Aurelia Butler

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    in Economy

    Mexico peso seen moderately weaker as election campaign begins – Reuters poll

    BUENOS AIRES (Reuters) – Mexico’s peso will likely depreciate moderately in the near-term as the campaign for June’s presidential election heats up, while the central bank continues to mull over the right time to launch a rate easing cycle, a Reuters poll showed.Since the start of the year, the currency has been trading within a close interval around 17.00 per U.S. dollar. Domestic markets have remained calm, hoping economic policies will be kept largely unchanged after the vote.The peso is set to weaken 7% to 18.24 per dollar in 12 months’ time, from 16.96 on Monday, according to the median estimate of 20 foreign exchange strategists polled March 1-4. Forecasts ranged from 15.50 to 19.00 per dollar.”Electoral races both in Mexico and the United States will for certain exercise pressure on the currency, but, overall, its performance will be among the best within emerging markets,” said Marcos Arias, an economist at Deloitte Mexico.”The country benefits from strong remittance inflows and possible increases in foreign direct investment as nearshoring projects materialize,” he added, projecting the peso at 17.80 per dollar in one year.Mexico’s presidential candidates started their campaigns on Friday for the election on June 2, with the ruling party candidate leading a race poised to crown a woman to rule Latin America’s second-largest nation for the first time.To cement current President Andres Manuel Lopez Obrador’s legacy, his MORENA party has been targeting its efforts on obtaining a majority needed in Congress to pass constitutional reforms.”It is unclear if any of them have a material chance of being approved in their current form, given MORENA and its allies lack the 2/3 majority needed … but it’s possible some could be ratified,” Scotiabank analysts wrote in a report.Meanwhile, Mexico’s central bank continues to signal the possible start of a rate cut drive similar to those already in place in other countries of the region. The cost of credit currently stands at 11.25%, the highest on record.This gives investors the opportunity to profit on a wide spread over the U.S. 5.25%-5.50% benchmark federal funds rate, which the Federal Reserve is expected to cut in June, according to another Reuters poll conducted last month.Answering a separate question in the March foreign exchange survey, a majority of 7 of 13 economists said risks to their estimates for the Mexican peso were skewed to softer values, while 4 viewed a stronger trend, and 2 saw a neutral one.In Brazil, the real is forecast to lose 0.8% in one year to 4.99 per dollar. The currency has shed around 2.0% of its value from the start of 2024, slightly worse than the flat performance of its Mexican counterpart so far.(For other stories from the March Reuters foreign exchange poll:) (Reporting and polling by Gabriel Burin in Buenos Aires; Editing by Alison Williams) More

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    in Economy

    Analysts stick to bullish Canadian dollar forecasts, eye soft economic landing – Reuters poll

    TORONTO (Reuters) – The Canadian dollar is set to strengthen over the coming year if the Federal Reserve shifts to cutting interest rates as expected and the U.S. economy slows without slipping into recession, a Reuters poll found.In the March 1-6 poll of 40 foreign exchange analysts the median forecast was for the loonie to strengthen 1.4% to 1.34 per U.S. dollar, or 74.63 U.S. cents, in three months, matching the forecast in February’s poll.It was then predicted to advance to 1.30 in a year, also matching the previous month’s forecast. The expected strengthening comes as some analysts forecast broad-based declines for the U.S. dollar.”The gradual decline in USD-CAD certainly in part reflects a slowing U.S. economy and the Fed embarking on a rate cutting cycle,” said Derek Halpenny, head of research, global markets EMEA and international securities at MUFG.”We also assume no hard landing (for the economy) and if risk remains broadly favourable this year that should also benefit CAD.”Canada is a major exporter of commodities, including oil, so the loonie tends to be sensitive to swings in investor sentiment.Still, roughly 75% of Canada’s exports go to the United States so slower U.S. growth may not be a recipe for Canadian dollar strength against Group of Ten currencies other than the greenback, say analysts.”A slowing economy in the U.S. and a weakening U.S. dollar tends to result in CAD underperformance vs other G10 currencies,” Halpenny said.The Bank of Canada is also expected to begin a rate cutting campaign this year as the economy slows and inflation cools.Analysts expect the Canadian central bank to leave its benchmark interest rate on hold at a 22-year high of 5% on Wednesday and at the following policy decision in April but to then start cutting in June, a recent Reuters poll showed.(For other stories from the March Reuters foreign exchange poll:) More

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    in Cryptocurrency

    Bitcoin rises after rapid climb to new record

    LONDON/SINGAPORE (Reuters) -Bitcoin rallied again on Wednesday in volatile trade, while ether jumped almost 10% as crypto mania continued to sweep through the investment community.Bitcoin rose by as much as 6.8% to a session high of $67,645, after having dropped 6% on Tuesday from an earlier record high above $69,000. It was last up 5.7% at $66,896.Ether, meanwhile, surged by 9.8% to its highest since January 2022. It was last up 8.6% at $3,827.Bitcoin has already surged 55% this year so far, fuelled by investors pouring money into U.S. spot exchange-traded crypto products and the prospect that global interest rates may fall.Billions of dollars have flowed into ETFs in the past few weeks and the market is getting extra support from an outlook that includes an ethereum upgrade and bitcoin “halving,” which slows the flow of bitcoin minting, said Lennix Lai, global chief commercial officer at crypto exchange OKX.”The trend also indicates an elevated level of mainstream acceptance of bitcoin, perhaps more than ever before.”The approval of 11 spot bitcoin ETFs by the U.S. Securities and Exchange Commission in late January had marked a watershed moment for the industry, following an 18-month long crypto winter plagued by a string of high-profile corporate bankruptcies and scandals.Even institutional investors who once shunned crypto due to its sharp and wild moves, have begun committing long-term money too, which experts say could help sustain the latest leg of this rally.The recent optimism over bitcoin has also spilled over to other digital tokens, particularly ether, which ranks second behind bitcoin in terms of total market value, up more than 60% since the start of the year.Still, some say it’s hard to shake off the speculative nature of these assets. After hitting the record high on Tuesday, bitcoin sharply reversed course and fell more than 10% back below the $60,000 level.”That looks like classic bitcoin behaviour – it chews you up then spits you back out,” said Matt Simpson, senior market analyst at City Index.”A pump and dump to previous record highs wiped out some weaker hands, and I suspect we’re now in the volatile and erratic phase we usually see when it reaches a record high.”Deutsche Bank strategist Jim Reid noted that bitcoin is some way off an all-time high in real, or inflation adjusted, terms.”Consumer prices are up by over 10% since the previous November 2021 peak, so in real terms, that would be above $75,000 in today’s prices,” he said. More

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    in Cryptocurrency

    Bitcoin pares losses, hovers around $65k after record-high run

    The world’s largest cryptocurrency was trading down 1.9% at $66,022.9 by 00:41 ET (05:41 GMT), after hitting a record high of $69,063 on Tuesday, according to Investing.com data. The token had fallen almost immediately after hitting a peak, sinking as low as $59,000 before paring its losses. Gains in Bitcoin come amid consistent capital flows into the recently-approved spot ETFs in U.S. markets. Data released earlier this week showed U.S. crypto products seeing a fifth straight week of inflows, with Bitcoin products commanding the lion’s shares of inflows.The spot ETF approval appeared to have drawn a deluge of institutional investors into crypto. Bitcoin was also buoyed by anticipation of a “halving” event in April, which will see the rate of generation of new Bitcoin being slashed in half, limiting fresh supply. Bitcoin’s highs mark a new record after November 2021. But in the interim, it had fallen drastically as the crypto industry was rattled by a string of high-profile frauds and bankruptcies. Still, the token has now risen more than four-fold from a low of about $15,000 hit in November 2022, in the aftermath of the FTX debacle. Bitcoin also surged about 150% through 2023. “The move has just gone parabolic, it just can’t continue like it has for so long, and we’re starting to see signs of a little bit of maturity in the move we’ve seen to date, but that doesn’t mean that it’s a reversal,” Tony Sycamore, market analyst at IG said in an interview with Ausbiz.“At this point of time, if we get the weekly candle closing where it is now, which is around $63-$64,000, I think that does signify that it’s come a long way now.” Still, trading volumes in Bitcoin remain well below highs seen during 2021 and 2022, in the aftermath of the bull run. Relatively low volumes have also been attributed for the token’s massive run-up over the past year.The token is still seen as far too volatile by a bulk of investors, with the retail sector having largely moved out of Bitcoin over the past year.The spot Bitcoin ETF approval this year, however, was a positive move for the broader crypto industry, which was otherwise grappling with a massive loss of faith. More

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    in Economy

    Brazil’s cenbank director says guidance could change without link to rate at end of easing cycle

    In an event hosted by consultancy firm APCE, the monetary policy director, Gabriel Galipolo, said given the way that the disinflation process and the pace of rate cuts have been unfolding, an eventual change in guidance does not mean a correlation with a terminal rate.”The absence of a signal from Copom about the terminal interest rate stems from the fact that we adopted the 50-basis-point pace precisely to take advantage, gain time and see how things will unfold,” he said.The central bank kicked off its easing cycle in August with a 50-basis-point cut after nearly a year of unchanged rates at a six-year high of 13.75%, aimed at combating inflation.Since then, it has consistently signaled the maintenance of the same easing pace for the meetings ahead.Galipolo highlighted that, despite the reduction in the differential between the country’s interest rates and those of advanced countries, which have been delaying the start of their own interest-rate-easing cycles, Brazil’s exchange rate has performed well.”Even with this differential closing, the exchange rate has remained at a good level,” he said.Asked if the central bank had a target for the exchange rate, Galípolo denied the existence of a goal, arguing that a floating exchange rate is an important “line of defense.” Last week, the central bank’s director said that “at some point” policymakers will need to remove the use of the plural in their monetary easing guidance, which has been flagging 50 basis point cuts for the upcoming “meetings”.Brazil’s benchmark interest rate now stands at 11.25%. More