Aurelia Butler

SINGAPORE/LONDON (Reuters) -The dollar dipped but stayed close to a two-year high against a group of peers on Friday on investor bets the gap between growth in the U.S. and elsewhere will widen, while Chinese blue chips suffered their biggest weekly fall since 2022. The dollar index, which tracks the currency against a basket of six other currencies, hit its highest since November 2022 on Thursday, as the euro fell to $1.02248 also its lowest since 2022. The pound and Japanese yen were at multi-month lows too.While other currencies did manage to rebound a touch on Friday – the euro was last up 0.3% at $1.0297 – the dollar’s continued strength dominated the market mood. [FRX/] “If a currency’s valuation is an expression of the degree of confidence in the growth outlook relative to other economies, it is a damning assessment of how the market reads the euro zone outlook versus that of the U.S. in 2025,” said Kenneth Broux, head of corporate research FX and rates at Societe Generale (OTC:SCGLY). The U.S. currency rallied late last year as investors bet President-elect Donald Trump’s policies would drive growth and inflation, meaning fewer further rate cuts from the Federal Reserve and higher yields on U.S. Treasuries, when European central banks are set to keep cutting rates. While U.S. Treasuries yields have come off their late December highs – the benchmark 10-year Treasury yield was last at 4.543%, down 3 basis points on the day – the dollar has kept climbing on growth concerns elsewhere. [US/] “Aside from the implications of expected U.S. protectionism under Trump, we think pressure is being added by the rise in (gas prices) caused by Ukraine’s pipeline shutdown,” said Francesco Pesole, currency analyst at ING. Wholesale gas prices in Europe are around their highest in 14 months, with temperatures falling, lower levels of gas in storage and the expiry of a decades-long deal for Russia to supply gas to Europe via Ukraine. [EU/NG] That is an added headwind for European stocks, which were down 0.26% on Friday, reversing gains from the previous day, though oil and gas shares gained 0.9%. Friday’s fall in European stocks was in part a catch-up with a late decline on Thursday in the U.S., where benchmarks ended broadly lower. Shares of Tesla (NASDAQ:TSLA) sank 6.1% after the company reported its first annual drop in deliveries. [.N] S&P and Nasdaq futures were both up around 0.3% on Friday however. CHINA WORRIES Growth concerns in China are also near the top of investors’ minds. The country’s blue chip index shed 5.2% this week, its biggest weekly loss since October 2022.[.SS] In addition, China’s yuan slid past the 7.3 per dollar technical threshold to a 14-month low, on a confluence of crumbling Chinese yields, rate cut expectations in the face of a strong U.S. dollar and the threat of tariffs from the incoming Trump administration. [CNY/]The fall in yields, as investors seek the safety of government bonds, has been steep. Ten-year and 30-year Chinese government bond yields each weakened around 3 basis points to touch record lows. An announcement from China that it will sharply increase funding from ultra-long treasury bonds in 2025 to spur business investment and consumer-boosting initiatives, did little to boost the mood. Despite political turmoil in South Korea, shares there rose after five sessions of declines, as the country’s finance minister, who was last month appointed acting president, said he remained committed to stabilising the country’s financial markets. (KS) In commodities, Brent crude oil futures eased marginally to $75.86 a barrel and U.S. crude was steady at $73.09. [O/R] Gold also held firm at $2,655 per ounce, after a 27% rise in 2024, its strongest annual performance since 2010. [GOL/] More

SINGAPORE (Reuters) -The dollar was on track for its strongest weekly performance since early December on Friday, propped up by expectations that the U.S. economy will continue to outperform its peers globally this year and U.S. interest rates will stay elevated for longer.The greenback began the new year on a strong note, reaching a more than two-year high of 109.54 against a basket of currencies on Thursday as it extended a stellar rally from last year.A more hawkish Fed and a resilient U.S. economy have led U.S. Treasury yields to rise, prompting the dollar to charge higher.Coupled with expectations that policies by U.S. President-elect Donald Trump will boost growth this year and potentially add to price pressures, the dollar now looks relentless.”Looks like dollar strength is here to stay for now in early 2025 given the U.S. exceptionalism story is here to stay, and it still comes with high U.S. yields,” said Charu Chanana, chief investment strategist at Saxo.”Add to that the uncertainty from policies of the incoming (Donald) Trump administration, and you also get the safety aspect of the dollar looking attractive.”Uncertainties over how Trump’s plans for hefty import tariffs, tax cuts and immigration restrictions will affect global markets has in turn given the greenback additional safe haven support.Jobless claims data on Thursday confirmed a resilient U.S. labour market, with the number of Americans filing new applications for unemployment benefits dropping to an eight-month low last week. The dollar index last stood at 109, down 0.2% on the day, but on track for a weekly gain of just under 1%, its strongest since early December.Other currencies attempted to rebound against the firm dollar on Friday, still tracking steep losses on the week.The euro was last up 0.28% at $1.02950 but was headed for a 1.3% weekly decline, its worst since November.The common currency was among the biggest losers against a towering dollar, having tumbled 0.86% in the previous session to a more than two-year low of $1.022475.Traders are pricing in more than 100 basis points worth of rate cuts from the European Central Bank next year, while they expect just about 45 bps of easing from the Fed.Uncertainties around trade policies of the incoming Trump administration are also weighing on the outlook for the euro looking ahead, along with China’s yuan and some other emerging market currencies.”We expect Trump’s policy mix to trigger further dollar strengthening, with European currencies – and the euro in particular – coming under pressure from protectionism and monetary easing,” said ING analysts in a note.Similarly, sterling ticked up 0.22% to $1.24065, after sliding 1.16% on Thursday. It was on track to lose roughly 1.4% for the week.Elsewhere, the yen rose around 0.24% to 157.085 per dollar, but was not far from an over five-month low of 158.09 per dollar hit in December.The Japanese currency has been a victim of the stark interest rate differential between the U.S. and Japan for over two years now, with the Bank of Japan’s caution over further rate increases spelling more pain for the yen.The yen tumbled more than 10% in 2024, extending its losses into a fourth straight year.China’s onshore yuan hit its weakest level in over a year at 7.3190 per dollar, as falling yields and expectations of more domestic rate cuts continued to weigh on the currency. More

To address overcapacity in Italy, the group has relied heavily on state-funded temporary layoff schemes. Stellantis in December presented a plan to boost production, but an increase is only expected from 2026 thanks to the launch of new models.The FIM-CISL union said Stellantis, which was created in 2021 from the merger of Fiat (BIT:STLAM) Chrysler and France’s PSA-Peugeot, last year manufactured 475,090 vehicles in Italy, down from 751,384 in 2023.Production of cars in particular shrank by 46% to the lowest since 1956, while output of new commercial vehicles fell 17%.Stellantis was not immediately available for comment.Like its European peers, the world’s fourth-largest car maker is wrestling with weak demand, especially for fully electric vehicles, regulatory uncertainty and tough Chinese competition.FIM-CISL said it would join a protest planned in Brussels by labour organisation IndustriALL Europe on Feb. 5, two weeks before the European Commission presents its “clean industrial deal”.The union’s leader Ferdinando Uliano said it was important to review EU targets for vehicles’ carbon emissions reduction due to kick in from 2025.”This is a battle for Europe,” Uliano said, speaking about the crisis facing the European car industry. “Single countries can only lose.”Stellantis operates five car plants in Italy plus a facility for commercial vehicles.Production at the group’s Mirafiori plant in Turin fell by 70% last year. Only the Maserati plant in Modena, the heart of Italy’s ‘motor valley’, performed worse with a 79% drop.”We are very worried about Maserati,” Uliano said. “We expect quickly a clear and detailed project for Maserati.”Stellantis in December pledged to invest 2 billion euros ($2.1 billion) in Italy in 2025 to produce new models at some of its plants in the country.($1 = 0.9709 euros) More

VIENNA (Reuters) – A small liberal party on Friday unexpectedly quit coalition talks on forming a new Austrian government, throwing into disarray negotiations that had sidelined the far-right Freedom Party (FPO) even though it won September’s national election.The shock move by the Neos party raises serious doubts about the process of forming the next government, and buoyed the eurosceptic, Russia-friendly FPO, which has been waiting in the wings since being shut out of the coalition talks.Opinion polls show FPO support has grown since it secured roughly 29% of the vote in the Sept. 29 election. It has slammed the talks between the second, third and fourth-placed parties as an undemocratic attempt to create a “coalition of losers”.”We, Neos, will not continue negotiations on a possible three-party coalition,” its leader, Beate Meinl-Reisinger, told a hastily convened news conference in which she accused her interlocutors of lacking the courage to take tough decisions.She said the talks with Chancellor Karl Nehammer’s conservative People’s Party (OVP) and the Social Democrats (SPO) had not made enough progress to be worth pursuing. Neos has pressed for lower taxes and structural reforms, including unpopular ideas like raising the retirement age.The rise of the far right has made it harder to form stable governments in several countries, including Germany and France. Austria has not had a three-party government since 1949.FRAGILE TWO-PARTY GOVERNMENT?Meinl-Reisinger said her party was still prepared to throw its support in parliament behind measures already agreed on in the coalition talks, hinting at the possibility that the SPO and OVP could form what would be a fragile two-way coalition.Together the two parties have a one-seat majority in the lower house. Without some extra backing, the tiny margin is widely seen as impractical because a single lawmaker’s absence could tip the balance.”We’re not saying no to responsibility for Austria. We’re not saying no to reforms. We’re not saying no to the compromises that have already been reached,” said Meinl-Reisinger.Spokespeople for the OVP and SPO were not immediately available for comment on how the talks might now proceed.While some in the OVP support working with the FPO, Nehammer has ruled out governing with FPO leader Herbert Kickl, who in turn insists he should lead any government involving his party.The only other party in parliament which could join the coalition talks is the Greens, Nehammer’s current coalition partner, but the two parties have had a fraught relationship.A snap election is possible but is not in the interests of the OVP or SPO as polls suggest they would fare worse than before, with the FPO now leading both by more than 10 percentage points.The FPO wasted no time in attacking Nehammer and comparing his talks with the so-called “traffic-light coalition” in neighbouring Germany that recently collapsed.”The FPO has been warning for months about this political monstrosity of the loser-traffic-light coalition based on the German model,” the FPO said on X. “People have had enough! It’s time for you to resign, Mr Nehammer.” More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More