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JOHANNESBURG, May 12 (Reuters) – South Africa’s rand fell against the dollar in early trade on Thursday as the greenback remained generally strong and investors awaited local mining and manufacturing data.

At 0627 GMT, the rand ZAR=D3 traded at 16.1600 per dollar, 0.2% weaker than its previous close.

Traders said the currency was on the back foot due to the strength of the dollar, which held near a two-decade high on Thursday after U.S. inflation moderated by less than markets had expected, keeping the Federal Reserve on course to tighten monetary policy aggressively.nL3N2X40ID

South African-focused investors will look to March mining and manufacturing data for clues on the first-quarter performance of the economy, which has been facing a power crisis.

Government bonds also weakened, with the yield on the benchmark 2030 maturity ZAR2030= rising 5 basis points to 10.09%.

(Reporting by Olivia Kumwenda-Mtambo; Editing by Bradley Perrett)

((Olivia.Kumwenda@thomsonreuters.com; +27 10 346 1084;))

By Kevin Buckland

TOKYO, May 12 (Reuters) – The dollar hit a two-decade high on Thursday after U.S. inflation moderated less than markets had expected, keeping the Federal Reserve on course to tighten policy aggressively.

The safe-haven greenback also got support amid a slide in global equities amid investor worries that central banks are behind the curve in trying to rein in consumer prices, with growth already facing risks from China’s prolonged COVID-19 lockdowns.

Riskier currencies like the Aussie and New Zealand dollars sank along with cryptocurrencies.

The dollar index =USD, which measures the buck against six major peers, added about 0.1% to 104.22, hitting its highest since December 2002.

The consumer price index climbed 8.3% on an annual basis in April, easing from 8.5% in March but outstripping the 8.1% estimate of economists. nL2N2X315F

The data suggested inflation may have peaked, but was unlikely to cool quickly and derail the Fed’s current monetary policy plans.

The market is fully priced for at least a half percentage point increase to the policy rate at each of the next two Fed decisions, on June 15 and July 27, according to the CME FedWatch Tool.

“The stronger-than-expected U.S. inflation print heightened concerns over the need for the Fed to accelerate its policy tightening path,” Rodrigo Catril, senior currency strategist at National Australia Bank, wrote in a client note.

The May CPI data comes five days before the June Fed meeting, and another “shocker” would make a 75 basis-point hike then a “strong possibility,” he said.

The euro EUR=EBS was about flat at $1.05095 after receiving a lift overnight as the European Central Bank overnight firmed up expectations that it will raise its policy interest rate in July for the first time in more than a decade.nL5N2X32V5

The single currency plumbed a more than five-year low of $1.04695 at the end of last month.

The yen JPY=EBS continued to garner support from an easing in long-term Treasury yields from a multi-year peak above 3.2% at the start of the week.

Japan’s currency added about 0.2% to 129.67 per dollar, pulling further away from the more than two-decade low of 131.35 reached Monday, as the 10-year Treasury yield US10YT=RR retreated to an almost two-week low of 2.862% in Tokyo trading on Thursday.

The British pound GBP=D3 languished as Brexit headlines returned, with the attorney-general for England and Wales advising the government that it would be within its legal rights to scrap large parts of the Northern Ireland protocol, according to the Times newspaper. nL2N2X336K

Sterling, which also tends to move with risk assets, dipped to $1.2211 on Thursday for the first time in almost two years.

The Aussie AUD=D3 slumped 0.76% to $0.6885 and earlier reached $0.68795 for the first time in almost two years. New Zealand’s kiwi NZD=D3 dropped 0.79% to $0.6240, also an almost two-year low.

Bitcoin BTC=BSTP slid about 8% to $26,645, but stayed above the previous day’s low of $27,757.77, a level not seen since the start of last year.

Smaller rival ether ETH=BTSP was last down almost 14% at 10-month trough of $1,785.

“Risk assets will surely not like (the U.S. CPI data) because it means that it remains far too premature to price out hikes in the fed funds curve,” TD Securities strategists wrote in a research note.

“This market is desperate to try to find the put in risk assets, but this time around, there will be no bailout because central banks are several months too late in tightening.”

(Reporting by Kevin Buckland; Editing by Simon Cameron-Moore and Sam Holmes)

((Kevin.Buckland@thomsonreuters.com;))

TOKYO, May 12 (Reuters) – Japan’s government bond yields on Thursday tracked overnight fall in U.S. Treasury yields amid weak demand for a domestic 30-year bond auction.

The 20-year JGB yield JP20YTN=JBTC fell 0.5 basis point to 0.765%. The 30-year JGB yield JP30YTN=JBTC fell 0.5 basis point to 1.015%.

The 10-year JGB yield JP10YTN=JBTC was flat at 0.245%.

Investors found the Ministry of Finance’s auction for 30-year bonds weak, even as its bid-to-cover ratio of 3.08 was almost unchanged from 3.05 at the previous auction.

“The results were weak, as there was a clear gap between investors who made active and cautions bids,” said a market participant at a domestic brokerage.

U.S. Treasury yields fell overnight, after U.S. consumer price data showed the pace of inflation slowed in April, though not enough to ease concerns that the Federal Reserve’s agenda to cool rising prices may induce a recession. US/

The two-year JGBs were not traded and the yield JP2YTN=JBTC remained at -0.050%.

The five-year yield JP5YTN=JBTC fell 0.5 basis point to 0.010%.

The 40-year JGB yield JP40YTN=JBTC rose 0.5 basis point to 1.135%.

Benchmark 10-year JGB futures 2JGBv1 rose 0.12 point to 149.44, with a trading volume of 13,832 lots.

(Reporting by Tokyo markets team; editing by Uttaresh.V)

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Adds comment from stats bureau vice head

BEIJING, May 12 (Reuters) – China will not hesitate to introduce new policies to prop up growth, a senior Communist Party official said on Thursday, as the economy feels the pinch of protracted COVID-19 lockdowns.

China aims to implement existing policies in the first half of the year and is ready to take new steps when the need arises, Han Wenxiu, deputy head of the party’s office for financial and economic affairs, told a news conference in Beijing.

“We will waste no time in planning and rolling out incremental policies. There is sufficient room for fiscal, monetary policy and other policies, and we have various policy tools,” Han said.

“We will step up policy adjustments, we will take actions when necessary,” Han said without giving details.

China must control COVID in a “scientific, precise and effective” way, to create a vital pre-condition for normal economic operations, Han said.

The government has moved to cushion a deepening economic slowdown as authorities race to stop the spread of COVID cases with full or partial lockdowns in dozens of cities, including the commercial hub of Shanghai.

The COVID-19 resurgence is having a “huge impact” on China’s economy, but such impact will be short-lived, the official Xinhua news agency quoted Sheng Laiyun, deputy head of the National Bureau of statistics, as saying.

Some economists expect China’s year-on-year economic growth to slow sharply in the second quarter from 4.8% in the first quarter, or even shrink.

The government has been cutting taxes for businesses and channelling more funds into infrastructure projects, while the central bank has been pumping more cash into the economy and increasing support for some sectors.

Some government economists have been calling for additional policy stimulus, including expanding the annual budget deficit and issuing special treasury bonds.

The People’s Bank of China will step up financial support for the real economy, including lowering financing costs, deputy central bank governor Chen Yulu told the same news conference.

(Reporting by Kevin Yao and Ellen Zhang; Editing by Himani Sarkar, Robert Birsel and Andrew Heavens)

((Ellen.Zhang@thomsonreuters.com;))

By Wayne Cole

SYDNEY, May 12 (Reuters) – The Australian and New Zealand dollars touched fresh two-year lows on Thursday as worries about China’s slowing economy weighed on Asian stocks, while a survey on New Zealand inflation expectations was more restrained than rate hawks had wagered on.

The Aussie was struggling at $0.6922 AU=D3, after some wild swings saw it reach as high as $0.7054 overnight only to lurch back to a low of $0.6906.

The kiwi sagged to a trough of $0.6265 NOD=D3, having also failed to sustain a bounce to $0.6379 overnight. The loss of chart support at $0.6268 opens the way to at least $0.6230.

It was not helped by a Reserve Bank of New Zealand (RBNZ) survey showing longer term inflation expectations had stabilised after four quarters of sharp increases. nS9N2V502F

The outlook for two years ahead steadied at 3.29% and the five-year outlook edged up only slightly to 2.42%, which the RBNZ said was close to or in line with its 1-3% target range.

Investors had been looking for much larger increases and quickly trimmed wagers on a half-point rate hike from the RBNZ at its May 25 policy meeting – though it is still seen as more likely than not.

That saw two-year swap rates NZDSM3NB2Y= drop a sharp 13 basis points to 3.630%, and away from a recent seven-year peak of 3.980%.

For the Aussie, the main drag remains coronavirus lockdowns in China and their impact on commodity demand.

While there has been speculation of further policy stimulus from Beijing, an easing of the strict zero-COVID rules will be needed to improve sentiment.

“We are confident that once lockdowns ease, China’s economy will snap back because of pent‑up demand and policy support,” said Carol Kong, a senior currency strategy at CBA. “As a result, we believe AUD can recover strongly before year end once there are signs the lockdowns will end.”

“But if we are wrong that lockdowns will end well before October, AUD could fall by another 5 U.S. cents in coming months.”

There were no major Australian data out on Thursday but Friday see an appearance by Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock.

She is taking part in a panel discussion on financial regulation but the subject of interest rates is likely to come up given the bank’s recent hike.

(Editing by Kim Coghill)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))

Recasts, adds comments and details, updates prices

By Bharat Gautam

May 12 (Reuters) – Gold steadied on Thursday, after U.S. inflation data lifted prices over 1% in the previous session, as traders were cautious about the Federal Reserve’s policy stance amid fears of a build-up in underlying inflation pressures.

Spot gold XAU= was nearly flat at $1,852.36 per ounce, as of 0350 GMT. U.S. gold futures GCv1 were little changed at $1,853.30

U.S. consumer price growth slowed sharply in April as gasoline eased off record highs, suggesting inflation has probably peaked, although it is likely to stay hot for a while and keep the Fed’s foot on the brakes.nL2N2X315F

Bullion prices hit a three-month low early on Wednesday before rising as much as 1.1% after the consumer price inflation data.

The inflation reading comes on the heels of the Fed raising its benchmark overnight interest rate by an aggressive half a percentage point last week — the biggest hike in 22 years — as it moves to unwind ultra-easy pandemic-era monetary policy.

Bullion yields no interest, and is hence sensitive to rising U.S. short-term interest rates and bond yields. Lower benchmark 10-year Treasury yields on Thursday, however, decreased the opportunity cost of holding gold. US/

With inflation risks still there, however, investors will now want gold as a safe-haven asset after the recent sell-off, said Brian Lan, managing director at dealer GoldSilver Central, adding that investors also know that once lockdowns in China are lifted, there may be more support for precious metals.nB9N2W401X

Meanwhile, the U.S. dollar steadied near its highest levels in 20 years, continuing to restrain gains in greenback-priced bullion. USD/

“With inflation expectations rising and evidence of money flowing into gold, we’re left wondering if an important swing low formed yesterday (Wednesday) around above $1,830,” City Index’s senior market analyst Matt Simpson said in a note.

Spot silver XAG= was down 0.4% at $21.47 per ounce, while platinum XPT= dipped 0.1% to $991.37, and palladium XPD= fell 0.2% to $2,032.07.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Vinay Dwivedi and Uttaresh.V)

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