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    Argentina’s world-beating currency rally puts pressure on Milei

    The Argentine peso strengthened more in real terms than any other currency in 2024, boosting the popularity of libertarian President Javier Milei even as economists question the sustainability of high prices in Argentina.The peso strengthened 44.2 per cent in the first 11 months of the year against a basket of trading partners’ currencies, adjusting for Argentina’s triple digit annual inflation, according to data from the Bank for International Settlements analysed by Argentine consultancy GMA Capital. That far outpaces the 21.2 per cent gain for the Turkish lira in second place.The gains for the government-set exchange rate have been replicated on several legal and illegal parallel markets where Argentines buy dollars because access to the official rate is restricted.The trend is popular with Argentines, who have seen average salaries almost double in dollar terms to $990 from December 2023 to this October at the parallel rate, after seven years of near-constant depreciation.But it has come at a cost. Argentina’s central bank has struggled to rebuild its virtually empty hard currency reserves as it spends dollars to keep the peso strong. Now, some analysts warn the rapid depreciation of the real in neighbouring Brazil and a potential tariff spree by incoming US president Donald Trump could leave Argentina vulnerable to a sudden devaluation.“Milei’s programme is working, but the peso’s appreciation is the greatest risk going forward,” said Ramiro Blázquez, head of research at investment bank BancTrust. “If the peso continues to appreciate, or if there is a big external shock, demand for cheap dollars could surge, increasing the risk of devaluation.”The stronger currency — dubbed the “super peso” in local media — is making itself felt in Argentina as prices in dollars soar. A Big Mac hamburger costs $7.90 compared with $3.80 a year ago, at the official exchange rate. Earlier this month, steelmaker Ternium warned that labour costs in Argentina had become “60 per cent more expensive” than in Brazil.Business leaders fret privately that the dynamic could soon begin to hurt the competitiveness of Argentine exports. The stronger peso is a side effect of Milei’s effort to stabilise an economy that was on the brink of hyperinflation when he took office a year ago. Alongside a severe austerity programme, he maintained the strict currency controls he inherited. After an initial big devaluation last December he kept the peso mostly stable throughout 2024. Overall, the value of the currency fell by just 18 per cent in the first 11 months, even though inflation for the same period was 112 per cent.The stronger peso is a side effect of Javier Milei’s effort to stabilise an economy that was on the brink of hyperinflation a year ago More

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    Wall St futures ease as strong holiday-shortened week draws to a close

    The Dow closed higher for the sixth consecutive session on Thursday in thin year-end trading, while higher U.S. Treasury yields weighed on some heavyweight tech and growth stocks.At 05:09 a.m. ET on Friday, Dow E-minis were down 119 points, or 0.27%, and S&P 500 E-minis were down 22 points, or 0.36%. Futures tracking the tech-laden Nasdaq 100 were down 92.25 points, or 0.42%, as Nvidia (NASDAQ:NVDA) dropped 0.8% in premarket trading and Tesla (NASDAQ:TSLA) shed 1.4%. The S&P 500 has recouped most of last week’s losses that stemmed from the U.S. Federal Reserve projecting fewer interest rate cuts in 2025 and hurting risk appetite.The benchmark index is now eyeing its best week in seven, and is about 1% below its all-time high of 6,099.97 points clinched on Dec. 6.With three sessions left to close out the year, investors are hoping for new all-time highs in the stock-buying season called the “Santa Claus rally” – the last five sessions of December and the first two of January. Since 1969, the S&P 500 has climbed 1.3% on average in the seven-day trading period, according to the Stock Trader’s Almanac.Trading volume in this holiday-shortened week has been below the average of the last six months and is likely to remain subdued until Jan. 6. The next major focus for markets will be the December employments report due on Jan. 10. More

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    Goldman expects 2025 to be another challenging year for the European economies

    The bank cites several factors contributing to the expected slowdown, including the impact of tariffs planned by US President-elect Trump, structural headwinds in manufacturing, and ongoing fiscal consolidation across the euro area.Goldman projects the euro area to see a growth of 0.8% and the UK 1% in 2025, both figures falling below the consensus.The labor market in the euro area has shown more resilience than anticipated this year, according to the bank, but wage growth has decelerated as pay adjustments align with past price increases.Underlying inflation also cooled significantly post-summer, prompting the European Central Bank (ECB) to cut policy rates by 100 basis points over the year. Goldman strategists anticipate further 25 basis point reductions sequentially to 1.75% by next July, with the possibility of more aggressive cuts if economic conditions deteriorate beyond expectations.In contrast, the UK has experienced persistently high wage growth and services inflation, leading the Bank of England (BoE) to adopt a more cautious stance than other major central banks.The BoE has reduced the Bank Rate only twice this year, with Goldman Sachs expecting additional quarterly rate cuts throughout 2025 “as a weaker labor market cools underlying inflation, more than currently priced,” the report said.2024 was a year of sluggish growth for both the euro area and the UK. Early in the year, economic activity showed promise as real incomes rose, financial conditions improved, and hopes for recovery grew.However, from mid-year onward, growth fell short of expectations as cautious consumer behavior, elevated energy prices, and mounting competition from China weighed on performance. As a result, economic expansion in the euro area and the UK lagged behind the U.S. once again. More

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    German parliament dissolved, snap election set for Feb. 23

    Scholz, a Social Democrat, ended his three-party alliance with the Greens and Free Democrats after he dismissed FDP Finance Minister Christian Lindner over a disagreement regarding government borrowing. This unexpected action left Scholz without a majority in the Bundestag, Germany’s lower house, and set the stage for a national election seven months ahead of the end of his four-year term.With less than two months until the election, the main opposition conservatives, led by Friedrich Merz, are significantly ahead in the polls. Scholz’s SPD party is currently in third place, trailing behind the far-right Alternative for Germany party, with the Greens ranking fourth.The Greens currently hold about 13% of the vote, while Lindner’s FDP is at risk of not reaching the 5% threshold required for parliamentary inclusion, currently polling at 4%.Lars Klingbeil, an SPD co-leader, expressed his belief that the party can start closing the gap to the conservatives in January and still has the potential to emerge as the strongest party again. During the previous election in 2021, the SPD managed to secure almost 26% of the vote in the final weeks of campaigning, outperforming the CDU/CSU, which received 24%.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

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    Dollar steady, yen hovers near 5-month low on BOJ caution

    TOKYO (Reuters) -The buoyant dollar slipped a notch on Friday at the end of a holiday-thinned trading week, while the yen hovered near a five-month low as traders chewed over contrasting messaging from a hawkish U.S. Federal Reserve and a cautious Bank of Japan. Traders are betting U.S. rates will remain elevated for longer, sending Treasury yields higher in recent weeks and in turn boosting the dollar against other major currencies. The U.S. dollar index, which measures the greenback against six currencies including the yen, euro and sterling, was down 0.12% on the day at 107.95. It has been in a holding pattern around 108 all week, and was still hovering close to the two-year high of 108.54 it hit last Friday.Fed Chair Jerome Powell said earlier this month that U.S. central bank officials would be “cautious” about further cuts following an as-expected quarter-point rate reduction.For the month, the dollar index is up 2%, bringing year-to-date gains to 6.4%.In contrast, the BOJ has taken a cautious approach to raising borrowing costs amid uncertainty over U.S. president-elect Donald Trump’s economic plans. This has dragged on the yen, which hit its weakest level since July 17 on Thursday at 158.09 per dollar. The Japanese currency got little respite from a fresh warning from the country’s finance minister who said that the government “has been alarmed by foreign exchange developments … and will take appropriate action against excessive moves”.The yen strengthened 0.1% to 157.75 per dollar by 1305 GMT, but still hovered close to Thursday’s low.Japanese officials have intervened in the currency market to prop up the yen this year but it remains on course for a fourth successive annual decline.A summary of opinions from the BOJ’s December policy meeting released on Friday showed some officials becoming more confident about a near-term rate increase, while others remained wary amid uncertainties over the trend for wages and Trump’s policies. BOJ Governor Kazuo Ueda said last week, after the central bank held rates, that it would take “considerable time” to fully gauge the outlook for wages and overseas economies, particularly the United States. Trump’s mooted looser regulation, tax cuts, tariff hikes and tighter immigration policies are seen as both pro-growth and inflationary by economists.The dollar is on track for a 5.3% gain against the yen this month and a 11.8% advance for the year.”Several market participants signal however that the upward trend in dollar/yen may be exaggerated, which increases the risk of a correction,” said Sydbank analysts in a note.”At the same time, Japanese authorities have indicated possible intervention in the event of rapid and sharp rises in dollar/yen.”DECEMBER RETREATOther major currencies attempted to claw back some ground against the dollar.The euro edged up 0.14% to $1.0439, but was still heading for a 1.3% decline for December. Sterling was up 0.28% at $1.2563 and on track for a 1.4% fall for the month.The Chinese yuan was set to round out the week near a 13-month low, at 7.2994 per dollar in the onshore market. The currency has suffered under the threat of additional U.S. tariffs on Chinese goods under Trump.South Korea’s won was down 0.4% at 1,472.5 per dollar after parliament impeached acting President Han Duck-soo, plunging the country deeper into political chaos. The won dropped to its lowest level in about 16 years ahead of the vote. Leading cryptocurrency bitcoin rose 1% to $96,630, but was largely flat on the month after retreating from a record high of 108,379.28 hit on Dec. 17. It has surged about 127% so far this year. More

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    US equity funds receive big inflows on cool inflation, funding bill, and holiday rally

    According to LSEG Lipper data, U.S. equity funds gained inflows for the seventh week in eight weeks, to the tune of $20.56 billion on a net basis following a sharp $49.7 billion worth of net sales in the previous week.Last Friday’s Commerce Department report revealed the PCE price index rose only 0.1% in November, below analyst expectations, reviving hopes for further Federal Reserve rate cuts next year and bolstering U.S. stocks, which also typically benefit from the “Santa Claus Rally” in the final week of the year.Investors, however, focused investments into U.S. large-cap funds, as they pumped a net $31.67 billion into these funds, the highest since Oct. 2, following $20.94 billion worth of net sales in the prior week.Small-cap, mid-cap and multi-cap funds, meanwhile, experienced outflows of $2.95 billion, $1.17 billion and $853 million, respectively.Sectoral equity funds also witnessed a net $2.14 billion worth of outflows with healthcare and consumer discretionary, having $495 million and $476 million in net sales, leading the way.U.S. bond funds experienced their second consecutive week of outflows, with investors withdrawing a net $5.42 billion. Among the segments, U.S. emerging markets debt, short-to-intermediate investment-grade, and municipal debt funds recorded net sales of $924 million, $899 million, and $879 million, respectively.In contrast, short-to-intermediate government & treasury funds bucked the trend, attracting $957 million in inflows. Meanwhile, U.S. money market funds saw substantial interest, drawing a net $41.72 billion, a sharp reversal from the previous week’s $27.31 billion in net sales. More

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    Bitcoin price today: dips to $96k in thin trading, tracks 2nd straight weekly fall

    Bitcoin fell 2.1% to $96,403.7 by 01:30 ET (06:30 GMT). Bitcoin pulled back on Thursday as markets seemingly responded to inaccurate chart data from TradingView.The cryptocurrency dipped toward $95,000 after social media users flagged an anomaly on TradingView’s Bitcoin dominance chart, which incorrectly showed Bitcoin’s share of the total crypto market cap dropping to 0%.Although the error was later corrected, it reportedly triggered sudden trading reactions that pushed the prices lower.According to CoinGlass data, roughly $33 million in Bitcoin long positions were liquidated within four hours.Bitcoin was set to fall for the second consecutive week as a rally induced by Donald Trump’s presidential election victory lost steam after the Fed meeting hindered.The rally had pushed prices to an all-time high of $108,244.9 last week, after which prices fell due to profit-taking amid macroeconomic pressures induced by the Fed rate outlook.The central bank lowered rates by 25 basis points but indicated only two rate cuts for the upcoming year, compared with previous expectations for four cuts.This shift led investors to reassess their positions in speculative assets like Bitcoin, contributing to its price decline.Other cryptocurrencies also fell tracing Bitcoin prices, and were set for weekly losses. Demand for speculative assets was still subdued after the hawkish Fed spurred liquidity concerns.World no.2 crypto Ether was 1.5% lower at $3,3379.39, after falling nearly 5% in the previous day.World no.3 crypto XRP fell 2.8% to $2.2187 and was set to fall nearly 4% the week.Solana fell 1.7% and Polygon lost 1%, while Cardano fell more than 8% to $0.8965. Among meme tokens, Dogecoin fell 2.6%. More

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    Bitcoin (BTC) ‘Santa Rally’ Might Be Dangerous, XRP Critical But Stable, Dogecoin (DOGE) Volume Hints at Bearish Drop

    A bearish pattern would be validated by a lower high, which might trigger a sharp decline in price. Bitcoin may find it difficult to sustain the positive momentum observed in previous months if it is unable to rise above prior highs of about $104,000. Bitcoin may move toward important support zones if it is unable to recover higher levels; the 100 EMA at about $84,500 is a crucial level to keep an eye on. Rapid changes in sentiment and momentum for Bitcoin, which has been experiencing growing selling pressure in recent weeks, pose a threat. Despite the asset’s attempts to rebound, volume indicators point to a mixed picture. Bitcoin’s recent recovery might not last if this pattern continues, and investors hoping for more gains might fall into a trap. This is consistent with the general ambiguity surrounding Bitcoin’s future. If the market does not make a clear move above $100,000, it may be more susceptible to a more severe correction, with $84,500 and even $76,000 as possible targets.Although the Santa Rally of Bitcoin may seem promising at first glance, traders and investors are finding it to be more and more risky. Given the potential for a lower high to form, this rally is crucial, and as the market moves through the holidays, prudence is encouraged. To rekindle bullish confidence, there must be a distinct breakout above resistance; otherwise, the downtrend might pick up more steam. The persistent downward trend draws attention to the unpredictability of XRP’s market conditions. When combined with declining trading volumes, the descending channel indicates that investors are reluctant to make a strong comeback to the market. If the general state of the market deteriorates, this lack of conviction makes XRP more susceptible to selling pressure. XRP has been able to maintain a comparatively stable position close to its 26 EMA in spite of the dire short-term outlook. A sustained hold above this level could offer some respite for the asset, as it has historically served as a crucial support during volatile times. A break below this level, though, would probably quicken the decline and move XRP closer to the $1.80-$1.50 range, which is home to the 50 EMA and other historical supports. The asset’s general structure should also cause market participants to exercise caution. Concerns regarding XRP’s medium-term prospects are raised by its failure to mount a robust recovery or break above significant resistance levels around $2.50. Reversing the bearish sentiment and restoring investor confidence require a successful breakout above this resistance. At the moment, XRP’s position is both crucial and vulnerable. The wider downtrend presents serious risks, even though the asset has demonstrated resilience close to its 26 EMA. A breach of the 1.80 level could indicate a more significant correction, so traders and investors should keep a careful eye on it. However, if stability is maintained above the 26 EMA, a slow recovery may be possible; however, significant buying pressure would be needed to change the trend. DOGE has had difficulty breaking through important resistance levels, lingering at $0.34, without making any headway. The general downward trend that began following its surge to $0.48 has continued as a result of this stagnation. Because of the low trading activity, which indicates that market participants are reluctant to commit, DOGE is susceptible to additional declines. Still, there are some positive aspects to the muted volume.In many instances, low volume during a downtrend can indicate the end of selling pressure. This could mean that bearish momentum is waning, which could lead to a reversal, or at least a brief retracement. Around $0.28, where the 100 EMA is located, Dogecoin may find support if bulls are able to intervene at this point. A recovery from this level might pave the way for one that goes higher — perhaps as high as $0.37.This article was originally published on U.Today More