Aurelia Butler

Early Asia moves were slight, leaving the euro below $1.10 following its largest drop in nearly four months overnight.The bid for safety kept the yen broadly steady at 143.45 per dollar and the Swiss franc at 0.8463 per dollar. The New Zealand dollar was nursing a 1.1% overnight fall at $0.6283 and oil prices had jumped 2.5%.The U.S. dollar index rose about 0.5% overnight to 101.2, its largest rise since Sept. 25, which was also helped by a stronger-than-expected reading on U.S. job openings.Israel said Iran fired more than 180 ballistic missiles and Iran’s Revolutionary Guard Corps said the attack was retaliation for Israeli killings of militant leaders and aggression in Lebanon against the Iran-backed armed movement Hezbollah.No injuries were reported in Israel. Iran previously struck Israel in April, without causing major damage or a lasting reaction in financial markets. However, the beginning of an Israeli ground assault against Hezbollah inside Lebanon and Israel’s vow to respond opens the possibility of escalation.Markets’ response centres on oil prices and ANZ analysts noted further moves will likely be determined by Israel’s response and whether it attacks Iran’s military or oil industry.The mood has pushed the Australian dollar down to $0.6883 though losses there were limited by some upbeat retail sales data released on Tuesday. Sterling fell 0.7% overnight and was steady at $1.3278 in early Asia trade.Westpac strategist Imre Speizer said the Middle East was unpredictable but that in the absence of escalation market sentiment could recover and focus return to economics.In New Zealand, a business survey showing a fast cooling in price pressures has raised the odds that New Zealand’s central bank cuts rates by 50 basis points next week. Westpac and BNZ revised their forecasts to expect a 50 bp cut and markets price about a 77% chance of a 50 bp cut. Later in the day, Democrat Tim Walz and Republican JD (NASDAQ:JD) Vance go head to head in a vice presidential debate and U.S. private payrolls data is due.Traders are also keeping a wary eye on an employment dispute on the U.S. dockside.East and Gulf Coast dockworkers began their first large-scale strike in nearly 50 years on Tuesday, halting the flow of about half the country’s ocean shipping. More

Incomes Data Research said on Wednesday that the median pay settlement awarded by major employers held at 4.0% for the second month in a row.Median pay awards in the public sector stood at 4.5%, above those in the private sector which slowed to 4.1%. “The differing outcomes in the private and public sectors reflect the cycle of pay between the two, with the public sector currently in the ‘catching-up’ phase, after a lengthy period in which pay awards lagged behind those in the private sector,” Zoe Woolacott, senior researcher at IDR, said.Finance minister Rachel Reeves announced above-inflation pay increases worth 9.4 billion pounds ($12.53 billion) for public sector workers including teachers and doctors shortly after the Labour Party won a parliamentary election in July. Official figures last month showed British private sector wage growth cooled to a more than two-year low of 4.9% in the three months to July.The BoE is monitoring wage growth, and expects private-sector pay to slow to 3% in late 2025.The central bank, which cut its key Bank Rate in August for the first time since 2020 but kept it at 5% on Sept. 19, is expected to lower borrowing costs by a further quarter point at its November meeting. The IDR analysis was based on 39 pay deals which covered more than 740,000 workers between June 1 and Aug. 31. ($1 = 0.7505 pounds) More

Stay informed with free updatesSimply sign up to the More

WASHINGTON (Reuters) – The International Monetary Fund is “too polite” when it comes to criticizing China’s economic policies and should more fully disclose financing assurances given by China and some other countries to support IMF loan programs, a senior U.S. Treasury official said on Tuesday.Brent Neiman, the Treasury’s deputy undersecretary for international finance, said the IMF has failed to apply enough analytical rigor to China’s industrial policies.WHY IT’S IMPORTANTSpeaking at an event hosted by the OMFIF financial think tank, Neiman offered unusually pointed criticism of the IMF’s approach to China ahead of IMF and World Bank annual meetings later this month.The Treasury manages the dominant U.S. shareholding in the IMF and has repeatedly warned China about its industrial overcapacity, technology transfer and currency practices over the past year, including during a trip to China by Treasury Secretary Janet Yellen that laid groundwork for higher U.S. tariffs that took effect last week. KEY QUOTES: Neiman said the IMF needed to be a “ruthless truth teller,” but that its annual economic assessment on China do not give adequate attention to exchange rate and industrial policies.”The IMF does not publicly comment on the role of state-owned banks in managing China’s exchange rate or on why changes in the People’s Bank of China’s balance sheet don’t line up with reserve transactions in China’s balance of payments data,” Neiman said.An IMF spokesperson could not immediately be reached for comment. The IMF and World Bank will assess a number of policies during the week of Oct. 21 at their annual meetings in Washington.CONTEXTNeiman also criticized the IMF’s lack of transparency in disclosing external financing assurances given by China and other countries to supplement IMF loan programs. Such assurances were given in recent programs for Argentina, Ecuador and Suriname, that were not delivered or significantly delayed, he said.The IMF last week approved a $7 billion program for Pakistan that included financing assurances from China, Saudi Arabia and the United Arab Emirates, but declined to provide details on the assurances.Neiman said the IMF also only referred to China as Ecuador’s “main bilateral creditor” in its program documents adding that such “politeness” can reduce incentives for creditors to honor their assurances in a timely manner. More

Stay informed with free updatesSimply sign up to the More

A spokesperson for tracking service FlightRadar24 said flights diverted “anywhere they could,” and a snapshot of traffic in the region showed flights spreading in wide arcs to the north and south, with many converging on Cairo and Istanbul.FlightRadar24 said Istanbul and Antalya in southern Turkey were becoming congested, forcing some airlines to divert south.Iran launched the strikes in retaliation for Israel’s campaign against Tehran’s Hezbollah allies in Lebanon, and Israel vowed a “painful response” against its enemy.Eurocontrol, a pan-European air traffic control agency, earlier sent a warning to pilots about the escalating conflict.”A major missile attack has been launched against Israel in the last few minutes. At present the entire country is under a missile warning,” it said in an urgent navigation bulletin.Shortly afterwards it announced the closure of Jordanian and Iraqi airspace as well as the closure of a key crossing point into airspace controlled by Cyprus.An Iraqi pilot bulletin said its Baghdad-controlled airspace was “closed due to security until further notice”.Iraq’s transport ministry later announced the reopening of Iraqi airspace to incoming and outgoing civilian flights at Iraqi airports. FlightRadar24 said on X that “it will be a while before flights are active there again”.Jordan also reopened its airspace after closing it following the volley of Iranian missiles fired towards Israel, the Jordanian state news agency reported. Lebanon’s airspace will be closed to air traffic for a two-hour period on Tuesday, Transport Minister Ali Hamie said on X.The latest disruptions are expected to deal a further blow to an industry already facing a host of restrictions due to conflicts between Israel and Hamas, and Russia and Ukraine. More

(Reuters) – A look at the day ahead in Asian markets.The final quarter of the year is under way, and the sense of caution that characterized its open on Tuesday could not be further removed from the ebullience and optimism that marked the end of the third quarter 24 hours earlier. Investors fled risky assets like stocks for the safety of U.S. Treasuries, gold and the dollar as Iran fired a salvo of ballistic missiles at Israel on Tuesday in retaliation for Israel’s campaign against Tehran’s Hezbollah allies in Lebanon.The S&P 500 and global stocks had their worst day in a month, the 10-year U.S. bond yield registered its steepest fall in a month, and oil rose 3%, after being up 5% at one stage. On top of the escalation of tensions between Israel and Iran, the sense of gloom hanging over markets on Tuesday was heightened by the steep decline in a closely-watched tracking model estimate of U.S. GDP growth. The Atlanta Fed’s GDPNow model estimate for third quarter U.S. GDP growth on Tuesday was cut to 2.5% from 3.1% last week. The fall of six-tenths of one percent was the biggest decline since the Q3 tracking estimates was launched in late July.This will set the tone on Wednesday for markets across Asia. Chinese markets are closed for Golden Week, and the major economic releases will be inflation and manufacturing purchasing managers index data from South Korea, and consumer confidence from Japan. Although oil spiked sharply on Tuesday, the deeply negative year-on-year price of oil is a major reason why inflation around the world is cooling, and much faster than many economists and policymakers had expected. In many cases, like the euro zone, inflation is already at or even below the 2% target that many central banks aim for. Figures on Wednesday from Seoul are expected to show that annual consumer inflation in South Korea eased to 1.9% in September from 2.0% in August. That would be the lowest, and also the first time below that 2% threshold, since March 2021. Japan’s markets should be a little calmer on Wednesday, even though Nikkei futures point to a fall of more than 1% at the open, as the dust begins to settle on the major political upheaval of recent days.Investors are getting used to what they might expect from new Prime Minister Shigeru Ishiba, once considered a monetary policy hawk who now appears to have softened his stance.He said on Tuesday that he hoped the Bank of Japan would maintain loose monetary policy “as a trend”, and that his administration will carry over the economic policy of former Prime Minister Fumio Kishida and “ensure Japan fully emerges from deflation.”Here are key developments that could provide more direction to Asian markets on Wednesday:- South Korea inflation (September)- South Korea manufacturing PMI (September)- Japan consumer confidence (September) More