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Wang Wentao was speaking in Brussels at a China-Europe Electric Vehicles event where around 30 top executives of Chinese and European electric vehicle industries met to discuss views on the EU’s anti-subsidy case against China’s EVs.Wang is due to meet the European Commission’s trade commissioner Valdis Dombrovskis on Thursday to discuss rising trade tension.The European Commission is on the verge of proposing final tariffs of up to 35.3% on EVs built in China on top of the EU’s standard 10% car import duty.The EU’s 27 members are due to vote on the proposed final duties on Sept. 25. They will be implemented by the end of October unless a qualified majority of 15 EU members representing 65% of the EU population votes against the levies. More
SINGAPORE (Reuters) – The U.S. dollar rose broadly on Thursday, recovering from an earlier tumble in the immediate aftermath of the Federal Reserve’s outsized interest rate cut that had been largely priced in by markets.The U.S. central bank on Wednesday kicked off its monetary easing cycle with a larger-than-usual half-percentage-point reduction that Chair Jerome Powell said was meant to show policymakers’ commitment to sustaining a low unemployment rate now that inflation has eased.While the size of the move had been anticipated by investors in part due to a slew of media reports pointing in that direction ahead of the decision, it defied the expectations of economists polled by Reuters, who were leaning toward a 25-basis-point cut.Still, markets reacted in a typical “buy the rumour, sell the fact” fashion that kept the dollar on the front foot in early Asian trade. It rebounded from a more than one-year low against a basket of currencies in the previous session and was last marginally higher at 101.03.Against the yen, the greenback gained 0.58% to 143.12. The euro fell 0.04% to $1.1113, away from a three-week high hit in the previous session.”Obviously, (there was) a lot of volatility on the announcement, but in terms of the pricing action and the information that came out … it’s not really that controversial in a sense,” said Rodrigo Catril, senior FX strategist at National Australia Bank (OTC:NABZY) (NAB).”It’s sort of been pretty close to what the market has been pricing, particularly in terms of expectations of – arguably a little bit more than a 100 – but 100 bps of rate cuts this time around and another 100 next year, and also a terminal rate that is below 3% as well. So the big picture … is not materially different.”Fed policymakers on Wednesday projected the benchmark interest rate would fall by another half of a percentage point by the end of this year, a full percentage point next year and half of a percentage point in 2026, though they said the outlook that far into the future is necessarily uncertain.”Our view is that the dollar will depreciate next year. That is a cyclical story, not a structural story,” said Eric Robertsen, Standard Chartered (OTC:SCBFF)’s global head of research and chief strategist at a media roundtable in Singapore on Wednesday.”We think the dollar is going to weaken because the Fed is easing interest rates and the global economy will experience a soft landing, which tends to be a benign scenario that tends to be negative for the dollar.”Sterling fell 0.11% to $1.3199 after scaling a peak of $1.3298 in the previous session, its strongest level since March 2022.That came in the wake of data on Wednesday which showed British inflation held steady in August but sped up in the services sector closely watched by the Bank of England, reinforcing bets that the central bank will keep interest rates on hold later in the day.”When it comes to the Bank of England, clearly those inflation numbers yesterday show that they still have a concern or a problem with inflation, and in particular services inflation is still too high for comfort,” said NAB’s Catril.”So to expect an easing today because of what the Fed has done seems a little bit too hard to believe.”Elsewhere, the Australian dollar edged up 0.05% against its U.S. counterpart to $0.6768, while the New Zealand dollar advanced 0.04% to $0.6210.Data out on Thursday showed New Zealand’s economy contracted in the second quarter as activity fell in a number of industries, though the figures came in better than forecasts. More
WELLINGTON (Reuters) – New Zealand’s economy contracted in the second quarter as activity fell in a number of major industries, keeping the central bank on track for more rate cuts this year.Official data out on Thursday showed gross domestic product fell 0.2% in the June quarter from the prior quarter, better than analysts’ forecasts of a 0.4% contraction. It followed a 0.1% rise in the first quarter, which was revised down from a previous estimation of 0.2% growth. Annual GDP decreased 0.5%, Statistics New Zealand data showed, which was in line with market expectations.The New Zealand dollar was almost unchanged at $0.6213 after the data, which were seen as too dated to affect the outlook for rates. Markets are fully priced for another quarter-point cut in October, with a 28% chance of 50 basis points. Swaps have 84 basis points of easing priced in by the end of the year.”The data today highlight that the economy was indeed in a weak patch in the second-quarter, with widespread evidence that private demand is soft and that this is flowing through to multiple sectors of the economy,” ASB Bank senior economist Kim Mundy said in a note.The data showed activity fell in nine of 16 industries with the retail trade and accommodation, agriculture, forestry, and fishing and wholesale trade sectors all weaker. The manufacturing industry saw the biggest improvement. Mundy said the data did not significantly alter the picture for the Reserve Bank of New Zealand and ASB Bank continued to expect the central bank would cut by another 50 basis points by the end of the year. The central bank lowered the official cash rate for the first time in more than four years at its last meeting in August, and RBNZ Governor Adrian Orr said he would like to deliver two more cuts by Christmas. This is in line with other major central banks that have begun to cut cash rates. The U.S. central bank on Wednesday kicked off an anticipated series of interest rate cuts with a larger-than-usual half-percentage-point reduction. The European Central Bank and Bank of Canada have also reduced rates.Westpac senior economist Michael Gordon said financial markets will no doubt fixate on the idea that the Federal Reserve’s decision has opened the door for 50 basis point rate cuts elsewhere, including in New Zealand.But “there isn’t much in the local data that argues for the RBNZ to step up the pace of easing beyond what it had already signalled in its August policy statement,” he said. More
The Fed cut its policy rate by 50 bps to a range of 4.75% to 5%, and signaled that more cuts were likely on tap. The central bank signaled that risks around its outlook for bringing down inflation and a cooling labor market were now roughly balanced. Fed Chair Jerome Powell said the central bank was growing increasingly confident that inflation will ease further in the coming months.Citi said that Wednesday’s cut completed the Fed’s pivot towards addressing labor market weakness from curbing further inflation risks. The brokerage said that weak monthly employment reports before the Fed’s November meeting will see the central bank cut rates by 50 bps again- which was its base case. The Fed is then expected to close out the year with a 25 bps cut, bringing its total 2024 reductions to 125 bps. “Powell noted a number of times that today’s 50bp cut is a “commitment” to not get behind the curve which suggests the bar for further large rate reductions is very low. We continue to see risks as balanced toward a more rapid softening of labor market data and a more aggressive pace of rate cuts,” Citi analysts wrote in a Wednesday note. Citi described Powell as sounding “particularly cautious” on the trend of payrolls growth, stating that any further signs of weakness in the labor market were likely to draw out more dovish moves from the Fed. Still, Powell warned that the Fed was unlikely to go back to an era of ultra-low rates, and that he saw a much higher neutral rate for the Fed than previous instances. More
