Gold firms on bets for early 2024 start to US rate cuts

Dec 26 – Gold consolidated gains on Tuesday, extending its climb for a third session on a weaker dollar and Treasury yields in a slow final week of the year, with traders expecting the Federal Reserve to cut US interest rates in early 2024.

Spot gold rose 0.3% to USD 2,059.79 per ounce by 2:10 p.m. ET (1910 GMT), near a more than two-week high of USD 2,070.39 hit in the last session. US gold futures settled mostly flat at USD 2,069.80.

Several markets were closed the day after Christmas for public holidays and trading is expected to remain muted the whole week.

“You may see speculators climb aboard early on the long side, thinking that the metals markets are due for some more upside action in the first quarter,” said Jim Wyckoff, senior analyst at Kitco Metals.

COMEX gold speculators raised their net long position by 20,365 contracts to 131,749 in the week to Dec. 19, data showed on Friday.

“The likely less restrictive monetary policies in 2024 will mean better commercial demand for precious metals,” Wyckoff said, adding that resurgent inflation or more economic weakness in top bullion consumer China could dampen his bullish outlook.

Traders were pricing in an 85% chance of a Fed rate cut in March, according to the CME FedWatch tool.

The dollar index hovered near five-month lows while benchmark US 10-year bond yields also fell.

Lower interest rates increase the appeal of non-yielding bullion and weaken the US currency, making dollar-priced gold more attractive for those holding other currencies.

“Spot gold should find adequate reasons to remain supported above the psychologically important USD 2,000 level, as long as the Fed can stay the course with its intended rate cuts next year,” said Han Tan, chief market analyst at Exinity Group.

Silver inched up 0.1% to USD 24.19 an ounce while palladium fell 1.9% to a one-week low of USD 1,179.60.

Platinum climbed 0.6% to USD 976.75, nearing highs since Sept. 1 in its sixth consecutive session of gains.

(Reporting by Deep Vakil and Hissay Ongmu Bhutia in Bengaluru; Editing by Chizu Nomiyama and Richard Chang)

Oil jumps over 2% amid Red Sea vessel attacks, rate cut hopes

HOUSTON, Dec 26 – Oil climbed more than 2% on Tuesday to its highest level this month, as further attacks on ships in the Red Sea prompted fears of shipping disruptions and on hopes of interest rate cuts that could boost economic growth and fuel demand.

Brent crude futures settled USD 2, or 2.5%, higher at USD 81.07 a barrel, after rising as much as 3.4% during the session. US West Texas Intermediate crude rose by USD 2.01, or 2.7%, to USD 75.57.

The rally, in thin trade with some markets closed for holidays, added to last week’s gains of about 3% after Houthi attacks on ships worried investors and as the violence in Gaza showed no sign of easing.

“There’s plenty of geopolitical tensions today in terms of the Middle East … and it has given some angst here to the security of the transit of oil and other goods,” said John Kilduff, partner with Again Capital LLC.

Yemen’s Iran-backed Houthi militia claimed responsibility for a missile attack on Tuesday on a container ship in the Red Sea, and for an attempt to attack Israel with drones.

An Israeli minister on Tuesday hinted that the country had retaliated in Iraq, Yemen, and Iran for attacks carried out against it as the war with Hamas-led militants in the Gaza Strip widens to other areas of the region and the Palestinian death toll continues to climb.

Despite concern about the Middle East and the re-routing of ships, actual supply has not yet been affected.

Maersk on Sunday announced the restart of shipping routes through the Red Sea, while France’s CMA CGM is increasing the number of vessels traveling through the Suez Canal, easing concerns to some extent.

Shipping companies had stopped sending vessels through the Red Sea and imposed surcharges for re-routing ships. The Red Sea connects with the Suez Canal, a major shipping route used for about 12% of global trade.

“We have issues in the Red Sea, causing ships to go around the horn of Africa, adding to price and risk,” said Tim Snyder, economist at Matador Economics.

“This could turn out to be a not very good start to 2024.”

Meanwhile, Israel’s military chief, Herzi Halevi, said the war on Hamas in Gaza will likely go on for many months.

Oil also found support from expectations the Federal Reserve will cut interest rates next year. Lower interest rates cut consumer borrowing costs, which can boost economic growth and oil demand.

The dollar index edged lower on Tuesday, within sight of a five-month low of 101.42 struck on Friday. A softer greenback makes dollar-denominated oil less expensive for investors holding other currencies, boosting demand.

Traders’ bets that the central bank will deliver a rate cut of at least 25 basis points in March 2024 stand at 86%, compared with about 21% in November, according to the CME Group’s FedWatch tool.

US crude stockpiles were expected to have fallen by about 2.6 million barrels in the week to Dec. 22., while distillate and gasoline inventories likely rose, a preliminary Reuters poll showed.

(Reporting by Arathy Somasekhar and Georgina McCartney in Houston, Alex Lawler and Florence Tan; Editing by David Goodman, Mark Porter, and Chizu Nomiyama)

Eyes on Japan CPI, US soft landing hopes grow

Dec 22 – Investors seem more confident than ever that the US economy is gliding towards the hallowed ‘soft landing’, which bodes well for risk assets in Asia as the final full trading week of the year draws to a close on Friday.

Consumer price inflation figures from Japan top the regional economic calendar, and investors also have inflation data from Malaysia, bank lending from Australia, and the latest unemployment report from Taiwan to get their teeth into.

Although the MSCI World index is poised for its eighth consecutive weekly rise, which would be the longest winning streak in six years, emerging market and Asian stocks have not performed as strongly.

The MSCI Asia ex-Japan index is on track for a third weekly loss in four. But it looks like a very slender decline which will flip to a second straight weekly gain if the index rises 0.2% or more on Friday.

This is likely, after the rebound on Wall Street and in global stocks on Thursday. The move was partly a natural bounce back from the surprise slump in the last hour of trading the previous day, and partly thanks to figures that showed US inflation is back down to the Fed’s target.

The final reading of third quarter US growth and inflation showed that growth was revised down to a 4.9% annualized rate from 5.2%, but annual rate of core PCE inflation was revised down to 2.0% from 2.3%.

Traders quickly moved to price in a more dovish Fed outlook – 155 basis points of easing next year is now expected, the first cut will be in March, with a 15% probability that the easing cycle could even start in January.

Music to the ears of the ‘soft landing’ crew, a band of believers that appears to be gaining in numbers by the day.

On Friday the inflation focus switches to Japan from the US.

Japan’s core annual consumer inflation rate is expected to slow in November to 2.5% from 2.9%. That would be the lowest since July last year and mark one of the steepest declines in years.

Headline inflation is stickier – in October it was running at an annual rate of 3.3% – and has not been below 3% since July last year. After decades of fighting deflation, the Bank of Japan wants to see sustained inflation, as it gears up to exit ultra-loose policy and turn interest rates positive again.

“The chance of trend inflation accelerating towards our price target is gradually heightening,” Ueda said in a press conference on Wednesday after leaving policy unchanged. “But we still need to scrutinize whether a positive wage-inflation cycle will fall in place.”

Here are key developments that could provide more direction to markets on Friday:

– Japan CPI inflation (November)

– Australia credit and lending (November)

– Malaysia CPI inflation (November)

(By Jamie McGeever)

Dollar index slips to 1-week low; traders eye Friday’s US inflation report

NEW YORK, Dec 21 – The dollar hit a one-week low against a basket of major currencies on Thursday as US equities rebounded from the prior day’s sell-off and investors braced for Friday’s US inflation data for clues to the path of future Federal Reserve policy.

Data earlier Thursday
showed gross domestic product increased at a 4.9% annualized rate last quarter, revised down from the previously reported 5.2%. The consumer spending element of third-quarter GDP was revised downward to 3.1% from 3.6% in the previous estimate.

“The GDP number wasn’t very helpful,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “We had a little bit less growth than we thought.”

“But there is nothing (in the day’s action) that says the market is having second thoughts about how aggressive it’s anticipating rate cuts in the year ahead,” he said. “The dollar has been generally soft … so I think we’re just churning for the most part.”

The US currency rose on Wednesday in a safe-haven bid after US stocks’ abrupt afternoon sell-off.

The Fed held interest rates steady last week and policymakers signaled in new economic projections that the historic monetary policy tightening engineered over the last two years is at an end and lower borrowing costs are coming in 2024.

A separate report on Thursday showed the number of Americans filing new claims for unemployment benefits rose just marginally last week, suggesting underlying strength in the economy as the year winds down.

Investor now await Friday’s reading on US core personal consumption expenditure (PCE) index. A November rise of 0.1% would slow the six-month annualized pace of inflation to just 2.1%, almost at the Fed’s 2% target.

Some investors expect slower inflation will prompt the Fed to ease policy to stop real rates from rising, and are wagering on early and aggressive action.

The dollar fell 0.93% against the Japanese yen. Japan’s government on Thursday slightly raised its economic growth projections for this fiscal year from its previous estimates.

The yen is down roughly 8% against the dollar for the year as the Bank of Japan has steadfastly kept short-term rates negative, against 300 basis points of US interest rate hikes.

Sterling GBP=D3 was up 0.4% at USD 1.2689 against the dollar on Thursday, a day after suffering its sharpest drop in two months on news that British inflation dived below forecasts to an annual 3.9% in October, a two-year low. Traders priced in Bank of England rate cuts as soon as May.

The dollar index, which tracks the US currency against six peers, was last down 0.596% at 101.8. It hit its lowest level in a week.

Some analysts said month-end rebalancing in thin trade could weigh on the dollar in the near term.

“US equity market outperformance through December rather suggests that passive hedge rebalancing flows will run against the USD through month end,” said Shaun Osborne, chief FX strategist at Scotiabank.

The risk-sensitive Australian and New Zealand dollars traded higher on the day. The Aussie was last up 1.04% at USD 0.68005, after touching USD 0.68035. The kiwi traded up 0.74% at USD
0.6294.

Bitcoin was 0.29% higher at USD 43,791.

(Reporting by Saqib Iqbal Ahmed and Caroline Valetkevitch; Additional reporting by Samuel Indyk and Tom Westbrook; Editing by Chizu Nomiyama, Bernadette Baum, and Richard Chang)

Wall Street ends sharply higher, rebounding with a boost from chips

NEW YORK, Dec 21- US stocks closed higher on Thursday, winning back much of the previous day’s losses, as economic data fueled optimism that the Federal Reserve would ease monetary policy and revived investor risk appetite.

All three major US stock posted gains as chips surged, led by Micron Technology (MU) after its better-than-expected quarterly forecast, putting the tech-heavy Nasdaq out front.

The rally gained momentum as the session drew to a close, with the S&P 500 and the Nasdaq surging more than 1%.

Data on Thursday showed third-quarter US economic growth was not as robust as originally stated, and cracks are appearing in the tight labor market, which the Fed considers an obstacle to cooling inflation.

“The fact that the third-quarter GDP number wasn’t revised upward, and in fact was cut, is giving investors comfort that the path the Fed is on, which they enunciated last week, isn’t going to change any time soon,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

US stocks abruptly sank late Wednesday afternoon, snapping a multi-session rally, in a sell-off possibly accelerated by hedging activity associated with short-dated option trades.

“The investor narrative yesterday was about profit taking on the heels of a very long consistent holiday rally,” said Greg Bassuk, chief executive of AXS Investments in New York.

“Investors would be prudent to buy on these dips,” Bassuk said, adding that he believes stocks “will end the year strongly.”

Financial markets are pricing in a 71.3% likelihood that the US central bank will reduce the Fed funds target rate by 25 basis points as soon as March, according to CME’s FedWatch tool.

The market is awaiting the Commerce Department’s personal consumption expenditures (PCE) report due on Friday, which will cover income growth, consumer spending, and inflation.

The Dow Jones Industrial Average rose 322.35 points, or 0.87%, to 37,404.35, the S&P 500 gained 48.4 points, or 1.03%, at 4,746.75 and the Nasdaq Composite added 185.92 points, or 1.26%, at 14,963.87.

All 11 major sectors of the S&P 500 ended in positive territory, and consumer discretionary stocks enjoyed the biggest percentage gains.

Micron Technology forecast quarterly revenue above market estimates, and its shares jumped 8.6% on signs of a memory chip recovery in 2024 after one of the most significant downturns in years.

The Philadelphia SE semiconductor index, housing chip stocks, advanced 2.8%.

US electric vehicle makers Tesla (TSLA), Lucid Group (LCID), and Rivian Automotive (RIVN) rose between 1.6% and 3.0% after a report said the United States was considering tariff hikes on Chinese EV manufacturers.

Triumph Group (TGI) soared 32.9% after the aerospace supplier said it would sell its components aftermarket business to AAR Corp (AIR) for USD 725 million.

US-listed shares of Blackberry (BB) tumbled 12.7% after its fourth-quarter revenue estimates landed below expectations.

Advancing issues outnumbered decliners on the NYSE by a 3.65-to-1 ratio; on Nasdaq, a 2.79-to-1 ratio favored advancers.

The S&P 500 posted 17 new 52-week highs and one new low; the Nasdaq Composite recorded 79 new highs and 68 new lows.

Volume on US exchanges was 10.88 billion shares, compared with the 12.28 billion average for the full session over the last 20 trading days.

(Reporting by Stephen Culp; Additional reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Richard Chang)

Gold gains after US data spurs Fed rate-cut prospects

Dec 21 – Gold prices gained on Thursday as the dollar retreated after US economic data fueled expectations the Federal Reserve would cut interest rates in March next year.

Spot gold was up 0.7% at USD 2,043.79 per ounce by 2:55 p.m. ET (1955 GMT), eyeing its best session in six. US gold futures settled 0.2% higher at USD 2,051.30.

Data showed US gross domestic product increased at a 4.9% annualized rate last quarter, revised down from the previously reported 5.2% pace, while weekly jobless claims increased slightly.

“GDP data came in a bit soft and gold charged up. The market is craving the burgeoning Fed pivot,” said Tai Wong, a New York-based independent metals trader.

The market expects an 83% chance of a Fed rate cut by March, compared with 79% before the data, according to the CME FedWatch tool.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

The US dollar fell 0.5% and 10-year Treasury yields hovered near a five-month low.

The Fed’s dovish stance has caused markets to price in several rate cuts in 2024. However, some Fed officials have spoken out against imminent rate cuts.

Market focus has now shifted to the US core personal consumption expenditure (PCE) report on Friday.

“Gold will continue to maintain price levels above USD 2,000 and these expectations we have of lowering inflationary pressures will continue to foster the sideways to higher movement in gold,” said David Meger, director of metals trading at High Ridge Futures.

Silver gained 0.9% to USD 24.33 per ounce, hitting a 16-day high.

Platinum rose 0.4% to USD 962.82, near a 16-week peak hit last session, and palladium was up 1.3% at USD 1,211.71.

“The fundamental backdrop is stronger for platinum and it should continue to outperform palladium going forward,” BofA said in a research note dated Wednesday.

BofA expects rising palladium surpluses under its base case next year, with a possibility of prices falling to a low of USD 500 per ounce if there are no supply cuts.

(Reporting by Sherin Elizabeth Varghese and Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri)

Oil prices slip as Angola decides to exit OPEC

NEW YORK, Dec 21 – Oil prices settled lower on Thursday after Angola said it would exit the Organization of the Petroleum Exporting Countries (OPEC), raising questions about the producer group’s efforts to support prices by limiting global supplies.

Brent crude futures settled down 31 cents at USD 79.39 a barrel. US West Texas Intermediate crude futures fell 33 cents to USD 73.89 a barrel.

Earlier in the session, both benchmarks were down by more than USD 1 after Angola said it was planning to leave the group.

Angolan oil minister Diamantino Azevedo said the country’s membership in OPEC was not serving its interests. The Saudi-led producer group in recent months has been rallying support to deepen output cuts and boost oil prices.

“It seems like OPEC is losing the battle to keep prices higher,” said Matt Smith of shipping tracking firm Kpler, noting that non-OPEC producers like the US have stepped up to fill the supply gap.

Angola produces around 1.1 million barrels per day (bpd), compared with 28 million bpd for the whole group.

The country’s exit raises questions about the cohesion and direction of OPEC, even though it is one of the smallest producers and its departure may have a limited impact on global supplies, Smith said.

At a meeting in November, Angola protested a decision by OPEC to cut its production quota for 2024 to help prop up oil prices.

Separately, the US Energy Information Administration (EIA) said US crude output rose to a record 13.3 million barrels per day (bpd) last week, up from the previous all-time high of 13.2 million barrels per day.

“The US is poised to increase production in the Permian Basin and across the country,” said Tim Snyder, economist at Matador Economics in Dallas.

“We’ve mitigated price risk here in the US and really put the Russians and the Saudis back on their heels,” Snyder said.

Recent attacks carried out in support of Palestinians by Yemeni Houthi militant groups on vessels headed towards Israeli ports have forced major maritime carriers to steer clear of the Red Sea, causing global trade disruptions.

“With such a heavy load of US crude reported in increased measure, one can only assume that the market remains edgy in regard to supply diversion or even hiatus caused by the Houthi attacks on shipping,” PVM analyst John Evans said.

The conflict between Israel and Hamas intensified on Thursday amid truce talks.

(Reporting by Nicole Jao in New York; Additional reporting by Robert Harvey, Ahmad Ghaddar, Yuka Obayashi, and Sudarshan Varadhan; Editing by Paul Simao, David Gregorio, and Aurora Ellis)

Asia stocks fall after Wall Street rally stalls

HONG KONG, Dec 21 – Asian shares retreated on Thursday after Wall Street snapped a long winning streak, while Treasury yields were near five-month lows on hopes Britain’s notably soft inflation reading would be echoed in looming US price data.

The equities rally, which had been driven by falling interest rates and the Federal Reserve’s dovish turn, stalled on Thursday even after U.S. economic data that beat expectations initially turned the major indexes green. A far steeper-than-expected decline in British inflation also took markets by surprise.

“Three US benchmark averages sharply retreated in the late session after hitting their respective intraday highs, snapping a more-than-one-week winning streak. This could be due to an overbought market as rate cuts optimism ran out of steam,” said Tina Teng, market analyst at CMC Markets.

“Global government bond yields accelerated falling due to risk-off sentiment.”

European markets were set for a lower open, with the pan-region Euro Stoxx 50 futures STXEc1 down 0.48%, German DAX futures FDXc1 dipping 0.44% and FTSE futures FFIc1 falling 0.57%.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3%, after US stocks tumbled to close sharply lower in the previous session. The index is up 1.7% so far this month.

U.S. stock futures, the S&P 500 e-minis ESc1, were up 0.33%.

Australian shares were down 0.45%, dragged down by losses in commodity-related stocks, while Japan’s Nikkei stock index slid 1.55%, slipping from near historical highs.

China’s blue-chip CSI300 index rose 1.25%, rebounding from a near five-year low hit in the previous session. Foreign investors have been net buyers of Chinese shares so far on the day, following two sessions of selling.

Hong Kong shares tracked global markets lower in morning trade but the benchmark Hang Seng Index gained 0.14% in the afternoon.

On Wednesday, an abrupt mid-afternoon nosedive ended Wall Street’s impressive rally.

All three major U.S. stock indexes, which were at or near record highs this week, veered lower late in the session to end 1.3% to 1.5% below Tuesday’s close. The Dow Jones Industrial Average fell 1.27%, the S&P 500 lost 1.47% and the Nasdaq Composite dropped 1.5%.

In US Treasuries, the yield on benchmark 10-year Treasury notes reached 3.8676% compared with its US close of 3.877% on Wednesday when it fell to an almost five-month month low as government bond yields fell globally after the British inflation data.

The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.3705% compared with a US close of 4.369%.

In currencies, the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was down at 102.29. The greenback on Wednesday strengthened against sterling after the British inflation data fuelled speculation of rate cuts by the Bank of England.

Sterling was last trading at USD 1.2646, up 0.06% on the day, while the euro was up 0.1% at USD 1.095.

In commodities, global oil benchmark Brent hovered above $80 a barrel amid jitters over global trade disruptions and geopolitical tensions in the Middle East following attacks on ships in the Red Sea by Yemen’s Iran-aligned Houthi forces.

Brent crude LCOc1 was last trading at USD 79.62 per barrel and US crude dipped 0.11% to USD 74.14 a barrel.

Gold was slightly higher. Spot gold was traded at USD 2036.19 per ounce.

(Reporting by Julie Zhu; Editing by Jamie Freed)

China stocks drop as stimulus optimism fades; Hong Kong edged higher

HONG KONG, Dec 20 – China’s blue-chip stocks hit a near five-year low on Wednesday, as investors are gradually losing hopes for stimulus surprises and not willing to buy the dip, while Hong Kong shares rose tracking overnight Wall Street gains.

** The blue-chip CSI 300 Index dropped 1.1%, dipping to its lowest closing level since February 2019, while the Shanghai Composite Index declined 1.0%.

** Hong Kong’s Hang Seng Index rose 0.7%, and the Hang Seng China Enterprises Index climbed 0.4%.

** China kept benchmark lending rates unchanged at the monthly fixing, matching market expectations, after the central bank kept its medium-term policy rate steady last week.

** Analysts said investors sentiment is gloomy after last week’s Central Economic Work Conference fell short of offering great stimulus to bolster the faltering recovery.

** A BofA Asia fund manager survey released on Wednesday showed more than 60% of investors would rather stick to a wait-and-watch approach or look for opportunities elsewhere than be exposed to China equities.

** “Investor interest towards risk assets in China is shockingly low,” the survey said.

** Yet J.P Morgan analysts noted that investors were likely neglecting the lagged impacts of the country’s fiscal stimulus due to be more visible in early 2024.

** “The current low positioning sets the base of a rebound into early 2024,” they said.

** Meanwhile, the United States has added 13 companies in China to a list of entities receiving U.S. exports that officials have been unable to inspect, according to a government notice posted on Tuesday.

** Sector wise, media, artificial intelligence-related firms, and brokers fell 3.1%, 3% and 2.7%, respectively, to lead the decline.

** In Hong Kong, Alibaba Group 9988.HK gained 2.7% after the firm appointed a new CEO to head its domestic e-commerce arm.

** Hang Seng Tech Index closed 0.5% higher.

(Reporting by Summer Zhen; Editing by Rashmi Aich)

Dollar rises on safe-haven bid, big UK inflation drop hits pound

NEW YORK, Dec 20 – The dollar rose against a basket of currencies on Wednesday as a late-session selloff on Wall Street boosted the US currency’s safe-haven appeal, and as data on sharply falling UK inflation prompted a steep drop in the British pound.

US stocks closed lower on Wednesday after an abrupt mid-afternoon sell-off snapped a rally which had been driven by falling interest rates and the Federal Reserve’s dovish turn.

The dollar was last up 0.28% at 102.42, on pace to break a two-day losing streak. The index had dropped about 1.5% for the week ended Tuesday after last week’s Federal Reserve meeting prompted traders to pencil in several rate cuts in 2024, starting as early as March.

US Federal Reserve officials have since been pushing back on the idea of rapid rate cuts next year.

Helen Given, FX Trader at Monex USA, said Wednesday’s rebound for the dollar was driven in part by a safety bid for the greenback as well as doubts about the Fed actually cutting rates as swiftly as the market is pricing.

“We don’t necessarily believe that the Fed is going to cut as early as the market thinks … so we think this reaction is pretty well merited,” Given said.

Data on Wednesday showed US consumer confidence increased more than expected in December amid optimism about the labor market, which could help to underpin the economy early next year.

The Federal Reserve’s dovish December pivot has boosted the case for the weakening dollar to keep falling into 2024, though strength in the US economy could limit the greenback’s decline, according to investors.

Investors now await US inflation data on Friday for clues to future Fed policy actions.

Meanwhile, the pound was down 0.76% at USD 1.2633, after slipping to a near 1-week low of USD 1.2625.

British inflation fell in November to its lowest rate in over two years, prompting investors to fully price in a BoE rate cut by May 2024 and assign a nearly 50% chance of a cut by March.

“A number of banks have seen pricing for (interest rate) cuts being front-loaded. I think the Bank of England was just a little bit behind because the inflation is higher, but it’s now starting to move in the same direction,” said Vassili Serebriakov, foreign exchange and macro strategist at UBS.

“Also, the pound has had a good run in the past couple of weeks, I think it’s just reversing some of those moves,” Serebriakov said.

Meanwhile, European Central Bank policymaker Joachim Nagel said in an interview published on Wednesday that eurozone interest rates must remain high and traders betting on upcoming cuts in borrowing costs should be careful. The euro was 0.36% lower at USD 1.0941.

The dollar fell 0.14% against the yen to 143.64, a day after the Bank of Japan maintained its ultra-loose monetary policy and opted to wait for more evidence to justify a shift.

“The last thing (the BOJ) wants to do is to have to undo (a rate hike) again in a couple of months’ time,” Rob Carnell, Asia-Pacific head of research at ING, said.

Japan’s government is aiming to reduce its budget next fiscal year for the first time in 12 years, Reuters reported on Wednesday.

In cryptocurrencies, bitcoin gained 3.26% to USD 43,634, its highest since Dec. 9. A spate of filings for spot bitcoin and ether ETFs, including from traditional finance heavyweights, has helped revive the crypto market this year after a series of meltdowns in 2022.

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Iain Withers in London and Brigid Riley in Tokyo; Editing by Andrew Heavens, Emelia Sithole-Matarise, Nick Zieminski, and Sonali Paul)

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