BSP chief: too early to say if rate hikes may be paused

MANILA, Jan 11 (Reuters) – The Philippine central bank chief said on Wednesday it was too early to say whether monetary authorities will pause raising interest rates this year, though he said upcoming hikes will not be as large as they were previously.

In comments to reporters, Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla at the same time ruled out rate cuts in the near term.

“Monetary policy is responding to inflation. It is not causing inflation,” Medalla said, speaking on the sidelines of a business forum.

“I am ruling out (rate) cuts in the very short run. But I am not ruling out the increases. But maybe the increases will not be as large as it used to,” he said.

He also said the likelihood of the BSP not doing anything on monetary policy in its next two policy meetings was “quite low”.

On Tuesday, he confirmed rates would likely need to rise a further 25 or 50 basis points at next month’s policy meeting, though said pressure to match hikes by the US Federal Reserve was waning.

The BSP, which raised its benchmark interest rate by a total of 350 basis points last year, as inflation hit a 14-year high, will hold its first policy meeting of the year on Feb. 16.

(Reporting by Neil Jerome Morales; Editing by Ed Davies)

Oil gains 3% on global economic optimism, despite surprise US crude build

NEW YORK, Jan 11 (Reuters) – Oil prices rose 3% to a one-week high on Wednesday as hopes for an improved global economic outlook and concern over the impact of sanctions on Russian crude output outweighed a massive surprise build in US crude stocks.

Brent futures rose USD 2.57, or 3.2%, to settle at USD 82.67 a barrel. US West Texas Intermediate (WTI) crude rose USD 2.29, or 3.1%, to settle at USD 77.41.

Both benchmarks settled at their highest since Dec. 30, with WTI up for a fifth day in a row for the first time since October and Brent up for a third day in a row for the first time since December.

Global equities were up on hopes that US inflation and earnings figures due on Thursday will indicate a resilient economy and result in a slower pace of interest rate hikes.

If inflation comes in below expectations, that will drive the dollar lower, analysts said, which could boost oil demand because it makes crude cheaper for buyers holding other currencies.

The Federal Reserve will likely hike its target interest rate for the last time at its Jan. 31-Feb. 1 monetary policy meeting, raising it by 50 basis points (bps) to a range of 4.75%-5.00%, HSBC said in a research note.

Much of the market’s optimism was pinned on top oil importer China’s reopening of its economy after the end of strict COVID-19 curbs.

“Energy traders should get used to seeing oil prices head higher. Oil demand is coming back and expectations are high that China’s demand is about to skyrocket,” said Edward Moya, senior market analyst at data and analytics firm OANDA.

China’s overall passenger vehicle sales are estimated to rise 5% in 2023, Volkswagen AG’s China President Ralf Brandstaetter told Chinese media.

China’s industrial output is expected to have grown 3.6% in 2022 from the previous year, the Ministry of Industry and Information Technology (MIIT) said, despite production and logistics disruptions from COVID-19 curbs.

The US Energy Information Administration (EIA) said crude inventories jumped by 19.0 million barrels last week, the third biggest weekly gain ever and the most since stocks rose by a record 21.6 million barrels in Feb 2021. Last week’s increase came as refiners were slow to restore production after a cold freeze shut operations in late 2022.

Analysts polled by Reuters had forecast a 2.2-million-barrel decline in crude stocks, and industry data from the American Petroleum Institute (API) showing a 14.9 million-barrel build.

EIA this week forecast US crude production will reach all-time highs in 2023 and 2024.

An international price cap imposed on sales of Russian crude took effect on Dec. 5 and more curbs aimed at products sales are set to come into force next month as the European Union (EU) keeps working on more sanctions against Moscow over the invasion of Ukraine.

EIA said the upcoming EU ban on seaborne imports of petroleum products from Russia on Feb. 5 could be more disruptive than the EU ban on seaborne imports of crude oil from Russia implemented in December 2022.

Russian Deputy Prime Minister Alexander Novak said the country’s oil producers have had no difficulties in securing export deals despite Western sanctions and price caps.

(Additional reporting by Noah Browning in London, Sonali Paul in Melbourne, Trixie Yap in Singapore and Laila Kearney in New York; Editing by Marguerita Choy, David Goodman and David Gregorio)

REFILE-PRECIOUS-Gold climbs 8-month high ahead of U.S. inflation test

Corrects typo in analyst’s organisation name in paragraph four

U.S. CPI data due at 1330 GMT on Thursday

Fed’s Bowman: more rate hikes needed to fight inflation

Soft inflation numbers could push gold above $1,900- analyst

By Ashitha Shivaprasad

Jan 11 (Reuters) – Gold prices scaled an eight-month peak on Wednesday, underpinned by a subdued dollar, although they traded in a tight range as traders positioned themselves for inflation data that could influence the U.S. Federal Reserve’s rate-hike stance.

Spot gold XAU= was up 0.3% at $1,883.48 per ounce, as of 0727 GMT, its highest level since early-May. U.S. gold futures GCv1 rose 0.5% to $1,885.90.

The dollar index =USD slipped 0.1%, making greenback-priced bullion cheaper for overseas buyers. Benchmark U.S. 10-year Treasury yields also edged lower. USD/ USD/

Overall, it looks like gold is currently consolidating into a range as the focus turns to the U.S. consumer price index (CPI) data on Thursday, said Ilya Spivak, head of global macro at Tastylive.

“If the data shows that inflation is softer, then gold might go north of the $1,900 level. However, it would be interesting to see if gold can get much traction beyond that.”

Gold is considered an inflation hedge, but is highly sensitive to rising interest rates, which increase the opportunity cost of holding the non-yielding bullion.

Fed Governor Michelle Bowman said on Tuesday that the U.S. central bank will have to raise rates further to combat high inflation and that will likely lead to softer job market conditions.

Spot silver XAG= rose 1.1% to $23.88 and platinum XPT= gained 0.7% to $1,088.08.

Palladium XPD= was up 0.5% at $1,789.57. Automakers embed palladium in exhaust pipes to neutralise harmful emissions, but the metal is not required for that function in electric vehicles (EVs).

The expansion of EVs is expected to continue in 2023, leading to a small overall decline in palladium’s demand for cars, despite an expected increase in overall new cars across markets, analysts at Heraeus Precious Metals said in a note.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)

((Ashitha.Shivaprasad@thomsonreuters.com;))

Asian shares subdued, dollar steady, focus on US CPI data

SINGAPORE, Jan 11 (Reuters) – Asian equities edged higher on Wednesday, while the dollar steadied as investors braced for US inflation data that will influence the Federal Reserve’s interest rate policy.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.28% higher, while Japan’s Nikkei gained 1%. Australia’s S&P/ASX 200 index rose 0.80%.

While China’s reopening from pandemic controls has boosted investor sentiment, with stocks in the country and Hong Kong starting the year with a strong rally, some investors have booked profits on doubts over the sustainability of the market’s rebound.

China’s stocks opened 0.1% higher while Hong Kong’s Hang Seng index gained 0.6% at the start of the day.

Overnight, US stocks ended higher as investors heaved a sigh of relief after Fed Chair Jerome Powell refrained in a speech from commenting on rate policy but said the Fed’s independence was essential for it to battle inflation.

“With some expectations that Powell would likely pushback on the easing financial conditions, equity markets celebrated the lack of any clear guidance on policy direction,” Saxo strategists said.

Investor attention will squarely be on the US consumer price index (CPI), scheduled to be released on Thursday. The data is expected to show December’s headline annual inflation at 6.5%, versus 7.1% in November.

Thursday’s data will be crucial in determining what the Fed is likely to do with interest rates in its next meeting at the start of next month.

The US central bank raised interest rates by 50 basis points in December after four straight 75 bps hikes in 2022 but has reiterated that it will keep rates higher for longer to tame inflation.

Investors are betting that the upcoming inflation report could show further deceleration, potentially giving the Fed room to slow the pace of interest rate rises, said Stephen Wu, economist at Commonwealth Bank of Australia.

Saxo strategists said despite Powell’s relative silence on policy outlook, there were other Fed and non-Fed speakers on Tuesday who continued to sound hawkish and raising alarms on inflation.

Federal Reserve Governor Michelle Bowman said on Tuesday the central bank would have to raise interest rates further to combat high inflation and that would likely lead to softer job market conditions.

JPMorgan Chase & Co Chief Executive Officer Jamie Dimon said heightened economic uncertainties might encourage the Federal Reserve to raise interest rates to 5%.

In the foreign exchange market, the Australian dollar was 0.3% higher after data showed the annual pace of inflation had increased to 7.3% in November. The New Zealand dollar rose 0.2%.

The dollar index, which measures the dollar against six major currencies, rose 0.058% to 103.31, hovering close to seven-month low.

The Japanese yen weakened 0.05% to 132.33 per dollar, while sterling was last trading at USD 1.2146, down 0.07% on the day.

The yield on 10-year Treasury notes was down 1.3 basis points to 3.606%, while the yield on the 30-year Treasury bond was down 1.5 basis points to 3.739%.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down 1.7 basis points at 4.241%.

US crude fell 0.71% to USD 74.59 per barrel and Brent was at USD 79.56, down 0.67% on the day.

(Reporting by Ankur Banerjee; Editing by Bradley Perrett)

Oil slips as US crude, fuel inventories reignite demand concerns

MELBOURNE, Jan 11 (Reuters) – Oil prices fell on Wednesday, erasing the previous session’s gains, after industry data showed an unexpected build in crude and fuel inventories in the United States, the world’s biggest oil user, which reignited worries about fuel demand.

US West Texas Intermediate (WTI) crude futures fell 59 cents, or 0.8%, to USD 74.53 a barrel at 0134 GMT, while Brent crude futures were down 62 cents, or 0.8%, at USD 79.48 a barrel.

US crude stocks jumped by 14.9 million barrels in the week ended Jan. 6, sources said, citing data from the American Petroleum Institute (API). At the same time, distillate stocks, which include heating oil and jet fuel, rose by about 1.1 million barrels.

Analysts polled by Reuters expected crude stocks to fall by 2.2 million barrels and distillate stocks to drop by 500,000 barrels.

Traders will be looking out for inventory data from the US Energy Information Administration due later Wednesday to see if it matches the preliminary view from API.

The oil market has been pulled lower by worries about US interest rate hikes to curb inflation which would trigger a recession and curtail fuel demand, offsetting hopes for fuel demand growth in China, the world’s second largest oil consumer, as it eases COVID-19 curbs and resumes international travel.

“Monday’s news that China had issued a fresh batch of import quotas suggests the world’s large importer is ramping up to meet higher demand,” ANZ Research analysts said in a note.

The big focus this week is on US inflation data, due on Thursday. If inflation comes in below expectations that would drive the dollar down, analysts said. A weaker dollar can boost oil demand as it makes the commodity cheaper for buyers holding other currencies.

(Reporting by Sonali Paul in Melbourne; Editing by Christian Schmollinger)

China central bank steps up short-term liquidity injection ahead of long holiday

SHANGHAI, Jan 11 (Reuters) – China’s central bank ramped up a liquidity injection on Wednesday, offering fresh funds to the banking system for the first time this year to help meet seasonal cash demand before the long holidays.

The People’s Bank of China (PBOC) injected 87 billion yuan (USD 12.84 billion) through reverse repurchase agreements in open market operations, including 65 billion yuan through seven-day tenor and another 22 billion yuan through 14-day tenor, according to an online statement.

The PBOC added that the move was to “maintain reasonably ample liquidity” in the banking system.

Market participants believed the higher cash injection was meant to help counteract higher cash demand ahead of the week-long Lunar New Year holidays, which starts on Jan. 21 this year.

With 14 billion yuan worth of such reverse repos maturing on Wednesday, the central bank injected a net 71 billion yuan on the day, making the first daily net fund offering this year.

(USD 1 = 6.7770 Chinese yuan)

(Reporting by Winni Zhou and Brenda Goh; Editing by Jacqueline Wong)

Philippines to boost onion imports to help inflation-hit consumers

MANILA, Jan 10 (Reuters) – Philippine President Ferdinand Marcos Jr. has cleared the importation of up to 21,060 tonnes of onions, an agriculture official said on Tuesday, as the government seeks to address tight supply and stabilize soaring domestic prices.

Prices of onions, widely used in many local dishes, have more than quadrupled in about four months, contributing to double-digit food inflation seen in December.

The importation of yellow and red onions will help fill the supply gap until the peak of the local harvest beginning in February, said Rex Estoperez, a spokesperson at the Department of Agriculture.

Retail prices of the more widely-consumed red onions skyrocketed to as high as 700 pesos (USD 12.70) per kilogram in recent days in Manila markets, among the highest in the world, according to some economists.

Food prices helped push the consumer price index last month up 8.1% from a year earlier, the fastest rise in 14 years, bringing full-year average inflation to 5.8%, outside the central bank’s 2%-4% target range.

Bangko Sentral ng Pilipinas Governor Felipe Medalla on Tuesday signaled further interest rates hikes this year to bring inflation back within a target range of 2% to 4%.

Accredited importers could bring in cargoes in just seven days, Estoperez said, with authorities setting a period until Jan. 27 to ship in the entire volume.

The Philippines is a regular onion importer and usually buys from China and other Asian neighbors.

The government was expecting the local harvest to produce close to 20,000 tonnes of onions this month, compared with monthly domestic demand of about 22,000 tonnes.

“Even with that production I think we still really need to intervene in the market to help push the prices a little bit lower,” Mercedita Sombilla, agriculture undersecretary for planning, told Reuters.

(Reporting by Enrico Dela Cruz; Editing by Martin Petty and Ed Davies)

Asia shares dip on hawkish Fed remarks

HONG KONG, Jan 10 (Reuters) – Asian shares fell on Tuesday, commodities shed recent gains from China’s reopening, and oil traded lower following hawkish comments from two US Federal Reserve officials overnight, with investors turning cautious ahead of key inflation data.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.17%.

“The main theme overnight was cautiousness in the equity space as stocks pared gains after hawkish comments from two Fed officials. Raphael Bostic and Mary Daly said the Fed would likely hike (interest) rates to above 5% and hold them there for some time,” Commerzbank said in a client note.

The S&P500 index began the week on a bullish tone with a more than 1.4% increase in early US trading on Monday before giving up all the gains to close a touch lower.

US treasury notes and the US dollar remained under pressure, with the yield on US 10-year notes edging higher on Tuesday by 2.23 basis point to 3.5393%, from 3.517% late on Monday.

The dollar index stayed flat.

“Sentiment may turn more cautious ahead of the US CPI (consumer price index) release on Thursday, dampening the ‘risk on’ trades initiated as a result of the optimism around China’s reopening,” Mizuho Bank said in a note.

If US consumer price data confirms the cooling seen in the most recent monthly jobs report, Atlanta Fed Bank President Bostic said he would have to take a quarter point increase “more seriously and to move in that direction”.

China stocks on Tuesday snapped a six-session winning streak, while Hong Kong shares jumped to a six-month high. However, any optimism may be short-lived, said Trinh Nguyen, emerging Asia economist at Natixis in Hong Kong.

“I think what would temper a lot of this optimism coming up is really the reality of this opening up. Even in Hong Kong, although it is officially open, the visa issuance has been rather slow,” Nguyen said.

China’s benchmark edged up from earlier losses to gain 0.15%, while losses of Hong Kong’s Hang Seng index narrowed to 0.15%.

Prices of most base metals fell on Tuesday from recent rallies driven by top consumer China’s reopening, as traders gauged the risks of a global economic downturn and weak consumption.

Three-month copper on the London Metal Exchange was down 0.8% at USD 8,786 a tonne, as of 0422 GMT. Copper prices hit their highest in more than six months on Monday, while zinc climbed 5% on Monday to its highest since Dec. 15

Japan’s Nikkei rose 0.35%, bucking the regional trend.

Core consumer prices in Tokyo, released on Tuesday, rose a faster-than-expected 4.0% in December from a year earlier, underpinning market expectations that the Bank of Japan may phase out its massive stimulus by tweaking its yield curve control policy.

In Australia, shares lost 0.28%.

Oil edged lower on Tuesday on expectations of further Fed rate hikes.

US crude fell 0.5% to USD 74.26 per barrel and Brent was at USD 79.20, down 0.56%.

Gold prices inched higher, adding 0.15% to USD 1,872.70 an ounce.

E-mini futures for the S&P 500 indicated a sluggish open with a 0.17% dip.

(Reporting by Selena Li; Editing by Muralikumar Anantharaman)

Dollar sluggish as Fed rate hike fears ebb; China reopening boosts optimism

SINGAPORE, Jan 10 (Reuters) – The US dollar languished near a seven-month low against other major currencies on Tuesday, as investors took heart that the Federal Reserve may be nearing the end of its rate-hike cycle and as China’s reopening drove demand for riskier assets.

Markets have grown increasingly doubtful that the Fed will have to take interest rates above 5% to cool inflation, as effects of its aggressive rate increases last year have already been felt. Investors now expect rates to peak just under 5% by June.

Last week’s employment report showed that while the US economy added jobs at a solid clip in December, it also recorded a slowdown in wage growth.

The euro was last 0.07% higher at USD 1.0739, holding near the previous session’s seven-month peak of USD 1.07605 that came on the back of the dollar’s decline.

Sterling slid 0.08% to USD 1.21705, after similarly hitting a three-week top of USD 1.2209 on Monday and ending the session 0.73% higher.

Against a basket of currencies, the US dollar index fell 0.03% to 103.14, after tumbling 0.7% and touching a seven-month low of 102.93 in the previous session.

“The dollar’s big climb down has begun,” said George Saravelos, head of foreign exchange research at Deutsche Bank.

China’s rapid reopening of its borders following pandemic restrictions also provided another boost toward riskier assets away from the safe haven appeal of the greenback, with the risk-sensitive Australian dollar spiking at a more than four-month peak of USD 0.6950 in the previous session. It was last 0.03% higher at USD 0.69155.

The New Zealand dollar rose 0.13% to USD 0.6378, not far off Monday’s over three-week high of USD 0.6411. The two antipodean currencies are widely used as liquid proxies for China’s yuan.

The offshore yuan last bought 6.7755 per dollar, after hitting a near five-month top of 6.7590 earlier in the session.

“Hedge fund managers have turned slightly bearish USD following the full reopening in China,” said Tareck Horchani, head of prime brokerage dealing at Maybank Securities.

Elsewhere, Japan’s yen edged 0.1% higher to 131.73 per dollar, drawing support from a weakening greenback and the Bank of Japan’s (BOJ) surprise tweak to its yield curve policy late last year.

“What the BOJ did at the end of 2022 just indicates that Mr. Kuroda is trying to make the job easier for his successor,” Dong Chen, head of Asia macroeconomic research at Pictet Wealth Management, told reporters at an outlook briefing. BOJ Governor Haruhiko Kuroda will step down in April.

Brazil’s real snapped its three-day winning run in the previous session and last stood at 5.2546 per dollar after supporters of former President Jair Bolsonaro stormed the capital. It had yet to trade as of Asia hours on Tuesday.

Investors will now turn their attention to a speech by Fed Chair Jerome Powell later on Tuesday and to US inflation data on Thursday, which could give further clarity on the outlook of the Fed’s rate-hike path.

(Reporting by Rae Wee; Editing by Bradley Perrett and Christopher Cushing)

Oil slips on concerns higher interest rates to crimp demand

Jan 10 (Reuters) – Oil edged lower on Tuesday on expectations that further interest rate hikes in the United States, the world’s biggest oil user, will slow economic growth and limit fuel demand.

Brent futures for March fell 33 cents to USD 79.32 a barrel, a 0.4% drop, by 0719 GMT. US West Texas Intermediate crude dipped 29 cents, or 0.4%, to USD 74.34 per barrel.

Both benchmarks climbed 1% on Monday, after China, the world’s biggest oil importer and second-largest consumer, opened its borders over the weekend for the first time in three years.

Two United States Federal Reserve officials this week expected the Fed policy rate – now at 4.25% to 4.5% – to need to rise to a 5% to 5.25% range to bring higher inflation rates under control.

“(The expectation) is more hawkish than what markets are pricing at the moment (4.75-5% range),” said Yeap Jun Rong, Market Analyst at IG in a note, adding that the upcoming speech from Fed chair Jerome Powell later on Tuesday could mirror the hawkish tone with some pushback as well.

Fed policymakers said fresh inflation data out later this week will help them decide whether they can slow the pace of interest rate hikes at their upcoming meeting, to just a quarter point increase instead of the larger jumps they used for most of 2022.

China also issued a second batch of 2023 crude import quotas, according to sources and documents reviewed by Reuters on Monday, raising the total for this year by 20% from the same time last year.

But analysts warned that China’s demand revival may play limited role to drive up oil prices under the global economic downward pressure.

“The social vitality of major Chinese cities is rapidly recovering, and the restart of China’s demand is worth looking forward to. However, considering that the recovery of consumption is still at the expected stage, the oil price will most likely remain low and range-bound,” said analysts from Haitong Futures.

Separately, US crude oil stockpiles likely fell 2.4 million barrels, with distillate inventories also seen slightly down, a preliminary Reuters poll showed on Monday.

Industry group American Petroleum Institute is due to release data on US crude inventories at 4:30 p.m. EDT (2030 GMT) on Tuesday.

The Energy Information Administration, the statistical arm of the US Department of Energy, will release its own figures at 10:30 a.m. (1430 GMT) on Wednesday.

(Reporting by Arathy Somasekhar and Muyu Xu; Editing by Muralikumar Anantharaman and Christian Schmollinger)

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