Aurelia Butler

LONDON (Reuters) -The dollar edged up on Friday to pull away from multi-month lows against the euro and sterling, as investors began to train their sights on a slew of major central bank meetings next week.The U.S. Federal Reserve, European Central Bank and Bank of England are all due to make rate decisions next week as they judge what policy adjustments may be required in their battle with rampant inflation against a tough global economic backdrop.Currency analysts said they did not expect big moves to end the week, with a key U.S. jobs report also in sight next Friday.The dollar index, which measures it against six major currencies, gained 0.2% to 101.930, as the dollar moved away from near a nine-month low to the euro and a seven-month trough to sterling. The euro was last down 0.1% versus the dollar at $1.08760, while sterling was down 0.4% at $1.23670.”The failure of the dollar to break lower … suggests from a technical perspective that some turnaround is possible,” currency analysts at MUFG said in a note.The yen, meanwhile, rose against the dollar as heated Tokyo inflation readings spurred bets that a hawkish pivot from the Bank of Japan (BOJ) could be in the offing. The dollar lost 0.3% to 129.900 yen after data showed consumer price inflation in Japan’s capital accelerated to a nearly 42-year peak this month, piling pressure on the BOJ to step away from stimulus.”Market expectations for changes at any time, including the next meeting in March, will remain high, and that will keep the yen bid,” said Shinichiro Kadota, a strategist at Barclays (LON:BARC) in Tokyo, who saw a possibility of the dollar-yen pair breaking below 125.Traders broadly expect the Federal Reserve to increase interest rates by 25 basis points (bps) on Wednesday, a step down from a 50 bps increase in December. Meanwhile, the ECB has all but committed to raising its key rate by half a percentage point the following day.The Bank of England faces a challenge in controlling inflation without damaging an economy already in recession. The bank will make its next policy decision on Thursday, and is seen increasing by a half point. More

Investing.com — Intel tells a tale of woe for the chipmaking segment. The U.S. releases December data for the inflation measure that the Fed really cares about. It will take a big shock to shake expectations of a 25 basis point rate hike next week, though. The Eurozone economy may be reacting more quickly to the ECB’s rate hikes than expected, as loan growth slowed sharply in December. Oil breaks through resistance and the paper wealth of Asia’s richest man is going up in flames after a blistering short report. Here’s what you need to know in financial markets on Friday 27th January.1. PCE prices and personal spending dataAfter a surprisingly strong first reading for fourth-quarter GDP growth, the U.S. will publish the figure the Federal Reserve cares most about at 08:30 ET (GMT 13:30): the core personal consumption expenditures price index for December.Headline inflation, as measured by the consumer price index, may have been declining steadily for the last six months but core PCE inflation has only recently started to trend downward, and the Fed will be eager to see that trend continuing ahead of its policy meeting next week.Analysts expect a modest acceleration to 0.3% in price growth, with a decline to 4.4% in the annual rate from 4.7%. It will take a big deviation to change a consensus view that a 25-basis point hike next week is nailed on. There are also pending home sales data and personal income and spending numbers for December, along with the final reading of the Michigan Consumer Sentiment index.2. Eurozone lending slows as ECB hikesThe European Central Bank’s interest rate hikes are having an effect already. Lending to private-sector companies and households grew at the slowest rate since April 2021 in December, with credit to non-financial corporations slowing particularly sharply.The impact, detailed in the European Central Bank’s monthly monetary data, suggest that 200 basis points of tightening has worked faster on the Eurozone economy than in the past. Whether that will be enough to persuade the bank from raising its key rates by 50 basis points next week is another question. The market is currently pricing in a high chance of two successive 50-bp hikes at the bank’s next meeting.The euro reversed early modest gains on the news but was still down only 0.1% by 06:30 ET.  However, 10-year Eurozone bond yields rose by as much as 10 basis points, amid nervousness that the ECB could trigger a recession that tests the single currency zone’s cohesion.3. Stocks set to open lower; Intel slumps on wide loss, bleak forecastU.S. stock markets are set to open lower later, dragged down by an alarmingly weak set of numbers and guidance from chipmaker Intel (NASDAQ:INTC) late on Thursday. Intel reported a slump in sales a loss that was twice as wide as expected. It also said it will lose money in the current quarter and that global PC shipments will be at the low end of its forecast range this year.By 06:30, Intel was down nearly 10% in premarket, erasing almost all of its 2023 gains.Tech stock futures underperformed on the read across to other chipmakers such as Advanced Micro Devices (NASDAQ:AMD). Nasdaq 100 futures were down 53 points, or 0.4%, while S&P 500 futures were down 0.2% and Dow Jones futures were largely flat.Stocks still look as if they will end the peak week of earnings season higher, having shaken absorbed poor numbers from Intel, Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM), among others to focus on more positive stories such as Tesla (NASDAQ:TSLA) and Chevron (NYSE:CVX).Chevron missed forecasts for its fourth-quarter earnings earlier, but is set to be supported by its $37 billion buyback announcement earlier in the week. Others reporting Friday include American Express (NYSE:AXP), Charter Communications (NASDAQ:CHTR), Colgate-Palmolive (NYSE:CL) and HCA (NYSE:HCA).4. Adani selloff gathers paceThe selloff in stocks controlled directly and indirectly by Gautam Adani deepened in the wake of Hindenburg Research’s short report earlier in the week.Adani, who was Asia’s richest man on paper at the start of the week thanks to the valuation of his portfolio companies, has seen his empire lose $50 billion this week. The flagship holding company Adani Enterprises (NS:ADEL) fell as much as 20% intraday in Mumbai and barely recovered before closing down 18.5%.Adani’s group has said it is exploring legal action against Hindenburg. Investor Bill Ackman by contrast praised the report as “highly credible and extremely well researched.”5. Oil breaks resistance; CFTC positioning data dueCrude oil prices broke through resistance to trade 1.5% higher, amid signs that geopolitical risk premiums may rise again in the near future as Russia responds to European and U.S. decisions to send heavy armor to Ukraine.By 06:45 ET, U.S. crude prices were testing a two-month high, rising 1.6% to $82.30 a barrel, while Brent crude was up 1.6% at $88.83 a barrel.The Commodity Futures Trading Commission will update later on the strength of speculative inflows into crude, at a time when net long positioning is close to its lowest in six years. Baker Hughes will also release its weekly rig count. More

UK chancellor Jeremy Hunt has told small-state Conservative MPs they will have to wait for tax cuts, as the government seeks to head off backbench pressure for cuts this year.In response to calls for tax cuts now from Liz Truss, the former prime minister, and other Tory rightwingers, Hunt said on Friday that “the best tax cut right now is a cut in inflation”.He added that in the long run “we need lower taxes”, but argued this would mean spending restraint by the government. The insistence of the Tory right that tax cuts are needed in April’s Budget has exasperated Hunt and Prime Minister Rishi Sunak, whose strategy is to stabilise the economy and bring inflation under control.“Risk-taking individuals and businesses can only happen when governments provide economic and financial stability,” the chancellor said in a speech at Bloomberg in the City of London, an apparent reference to the implosion of the Truss government’s debt-funded £45bn tax-cutting mini-Budget last year.Hunt said that inflation was still far too high but was nevertheless lower than in 14 EU countries, with interest rates rising more slowly than in Canada or the US.

The chancellor acknowledged that Britain had not returned to its pre-pandemic employment or output levels but emphasised that unemployment was still at its lowest level for half a century. “Our growth was slower in the years after the financial crisis than before it but since 2010, the UK has grown faster than France, Japan and Italy,” he said.Setting out what he said was the ambition “to turn the UK into the world’s next Silicon Valley”, Hunt hailed the success of industries such as offshore wind and technology.“But like any business embracing new opportunities, we should also be straight about our weaknesses,” he added. “Structural issues like poor productivity skills gaps, low business investment, and the overconcentration of wealth in the south-east have led to uneven and lower growth.”In the wake of the controversy about Conservative chair Nadhim Zahawi’s payment of a penalty to settle a tax dispute with HMRC, Hunt initially resisted responding to questions about his own tax affairs.He later said: “I don’t normally comment about my own tax records but I’m chancellor so for the record I have not paid an HMRC fine.” More

Refinitiv Lipper data showed global equity funds obtained $3.23 billion worth of inflows during the week, compared with $5.16 billion worth of net purchases in the previous week.Data released on Thursday showed the U.S. economy grew faster than expected in the fourth quarter. Earlier in the week, a survey showed business activity in the euro zone improved in January, raising hopes the economy is on a better footing than previously feared.European and Asian equity funds received $3.15 billion and $1.36 billion worth of inflows, but investors sold about $1.14 billion worth of U.S. equity funds.Data showed many sectoral funds were out of favour with health care, industrials and financials witnessing disposals of $1.8 billion, $695 million and $687 million, respectively. Meanwhile, global bond funds accumulated a net $11.35 billion worth of inflows in a fourth successive week of net buying.Global short- and medium-term bond funds obtained $1.05 billion, while government bond funds drew $3.53 billion in a 13th straight week of net buying, but investors exited $160 million worth of high yield funds after two weeks of net purchases.Global money market funds suffered $12.25 billion worth of outflows.Among commodity funds, precious metal funds lured $1.19 billion, the biggest weekly inflow in nine months, but energy funds had outflows of $87 million.Data for 24,502 emerging market (EM) funds showed equity funds attracted a net $5.02 billion in a third successive week of net buying, while bond funds obtained a net $3.9 billion worth of inflows. More

New Delhi (Reuters) – India’s federal government is likely to keep its gross market borrowing below 16 trillion rupees ($196 billion) for 2023/24 as it does not want to destabilise the bond market with any negative surprises, two sources close to the deliberations said.”Feedback from the market participants is that a borrowing of 15.5-16 trillion rupees can be absorbed well in the next financial year,” one of the officials told Reuters.The second official said that based on the discussions held so far within the government, the view has emerged that borrowing should be consistent with the market’s expectation. The government has so far raised 12.93 trln rupees up to Jan. 27, which is 91% of the overall gross borrowing target of 14.21 trillion rupees in the 2022/23 fiscal year which ends on March 31.Traders are waiting for the Union budget on Feb. 1, with the government’s fiscal consolidation path and its borrowing calendar for fiscal year 2024 set to be the next market-moving trigger.The federal government’s gross indebtedness has more than doubled in the past four years as Prime Minister Narendra Modi’s government has spent heavily to cushion the economy from the effects of the COVID-19 pandemic and to provide relief to the poor.India’s finance ministry did not immediately reply to an email and a message seeking comments.In a Reuters poll, economists forecast the government will borrow a record 16 trillion Indian rupees in the fiscal year to March 2024 on higher infrastructure spending.The poll also suggested that the government would bring the budget deficit down to 6.0% of GDP in 2023/24. It aims to reach a target of 4.5% by 2025/26.The indebtedness of federal and state governments is equal to 83% of annual gross domestic product (GDP), a ratio higher than that of many other emerging economies. The country’s sovereign credit rating is just a notch above junk level.The International Monetary Fund said last month India needed a more ambitious plan for fiscal consolidation to ensure debt would be sustainable in the medium term. The government says its current plan is already enough for the task.($1 = 81.5010 Indian rupees) More