Rupee edges up as dollar softens ahead of US inflation data

MUMBAI, April 12 (Reuters) – The Indian rupee made slim gains against the US dollar on Wednesday, as the greenback slipped ahead of a crucial US inflation report that could influence the Federal Reserve’s next policy move.

The rupee was trading at 82.0750 per dollar by 10:44 a.m. IST compared with 82.1250 in the previous session.

Asian currencies were mostly higher, while the dollar index extended losses ahead of March US consumer price index data. Core CPI, in focus, likely rose by 0.4% month-on-month in March, according to economists polled by Reuters.

That would be down from the 0.5% increase in February, but well above the pace required for bringing annual inflation to Fed’s 2% target. Headline inflation is expected to rise 0.2%.

Following the robust jobs report, investors have increased their bets of a 25 bps points hike by the Fed at the May meeting to 70%.

There is a lot of risk ahead of the event as this is the last major data release before the Fed’s May 2-3 meeting, said Gaurang Somaiya, FX and bullion analyst at Motilal Oswal Financial Services.

“A soft inflation reading has been priced in by the markets, but in case of slightly contrary data, there could be a major reaction”.

India’s headline inflation probably eased in March to 5.80%, dipping below the Reserve Bank of India’s upper tolerance limit of 6% for the first time this year, according to a Reuters poll.

The data, also due later in the day, follows the RBI’s surprise move last week to hold its key interest rate at 6.50%, after which USD/INR forward premiums have been on a declining trend.

The 1-year implied yield fell a further 3 bps to 2.34%, down over 20 basis points since last Thursday.

(Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee)

Dollar slips ahead of US inflation data, still hits month high against yen

SINGAPORE, April 12 (Reuters) – The dollar dipped on Wednesday against most major currencies, with the exception of the yen, with investors expecting US inflation data out later in the global day to hold some clue on how soon US interest rates will peak.

Against a basket of currencies, the US dollar index fell 0.07% to 102.05.

The euro was last 0.12% higher at USD 1.0926 and sterling rose 0.02% to USD 1.2430, with both currencies some distance away from their one-week lows hit on Monday.

The US inflation data for March is forecast to come in at 5.2% year-on-year, down from 6.0% previously, while core inflation likely ticked higher to 5.6%, according to a Reuters poll of economists.

“It could be the difference between a 25bp hike or pause at the Fed’s next meeting in May,” said Matt Simpson, senior market analyst at City Index, adding that money markets could “quickly revert to reprice a policy pause” if the inflation data comes in softer than expected.

Money markets are pricing in a roughly 74% chance that the Fed will raise rates by 25 basis points next month, though multiple rate cuts are also being priced in as early as July through to the end of the year.

A raft of Fed speakers on Tuesday offered little guidance on how much further US interest rates would rise. New York Fed President John Williams said it depended on incoming data.

Philadelphia Fed Bank President Patrick Harker said he felt that the end of rate hikes may be near, while Chicago Fed President Austan Goolsbee said that the US central bank should be patient about raising interest rates in the face of recent banking sector stress.

Banking turmoil sparked by the collapse of Silicon Valley Bank last month has added to bets that the Fed would not raise rates as high as previously feared in order to ease stress on the sector.

Against the yen, the dollar rose to a nearly one-month high of 134.045, a reflection of the stark contrast between the Fed’s aggressive monetary policy tightening cycle and the Bank of Japan’s (BOJ) ultra-loose policy.

The International Monetary Fund said in its global financial stability report released on Tuesday that the Bank of Japan could help prevent abrupt policy changes later by allowing more flexibility in its yield curve control policy.

Elsewhere, the Aussie rose 0.32% to USD 0.6675, while the kiwi gained 0.19% to USD 0.6204.

In cryptocurrencies, bitcoin slipped marginally to USD 30,001, holding above the key USD 30,000 level after breaching it for the first time in 10 months on Tuesday.

Ether, the second largest cryptocurrency, stood at USD 1,867.90.

PH raises USD 454M from 2032 T-bond re-issue

MANILA, April 12 (Reuters) – Following are the results of the Philippine Bureau of the Treasury’s (BTr) auction for 2032 T-bond re-issue on Wednesday:

* BTr fully awards PHP 25 billion (USD 454.4 million) offer

* Average yield 6.142%

* Tenders total PHP 44.492 billion]

* Bonds originally issued in September 2022

* Details on the BTr’s website

(USD 1 = PHP 55.0200)

(Reporting by Enrico Dela Cruz; Editing by Jacqueline Wong)

Oil edges up as market awaits key US inflation data

April 12 (Reuters) – Oil prices edged up on Wednesday as the market waited for US inflation data later in the day that will likely influence the Federal Reserve’s policy on future interest rate hikes.

Brent crude gained 19 cents, or 0.2%, to USD 85.80 a barrel as of 0615 GMT, while US West Texas Intermediate rose 13 cents, or 0.2%, to USD 81.66 a barrel.

Prices had risen about 2% on Tuesday amid optimism that the US Federal Reserve is getting closer to ending its cycle of interest rate hikes, making dollar-priced oil cheaper for buyers holding other currencies.

The US consumer price index is expected to show March core inflation rose 0.4% on a monthly basis and 5.6% year-on-year, according to a Reuters poll of economists.

Philadelphia Federal Reserve Bank President Patrick Harker said on Tuesday that he feels the US central bank may soon be done raising interest rates, while Minneapolis Federal Reserve Bank President Neel Kashkari said he believes inflation, now at a rate of 5% by the Fed’s preferred measure, will get to “the mid-threes” by the end of this year.

Yeap Jun Rong, a market analyst at IG said in a note to clients, however, that any “higher-than-expected inflation print could lay the ground for another 25 basis-point rate hike in June”.

Meanwhile, data from the American Petroleum Institute (API) showed crude inventories rose by about 380,000 barrels in the week ended April 7, sources said, against forecasts from eight analysts polled by Reuters for a decline of 600,000 barrels.

At the same time, gasoline inventories rose by about 450,000 barrels, according to the API report, while analysts had expected a 1.6 million-barrel drawdown.

The US government will release its stockpile data at 10:30 a.m. (1430 GMT) on Wednesday.

In another negative for oil demand, the International Monetary Fund on Tuesday trimmed its 2023 global growth outlook, citing the impact of higher interest rates.

In addition to the inflation data, the market is waiting for more clarity on oil demand and supply with monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency due on Thursday and Friday respectively.

The US Energy Information Administration on Tuesday cut its forecast for oil production by OPEC countries by 0.5 million barrels-per-day for the rest of 2023 and cut its 2023 world oil demand growth forecast by 40,000 bpd.

(Reporting by Muyu Xu and Arathy Somasekhar; Editing by Sonali Paul and Edwina Gibbs)

((arathy.s@thomsonreuters.com; +1 832 208 3362; Twitter: @ArathySom))

Oil rises 2% on lower-than-expected US inflation data

HOUSTON, April 12 (Reuters) – Oil prices rose 2% on Wednesday to their highest in more than a month as cooling US inflation data spurred hopes that the Federal Reserve is getting closer to ending its cycle of interest-rate hikes and cushioned the impact of a small build in US crude oil stocks.

Brent crude settled up USD 1.72, or 2.01%, at USD 87.33 a barrel, its highest since late January, while US West Texas Intermediate closed up USD 1.73, or 2.1%, to USD 83.26, its highest in five months. Prices rose about 2% on Tuesday.

The US Consumer Price Index (CPI) climbed 0.1% last month after advancing 0.4% in February, the Labor Department said. In the 12 months to March 31 the CPI increased 5%, the smallest year-on-year gain since May 2021.

“The weaker US CPI print has raised doubts over whether the Fed will now hike rates at all next month,” said Fawad Razaqzada, market analyst at brokerage StoneX. “Falling interest-rate expectations is reducing recession concerns and helping to support buck-denominated asset prices at the same time.”

US President Joe Biden’s top economic adviser and ex-Federal Reserve vice chair, Lael Brainard, also said she was seeing inflation coming down.

The dollar dropped sharply after the data. A weaker US currency makes dollar-priced oil cheaper for buyers holding other currencies.

Hedge fund were buying oil futures in the market over the past few days in anticipation of improving demand, said Dennis Kissler, senior vice president of trading at BOK Financial.

Markets shrugged off a small build in US crude oil stocks, attributing it in part to a congressionally mandated release of oil from the US emergency reserve and lower exports at the start of the month.

Crude inventories rose by 597,000 barrels in the last week to 470.5 million, compared with analysts’ expectations in a Reuters poll for a 600,000-barrel drop. Gasoline and distillate stocks drew less-than-expected.

A report from the American Petroleum Institute (API) showed crude inventories rose by about 380,000 barrels in the last week, while gasoline inventories were also higher, according to sources.

Meanwhile, the global oil market could see tightness in the second half of 2023, which would push oil prices higher, said Fatih Birol, executive director of the International Energy Agency.

The top US shale basin has not seen peak production, Occidental Petroleum Chief Executive Vicki Hollub said, while Pioneer Natural Resources chief executive Scott Sheffield said Wednesday that if oil prices break above USD 90 per barrel, then prices will likely reach USD 100 per barrel this year.

In a negative for oil demand, the International Monetary Fund on Tuesday trimmed its 2023 global growth outlook, citing the impact of higher interest rates.

The market is also waiting for clarity on oil demand and supply, with monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency due on Thursday and Friday, respectively.

(Reporting by Arathy Somasekhar in Houston; Additional reporting by Muyu Xu and Ahmad Ghaddar; Editing by Kirsten Donovan, Matthew Lewis, Leslie Adler and Daniel Wallis)

Calm before the US inflation storm

April 12 (Reuters) – The world is bracing for US inflation figures on Wednesday, but before that Asia gets to digest a mixed performance on Wall Street, another creep up in US bond yields, and a major inflation report of its own.

Indian consumer price inflation for March tops a regional economic calendar on Wednesday which also includes Indian industrial production, South Korean unemployment, and corporate goods inflation and machinery orders from Japan.

These releases come against a backdrop of global stock markets still maintaining a glass-half-full outlook despite the growth picture fraying at the edges and bond yields continuing a steady creep higher.

Asian stock markets, in particular, are holding firm – the MSCI Asia ex-Japan index rose 0.6% on Tuesday, its third consecutive increase and its best performance this month.

The US CPI inflation report for March will go a long way to determining what the Fed decides at its May 2-3 policy meeting. Markets expect headline inflation to continue slowing but are still shifting towards pricing in another quarter point rate hike.

India’s consumer inflation, meanwhile, likely eased in March to 5.80%, thanks to softer food price rises, dipping below the Reserve Bank of India’s upper tolerance limit of 6.00% for the first time this year.

The data comes less than a week after the RBI surprised markets by holding its key interest rate steady at 6.50% when most expected a 25-basis-point rise.

South Korean unemployment in February fell back to match last August’s record low of 2.6%, so a further decline in the March reading would break new historic ground.

Finance ministers and central bank officials from around the world are in Washington for this week’s International Monetary Fund and World Bank spring meetings.

The IMF on Tuesday trimmed its global growth outlook for this year and next as higher interest rates bite, and warned that the risk of “perilous” financial turmoil could slash output to near recessionary levels.

The global lender kept its Chinese growth forecasts at 5.2% and 4.5%, respectively, but lowered its 2023 Indian GDP growth forecast by a fifth of a percentage point to 5.9% and next year’s outlook by half a point to 6.3%.

US Treasury Secretary Janet Yellen was more optimistic about global economic growth and warned against overdoing the ‘negativism’. She also said she still hopes to visit China, underscoring President Joe Biden’s focus on opening up and maintaining channels of communication with Beijing.

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

– IMF/World Bank spring meetings in Washington

– India CPI inflation (March)

– US CPI inflation (March)

(By Jamie McGeever; Editing by Deepa Babington)

Gold climbs as dollar pauses ahead of US inflation data

April 11 (Reuters) – Gold climbed back up above the key $2,000 level on Tuesday as the dollar came off last session’s peak, while traders hunkered down for Wednesday’s U.S. inflation data for cues on future interest rate hikes.

Spot gold rose 0.8% to $2,005.79 per ounce by 2:00 p.m. EDT (1800 GMT) while U.S. gold futures settled 0.8% higher at $2,019.00.

Bullion found some respite from a pause in the dollar, following a bounce in the previous session, also helping offset pressure from higher Treasury yields.

“At this stage of the game, the market isn’t particularly fussed on whether we get another 25 basis points” from the Federal Reserve in May, said Bart Melek, head of commodity strategies at TD Securities.

“The market is looking at the pivot and signaling lower rates as we move deeper into the second half of 2023.”

The prospect of the Fed raising its benchmark interest rate only once more by 25 basis points is a useful starting point, said New York Fed President John Williams, while Chicago Fed President Austan Goolsbee said the central bank should be cautious about raising interest rates in the face of recent banking stress.

Gold shed nearly 1% on Monday after strong U.S. jobs data on Friday raised the chances of a May rate hike to around 70%.

The U.S. consumer price index (CPI) data on Wednesday could yield signs on how long the Fed would continue its campaign against inflation.

“Should CPI push higher and support monetary policy tightening after strong non-form payroll figures, real yields may turn higher thus increasing the opportunity cost of holding gold,” DailyFX analyst Warren Venketas wrote in a note.

Central banks should not halt their fight against inflation because of financial stability risks, IMF chief economist Pierre-Olivier Gourinchas said.

Silver was up 0.8% to $25.08 per ounce, platinum gained 0.6% to $997.20 while palladium jumped 3% to $1,454.17.

(Reporting by Deep Vakil in Bengaluru; Editing by Christina Fincher, David Holmes and Krishna Chandra Eluri)

Tech IPO freeze will thaw soon

NEW YORK, April 11 (Reuters Breakingviews) – If people get recession fatigue – tire of fretting about their financial fortunes and start spending again – couldn’t initial public offering drought fatigue happen, too? Recent data from Morgan Stanley’s equity capital markets team suggests that could be the case. And though it’s self-interested, there’s good reason to think that they are right.

Several venture-backed technology companies looking to go public last year pumped the brakes as the US Federal Reserve raised rates and riskier sectors fell out of favor. The IPO market came to a near-standstill, with just two tech companies listing on US exchanges all year. Despite a 16% surge in the tech-heavy Nasdaq Composite Index this year, corporate chieftains are still jittery about moving forward. Only two US-listed tech IPOs have been completed so far in 2023, leaving hotly anticipated names such as Reddit and Instacart still in the pipeline, where they have been sitting since 2021.

Historical precedent shows droughts only last so long. Even during last year, the worst for tech IPOs since 2001, the window only stayed shut for 272 days. Following the financial crisis, the market went without a listing for 237 days. Other recent closures, in 2016 and in 2020 after the Covid-19 outbreak, were shorter-lived.

The current drought is running on 62 days. Even if it beat the prior drought record by a day, the next IPO would come some time in early November. Sentiment towards tech companies has slowly been improving, along with the Nasdaq. In February, Instacart’s internal valuation increased 18% compared to last December. That’s probably 70% lower than two years ago, according to The Information, but moving in the right direction. Marketing automation firm Klaviyo has already hired Goldman Sachs GS.N for an IPO later this year, the Wall Street Journal reported last week.

Companies are in dire need of cash, and not just because they are burning it. Founders of Stripe, Patrick and John Collison, recently went hat in hand to private investors to appease employees who had been promised payouts despite taking a 50% knock on price. ECM bankers, who don’t get paid unless a deal is done, have also been doing quite a lot of work for free. The tech IPO market might open soon enough, if only because everyone is sick of being broke.

CONTEXT NEWS

Initial public offerings by US-listed technology companies sunk to their lowest levels last year since the global financial crisis of 2008, according to data compiled by Morgan Stanley. After a record-breaking 124 US-listed tech IPOs in 2021, only two such deals occurred in 2022, the data shows.

Since 2001, the IPO market for technology companies has not been closed for longer than 272 consecutive days, which it was in 2022, Morgan Stanley’s data shows.

The most recent US-listed technology IPO this year captured in the Morgan Stanley data was Chinese sensor maker Hesai Group’s USD 190 million upsized offering on February 10.

(Editing by Lauren Silva Laughlin and Sharon Lam)

Dollar eases after strong gains on hawkish Fed bets

TOKYO, April 11 (Reuters) – The US dollar eased on Tuesday following its best rally this month against major peers as a resilient US. labour market bolstered the case for a Federal Reserve rate hike next month.

At the same time, bets for a peak in US rates in coming months spurred leading cryptocurrency bitcoin to top USD 30,000 for the first time since June.

The Australian dollar jumped 0.46% to USD 0.66725, clawing back all of the previous day’s losses, amid a thawing of trade tensions with China, as the pair agreed to end a dispute over Australian barley.

The US dollar index which measures the greenback against six major counterparts – slipped 0.16% to 102.31, following a 0.39% advance at the start of the week. The index had dropped to a two-month low of 101.40 on Wednesday.

The euro added 0.26% to USD 1.08885 after Monday’s 0.34% retreat. Sterling ticked up 0.2% to USD 1.24085 having declined 0.23% overnight.

The dollar slipped 0.21% to 133.31 yen, after jumping 1.1% on Monday.

Selling pressure eased on the yen, which is highly sensitive to long-term US bond yields, as the 10-year Treasury yield edged lower in Tokyo trading after a sharp two-day climb.

The Japanese currency’s Monday slide was helped by new Bank of Japan Governor Kazuo Ueda, who vowed to stick with ultra-easy stimulus settings at his inauguration on Monday.

“The BOJ under Mr. Ueda will intentionally try to be behind the curve and push up inflation expectations a little further, so he needs to keep the exchange-rate stable,” said Masayuko Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management in Tokyo.

“It is highly likely that the US economy will slow down in the second half of this year, leading to lower long-term interest rates over there, and if the BOJ does something to push up long-term interest rates here, that could strengthen the yen, undoing recent positive developments in Japan.”

Traders now see the Fed as 71% likely to raise rates by another quarter point on May 3, after data released on Good Friday showed US employers continued to hire at a strong pace in March, pushing down the jobless rate. Last week, money markets priced a hike next month as a coin toss.

The consumer price index (CPI), due on Wednesday, will be the next major clue for Fed policy direction.

“Financial markets have been too pessimistic about the US economy since several small US banks collapsed in March,” Commonwealth Bank of Australia strategists Joseph Capurso and Kristina Clifton wrote in a client note, referring to the demise of SVB and Signature Bank.

“Strong underlying CPI is likely to be the catalyst for a change in market pricing for May, and delay pricing for the start of rate cuts,” they said, postulating the dollar index could lift toward the 100-day moving average at 103.91 this week.

Traders currently expect the Fed to start cutting rates from around September.

Bitcoin touched a fresh 10-month high at USD 30,438 on Tuesday before last fetching USD 30,053, after breaking free of recent ranges on Monday.

The digital token had been stuck between about USD 26,500 and USD 29,400 for the previous three weeks.

(Reporting by Kevin Buckland Editing by Shri Navaratnam)

Asia stocks bounce as dovish central banks lift the mood

Asian stocks put in a strong showing on their return to full trading globally after the Easter break, with Australian investors coming back to a 1.3% rally in their equity benchmark.

In Japan, where it had been trading as usual over the holiday period, the Nikkei jumped 1.4% after new Bank of Japan Governor Kazuo Ueda signalled overnight he would stick to ultra-easy stimulus for now, knocking down the yen. The market got an additional boost after Warren Buffett said he plans to add to Japanese investments.

South Korea’s Kospi leapt 1.5% after the Bank of Korea held rates steady for a second consecutive meeting, resisting any pressure from bets that the US Federal Reserve would be hiking rates by a quarter point in May.

Sentiment may have also got a boost from a lower-than-expected reading on consumer price inflation from China, which gives the PBOC leeway for more supportive measures to help along the economic reopening. The local stock price reaction was muted though: Hong Kong’s Hang Seng was up 0.9% while mainland benchmarks were flat.

The good mood belied a ramp up in China-US tensions after the Asian superpower staged three days of military drills to yesterday that simulated strikes on Taiwan.

China’s relationship with Australia seems to be thawing, however, with the trade partners resolving a dispute over barley, boosting the Aussie dollar.

Bitcoin, meanwhile, soared as high as USD 30,438 in Asia for the first time in 10 months, smashing out of recent ranges.

Europe returns to trading with very little on the economic calendar aside from euro zone retail sales for February and the Sentix business survey.

The start of the US bank earnings season beckons later in the day, bringing us results from First Republic FRC.N, which was hit hard by client withdrawals in the aftermath of Silicon Valley Bank’s collapse.

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