Dollar edges higher ahead of US jobs data

LONDON, Aug 5 (Reuters) – The US dollar edged higher on Friday, attempting to recoup some losses after its sharpest daily drop in more than two weeks, as traders turned their attention to US jobs data for further clues about the strength of the economy.

The US dollar index, which measures the greenback against a basket of currencies, was up 0.21% to 105.92, after sliding 0.68% on Thursday, the largest fall since July 19. It remains around 3% below its mid-July high.

Investors await the key US nonfarm payrolls report due at 1230 GMT, which will provide hints of how the US economy is faring. Economists expect an increase of 250,000 jobs for the month of July, after 372,000 were added in June.

However, signs of softening in the labour market could already be underway, as data on Thursday showed that the number of Americans filing new claims for unemployment benefits increased last week.

“A far stronger than expected jobs report together with a considerable upside surprise in the average hourly earnings data in particular could see the USD broadly stronger,” said John Hardy, head of FX strategy at Saxo Bank.

The euro was down 0.17% against the greenback to USD 1.02285, within in its relatively narrow range of USD 1.01-USD 1.03 that its been trading in since July 19, as concerns about an European energy crisis are offset by fears of a slowing US economy.

A stand-off over the return of a turbine that Russia says is holding back gas supplies to Europe showed no sign of being resolved on Thursday, as Moscow said it needed documentation to confirm the equipment was not subject to sanctions.

Meanwhile, sterling was little changed at USD 1.2156, a day after the Bank of England (BoE) raised rates by the most in 27 years to fight surging inflation, but warned a long recession was coming, beginning in the fourth quarter of this year.

“Ultimately, that’s one of the most dovish 50 basis point hikes I’ve seen,” said Justin McQueen, FX strategist at DailyFX.

“The BoE said we’re going to have a recession for five quarters, it highlights the bleak outlook for the UK economy and the pound.”

Elsewhere, the US dollar rose 0.24% against the Japanese yen to 133.27 per dollar, after tumbling 0.69% on Thursday.

The risk-sensitive Aussie and kiwi remained little changed at USD 0.69605 and USD 0.6299, respectively.

In cryptocurrencies, bitcoin was up 2.9% to USD 23,272.80.

(Reporting by Samuel Indyk in London and Rae Wee in Singapore, editing by Ros Russell)

Philippine central bank ready to act as inflation seen below 4% in 2023

MANILA, Aug 5 (Reuters) – The governor of the Philippine central bank on Friday reiterated its readiness to act to combat inflation, which it said could fall below 4% next year.

At a business forum, Felipe Medalla said there was a chance for inflation to return within the central bank’s 2-4% target next year despite data showing the consumer price index rose to a near four-year high in July.

(Reporting by Neil Jerome Morales and Karen Lema; Editing by Martin Petty)

Oil prices rise from multi-month lows on supply concerns

LONDON, Aug 5 (Reuters) – Oil prices rose slightly on Friday, bouncing off their lowest levels since February, as concern over supply shortages was countered by expected declines in fuel demand.

Brent crude rose 39 cents, or 0.4%, to USD 94.51 a barrel by 0900 GMT. US West Texas Intermediate crude was up 27 cents, or 0.3%, at USD 88.81.

Prices have come under pressure this week as the market has fretted over the impact of inflation on economic growth and demand, but signs of tight supply kept a floor under prices.

The OPEC+ producer group agreed this week to raise its oil output goal by 100,000 barrels per day (bpd) in September, but this was one of the smallest increases since such quotas were introduced in 1982, OPEC data shows.

“OPEC’s meagre supply hike highlights the limited capacity the market has to handle further shortages,” ANZ Research analysts said.

The global crude oil markets remained firmly in backwardation, where prompt prices are higher than those in future months, indicating relatively tight supplies.

Supply concerns are expected to ratchet up closer to winter, with European Union sanctions banning seaborne imports of Russian crude and oil products set to take effect on Dec. 5.

“With the EU halting seaborne Russian imports, there is a key question of whether Middle Eastern producers will reroute their barrels to Europe to backfill the void,” said RBC analyst Michael Tran.

“How this Russian oil sanctions policy shakes out will be one of the most consequential matters to watch for the remainder of the year.”

For now, signs of an economic slowdown capped price recovery. Recession worries have intensified since the Bank of England’s warning of a drawn-out downturn after it raised interest rates by the most since 1995.

“If commodities are not pricing in an imminent economic recession, they might be preparing for a ‘stagflation’ era when the unemployment rate starts picking up and inflation stays high,” said CMC Markets analyst Tina Teng.

(Reporting by Noah Browning; Editing by David Goodman)

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)

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