology.A government spokesman said: “We will never compromise on our national security and are continuing to strengthen the security and resilience of our infrastructure and identify risks within our supply chain to protect the UK.”The West Midlands site, which is currently a working airport, has struggled to attract prospective buyers, with both Tata and Britishvolt passing on the site previously. Criticisms included that the area is landlocked and lacks enough power, a critical element in battery-making.It is not clear whether EVE has carmakers in the UK lined up to buy its batteries. A failure to secure orders led to the collapse of the start-up Britishvolt last year. EVE is already building several battery factories across Europe, including one in Hungary that will supply BMW. BMW’s Mini plant at Oxford will begin making electric models later in the decade, but has not announced where it will buy the batteries from. The company, which declined to comment, is not involved in the EVE discussions in the UK. A spokesman for the “West Midlands Gigafactory” project, set up to attract investment to the site, said the business was “in discussions with a number of global battery manufacturers, but these remain confidential”.The site has been a pet project of Andy Street, the Conservative mayor of the West Midlands, who is standing for re-election in May. Street said: “Whilst I will not comment on ongoing commercial negotiations, it is no secret that we have long earmarked Coventry Airport as a future gigafactory site. It is the only site in the UK with planning permission to become a gigafactory, and we’re working immensely hard to bring it to life.” More

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Dankl, 35, led his party to second place in this month’s city council election, close behind Auinger’s Social Democrats. Just 821 votes separated the two men in the separate, first-round vote for mayor of the country’s fourth largest city, best known to tourists as the home of Mozart and “The Sound of Music”.”Apart from the day I met my wife and the birth of my two wonderful daughters, today is definitely the happiest day of my life,” Auinger, 50, said in a statement to the media alongside Dankl after he emerged the clear winner with most votes counted from the second round.With all but postal ballots counted, he had 63.1% of the vote to Dankl’s 36.9%.”I believe that Kay will be a strong addition to our city government. I am convinced that we will work together excellently,” Auinger said. While Austria’s second city, Graz, already has a Communist mayor, winning in Salzburg would have been a rare triumph for a party not even in national parliament. Auinger told Reuters last week that Dankl’s pledge to build 1,000 units of subsidised rental housing a year to alleviate the city’s housing crisis was unrealistic, suggesting 1,500 over five years instead. But he did say he favoured putting Dankl in charge of housing in the city.”That four out of 10 voters gave us their trust in today’s election shows that many people want a different social policy,” Dankl said.Speaking to Puls 24 television later, Dankl added: “The key issue in Salzburg is that housing costs continue to rise. The city government could do something about that, for example by investing more in subsidised rental accommodation,” he said.”The misappropriation of living space through Airbnb, speculation and vacant apartments could be better brought under control.” More