Gold at 1-month peak as bond yields dip ahead of US jobs data

Aug 5 (Reuters) – Gold prices steadied at a one-month high on Friday, ahead of a much awaited US jobs data, as a retreat in Treasury yields and growing recession fears supported the safe-haven metal and kept it on track for a third straight weekly rise.

Spot gold was flat at USD 1,790.42 per ounce, as of 0701 GMT, after hitting its highest level since July 5. Prices are up 1.5% this week.

US gold futures was little changed at USD 1,805.80.

“Gold continues to benefit from a combination of a weaker dollar that has been driven by falling US bond yields as markets continue to price in peak inflation and a recession,” OANDA senior analyst Jeffrey Halley said.

The yield on 10-year Treasury notes slipped, reducing the opportunity cost of holding non-interest bearing gold.

The dollar crept higher but struggled to recoup its losses after falling by its sharpest pace in two weeks on Thursday.

The market’s focus is now on monthly US non-farm payrolls report for July due at 1230 GMT that could offer more clarity on the Federal Reserve’s aggressive tightening plans to combat inflation. Economists expect an increase of 250,000 jobs.

“A soft payroll number will support gold’s upward momentum as it is likely to result in another bout of dollar weakness as yields fall. Gold should continue grinding towards the USD 1,900.00 region in the coming sessions,” Halley added.

The Bank of England raised interest rates by the most since 1995 in an attempt to smother surging inflation.

Sino-US tensions remained in focus after China fired multiple missiles near Taiwan on Thursday, a day after US House of Representatives Speaker Nancy Pelosi made a solidarity trip to the self-ruled island.

Spot silver rose 0.3% to USD 20.21 per ounce, and palladium climbed 2.1% to USD 2,107.16.

Platinum gained about 1% to USD 935.14 per ounce and was heading for its third consecutive weekly rise.

(Reporting by Brijesh Patel in Bengaluru; Editing by Uttaresh.V and Jason Neely)

Philippine CPI hits near 4-yr high, raises odds of bigger hike in August

MANILA, Aug 5 (Reuters) – Philippine inflation accelerated to its fastest pace in nearly four years in July, raising the odds of a bigger interest rate hike at the central bank’s next policy meeting on Aug. 18.

The consumer price index (CPI) rose 6.4% in July from a year earlier, driven by higher transport and food prices, the Philippine Statistics Authority said on Friday.

Last month’s inflation print, which was at the top end of the central bank’s 5.6% to 6.4% projection, raised the probability of a 50 basis points hike this month, Bangko Sentral ng Pilipinas Governor Felipe Medalla said.

He reiterated the central bank was ready to act to bring inflation, which averaged 4.7% in January to July, back down to the 2% to 4% target set by the government for this year and next.

“The BSP stands ready to employ all the necessary policy actions to bring inflation toward a target-consistent path over the medium term,” Medalla told a business forum.

The was a chance for inflation to return within the target range next year after likely settling at an average of 5% this year, he said.

The BSP’s cumulative 125 basis points hike this year, including last month’s off-cycle 75 bps hike, worked in stabilizing the peso against the dollar, therefore minimizing the impact of its weakness on prices, Medalla said.

Analysts have said the peso remains vulnerable to depreciation given the Philippines’ current account deficit and the prospect of further US Federal Reserve tightening.

Medalla was confident the central bank’s aggressive policy tightening would not prevent the economy from recovering.

Second quarter growth data, due to be released on Aug. 9, would likely show the economy expanded much faster than the first quarter’s 8.3% annual pace, he said.

(Reporting by Neil Jerome Morales, Enrico Dela Cruz and Karen Lema; Editing by Ed Davies, Himani Sarkar, Martin Petty)

Wall Street ends mixed as investors eye jobs data

Aug 4 (Reuters) – Wall Street’s main indexes ended mixed in a dull session on Thursday as gains in high-growth stocks offset losses in energy shares, with investors looking ahead to monthly jobs report for clues on the pace of interest rate hikes by the Federal Reserve.

The tech-heavy Nasdaq hit a fresh three-month high led by Amazon.com Inc. (AMZN) and Advanced Micro Devices (AMD), while losses in energy stocks including Exxon Mobil (XOM) and Chevron Corp. (CVX) weighed on the S&P 500.

Worries about a slowing global economy pushed oil prices to their lowest since before Russia’s February invasion of Ukraine and U.S. bond yields slipped after the Bank of England warned of a long recession.

Strong earnings reports and a surprise pick-up in services sector activity had sent the main indexes sharply higher in the previous session.

“The market is looking for direction after a strong bounce that relieved the deep pessimism that had permeated the markets,” Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

“Many signs indicate that inflation has peaked and the question now turns to how quickly it will come down or whether stickier components will keep it higher than the Fed is comfortable with.”

The Dow Jones Industrial Average fell 85.68 points, or 0.26%, to 32,726.82, the S&P 500 lost 3.23 points, or 0.08%, to 4,151.94 and the Nasdaq Composite added 52.42 points, or 0.41%, to 12,720.58.

Focus on Friday will be on closely watched U.S. employment report, which is expected to show nonfarm payrolls increased by 250,000 jobs last month, after rising by 372,000 jobs in June.

Any signs of strength in the labor market could feed into fears of aggressive steps by the Fed to curb inflation.

Cleveland Fed President Loretta Mester, a voting member of the rate-setting panel, reiterated the need to see several months of inflation coming down toward the Fed’s 2% target before policymakers can let up on tightening monetary policy. nW1N2YE006

The S&P 500 has gained about 14% from its mid-June lows, but is still down about 13% for the year on concerns around the fallout of the Ukraine war, soaring inflation, COVID-19 flare-ups in China and an aggressive rise in interest rates.

Among individual stocks, crypto exchange Coinbase Global Inc. (COIN) jumped 10% after it announced a tie-up with BlackRock (BLK) to provide its institutional clients access to crypto trading and custody services.

Health insurer Cigna Corp. (CI) gained 3.1% after raising its annual profit forecast.

Drugmaker Eli Lilly and Co. (LLY) slipped 2.6% as it cut annual profit view for the second time.

Facebook-parent Meta Platforms (META) closed up 1.0% after it said it would make its first-ever bond offering.

Advancing issues outnumbered decliners by a 1.02-to-1 ratio on the NYSE and 1.40-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 29 new lows, while the Nasdaq recorded 59 new highs and 31 new lows.

Volume on U.S. exchanges was 11.38 billion shares, compared with the 10.76 billion average for the full session over the last 20 trading days.

(Reporting by Sruthi Shankar, Medha Singh, Aniruddha Ghosh and Devik Jain in Bengaluru; Editing by Alden Bentley and Arun Koyyur)

US recap: Dollar down pre-payrolls and on doubts Fed hawks will hold

Aug 4 (Reuters) – EUR/USD rebounded from the Tuesday-Wednesday pullback that was driven largely by hawkish Fed remarks, as markets shrugged off those comments and got back to pricing in Fed rate cuts next year, following dismal inflation and recession projections by the BoE and ahead of Friday’s key U.S. employment report.

Treasury yields and the dollar strengthened after the last two non-farm payrolls reports, but the sharp deceleration in jobs growth since February’s 714k post-Omicron peak is forecast to make a subsequent low of 250k in July versus 372k in June.

While a 250k print would still be historically healthy, the concern is that further tightening of financial conditions and negative real wage growth will eventually weaken the economy enough to slow Fed rate hikes.

Cleveland Fed President Loretta Mester Thursday allowed that recession risks have gone up, but several months of retreating inflation is needed before a Fed rethink, with firms still struggling to find workers.

The broader negative growth outlook appeared more plausible after the BoE followed its biggest rate hike since 1995 with grueling projections for inflation soaring the 13.1% in October and the likelihood of a recession lasting 5 quarters.

Sterling initially spiked up to 1.2220 on the BoE seemingly digging in to fight inflation, but then slid to 1.2065, as gilt yields tumbled at the prospect of recession and eventual BoE easing, only to rebound with a broader dollar slide ahead of Friday’s jobs report and fresh upticks in initial and continuing jobless claims nU8N1A4002. There was some disappointment at the slower-than-expected BoE’s QE reduction plan.

EUR/USD was up 0.73% and closer to the top of its ongoing consolidation range, with Friday’s jobs report seen presenting binary risks, and perhaps the impetus to either resume the pandemic downtrend or extend the bullish reversal following the fleeting break below parity.

Sterling gaine 0.14% after this morning’s wild swings, with prices using the 30-day moving average as support and the 55-DMA as resistance, but with prices still tucked in below the falling daily cloud.

USD/JPY fell 0.58%, weighed down by the drop in Treasury yields and broader demand for the haven yen amid heightened geopolitical risks from China’s military response to U.S. House Speaker Pelosi’s visit to Taiwan.

Unless Friday’s U.S. jobs report can revive the uptrend in Treasury yields and reverse the recessionary yield curve inversion, this week’s USD/JPY rebound will look corrective rather than the resumption of the rampant pandemic recovery trend.

Plunging oil prices weighed on the dollar and saw Brent trade down to pre-Ukraine invasion levels as growing concerns about global growth and slowing demand weighed on prices and sizeable speculative longs.

Bitcoin and ether were both modestly lower in line with U.S. equities.

As noted earlier, U.S. employment data top Friday’s event risk list. Payrolls are forecast at 250k vs 372k prev. The jobless rate is seen steady at 3.6% and average hourly earnings are expected up 0.3% m/m and 4.9% y/y vs 0.3% and 5.1% previously. The workweek (GDP feeder) is also seen steady at 34.5 hours.

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

Dollar dip, US-China tensions push gold to a new 1-month peak

Aug 4 (Reuters) – Gold prices climbed over 1% to hit a fresh one-month peak on Thursday, underpinned by a retreat in the dollar and U.S. Treasury yields, as investors kept a close tab on U.S.-China tensions.

Spot gold rose 1.6% to $1,792.19 per ounce by 1:56 p.m. ET (1756 GMT), having risen to its highest since July 5 earlier. U.S. gold futures settled 1.7% higher at $1,806.90.

“As of late, yields are coming down slightly. That has been along with the dollar’s recent weakness, one of the key benefits to gold,” said David Meger, director of metals trading at High Ridge Futures.

The dollar’s retreat bolstered gold’s appeal among overseas buyers, while benchmark U.S. Treasury yields also slipped, reducing the opportunity cost of holding non-yielding bullion.

“We’ve seen some rising tensions between the U.S. and China, so (that’s) one additional reason why gold has been well supported coming into the morning,” Meger added.

China fired multiple missiles near Taiwan in its biggest ever military drills in the Taiwan Strait one day after U.S. House of Representatives Speaker Nancy Pelosi visited the self-ruled island.

Investors also took stock of data that showed the number of Americans filing new claims for unemployment benefits increased last week. Investors are now eyeing the U.S. non-farm payrolls report due on Friday.

“However, with nonfarm payrolls headlining the week tomorrow, our expectations of a stronger-than-anticipated report could quickly put a cap on the prevailing bullishness among gold bugs,” TD Securities wrote in a note.

Elsewhere, spot silver rose 0.8% to $20.20 per ounce.

“Short covering in the futures market and some fresh chart-based buying are also featured today, as the near-term technical postures for both metals (gold and silver) have improved this week,” Jim Wyckoff, senior analyst at Kitco Metals, wrote in a note.

Platinum jumped 3.4% to $928.71 while palladium XPD= rose 2.7% to $2,070.58.

(Reporting by Kavya Guduru in Bengaluru; Editing by Mark Potter)

Dollar aided by hawkish Fed; sterling eyes big BoE rate hike

LONDON, Aug 4 (Reuters) – The dollar held onto recent gains against other major currencies on Thursday, as more Federal Reserve officials reinforced the central bank’s determination to slay the highest inflation in decades with aggressive interest rate hikes.

The Bank of England meanwhile was widely expected to raise interest rates by the most since 1995, with sterling edging up ahead of the rate decision at 1100 GMT.

Fed officials continued to push back against the perception that US interest rates were close to peaking. That supported the dollar.

San Francisco Fed President Mary Daly and Minneapolis Fed President Neel Kashkari overnight voiced their determination to rein in high inflation.

Fed officials have uniformly flagged that they remain determined to deliver rate hikes until there is strong evidence that inflation is headed back down to the Fed’s 2% goal.

“We’ve had hawkish comments and we’ve also had comments about the extent to which bond markets are expecting rate cuts next year,” said Jane Foley, head of currency strategy at Rabobank in London.

“This suggests that rates will stay higher for longer. So, this peak hawkishness could be drawn out and that has supported the dollar this week.”

The dollar was last up around 0.2% at 134.15 yen and just a tad softer against the euro, which traded at USD 1.0176.

The dollar index, which measures the greenback against six peers, was at 106.34, holding comfortably above a one-month low hit earlier this week. It is up around 0.4% this week, reversing the trend of the previous two weeks.

The dollar’s strength has yet to peak, according to a Reuters poll released on Thursday.

It found that 70% of those polled thought the dollar was yet to peak in this cycle, even after the dollar index hit its highest level in two decades in July.

Money markets price in a 50 bps hike at the Fed’s September meeting, and a roughly 44% chance of another massive 75 bps increase. The Fed hiked rates by 75 bps at its meeting in June and July.

Britain’s pound rose 0.2% to USD 1.2172. The BoE was widely expected to raise rates by an aggressive 50 basis points to 1.75%, the highest level since late 2008.

The BoE has never raised the Bank Rate by a half point since it was made independent in 1997.

The Australian dollar was at USD 0.6968, up 0.2% after gaining almost 0.5% the day before. It was trying to head back above the symbolic USD 0.70 level it fell from earlier in the week after seemingly dovish remarks from the central bank.

(Reporting by Dhara Ranasinghe; Additional reporting by Alun John in Hong Kong; Editing by Bradley Perrett)

Rebound in Chinese shares powers broader rally

Aug 4 (Reuters) – Emerging market stocks made cautious gains on Thursday, with eyes on Chinese sabre-rattling, while currencies bided time ahead of some central bank policy decisions.

After a two-session sell-off on heightening US-China tensions over Taiwan, mainland China’s benchmark stock indices rose around 0.8% each, as the government launched infrastructure projects that were seen aiding the COVID-19-hit economy.

The mood lifted across Asia, carrying forward improved sentiment overnight after some strong US earnings updates as well as an unexpected pick-up in the US services sector assuaged worries about the world’s largest economy being in recession.

MSCI’s index of emerging market shares was up 0.5%, with Turkish stocks surging 1.4% to record highs, while South Africa’s top 40 FTSE JSE index rose 0.1%.

As the euro rose, currencies in the region were sluggish with eyes on central bank decisions from the Bank of England and the Czech Republic later in the day, and Romania’s decision on Friday.

Hungary’s forint slid 0.3% after a four-day rally over which it gained 2.6%.

The Czech crown was steady at near one-month lows. The central bank decision, the first under new governor Ales Michl, was seen as a toss-up with analysts split between expectations that interest rates will be held at 7% or raised by 25 basis points as inflation overshoots forecasts.

“We believe today’s meeting should confirm the Czech National Bank’s dovish change,” said Chris Turner, global head of markets and regional head of research for UK & CEE at ING.

“The Czech koruna has been in the CNB’s favored band… which is likely to force the central bank to be more active in the market.”

A Reuters poll showed space for central European currencies to firm in the next year remains tight.

Eyes on Thursday will also be on the BoE which is seen delivering a 50 bps hike to 1.75%, in what would be its biggest move since 1995.

Meanwhile, investors pared back the probability that the US Federal Reserve would raise the policy rate by 75 basis points next month after San Francisco Fed President Mary Daly said a half-percentage-point hike might be enough to tame inflation.

Another Reuters poll showed that the dollar’s strength has yet to peak, with the Fed expected to stay ahead of its peers in the tightening cycle by some measure and the global economy expected to slow significantly keeping up the greenback’s safe-haven appeal.

(Reporting by Susan Mathew in Bengaluru; Editing by Christina Fincher)

Fed is first among equals for King Dollar’s subjects

Aug 4 (Reuters) – While a myriad of factors will impact the US dollar through year-end, the most important will be monetary policy decisions from the Federal Reserve — with the more hawkish its policy the better for the currency.

The next Fed policy announcement is on Sept. 21, when money markets currently price a 46% chance of a third consecutive 75 basis point interest rate hike.

If the Fed raises rates by 75 bps next month, and looks set to keep on hiking in the fourth quarter, it could propel the USD index through last month’s 20-year high of 109.29 (July 14).

Any such move would hearten the 40 out of 56 currency strategists polled by Reuters between Aug. 1-3 who said the dollar’s strength has not yet peaked.

IMM speculators held a net USD long position of USD 18.46 billion in the week ended July 26, just before the Fed raised rates by 75 bps for the second consecutive meeting (IMM speculators have been net USD long since July 2021).

(Robert Howard is a Reuters market analyst. The views expressed are his own)

Foreigners turn sellers of Chinese shares in July on COVID worries

Aug 4 (Reuters) – Overseas investors turned net sellers of Chinese stocks in July, as mainland stock prices tumbled on concerns that COVID-19 flare-ups and ensuing lockdowns would further disrupt economic activity.

Refinitiv data showed foreigners sold a net 21.07 billion yuan ($3.12 billion) worth of mainland shares in July via Stock Connect, a key cross-border link between the mainland and Hong Kong exchanges.

They sold a net 11.8 billion yuan worth of shares in the Shanghai stock exchange, and 9.27 billion in the Shenzhen stock exchange.

Foreigners had bought a cumulative 95.45 billion yuan in the previous three months, according to the data.

China’s factory activity contracted unexpectedly in July, due to the fresh emergence of coronavirus cases, with its official manufacturing manager’s index falling to 49 from a reading of 50.2 in June. A reading below 50 is considered as a contraction.

Also, a threat by Chinese home buyers to halt mortgage payments until developers resume construction of pre-sold homes deepened concerns about the debt-stricken property sector last month, raising fears banks could face hefty writedowns.

The benchmark CSI300 Index dropped 7% last month.

Winnie Wu, China equity strategist at BofA Securities, said renewed fears of Chinese ADRs delisting and heightened geopolitical tensions also affected money flows in July.

Foreigners have dumped about 962 million yuan worth of China-listed shares so far this month, as tensions between Washington and Beijing escalated on news U.S. House of Representatives Speaker Nancy Pelosi was set to visit Taiwan.

However, Herald van der Linde, head of HSBC’s Asia Pacific equity strategy, said he had an overweight rating on Chinese equities.

“Beijing has shifted its policy tone from de-risking to being pro-growth, and policies like setting up the real estate fund should substantially reverse the investor gloom,” he said.

“In addition, foreign institutional investors are generally underweight Chinese equities, so if there are improvements, they have plenty of room to add to their positions in this market.”

Meanwhile, Chinese investors purchased about $405 million worth of Hong Kong shares via Stock Connect in July, which was their smallest net buying since November.

(Reporting By Patturaja Murugaboopathy, Gaurav Dogra in Bengaluru; Editing by Vidya Ranganathan and Kim Coghill)

OPEC+’s tiny boost to oil output may show its waning influence: Russell

LAUNCESTON, Australia, Aug 4 (Reuters) – The almost inconsequential increase in oil output announced by the OPEC+ group has highlighted an emerging dynamic in global crude markets, namely that the producer group is no longer in the driving seat.

Since OPEC+ was formed in 2017 the market has hung on its every word and analyzed every move with great detail, and oil prices have largely moved in tandem.

But by increasing production by a tiny 100,000 barrels per day for September, the group, which consists of the Organization of the Petroleum Exporting Countries (OPEC) and key allies including Russia, runs the risk of diminishing its relevance.

OPEC+ is facing two problems.

The first is that the market is increasingly focused on the related issues of declining demand amid a global economic slowdown, while still trying to assess the full impact of the loss of Russian crude and product exports, especially to former top buyer Europe.

The second is that the group is struggling to produce as much oil as it says it will, which has the impact of leading market watchers to look more at what OPEC+ actually does, rather than what it says it’s going to do.

The 10 members of the OPEC part of the wider group that have quotas produced 24.98 million bpd in July, up slightly from June’s 24.74 million, according to a Reuters survey.

While the small increase may seem to indicate the OPEC 10 are meeting their commitment to pump more oil, the actual target for them under the OPEC+ agreement was 26.276 million bpd.

This means the 10 OPEC members with quotas were under-producing by 1.7 million bpd.

It doesn’t take much imagination to work out that crude prices would be substantially lower than what they currently are if the OPEC members were actually meeting output targets.

But the market is no longer focusing on shortfalls in production from both the OPEC 10 and the wider OPEC+ group.

PRICE ACTION

This was starkly illustrated by the reaction of global benchmark Brent crude futures to the miniscule OPEC+ boost to September’s planned output.

The front-month contract fell its lowest since Feb. 23, the day before Russia invaded Ukraine, ending Wednesday’s session at USD 96.78 a barrel, down 3.7% on the prior day’s close.

US West Texas Intermediate futures also dropped to the lowest since February, ending at USD 90.66 a barrel, down 4% from the previous day, as the market focused on a surprise build in US crude and gasoline inventories.

The increase in US stockpiles is among indicators suggesting that crude demand is softening amid the spike in prices caused by Russia’s attack on Ukraine and the subsequent impact on global economic growth.

It may be more important to the market now to look at factors such as the ongoing, but tapering, release of US strategic inventories, as well as demand figures across the globe.

Asia, the top-importing region, is showing mixed signs when it comes to crude demand, with Refinitiv Oil Research forecasting July imports at 24.57 million bpd.

While this is up from June’s 8-month low of 23.83 million bpd, it’s below May’s 26.73 million bpd and is in line with the average of imports for the first half.

China, the world’s biggest crude buyer, is still a soft spot, with July imports expected at 8.42 million bpd, down from June’s 8.75 million bpd, which was a 49-month low, according to Refinitiv data.

There is some optimism that China’s imports will pick up over the rest of 2022, but this will be dependent on Beijing’s success in stimulating the world’s second-biggest economy as it emerges from a series of COVID-19 lockdowns.

India, the world’s third-biggest crude importer, is also forecast to see slightly weaker arrivals in July, with Refinitiv estimating 4.63 million bpd, down from June’s 4.69 million bpd.

Overall, the market dynamic seems to be tilting toward demand concerns outweighing supply issues.

This doesn’t render OPEC+ irrelevant, but it does lessen the influence the group will have in influencing prices, at least for now.

(Editing by Kim Coghill)

2024 Mid-Year Economic Briefing: Navigating the Easing Cycle

Investing with Love: A Mother’s Guide to Putting Money to Work

Investor Series: An Introduction to Estate Planning

Quarterly Economic Growth Release: 5.4% Q12025

Policy rate views: Uncertainty stalls cuts