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TOKYO (Reuters) – The dollar traded near a one-week high versus major peers on Friday, on track to snap a five-week losing run, after robust economic data pared bets for aggressive Federal Reserve interest rate cuts.The euro languished close to a two-week low to the dollar as cooling inflation in Germany and Spain boosted the case for European Central Bank easing.The yen held near the closely watched 145 per dollar level after weakening on Thursday, as the greenback tracked a rise in U.S. Treasury yields.The Japanese currency largely ignored data on Friday showing core consumer prices in Tokyo climbing at a faster than expected 2.4% in August, again topping the Bank of Japan’s 2% target, although a measure that also strips out energy costs rose by just 1.6%.Overnight, U.S. data showed gross domestic product (GDP) grew a 3.0% annualised rate in the second quarter, an upward revision from the 2.8% rate reported last month. Economists polled by Reuters had forecast GDP would be unrevised.”That’s been the market mover from the price action overnight, particularly when you look at currencies and U.S. Treasury yields,” said Rodrigo Catril, senior FX strategist at National Australia Bank (OTC:NABZY), referring to the GDP reading. “The takeaway there – the highlight – is that the consumer was stronger than had previously been thought,” he added. “The exceptionalism of the U.S. was still evident in Q2.”Traders now more strongly favour a quarter-point Fed rate reduction on Sept. 18, laying only 34% odds of a 50-basis point (bp) cut, down from 38% a day earlier, according to the CME Group’s (NASDAQ:CME) FedWatch Tool.The U.S. dollar index – which measures the currency against a basket of six major peers – was little changed at 101.34 as of 0032 GMT, after rising 0.36% on Thursday and touching the highest since Aug. 22 at 101.58.It’s on course for a 0.66% gain this week, which would be its best week since the start of August and snap a five-week losing streak. Over August though, it’s set for a 2.6% drop, which would be its worst month since November.The dollar eased 0.14% to 144.78 yen, after rising as high as 145.55 overnight for the first time since Aug. 23.The euro was flat at $1.1082 and dropped as low as $1.10555 on Thursday. Later in the day, more consumer inflation readings from around Europe are due, including France, Italy and the euro zone as a whole.The United States also sees the release of the core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge.Sterling was steady at $1.31655 after dipping to $1.3146 overnight for the first time since Aug. 23. More

NEW DELHI (Reuters) – India’s economic growth is expected to have slowed in the April-June quarter due to reduced government spending during the national elections and stalling consumption.A Reuters poll of 52 economists projected GDP growth of 6.9% year-on-year for the three months through June, the first quarter of India’s 2024/25 fiscal year. That is below the central bank’s estimate of 7.1% and the 7.8% growth rate of the previous quarter. If the projection holds, India will remain the world’s fastest growing major economy. Official GDP growth figures for recent quarters have consistently exceeded forecasts.For the full fiscal year, the central bank expects the economy to grow 7.2%, slower than 8.2% growth the previous year, dragged down by a contraction in state spending and the central bank’s tightened rules on retail loans. The government is due to announce GDP figures for the April-June quarter on Friday at 1200 GMT. Garima Kapoor, an economist at Elara Capital, said uncertainty surrounding the general elections negatively affected infrastructure and capital expenditure in the June quarter, but economic activity was recovering. “Our real sector indices continue to signal a steady and healthy economy, led by consumption.” Government spending in the June quarter fell 7.7% on year, compared with a 10.8% increase during the same period a year earlier, she said.Political uncertainty also weighed on investment and consumption during the April-June quarter, Mumbai-based brokerage Axis Capital (NYSE:AXS) said in a note. After a setback in the general election, Prime Minister Narendra Modi increased spending with a $576 billion annual budget. The budget included billions of dollars for affordable housing and rural jobs, aimed at boosting the economy.Economists expect that favourable rainfall this year will enhance farm output, rural incomes, and consumer demand, a trend reflected in the increased sales of two-wheelers and tractors in July. “At this stage, this weakness would be attributed to election-related uncertainty and slowdown in government spending,” Axis Capital said.”However, if growth momentum does not improve in the next few months, the annual growth forecast of 7% could be at risk.”However, economists warned that a tight monetary policy could also constrain growth.Earlier this month, the Reserve Bank of India (RBI) maintained its policy rate, focusing on sustainably reducing inflation towards its 4% medium-term target.Despite strong growth relative to other economies, India is lagging on job creation and more inclusive economic growth, which has weighed on wages and consumption of lower income households as well as investments by private companies.”It will take India 75 years to reach one-quarter of U.S. per capita,” said a World Bank report released earlier this month, adding “with growing demographic, ecological and geopolitical pressures, there is no room for error.” More

BANGKOK (Reuters) – Thailand’s central bank chief and finance minister will meet in early September to open negotiations on an inflation target for 2025, a senior official said, as the government seeks a new goal with an eye on a rate cut that it has pushed for months.The government has been locked in a tussle with the Bank of Thailand (BOT) since last year, repeatedly asking the central bank to cut key interest rates to help revive a flagging economy, Southeast Asia’s second-largest.Paetongtarn Shinawatra, who was elected prime minister earlier this month, in May even described the central bank’s independence as an “obstacle” to resolving economic problems.A review of the 1-3% inflation target range, which has been in place since 2020, could raise the chance of a rate cut, her predecessor Srettha Thavisin, who was dismissed from office by a court order, said in June.At the upcoming meeting, the central bank would propose a target approved by its monetary policy committee (MPC), BOT assistant governor Piti Disyatat said.”We have to wait for the meeting to see whether they are differences of opinion,” Piti told Reuters, declining to disclose the MPC’s target. “We expect a mutual agreement to be reached.”A scheduled first meeting for discussions between the BOT and finance ministry on the inflation target has not been previously reported. Despite government calls for an easing, the central bank has kept its benchmark interest rate unchanged at a more than decade-high of 2.50%. The next rate review is due on Oct. 16.The finance ministry said it was preparing data ahead of the September meeting, the exact date for which would be fixed after Paetongtarn confirms her cabinet, including the finance minister. “We won’t set our goal in advance but will wait to see what they will propose,” said Pornchai Thiraveja, head of the ministry’s fiscal policy office.”We must set a target that is appropriate.”OPEN LETTERThailand’s inflation target is reviewed every year and must be agreed by the BOT and finance ministry, and approved by the cabinet before the end of the year.The BOT has said the current target range is functioning well, although headline inflation averaged just 0.11% in January-July. The central bank has not met the current inflation target range since it was set. Last month, Governor Sethaput Suthiwartnarueput said changing the target would put at risk credibility, inflation expectations and borrowing costs.The central bank was preparing an open letter to the finance minister to explain why inflation was outside the target, in line with existing protocols, Piti said.In its last such letter in February, the BOT said headline inflation had remained low in large part because of government energy subsidies that lowered electricity costs and retail oil prices.”Without such aforementioned subsidy measures, average headline inflation over the previous 12 months would have resided within the monetary target range at 1.6 percent,” the letter said.Thailand’s economic growth picked up to 2.3% in the April-June quarter from a year earlier, but analysts said fiscal policy uncertainty clouded the outlook.The BOT has predicted 2.6% growth for 2024, after last year’s 1.9%. More

(Reuters) – A look at the day ahead in Asian markets.Financial market trading in many Asian countries could be choppy on Friday, with investors hoping to close out a remarkable month on a high but facing an economic calendar bursting at the seams with top-tier releases.Wall Street put in mixed performance on Thursday as investors digested Nvidia (NASDAQ:NVDA)’s results from the day before which pushed the Nasdaq into the red, and surprisingly strong U.S. GDP data that helped lift the Dow to a record high.But the moves in stocks, rates and yields were modest, and investors in Asia may plow their own furrow on Friday. They will certainly have plenty of potential drivers.The economic calendar includes second quarter GDP from India, retail sales and industrial production from South Korea, retail sales and private sector credit growth from Australia, current account data from Thailand, and retail sales from Hong Kong.There is also a data deluge from Japan, which includes retail sales, industrial production, unemployment, and perhaps most important of all, Tokyo inflation figures for August.On the corporate front, earnings releases from Chinese financial giants Industrial and Commercial Bank of China, CITIC and China Construction Bank (OTC:CICHF) are also on tap.It is worth noting where markets stand going into the last trading day of August. Especially bearing in mind the historic volatility and price swings that battered many markets earlier this month.Japan’s Nikkei is down around 2% so far this month, the MSCI Asia ex-Japan is up 1.5%, world stocks and the S&P 500 are up more than 1%, the Nasdaq is flat, and China’s blue chip index is down nearly 5%.The dollar index is down 2.6% and languishing at its weakest level of the year, although it has risen for two days in a row, while the yen is up around 3.7% and China’s yuan is up around 1.5%.On the data front, annual consumer price inflation in Tokyo is expected to stay unchanged at 2.2% in August, ending three months of acceleration, according to a Reuters poll. Would this suggest the Bank of Japan may not be in such a hurry to raise rates again? On the other hand, the same poll also found factory output rose and retail sales kept growing in July, underscoring the strength of Japan’s economy after better-than-expected April-June gross domestic product figures earlier this month.India’s economic growth, meanwhile, likely moderated and grew at its slowest pace in a year in the April-June quarter due to lower government spending amid a national election that concluded in June, a Reuters poll found.Annual growth likely slowed to 6.9% in the quarter, down from 7.8% in the January-March period, the poll showed. The range of forecasts was wide – from 6.0% to 8.1%.Here are key developments that could provide more direction to Asian markets on Friday:- Japan – Tokyo inflation (August)- India – GDP (Q2)- Australia – retail sales (July) More

(Reuters) -Dell Technologies raised its annual revenue and profit forecasts on Thursday, buoyed by demand for its AI-optimized servers that are powered by Nvidia (NASDAQ:NVDA)’s powerful chips, sending its shares up about 3% in extended trading.Dell (NYSE:DELL)’s infrastructure solutions group, which includes Nvidia-powered servers, surged 38% to a record revenue of $11.65 billion in the second quarter.The company’s servers are engineered to handle AI systems’ intense computational demands, including training large language models.”Enterprise remains a significant opportunity for us, as many are still in the early stages of AI adoption,” Chief Operating Officer Jeff Clarke said in a post-earnings call.Clarke said that Dell sees an emerging opportunity in “sovereign AI” by leveraging the company’s strong relationships with governments globally. Nvidia on Wednesday said nations building AI models in their own languages were turning to its chips, and that this would contribute about low double-digit billions to its revenue in the financial year ending in January 2025.Nvidia CEO Jensen Huang called out the partnership with Dell earlier this year, saying they were helping businesses create their own “AI factories.”Dell’s stock has risen 45% this year.Dell said on Thursday it now expects annual revenue outlook to be between $95.5 billion and $98.5 billion, up from $93.5 billion and $97.5 billion previously. It also raised its annual adjusted profit per share forecast to $7.80, plus or minus 25 cents.Demand for its AI-optimized servers rose about 23% sequentially to $3.2 billion in the second quarter. The backlog for these AI servers was $3.8 billion.”Our pipeline has grown to several multiples of our backlog,” Clarke said in a statement.Revenue for the second quarter ended Aug. 2 rose about 9% to $25.03 billion, beating analysts’ average estimate of $24.14 billion, according to LSEG data. It reported adjusted profit per share of $1.89 per share, compared with estimates of $1.71 per share.While AI server demand soared, Dell’s PC business struggled, losing market share to rivals. However, a strong refresh cycle for AI PCs is expected next year after Microsoft (NASDAQ:MSFT) ends support for Windows 10.Revenue for the client solutions group – home to PCs – fell about 4% to $12.41 billion.”Dell lost PC shipment shares in key markets in the second quarter. It is the top vendor in the U.S. business market, but its competitors have shown growth and gained more shares than they did a year ago,” said Mikako Kitagawa, director analyst at Gartner (NYSE:IT).The company took a $328 million charge for workforce reductions in the second quarter.Separately, Reuters exclusively reported earlier on Thursday that Dell is again exploring a possible sale of cybersecurity firm SecureWorks (NASDAQ:SCWX), following previous unsuccessful attempts to find a buyer. More

Here is a rundown of its key interest rates and policy tools. INTEREST RATES* Reverse repo rates – at which the PBOC purchases government bonds from commercial banks in open market operations, with an agreement to sell them back in the future, thereby providing banks with short-term liquidity. On July 22, the PBOC cut the seven-day reverse repo rate by 10 basis points (bps) to 1.7% and has kept it steady since.This rate has become the PBOC’s main policy rate. The central bank uses an interest rate corridor made of temporary overnight repos and reverse repos to guide interbank rates to fluctuate around the benchmark.* Loan prime rates (LPR) – the benchmark lending rates that are based on quotes from 20 commercial banks. The PBOC has pledged to improve the quality of the LPR to better reflect actual borrowing costs.On July 22, the PBOC cut the one-year LPR, linked to regular consumer loans, by 10 bps to 3.35% and cut five-year rate, linked to mortgages, by the same margin to 3.85%.* Medium-term lending facility (MLF) rate was the previous benchmark policy rate. It is the rate at which banks can borrow from the PBOC for one year. The one-year rate stands at 2.3%.At the end of June, outstanding funding through MLF stood at 7.07 trillion yuan ($994.6 billion) – approximately 5.6% of GDP.* Standing loan facility (SLF) rate – for short-term loans to commercial banks. Use of the SLF is low. The seven-day SLF rate is at 2.7%.* Interest rate on excess reserves – which banks receive for depositing surplus cash at the central bank. It stands at 0.35%. QUANTITATIVE TOOLS* Reserve Requirement Ratio (RRR) – the amount of cash banks need to keep as reserves with the central bank. The PBOC has cut the weighted average RRR from nearly 15% in 2018 to around 7%, pumping more than 12 trillion yuan into the economy. * Open market operations (OMO) – the PBOC mainly conducts OMO via short-term repo and reverse repo operations to manage market liquidity.* Structural tools – the PBOC has in recent years expanded its basket of structural policy tools, including relending facilities and other low-cost loans, as it seeks to provide long-term support for some key sectors, including tech innovation, carbon reduction and affordable housing. For example, the Pledged Supplementary Lending (PSL) facility, launched in 2014, provides long-term funding for government infrastructure and urban redevelopment – a form of property market support.In May, the PBOC launched a 300 billion yuan relending programme to facilitate up to 500 billion yuan in funding for state-owned firms to buy empty apartments and turn them into affordable housing.Outstanding structural monetary policy tools stood at 7.03 trillion yuan at the end of June, including 2.82 trillion through the PSL.($1 = 7.1086 Chinese yuan) More

BEIJING (Reuters) – China’s central bank wants to shift its policy framework to target the cost of credit rather than its size, but liquidity risks and uncooperative markets are making it difficult to transition the economy away from state-directed bank lending.The goal of giving markets a more prominent role in allocating resources was restated at a roughly twice-a-decade Communist Party leadership meeting in July and the People’s Bank of China (PBOC) is expected to play a major role in the reforms.In recent months, the PBOC has taken steps towards creating a more market-driven interest rate curve, and it is expected to make further changes so that credit demand is more responsive to monetary policy moves.Longer-term, regulators hope these changes can also lead to the development of capital markets as an alternative source of financing, reducing the risk of wasteful investment by a state-dominated banking system.But a slowing economy, still heavily reliant on state-led infrastructure investment for growth and in the middle of modernising its industrial complex, has significant liquidity needs. Markets may be unwilling to provide funding in ways the PBOC considers beneficial for national development goals.In a recent tug-of-war between the PBOC and bond markets, safety flows into bonds pushed down government debt yields to levels that signal bearish bets on China’s growth outlook.”The PBOC will continue to gradually reform its monetary policy framework towards the type adopted by major central banks globally. However the changes will be slow,” said Louis Kuijs, Asia Pacific chief economist at S&P Global Ratings.The PBOC has shifted towards targeting the short end of the interest rate curve and announced plans to gradually increase bond trading to influence long-term borrowing costs, but more steps are needed to improve its policy transmission.”We are moving in the direction of developing market-based interest rates, but it’s an arduous task and the road is long,” said a government adviser who spoke on condition of anonymity as they are not authorised to speak to media.Future reforms are likely to involve phasing out liquidity supply levers, including credit guidance, analysts and policy advisers say.For more details, please click on factbox:LIQUIDITY NEEDSCredit guidance and other quantitative tools encourage banks to lend irrespective of market demand.This has created inefficiencies, with idle funds sloshing around the financial system as borrowers often park the money back with the banks in deposits or asset management products.But phasing these tools out carries risks.Debt levels of around three times annual economic output, and ambitious annual growth targets – this year’s is set at around 5% – require greater liquidity injections year after year.Xing Zhaopeng, ANZ’s senior China strategist, estimates the central bank needs to inject approximately 2 trillion yuan ($281 billion) in fresh liquidity annually to support the economy.The PBOC has indicated that the MLF will be the first to see a reduced monetary policy role.But at the end of June, outstanding funding through MLF stood at 7.07 trillion yuan ($994.6 billion) – about 5.6% of GDP.”I don’t expect the MLF to be abruptly cut off as it remains quite important for longer-term financing,” said Lynn Song, chief China economist at ING. “It will be a gradual process.” MARKET TROUBLEMarket preference for safe assets over other types of investment could lead to an inverted yield curve if the central bank freed up interest rates prematurely, ANZ’s Xing said.Long-term borrowing costs falling below short-term rates usually signal recessions. In China’s case, that could weaken the yuan and trigger capital flight. “Once you completely liberalise interest rates, it would be impossible to intervene,” Xing said. “It’s a contradiction: if you let the market work, you have less room to manoeuvre.”Increasing the role of capital markets in financing growth also requires deep structural changes in the economy alongside interest rate reform.China’s stock markets are dominated by retail investors and frequently described as a “casino” due to poor liquidity while debt markets are dominated by government-owned issuers, with banks being the main investors.Low household incomes relative to the size of the economy mean that private pension and insurance markets are small, limiting the number of institutional investors in stocks and bonds and resulting in a shallow capital pool for these assets.Foreign financial investor flows are also limited as China manages a tight capital account.There is little public debate on addressing any of these limitations on capital market development. “What the PBOC is doing regarding long-term interest rates isn’t obviously in line with the long-term reform agenda,” said Kuijs of S&P Global Ratings.($1 = 7.1086 Chinese yuan) More