Aurelia Butler

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SINGAPORE (Reuters) – The dollar held to tight ranges on Monday while the yen pared some of its safe-haven gains, as investors were undecided on the scale of a Federal Reserve rate cut expected later this month and looked to this week’s U.S. inflation reading for more clues.Friday’s highly anticipated U.S. jobs data failed to offer clarity to traders on the question of whether the Fed would deliver a regular 25-basis-point rate cut or an outsized 50 bp one at its policy meeting next week.While employment increased less than expected in August, the jobless rate ticked lower and wage growth remained solid, indicating that the U.S. labour market was cooling, but not at a pace that warranted panic over the economy’s growth outlook.Currencies were mostly rangebound in early Asia trade, steadying after some volatility in the wake of the nonfarm payrolls report on Friday.The yen was last 0.26% lower at 142.65 per dollar, surrendering some of its gains after having risen 2.73% last week, as risk aversion gripped markets.It hardly reacted to data on Monday which showed Japan’s economy expanded in April-June at a slightly slower pace than initially reported, largely due to downward revisions in corporate and personal spending.The euro rose 0.03% to $1.1089, while sterling advanced 0.06% to $1.3138.Against a basket of currencies, the dollar was little changed at 101.21.”The Fed finds itself at a crossroads,” said Boris Kovacevic, global macro strategist at Convera. “With mixed signals from the job market, they’re unlikely to commit to either a 25 or 50 bp cut just yet.”Fed policymakers on Friday signalled they are ready to kick off a series of interest rate cuts at the central bank’s upcoming meeting on Sept. 17-18, noting a cooling in the labour market that could accelerate into something more dire in the absence of a policy shift.Futures show a 35% chance that the Fed could ease rates by half a percentage point next week, with Wednesday’s U.S. inflation report the next main economic indicator that could alter the market pricing.”While more substantial cuts through year-end are possible should data deteriorate, our baseline remains for a 25 bps rate cut in September, with easing at this pace also likely to occur in November and December,” said David Doyle, head of economics at Macquarie.In other currencies, the Australian dollar advanced 0.07% to $0.6675, after having fallen more than 1% and touching a roughly three-week low on Friday.The New Zealand dollar was flat at $0.6175, though remained not far from Friday’s two-week trough. More

The monthly Report on Jobs from the Recruitment and Employment Confederation trade body and accountants KPMG showed permanent job placements dropped at the fastest pace in five months.Starting pay growth for permanent staff also fell to a five-month low, one of the weakest readings since early 2021.Jon Holt, KPMG’s UK chief executive and senior partner, said business confidence continued to fluctuate, despite an interest rate cut from the BoE last month.”The news that while salaries rose last month it was at the weakest rate since March could help make the case for more rate cuts when the Monetary Policy Committee meets to decide the future path of interest rates,” Holt said.The vast majority of economists polled by Reuters think the BoE will wait until November to reduce interest rates again, although financial markets currently show a one-in-four chance of a rate cut on Sept. 19.Official labour market data on Tuesday are expected to show robust employment growth and a further moderation in pay growth. More

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(Reuters) – A look at the day ahead in Asian markets.Asian stocks are set to open sharply lower on Monday, tracking Wall Street’s slump on Friday after investors interpreted U.S. jobs data and comments from top Fed officials as a ‘worst of both worlds’ outcome – further labor market weakness, but little appetite to cut interest rates by 50 basis points next week.Japanese futures point to the Nikkei 225 index opening down more than 3%, dragged lower also by the yen’s strength, another indication of the risk aversion permeating world markets. The S&P 500 and the Dow’s losses on Friday secured the biggest weekly drop since March 2023, and the Nasdaq’s 2.6% fall confirmed its biggest weekly loss since January 2022.If heightened anxiety over the U.S. economic and policy outlook were not enough, Asia’s calendar is packed with top-tier economic indicators from China, Japan and Taiwan that will be of potential global significance too.Japan releases bank lending, trade, current account and revised GDP growth figures, Taiwan releases trade data, and perhaps most important of all, China unveils producer and consumer price inflation figures. Overseas investors are growing more cautious on Asian stocks. LSEG data show they were net sellers in August, while JP Morgan recently ditched its buy recommendation on Chinese stocks. Chinese stocks on Friday closed at a seven-month low.The signals from the United States on Friday were probably more nuanced than markets’ negative reaction would suggest. The unemployment rate ticked lower, wage growth accelerated and officials reaffirmed their confidence in a ‘soft landing’. Fed Governor Christopher Waller or New York Fed President John Williams both said on Friday that it is time to cut rates. But in prepared remarks and question and answer sessions, neither signaled that a 50 basis point cut is in the offing. Oil and commodity prices, meanwhile, are falling rapidly, another sign of investors’ growing unease about the global economic picture. Asia’s calendar on Monday will deliver another few pieces of that jigsaw.Figures from Beijing are expected to show that annual consumer inflation in China accelerated to 0.7% in August from 0.5% in July. That would be welcome progress. But the fight against deflation is nowhere near over – data on Monday are expected to show that factory gate prices fell 1.4% year-on-year in August, nearly twice the pace of July’s 0.8% fall.Former central bank governor Yi Gang on Friday urged the country to do more to fight deflationary pressures with more fiscal stimulus and accommodative monetary policy.Japan’s second quarter GDP growth is expected to be revised up slightly, while Taiwan’s export growth is forecast to have more than doubled in August to 7.35%. Taiwan’s TSMC is the world’s largest contract chipmaker and Nvidia (NASDAQ:NVDA)’s chip manufacturing partner. Here are key developments that could provide more direction to Asian markets on Monday:- China PPI, CPI inflation (August)- Japan GDP (Q2, revised)- Taiwan trade (August) More

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