Economy

LONDON (Reuters) -The yen staged its biggest one-day rally in almost a year on Thursday, after Japanese monetary authorities offered a surprisingly clear hint at a shift in policy, while the euro headed for its biggest weekly fall since May.The dollar index eased ahead of Friday’s U.S. non-farm payrolls report, under pressure mostly from the yen, which rose by nearly 2% to its strongest in three months. Bank of Japan (BOJ) Governor Kazuo Ueda said on Thursday the central bank has several options on which interest rates to target once it pulls short-term borrowing costs out of negative territory.Markets took this as a potential sign that change may be imminent and pushed the yen, which has been punished by speculators taking large bearish positions, higher.The dollar fell by as much as 1.9% against the yen at one point and was last down 1.5% at 145.05. “It probably speaks to the positioning that we’ve seen. The market is very, very heavily short the yen and we’ve got a heavy consensus in for 2024 that this is going to be the year that they bring negative rates to an end. So it shows the market is ready to latch on absolutely anything that it can in light of that,” TraderX strategist Michael Brown said.The BOJ has been the lone holdout among central banks, by maintaining a policy of ultra-low rates that sent the yen to its weakest in decades against the dollar and sparked speculation that monetary authorities could intervene to prop up the currency.Expectations are growing for the BOJ to signal it will soon wind down this policy and next week’s meeting may provide that opportunity.The euro held around three-week lows, fuelled by a dramatic repricing of interest rate expectations for 2024, although caution around Friday’s U.S. non-farm payrolls has kept trading volatility subdued.Falling inflation, a slowdown in major economies such as Germany and softness in the labour market have prompted traders to assume euro zone rates will fall to 3.0%, from 4% currently, by September, from an expectation of 3.4% just two weeks ago.As a result, the euro has hit eight-year lows against the Swiss franc and three-month lows against the pound this week.The European Central Bank (ECB) holds its final meeting of 2023 next Thursday. There has been very little resistance from policymakers to the recent repricing of rates, with even known hawk Isabel Schnabel taking rate hikes off the table.The question of a rate cut could emerge in 2024, ECB member and Bank of France head Francois Villeroy de Galhau told a French paper in an interview published on Wednesday.Villeroy said that “disinflation is happening more quickly than we thought”.The euro, which has fallen 0.95% this week, was flat at $1.0764. Against the Swiss franc, it was up 0.3% at 0.945 francs, above an earlier low of 0.9404, its weakest since early 2015, when the Swiss National Bank removed its peg between the two currencies.The dollar index, which shed 3% last month, was down 0.2% at 103.94, not far off a two-week high, with Friday’s payrolls the main focus.Separate U.S. jobs data this week has suggested the labour market is softening, but not showing any material weakness. Futures markets are pricing in a 60% chance of a rate cut by March, up from 50% a week ago, according to the CME’s FedWatch tool. But analysts think this might be overdone.The Canadian dollar was down 0.1% against the U.S. currency at 1.3605 after the Bank of Canada on Wednesday held its key overnight rate at 5% and, in contrast to other central banks recently, did not rule out another hike. More

Russia’s export-focused economy has proved more resilient than either Moscow or its adversaries anticipated when the West sought to punish and isolate it with sweeping sanctions for sending its troops into Ukraine in early 2022. Putin told the “Russia Calling” business forum in Moscow that gross domestic product (GDP) was set to grow 3.5% this year, rebounding from a 2.1% contraction in 2022. “Today, GDP is already higher than it was before the Western sanctions attack,” he said.Russia’s economy has been boosted by a sharp increase in defence spending and manufacturing for the conflict in Ukraine, which Moscow calls a “special military operation”.But it is also grappling with elevated interest rates that are expected to be raised to 16% next week, high inflation that will end the year well above the central bank’s 4% target, and a labour shortage that has seen unemployment drop to a record low of 2.9% and start putting the brakes on productivity.WEST ‘RESTING ON LAURELS’Putin, as he has done on several occasions, lauded the health of the Russian economy and state finances, casting the West’s sanctions as an onslaught that has failed to land any meaningful blows. “The world has entered an era of radical changes and serious tests not only for specific companies and sectors, but also for whole countries and regions of the world,” Putin said. “Only a strong, stable and, I stress, sovereign country will be able to pass this phase successfully, to become one of the growth centres of the new global economy.”Putin said the Western financial system was becoming technologically obsolete.”It has been resting on its laurels, for so long becoming accustomed to monopolies and exclusivity, to the lack of real alternatives, to the habit of changing nothing, that it is becoming archaic.” As evidence of Russia’s solidity, Putin said the state budget deficit had narrowed further in November, shrinking to 878 billion roubles ($9.51 billion) or 0.5% of GDP in the first 11 months of the year. That was down from 1.24 trillion roubles a month earlier. ($1 = 92.2860 roubles) More

Announced job layoffs by U.S.-based employers totaled 45,510 last month, up 24% from 38,836 in October, global outplacement firm Challenger, Gray & Christmas said in the report. While it was the first time since July the announced cuts were lower than the corresponding month a year ago, the year-to-date tally was the highest since 2020, when the economy was swooning amid the impact of the COVID-19 pandemic.Hiring plans also appeared to have weakened. U.S. employers in November announced plans to hire 15,566 workers, for a year-to-date total of 775,501. It is the lowest year-to-date total for announced hiring since 2015.Likewise, seasonal employers have announced 573,300 hires this year through November, the lowest year-to-date tally since 2013. The Federal Reserve is keenly watching for further indications of labor market cooling as it aims for continued progress in bringing inflation back to its 2% target rate. The central bank’s rate-hiking campaign over the past 20 months has already borne fruit in lowering inflation to a 3.0% annual rate by the Fed’s preferred measure, less than half its peak in the summer of last year, and the labor market is now steadily slowing too as the surge in borrowing costs dents companies’ spending.From January to November, companies have announced plans to cut 686,860 jobs, a 115% increase from the 320,173 cuts announced in the same period in 2022. Job openings fell to a more than 2-1/2-year low of 8.733 million in October, government data showed on Tuesday. There were 1.34 vacancies for every unemployed person, the lowest since August 2021.The much-anticipated monthly jobs report is scheduled for release on Friday. Economists surveyed by Reuters forecast as of Wednesday that total nonfarm payrolls are estimated to have increased by 180,000 in November after rising 150,000 in the prior month.”The job market is loosening, and employers are not as quick to hire. The labor market appears to be stabilizing with a more normal churn, though we expect to continue to see layoffs going into the New Year,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas.Retailers led the announced layoffs in November, with 6,548 job cuts. Technology sector job cuts, while way off the surge seen from last October through May of this year, still came in second, with 5,049 announced.The tech sector stands out in 2023 as the weakest by far, with a net drop of 93,000 payroll jobs, according to the Labor Department, a drop of 3%. More

Renault (EPA:RENA) said that, between now and 2027, it would aim to cut its production costs per vehicle by 30% for internal combustion vehicles, and by 50% for electric vehicles.The carmaker also wants to reduce vehicle development times to two years from three years, it said in a statement.Renault already uses more than 300 AI applications to trace car parts such as tyres and boost quality control, and aims to increase that number to 3,000 by 2025.As part of the plan to make its manufacturing base more competitive, the company also said on Thursday it would invest 400 million euros make four new models at its Bursa site in Turkey, including a new low-cost SUV Duster.The goal is to turn the plant into an export hub not only for Europe but for other countries in the world, it said. More

Shares of the Goodlettsville, Tennessee-based company, down 45% so far this year, were up about 3% in premarket trading after the company also reaffirmed its full-year sales and profit forecasts.Dollar General (NYSE:DG), which in October re-appointed former CEO Todd Vasos for a second stint, in a move to stabilize its struggling business, had trimmed its annual sales and profit forecasts for a third time.Discount store operators in recent quarters have been struggling with a shift in shopper preferences for essentials over general merchandise, including home goods and apparel, as well as stiff competition from larger retailers such as Walmart (NYSE:WMT).To counter this, Dollar General has been taking measures to keep prices low on its everyday staples, while offering discounts and promotions as it tries to clear excess stock.Last week, rival Dollar Tree (NASDAQ:DLTR) trimmed its annual sales forecast on weaker spending from lower-income households.Dollar General saw total merchandise inventories in the third quarter decline 1.8% year-on-year.The company, however, saw its gross profit as a percentage of net sales fall 147 basis points for the quarter, as it grapples with a rise in retail shrink, where inventory is either lost, damaged or stolen.The discount retailer’s same-store sales fell 1.3% for the third quarter, compared with analysts’ average estimate of a 2.08% drop, according to LSEG data.It posted a per-share profit of $1.26 for the quarter, compared with LSEG estimates of $1.19. More

BRUSSELS (Reuters) – France and Germany agree on most of the proposed changes to European Union fiscal rules but differ on the treatment of investment spending when the deficit is above EU limits, French finance minister Bruno Le Maire said on Thursday.Speaking to reporters ahead of a key meeting of EU finance ministers that aims to produce a deal on changes to EU fiscal and debt rules, Le Maire said the ability to maintain investment was crucial for Paris, a “red line”.”I consider that France has taken every necessary step towards Germany to reach a compromise, we are 90% in agreement,” he said. “The only question that remains open between France and Germany is what do we do for excessive deficit procedures.”Under EU rules, which set a limit of 3% of GDP on budget deficits and 60% of GDP on public debt, when a country breaches the deficit ceiling it must cut the deficit by 0.5% of GDP in structural terms every year until it is below 3% again. This obligation is called an “excessive deficit procedure”.France wants a smaller annual deficit reduction if a government makes reforms and invests under a medium-term plan of four years that would be negotiated with the European Commission.”We are totally convinced that during the four years of the excessive deficit procedure it is essential to keep incentives to encourage investment and structural reforms by introducing flexibility that could be 0.2 points per year. That’s the only thing keeping France and Germany from having an agreement.” he said.”This principle is an absolute red line,” he added.The discussions of EU finance ministers on Thursday evening and Friday are the final stage of a reviewing the EU’s fiscal rules, suspended since 2020 for the COVID-19 pandemic and the energy crisis.The ministers want to adapt the framework to the post-pandemic reality of high public debt and public investment needed to fight climate change.The changes are designed to give EU countries more time to reduce debt through tailor-made plans and create incentives for public investment even when government spending has to fall, while making the rules easier to follow.Le Maire said France has already accepted Germany’s demand to set the minimum annual average debt reduction for countries with high debt at 1% of GDP and to establish a 1.5% of GDP safety buffer below the 3% of GDP deficit ceiling to prevent unexpected events from pushing governments above the EU limit. More

The euro fell to 0.9404 francs against the franc at 1122 GMT, its lowest level since the Swiss National Bank discontinued its minimum exchange rate policy in January 2015.The SNB, which is due to announce its latest interest rate decision on Dec. 14, declined to comment.”Perhaps market participants are starting to price in more aggressive interest rate cuts by the ECB next year,” said Stefan Gerlach, chief economist at EFG Bank in Zurich, who expects the SNB to keep its interest rates unchanged at 1.75% next week.The franc’s rise could make the SNB consider relaunching interventions in the currency markets to weaken the safe-haven currency, but Gerlach thought this unlikely.”That would mean adding to the foreign exchange reserves and blow up the balance sheet further,” he said. “Thus, I think they will want to avoid that.”ECB policy hawk Isabel Schnabel this week said further interest rate hikes could be taken off the table, given a remarkable fall in inflation, driving up expectations of an interest rate cut.UBS economist Alessandro Bee said there was more potential for interest rate cuts by the ECB, which weighed on the euro.”At the moment the difference between short-rates in the Eurozone and in Switzerland is around 225 basis points but the markets expect this difference to shrink to around 150 bp in the coming 12 months,” he said.”This makes the euro less attractive against the Swiss franc.” More

(Reuters) – Futures tracking the Dow and the S&P 500 indexes were subdued on Thursday as caution prevailed ahead of the monthly payrolls data due later in the week, while Nasdaq futures were propped up by a rise in Google shares.Reports showing weak private payrolls and job openings this week have reinforced expectations the Federal Reserve’s furious pace of rate hikes is slowing the economy, potentially allowing the central bank to ease up on its monetary policy next year.Traders have nearly fully priced in the likelihood of the Fed keeping interest rates unchanged at its meeting next week, with 61% betting on a rate cut as soon as March 2024, according to the CME Group’s (NASDAQ:CME) FedWatch tool.However, some analysts have warned that markets have been too optimistic about rate cuts and also said the upcoming jobs report will be crucial in determining the chances of a soft landing – where the Fed manages to avert a recession.”U.S. jobs numbers tomorrow and central bank meetings next week could inform the market if it has got carried away with the level of rate cuts which are now being priced in for 2024,” Russ Mould, investment director at AJ Bell, wrote in a note.The Labor Department’s report is expected to show non-farm payrolls increased by 180,000 jobs last month after rising by 150,000 in October.Another report due at 8:30 a.m. ET is expected to show initial jobless claims ticked up to 222,000 for the week ended Dec. 2, compared with 218,000 in the prior week.Meanwhile, comments from Bank of Japan Governor Kazuo Ueda added to growing speculation that the central bank could soon shift away from its ultra-easy monetary policy.At 7:02 a.m. ET, Dow e-minis were down 75 points, or 0.21%, S&P 500 e-minis were down 0.25 points, or 0.01%, and Nasdaq 100 e-minis were up 30 points, or 0.19%.Shares of Google-parent Alphabet (NASDAQ:GOOGL) were up 2.9% in premarket trading, a day after the release of its most advanced artificial intelligence model. Other megacap stocks were mixed.Among other major movers, Advanced Micro Devices (NASDAQ:AMD) gained 2.2% before the bell, a day after the chipmaker estimated there was a $45 billion market for its data center artificial intelligence processors this year.GameStop (NYSE:GME) tumbled 7.3% after the videogame retailer missed estimates for quarterly revenue, hurt by rising competition.Bristol-Myers Squibb (NYSE:BMY) added 1.2% after the drugmaker announced an additional $3 billion share buyback program. More