US recap: EUR/USD hits 1-year high as US data favor end of Fed hikes

April 13 (Reuters) – EUR/USD hit a 1-year high as markets coalesced around the Fed having maybe one more 25bp rate hike before a spate of rate cuts begin later this year in the wake of March US PPI, which fell far more than forecast while jobless claims inched higher.

The dollar’s initial slide on the data, in the wake of other somewhat disinflationary numbers of late, was curtailed by Treasury yields rebounding from earlier lows, in part because the Fed remains well favored to hike in May.

Data point to an economy that is cooling but not drastically enough to force the US central bank to abandon its focus on inflation just yet.

Markets, see the delayed impact of aggressive rate hikes, tighter bank credit after March’s record fall in smaller banks’ deposits and a shrinking pool of savings from the pandemic pointing to economic weakness later this year and next.

Weekly Fed bank data late Thursday and Friday will be checked for banking crisis fallout. But Friday’s March retail sales and April Michigan sentiment data will set the pre-May Fed meeting tone and likely extend dollar weakness.

EUR/USD rose 0.5% even with Reuters reporting ECB policymakers were converging on a 25bp May hike while markets still project a 41% probability of a 50bp increase and a total of 78bp of tightening by October.

Two-year Bund-Treasury yield spreads are their least negative since 2021 and EUR/USD prices are now well clear of the 100-week moving average with room to run.

Sterling rose 0.3% after making new 10-month highs. Fed rates are seen falling below the BoE’s by November. Longer-term charts suggest a rise to roughly 1.29 is plausible.

USD/JPY fell 0.3% after recovering with Treasury yields from a dive toward this week’s lows.

Aussie surged 1.4% amid risk-on flows, strong jobs data and China growth hopes.

(Editing by Burton Frierson; Randolph Donney is a Reuters market analyst. The views expressed are his own.)

Gold rallies to 1-year peak as economic worries mount

April 13 (Reuters) – Gold surged on Thursday as more weak US economic readings bolstered bets for a pause in interest rate hikes, with prospects of a mild recession also sending investors scurrying for the safe-haven.

Spot gold was up 1.4% at USD 2,042.50 per ounce by 1:40 p.m. EDT (17:40 GMT), its highest since March 2022, and about USD 30 shy of its record high hit in 2020. US gold futures settled 1.5% higher at USD 2,055.30.

Treasury yields dropped and the dollar dipped after data showed a moderation in the rise in producer prices last month and an uptick in jobless claims, suggesting the Federal Reserve’s aggressive tightening over the past year was taking a toll on the economy.

“These economic data have reinforced the market’s assessment that the cycle of interest rate hikes is nearing its end, which makes gold attractive to investors as it does not pay interest itself,” said Alexander Zumpfe, a precious metals dealer at Heraeus.

Further, US consumer prices barely rose in March as the cost of gasoline declined, but stubbornly high rents kept underlying inflation pressures simmering.

“That’s an underlying positive environment for gold where the Fed is done with their interest rate hike cycle, yet inflation overall remains higher than they would like,” said David Meger, director of metals trading at High Ridge Futures.

This comes after US Fed minutes on Wednesday indicated that several policymakers considered pausing rate increases and projected that recent banking sector stress would tip the economy into recession.

Safe-haven gold tends to gain during times of economic or financial uncertainty, while lower rates also lift the appeal of the zero-yield asset.

Spot silver rose 1.6% to a one-year high of USD 25.88. Platinum jumped 3.7% to USD 1,052.70 and palladium gained 3.8% to USD 1,515.95.

(Reporting by Deep Vakil and Ashitha Shivaprasad in Bengaluru; Editing by Sharon Singleton, Shilpi Majumdar and Shweta Agarwal)

Australian shares dip as jobs data points to further rate hike

April 13 (Reuters) – Australian shares snapped two sessions of gains on Thursday, as data showing a tight labour market suggested further monetary policy tightening by the country’s central bank.

The S&P/ASX 200 index closed 0.3% lower at 7,324.10, dragged by mining and banking stocks. The benchmark rose 0.5% on Wednesday.

Australia’s employment blew past expectations for a second straight month in March, while the jobless rate held near 50-year lows, pointing to a drum-tight labour market.

“This increases the likelihood of a further (and likely final) rate hike at next month’s meeting,” said Anna Milne, an equity analyst at Sydney-based Wilson Asset Management.

Analysts at Citi said in a note they expected the labour market to loosen this year, likely in the second half.

Meanwhile, minutes of the US Federal Reserve’s March meeting showed policymakers considered pausing rate hikes due to concerns related to the failures of two regional banks, and projected a “mild recession” starting later this year.

Data showed US consumer prices barely rose in March, suggesting the rate-hike cycle was nearing its end.

In Australia, financials dipped 0.3% in their second straight session of fall.

Miners slipped 0.6%, as iron ore futures fell on pessimism spurred by tepid steel demand in China.

Index heavyweights Rio Tinto, BHP Group and Fortescue Metals Group fell between 0.7% and 1.8%.

BHP won support from OZ Minerals shareholders to proceed with its AUD 9.6 billion (USD 6.44 billion) takeover of the Australian copper and gold producer.

On the other hand, energy stocks advanced 0.9%, with Woodside Energy and Santos adding 1.1% and 0.4%, respectively.

New Zealand’s benchmark S&P/NZX 50 index rose 0.1% to 11,930.86.

(Reporting by Echha Jain in Bengaluru; Editing by Subhranshu Sahu)

Japan’s Nikkei rises for fifth day, buoyed by retail sector optimism

Adds details on closing prices

By Rocky Swift

TOKYO, April 13 (Reuters) – Japan’s Nikkei stock gauge climbed for a fifth straight session on optimism of a recovery in the domestic retail sector, while financial shares were weighed down by U.S. recession concerns.

Japan’s Nikkei share average .N225 closed 0.26% higher, erasing an early slide, to cement the longest winning streak in more than a month. The broader Topix .TOPX finished 0.05% higher.

Aeon Co Ltd 8267.T rose 2.7% to lead all gainers on the Nikkei after the retailer said revenue in the year through February reached an all-time high and forecast record profit for next year.

Cosmetics maker Shiseido Co Ltd 4911.T jumped 1.96%. Investors will be eyeing results from other major retailers on Thursday, including Uniqlo operator Fast Retailing Co Ltd 9983.T and Muji owner Ryohin Keikaku Co Ltd 7453.T.

“As seen in the results of retail companies, increased mobility of people and the recovery of inbound travel are boosting the economy,” Nomura strategist Maki Sawada said.

“That seems to be providing some support for the Nikkei.”

There were 128 decliners on the Nikkei index against 89 that rose. Financials and tech companies were the biggest losers on the gauge.

Lender Resona Holdings Inc 8308.T lost 1.62%. Chip equipment maker Tokyo Electron Ltd 8035.T fell 1.57%.

U.S. shares fell after minutes from the Federal Reserve’s policy meeting last month indicated that banking sector stress could tip the economy into a recession. The minutes followed inflation data, which added to the likelihood of another rate hike next month.

“The market has been too complacent on both recession risk and inflation persistence,” said Mio Kato, founder of LightStream Research, who publishes on the SmartKarma platform.

“I am expecting earnings guidance to come out cautious, especially on tech,” he added.

Lunar transport start-up ispace Inc 9348.T traded for the first time and closed at 1,201 yen, more than four times its initial public offer price.

(Reporting by Rocky Swift; Editing by Janane Venkatraman and Sonia Cheema)

((rocky.swift@thomsonreuters.com;))

China’s March crude oil imports surge 22.5% from year earlier

BEIJING, April 13 (Reuters) – China’s crude oil imports in March surged 22.5% from a year earlier to the highest since June 2020, data showed on Thursday, as refiners stepped up runs to capture fuel export demand and in anticipation of a domestic economic recovery.

Crude imports in March totalled 52.3 million tonnes, or 12.3 million barrels per day (bpd), according to data from the General Administration of Customs. This compares with 10.1 million bpd of crude imported in March last year.

The imports were in line with expectations of higher refinery runs and product inventory draws on improved demand following the lifting of COVID restrictions late last year.

Analysts pointed to a sharp increase in refined fuel product exports as a key reason behind the jump in crude imports. Refined product exports jumped 35.1% to 5.5 million tonnes for March, versus 4.1 million tonnes in the same month of 2022.

“Refined fuel exports will increase, as currently the margins on exported gasoline are quite positive,” said Xu Peng, a refined products analyst at China-based commodities consultancy JLC.

“The growth of diesel demand has been less than expected, while (domestic) gasoline consumption was relatively flat,” Xu added.

Kerosene consumption had also been widely anticipated to increase through March, as the country’s aviation sector rebounds following the lifting of travel curbs.

Analysts also cited lower costs of Russian crude as a factor driving China’s imports.

“Lower prices and discounted Russian oil along with improving demand prospects are behind the rise,” stated analysts from ANZ Bank in a client note.

Crude demand had also been expected to increase at big private refiners such at Zhejiang Petrochemical (ZPC) and Hengli Petrochemical, which are reportedly operating at or above official processing rates to profit from stronger refining margins.

ZPC and Hengli account for 6.5% of China’s refining capacity.

Total crude imports for the first quarter stood at 136.6 million tonnes, a 6.7% increase over 127.9 million tonnes in the same period last year.

China imported 8.9 million tonnes of natural gas in March, up 11.2% from 8.0 million tonnes a year ago. Total natural gas imports for the first quarter stood at 26.7 million tonnes, down 3.6% on last year.

(Reporting by Andrew Hayley; Editing by Christian Schmollinger, Tom Hogue and Kim Coghill)

Gold firms as US inflation data fuels bets for rate hike pause

April 13 (Reuters) – Gold prices rose for a third consecutive session on Thursday, as softer-than-expected US inflation data prompted bets that the Federal Reserve might raise rates just once more before pausing.

Spot gold was up 0.3% at USD 2,020.52 per ounce, as of 0700 GMT. US gold futures rose 0.5% to USD 2,035.20.

Gold prices rose over 1% on Wednesday after data showed the US Consumer Price Index (CPI) rose 0.1% last month, compared with expectations of a 0.2% increase, after advancing 0.4% in February.

“Expectations that the Fed’s hiking cycle may be nearing its end are well-anchored by the recent US CPI data, with lower Treasury yields and a weaker dollar being supportive of gold prices,” said Yeap Jun Rong, a market analyst at IG.

The CME FedWatch tool shows markets are pricing in a 66.2% chance of a 25 basis point hike in May, with rate cuts seen in the second half of the year.

Rising interest rates reduce the appeal of non-yielding bullion.

Gold might retest a resistance at USD 2,032, Reuters technical analyst Wang Tao said.

San Francisco Fed Bank President Mary Daly on Wednesday said while the Fed had “more work to do” on rate hikes, tighter credit conditions could argue for a pause.

Richmond Fed President Thomas Barkin said the Fed had more work to do in bringing inflation down to its 2% target because the latest data on price pressures was not sufficiently weak.

Minutes from the Fed’s March meeting also showed several policymakers considered pausing rate increases after a forecast that banking sector stress would tip the economy into recession.

Recession concerns are “allowing gold prices to ride on its safe-haven status… while technical conditions are revealing some moderation in upward momentum on recent highs,” IG’s Yeap said.

Spot silver fell 0.1% to USD 25.45 per ounce, platinum edged up 0.1% to USD 1,016.44 and palladium eased 0.1% to USD 1,458.66.

(Reporting by Kavya Guduru in Bengaluru; Editing by Subhranshu Sahu and Emelia Sithole-Matarise)

Oil drops 1% after scaling multi-month highs on OPEC’s demand warning

BENGALURU, April 13 (Reuters) – Oil prices fell a dollar a barrel on Thursday, as an OPEC report stoked summer demand worries and traders took profits after benchmarks scaled multi-month highs in the previous session.

Brent crude fell USD 1.24, or 1.4%, to settle at USD 86.09 a barrel, only the second time this month that the global benchmark has finished lower. The US West Texas Intermediate (WTI) slipped USD 1.10, or 1.3%, to close at USD 82.16 a barrel.

Both benchmarks had gained 2% on Wednesday to their highest in more than a month, as cooling US inflation spurred hopes that the US Federal Reserve will stop raising interest rates.

The Organization of the Petroleum Exporting Countries (OPEC) flagged downside risks to summer oil demand in a monthly report on Thursday, highlighting rising inventories and challenges to global growth.

The report shed light on the reasons behind a surprise production cut announced by OPEC+, which includes Russia and other OPEC allies, at the start of this month.

“Generally, I would say we saw builds in oil inventories this week in those countries which publish stocks data, so maybe that is what has been a realization that the market hasn’t shifted into a deficit,” UBS analyst Giovanni Staunovo said.

Despite Thursday’s declines, the OPEC+ decision has pushed Brent futures up nearly 8% so far this month, and it continues to raise expectations of potential future tightness in the oil markets.

Oil price declines were also limited as OPEC kept its forecast for global oil demand growth in 2023 unchanged. Other economic indicators lent further support.

The US dollar index fell to a two-month low on Thursday after producer prices unexpectedly declined in March, boosting expectations that the Federal Reserve is near the end of its interest rate hiking cycle.

A weaker greenback makes dollar-denominated oil cheaper for investors holding other currencies, lifting demand.

“With the dollar at its weakest in a year versus the euro, that formula kicks in with an exclamation mark,” said Mizuho analyst Robert Yawger.

Signs of a demand recovery in China, the top importer of crude oil and products, provided more support for oil prices, Yawger said.

China’s crude oil imports in March surged 22.5% from a year earlier to the highest since June 2020, data showed on Thursday.

(Reporting by Shariq Khan; Additional reporting by Rowena Edwards, Yuka Obayashi and Jeslyn Lerh; Editing by David Goodman, Will Dunham, Jane Merriman, Mark Heinrich and Mike Harrison)

US recap: EUR/USD soars toward 2023’s peak as US CPI dims Fed fears

April 12 (Reuters) – The dollar index fell roughly 0.6% on Wednesday after March US CPI came in slightly softer than forecast, though losses were kept in check after Fed speakers reminded markets that further tightening is possible if core inflation doesn’t proceed sustainably toward target.

Minutes from the Fed’s March meeting showed concern regarding the banking crisis but also viewed it as contained, leaving inflation the top priority.

Treasury yields and the dollar slipped slightly after the minutes, as some worry the Fed’s 25bp hike was meant to project a business-as-usual message to markets still weighing banking and credit risk.

EUR/USD rose 0.74% as the ECB remains favored to hike rates by at least 75bp into year-end versus the Fed not fully priced to hike 25bp in May before roughly 50bp of cuts by December.

EUR/USD’s rally to 1.1005 on EBS neared February’s 1-year highs at 1.1034 and threatens the first weekly close above the 100-week moving average, now at 1.0949, since October 2021.

If US PPI, claims and retail sales on Thursday and Friday further dim Fed tightening prospects and reinforce 2-year bund-Treasury yield spreads, already at their least negative since November 2021, EUR/USD could move sharply higher.

Sterling rose 0.5%, nearing April’s 1.2525 10-month highs. If upcoming US data favor a more cautious Fed, cable’s bullish medium-term technical outlook and further BoE rate hikes, clearly appropriate with UK inflation still above 10%, could carry prices far higher.

USD/JPY fell 0.42% after recovering some of its initial post-CPI plunge in line with tumbling Treasury yields. Two-year Treasury yields are down 9bp, but 4bp off the day’s lows.

USD/JPY now needs hawkish US data to get a bullish close above the pivotal 133.77 level.

(Editing by Burton Frierson; Randolph Donney is a Reuters market analyst. The views expressed are his own.)

Gold shines as bets for US rate hike pause gather pace

April 12 (Reuters) – Gold prices jumped on Wednesday as signs of cooling inflation bolstered bets that the US Federal Reserve may pause its policy tightening after a likely interest rate hike in May.

Spot gold was up 0.6% at USD 2,014.39 per ounce by 2:10 p.m. EDT (18:10 GMT), after rising as much as 1.3% earlier. US gold futures settled 0.3% higher at USD 2,024.90.

The Consumer Price Index (CPI) climbed 0.1% in March after advancing 0.4% in February. But in the 12 months through March, the core CPI gained 5.6%, after rising 5.5% on the same basis in February.

“The risks of not raising rates enough far exceeds over-tightening so the Fed is probably going to go forward with the quarter-point rate hike, the core justifies it,” said Edward Moya, senior market analyst at OANDA.

“There’s still a tremendous amount of risk on the table, so gold should still see some strong flows headed its way.”

Gold drew strength from a slide in the dollar and benchmark US yields.

Markets are now pricing in a 69% chance of a 25-basis-point rate hike in the May meeting, followed by 2-to-1 bets of a pause in June.

While gold is seen as a hedge against inflation, higher rates to tame rising price pressures weigh on the non-yielding asset’s appeal.

Several officials at the Fed’s meeting last month considered pausing interest rate increases over concerns of wider financial stress from the failure of two US regional banks, but they concluded that high inflation remained the priority, minutes showed.

Whether the Fed will slow its rate hikes “largely depends on the confirmation of economic cooling indicators, such as a potential deterioration in the US job market,” said Alexander Zumpfe, a precious metals dealer at Heraeus.

Silver gained 1.5% to USD 25.45 per ounce, platinum added 2.5% to USD 1,019.22 and palladium rose 1.6% to USD 1,469.52.

(Reporting by Deep Vakil and Seher Dareen in Bengaluru; editing by Jonathan Oatis, Shilpi Majumdar and Shweta Agarwal)

Europe’s blue-chip index hits 22-year high, US inflation eases

April 12 (Reuters) – Europe’s blue-chip stocks hit their highest in 22 years on Wednesday as investors sought mega-cap quality stocks and as investors weighed whether the Federal Reserve could pause its rate hikes after evidence of cooling US inflation.

The blue-chip STOXX 50 index touched its highest since 2001 prior to the inflation data, but came off that level later, eking out only marginal gains for the day.

The pan-European STOXX 600 index ended 0.1% higher, also having chopped early gains.

A US Labor Department report showed the Consumer Price Index climbed 0.1% last month after advancing 0.4% in February. The core CPI, however, gained 5.6% year-on-year last month after rising 5.5% in February.

While the data had fueled hopes of a pause in rate hikes, leading to a rally in global markets earlier in the day, analysts cautioned the headline figure remained above the Fed’s target and the central bank is likely to press forward with a 25-bp rate increase at its May meeting.

“If we look at the headline inflation, it was good of course, but the core CPI is still quite sticky. So probably it’s too soon to stop the hiking cycle of the Fed,” said Michele Morra, Portfolio Manager at Moneyfarm.

European Central Bank officials also have been voicing concerns about sticky inflation, with Austrian Central Bank chief Robert Holzmann telling a German newspaper that another 50 basis point rate hike may be needed in May.

Rate-sensitive real estate stocks were the top sectoral gainers on the STOXX 600 on Wednesday, rising 1.1%, while travel and leisure and technology stocks limited gains.

Defensive healthcare and utilities shares were a big boost to the blue-chip STOXX 50.

Investors are still digesting the International Monetary Fund’s warning that lurking financial system vulnerabilities could erupt into a new crisis and slam global growth this year.

Luxury group LVMH (LVMH), Europe’s most valuable company, is due to report first-quarter sales after markets close.

Shares of AB Volvo (VOLVb) jumped 7.4% as the truck-maker reported record first-quarter profit on higher revenue and margins.

Mercedes-Benz Group (MBGn) gained 1% after its first quarter sales rose on a boost from electric vehicles and premium cars.

Germany’s Merck (MRCG) slid to the bottom of the STOXX 600, falling 7.4%, after the US health regulator paused the initiation of new patients on the company’s evobrutinib drug.

(Reporting by Shubham Batra and Amruta Khandekar in Bengaluru; Additional Reporting by Sruthi Shankar; Editing by Sonia Cheema, Arun Koyyur, William Maclean)

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