Gold slips as dollar holds steady ahead of Powell speech, ECB rate decision

Sept. 8 (Reuters) – Gold prices dipped on Thursday, as resilient dollar held close to recent highs, while cautious investors awaited comments from US Federal Reserve Chair Jerome Powell and interest rate decision by the European Central Bank later in the day.

Spot gold inched 0.1% lower to USD 1,716.59 per ounce by 0609 GMT, after rising nearly 1% on Wednesday.

US gold futures were little changed at USD 1,728.00.

The dollar index held steady near a two-decade high touched in the previous session.

“A lot of eyes are glued to what Powell will say tonight and whether there’s any view on what the Fed will do at the end of the month,” said Brian Lan, managing director at Singapore-based dealer GoldSilver Central.

Gold hasn’t really regained its shine as a safe-haven with liquidations seen in exchange traded funds (ETFs) and many investors are on the sidelines because of the Fed raising interest rates, Lan added.

Powell will participate in a discussion at Cato Institute conference later in the day, which could be his final public comments before the Sept. 20-21 policy meeting.

Fed officials said on Wednesday they still are not convinced that the worst of the US inflation scare has passed, hinting at continuation of the central bank’s aggressive rate hikes.

The Fed is expected to lift its policy rate by another 50 or 75 basis points this month.

Investors were also expecting a hefty rate increase from the ECB to combat soaring inflation at its policy decision at 12:15 GMT, followed by President Christine Lagarde’s news conference at 12:45 GMT.

Elsewhere, platinum fell 0.4% to USD 863.02 per ounce, and palladium dropped 0.3% to USD 2,037.47.

Silver was little changed at USD 18.5143.

(Reporting by Eileen Soreng and Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips and Rashmi Aich)

Oil prices climb on tight supply worries

Sept 8 (Reuters) – Oil prices rose by as much as USD 1 per barrel on Thursday after dropping below key technical support levels in the previous session, as an energy standoff between Europe and Russia focused investor minds on how tight fuel supply may become.

Brent crude futures gained 63 cents, or 0.7%, to USD 88.63 per barrel by 0628 GMT after closing at their lowest since early February in the previous session. US crude futures were up 70 cents, or 0.9%, at USD 82.64 per barrel.

Prices drew support from Russian President Vladimir Putin’s threat to halt the country’s oil and gas exports if price caps are imposed by European buyers.

The European Union proposed capping Russian gas prices only hours later, raising the risk of rationing in some of the world’s richest countries this winter if Moscow carries out its threat. Russia’s Gazprom has already halted flows from the Nord Stream 1 pipeline, cutting off a substantial percentage of supply to Europe.

The oil price trend is being shaped by “various external forces such as the energy battle between Western countries and Russia,” said analysts from Haitong Futures in a note.

The potential impact of any deal or reinstating an accord between the West and Iran on Tehran’s nuclear programme would also be significant, they noted. An agreement would see sanctions on Iranian oil exports lifted.

Elsewhere, reacting to soaring energy prices, Britain’s new Prime Minister Liz Truss will on Thursday scrap the country’s fracking ban and will seek to make more use of its reserves in the North Sea, the Telegraph newspaper reported earlier.

The British government is expected to announce dozens of new North Sea oil and gas exploration licences in an effort to boost domestic production, two sources familiar with the government’s discussions told Reuters.

Meanwhile a number of central banks around the world are expected to begin a new round of interest rate hikes to fight inflation.

The European Central Bank is expected to raise interest rates sharply when it meets later on Thursday. A US Federal Reserve meeting follows on Sept. 21.

(Reporting by Laura Sanicola and Muyu Xu; Editing by Kenneth Maxwell)

Marcos touts USD 14 billion investment pledges from ‘fruitful’ overseas trip

MANILA, Sept 8 (Reuters) – Philippines leader Ferdinand Marcos Jr has touted his first overseas trip as a success that secured investment pledges of USD 14 billion, as the son of the country’s late ruler eyes economic gains to get his presidency off to a strong start.

During visits this week to Indonesia and Singapore, Marcos met leaders of government and commerce and declared the Philippines open for business, inviting private capital to upgrade and expand roads, airports and seaports in the archipelago of 110 million people.

Marcos, 64, who travelled with top officials of his economic team, said he received investment pledges in renewable energy, data centres, e-commerce, broadband technology, government housing and agriculture.

“This will support our country’s economic recovery efforts and create more jobs for Filipinos here in our country,” Marcos said on his return late on Thursday.

“We look forward to doing the detailed work that is necessary to bring all these proposals to fruition.”

The elder Marcos was overthrown in a 1986 uprising, ending a tumultuous two-decade rule that his son and namesake insists was a “golden era” of development for the Philippine that he intends to replicate.

Marcos Jr, wants to improve agriculture to reduce reliance on food imports and to expand the economy by as much as 8% during his six-year term and halve the poverty rate, which was 18.1% in 2021.

(Reporting by Neil Jerome Morales; Editing by Martin Petty)

US SEC to propose new Treasury market reforms next week

WASHINGTON, Sept 7 (Reuters) – The US Securities and Exchange Commission (SEC) will on Sept. 14 propose draft rules reforming how US Treasuries are traded and cleared, according to a notice published by the agency on Wednesday.

US regulators have been working on reforms to the structure of the USD 23 trillion Treasury market following a number of liquidity crunches, including a meltdown in the market as the COVID-19 pandemic shut down the US economy in March 2020. That episode prompted the US Federal Reserve to step in and start buying up Treasury securities.

As Treasury debt continues to grow and Treasury dealers’ market-making capacity remains limited, the Treasury market remains highly vulnerable to further dysfunction under stress, regulatory experts including former Treasury Secretary Tim Geithner warned in a report this year.

With the Fed kicking off “quantitative tightening” in June, letting its Treasury bonds reach maturity without buying more, the market has experienced wild price swings, Reuters reported last month.

The Treasuries market is the world’s largest bond market and serves as a global benchmark for a swathe of other asset classes, making its price gyrations especially worrying.

The SEC notice said the agency would consider amendments to certain clearing rules for Treasury market participants, without providing details. Central clearing involves sending trades to a clearing house, which demands both counterparties put up cash to guarantee the trade’s execution in the event either defaults.

SEC chair Gary Gensler has in the past advocated for expanding centralized clearing of Treasury securities on the basis it increases resilience by bringing additional capital into the market during times of stress.

(Reporting by Michelle Price; Editing by Leslie Adler and Richard Pullin)

US recap: Energy drop, Fed puzzle boost EUR/USD before ECB

Sept 7 (Reuters) – The dollar index slipped from new 20-year highs that were led by gains against the yen to a 24-year peak, as energy prices tumbled after weak Chinese data and traders lightened long trades in the US currency before Thursday’s ECB meeting.

Brent fell 5%, while US and Dutch natgas prices tumbled 3.9% and 12%, respectively, shrugging off Russian President Vladimir Putin’s threat to cut off energy supplies if the EU pursued its proposed price-cap plan.

Those falls on global demand doubts trimmed the premium markets have assigned to the dollar based on the US status as an energy exporter versus the euro zone and Japan being heavy importers.

Fed speakers affirmed the need to keep raising rates until inflation has been defeated, though the pace of tightening will become more data-dependent.

In contrast, the Fed’s beige book pointed to a weakening outlook, mixed August activity and some moderation in labor tightness, which kept Treasury yields and the dollar near their lows.

The broad dollar pullback was accelerated by a New York Fed report showing the decline in global supply chain pressures since December 2021 persisted in August and was broad-based.

Following US jobs and ISM services data also suggesting slightly less supply-side tightness, the supply-chain report will keep markets on alert for further such data, as it would suggest progress toward the Fed’s inflation-defeating goal and perhaps less upside in Treasury yields and the dollar.

EUR/USD’s 0.93% gain followed another shallow dip below 0.9900 but now faces resistance above parity. Thursday’s ECB meeting, seen yielding a 75bp hike that the Fed is expected to match on Sep. 21, could be pivotal, as will the durability of the recent drop in energy prices.

USD/JPY’s 144.99 peak on EBS ran into 145 offers by a Fibo target and worries about Japan’s FX warnings as prices near 146.

USD/JPY’s 11.2% surge from August’s lows and nearing 1998’s 147.63 peak is alarming, but overt FX intervention within the G7 isn’t allowed without the group’s consent.

Unless the BoJ ends QE needed to cap JGB yields, any unofficial intervention would fail unless driven by dollar weakness.

Sterling shed early losses to a 37-year low at 1.1407, but the tiny breach of 2020’s 1.1413 low left shorts in squaring mode amid broader dollar long trimming.

The BoC’s 75bp hike reversed early USD/CAD gains to a modest loss, limited by tumbling energy prices and helped, along with the Aussie and other high betas, by rebounding Treasuries and equities.

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

Bargain hunters bolster gold as rate hike headwinds persist

Sept 7 (Reuters) – Gold bounced back on Wednesday helped by the dollar’s slight retreat from a two-decade high and as bargain hunters took advantage of recent losses, but the precious metal’s outlook was still clouded by prospects of aggressive rate hikes.

Spot gold rose 0.9% to USD 1,716.59 per ounce by 2:02 p.m. ET (1801 GMT). US gold futures settled 0.9% higher at USD 1,727.80.

The dollar index hit a fresh 20-year high, making greenback-priced gold less attractive for overseas buyers. But a slight pullback from the peak late in the session seemed to offer some respite for gold.

David Meger, director of metals trading at High Ridge Futures, attributed gold’s moves to “a combination of a bit of safe haven demand and buying on dips,” while headwinds from the dollar and an aggressive Fed persisted.

“Gold recently has acted as a risk asset than a safe-haven. The question is when will we see gold take on more of a safe-haven role as we begin to see economies slow due to these rising rate hike policies.”

Gold prices have fallen over USD 300 since rising above USD 2,000 per ounce in March.

Data on Tuesday showed US services industry picked up last month, providing ammunition to the US Federal Reserve to deliver another 75-basis-point rate hike.

Higher rates increase the opportunity cost of holding non-yielding bullion.

Spot silver rose 1.9% to USD 18.40 per ounce.

Silver represented a buying opportunity since the price had fallen so far below its true value, with the demand outlook for the metal used in key sectors of the energy transition such as batteries still positive, Kinesis Money analyst Rupert Rowling said in a note.

Platinum gained 1.6% to USD 866.43 and palladium climbed 1.9% to USD 2,044.09.

(Reporting by Brijesh Patel and Arpan Varghese in Bengaluru; Editing by Maju Samuel and Shounak Dasgupta)

US Fed’s new supervision chief to lay out vision for Wall Street oversight

WASHINGTON, Sept 7 (Reuters) – The US Federal Reserve’s new regulatory chief Michael Barr will on Wednesday outline his plan for overseeing Wall Street banks and reviewing regulations, in his first public remarks since joining the central bank in July.

Nominated by Democratic President Joe Biden as the Fed’s Vice Chair of Supervision, Barr is expected to take a much more aggressive stance on Wall Street than his Republican predecessor Randal Quarles. As a former senior Treasury Department official, Barr helped craft the 2010 Dodd-Frank law that created the Fed Supervision role and imposed a host of new rules on lenders in the wake of the 2007-09 financial crisis.

Barr is due to speak at 2:00 p.m. EDT (1800 GMT) at the Brookings Institution. The Washington think tank said his remarks will focus on making the financial system “safer and fairer.”

Barr’s to-do list includes potentially reviewing bank capital and trading rules that were relaxed by Quarles, overhauling how the Fed handles large bank mergers, and stepping up scrutiny of risks posed by climate change, cryptocurrencies and fintech firms, according to analysts and policy experts.

With Barr in place, all the major financial regulatory agencies are now filled with Biden picks, meaning other joint reform efforts, such as overhauling fair lending rules and the US Treasury market structure, can also be accelerated.

“It is just so important to have this position filled with a Biden appointee,” said Todd Phillips, director of financial regulation at the Center for American Progress, a liberal think tank. “Having Barr allows the Biden bank regulatory agenda to kick into high gear.”

Barr’s role gives him extensive powers to supervise the country’s largest lenders, including by setting their capital levels via a number of rules and annual “stress tests” of their balance sheets. Some Democratic critics say the annual stress tests have become too easy and the industry is keen to glean Barr’s views on whether those should be stricter.

Banks are also anxious to get Barr’s view on Basel III global capital requirements, and the “supplementary leverage ratio,” which banks say has limited their ability to provide liquidity to the Treasury markets.

Barr is also expected to tackle oversight of large regional banks, which have dramatically grown following several high-profile mergers in recent years. He could suggest a number of ways to ramp up safeguards for such lenders, including additional capital requirements, said analysts.

“This first speech should provide valuable insight into his actual priorities and the agenda for his tenure,” said Isaac Boltansky, director of policy research for brokerage BTIG.

(Reporting by Pete Schroeder; Editing by Michelle Price and Andrea Ricci)

Euro zone bond yields rise as markets add back to 75 bps ECB hike bets

Sept 7 (Reuters) – Benchmark euro zone bond yields rose on Wednesday as markets raised their bets on a 75 basis-point rate hike from the European Central Bank when it meets on Thursday.

The ECB is this week expected to deliver a second big rate hike to tame record-high inflation just as a halt to Russian energy supply fans further inflation and recession fears in the bloc.

Having factored in a more than 90% chance that the ECB would hike by 75 bps earlier this week, euro zone money markets lowered those bets on Tuesday in reaction to several media reports, including one that said a 50 bps rate hike remained on the table.

But on Wednesday, markets had added some of those bets back and now price in a 75% chance of such a move, versus below 70% on Tuesday, according to Refinitiv data.

“The bottom line is that the decision remains open and even the ECB council members themselves probably cannot guess what the outcome will be,” said Christoph Rieger, head of rates and credit research at Commerzbank in Frankfurt.

Germany’s 10-year yield, the benchmark for the euro zone, was up 1 basis point to 1.62% by 0739 GMT, after rising to the highest since late June at 1.645% at the start of the session.

Yields on German shorter-dated maturities, more sensitive to interest rate expectations, were down 1-3 bps on the day.

In Italy, which has come into particular focus given talk of a faster pace of ECB hikes and an election looming in late September, the 10-year yield was up less than one bp to 3.97%, keeping the closely watched risk premium over German peers at 234 bps.

In the primary market, Germany will raise 1.5 billion euros from the re-opening of a 15-year bond.

(Reporting by Yoruk Bahceli; Editing by Jan Harvey)

BSP chief says has policy room to combat inflation

Sept 7 (Reuters) – The Philippine central bank “has much room” to tighten policy to combat inflation, its governor said on Wednesday.

Bangko Sentral ng Pilipinas Governor Felipe Medalla also said in an economic briefing in Singapore the central bank, which meets on Sept 22 to review policy, “cannot not react” if the US Federal Reserve keeps hiking rates by 75 basis points.

(Reporting by Neil Jerome Morales and Karen Lema in Manila)

Emerging stocks sink to fresh 27-month low on China data

LONDON, Sept 7 (Reuters) – Emerging market stocks fell as much as 1.3% to hit a fresh 27-month low on Wednesday as disappointing Chinese trade data cast a pall over markets.

The MSCI benchmark touched USD 956.26 – its lowest level since June 2, 2020 when the index was recovering from its COVID-rout low of USD 751.76 hit, in mid-March 2020.

By 0649 GMT, the index had clawed back some of the losses and was down 1% at USD 955.98.

The index is down nearly 23% since the start of the year.

Data on Monday showed China’s exports and imports lost momentum in August with growth significantly missing forecasts as surging inflation crippled overseas demand and fresh COVID curbs and heatwaves disrupted output, reviving downside risks for the shaky economy.

(Reporting by Karin Strohecker, editing by Alun John)

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