Gold extends record rally on dollar weakness, rate-cut bets

Gold prices extended their record run on Tuesday, holding firm above the key USD 2,500 level, driven by a weaker dollar and growing investor confidence that the Federal Reserve will likely cut interest rates in September.

Spot gold rose 0.3% to USD 2,510.35 per ounce by 01:44 p.m. ET [1744 GMT], after hitting an all-time high of USD 2,531.60 earlier in the session.

US gold futures settled 0.4% higher at USD 2,550.6.

The dollar index sank to a seven-month low, making gold more attractive for other currency holders, while benchmark US 10-bond yields slipped.

“The primary drivers of the gold price move are financial investment demand, particularly with ETF buying improving and overall improved sentiment as the expectations of Fed easing cycle to begin in September,” said Aakash Doshi, head of commodities, North America at Citi Research

Gold could reach USD 3,000 per ounce by mid-2025 and USD 2,600 by the end of 2024, Doshi added.

Holdings of SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, jumped to their highest in seven months at 859 tons on Monday.

Markets are pricing in about a 71.5% chance of Fed cutting interest rates by 25 basis points in September, according to the CME FedWatch Tool.

Traders will be closely monitoring the minutes of the Fed’s July policy meeting on Wednesday and Fed Chair Jerome Powell’s keynote speech at the Jackson Hole symposium at the end of the week for more cues on rate cuts.

Positioning in gold might be overextended, with expectations of significant Fed rate cuts possibly leading to a correction if this narrative is challenged, said Daniel Ghali, commodity strategist at TD Securities.

Gold, which tends to thrive in a low-interest-rate environment, has risen more than 20% so far this year and heading for the best year since 2020.

“Geopolitical uncertainties, the rise in speculative interest, and substantial global ETF inflows are further fueling the bullish trend in gold,” said Joseph Cavatoni, market strategist at World Gold Council.

Elsewhere, spot silver fell 0.2% to USD 29.42 per ounce, platinum eased 0.5% to USD 949.05 and palladium fell 0.5% at USD 927.00.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Alan Barona and Shailesh Kuber)

Dollar hits 7-month low before Powell, Swedish crown volatile after rate cut

The dollar hit a fresh seven-month low on Tuesday with traders bracing for comments from Federal Reserve Chair Jerome Powell due on Friday, which could provide clues about the speed of the US monetary easing cycle.

Meanwhile, Sweden’s crown fell after swinging up and down in morning trade as the central bank cut rates and said it could speed up policy easing if price pressures did not pick up.

It was last down 0.33% at 10.27 versus the US dollar after hitting 10.33 earlier in the session a few minutes after the Riksbank announcement.

“None of this (Riksbank statement) is hugely surprising, but it’s still remarkable just how much the central bank’s stance has changed over these past few months,” said James Smith, economist at ING.

The euro last fetched USD 1.1078 on Tuesday having touched USD 1.1087, its highest since Dec. 28 in early trading.

The dollar index, which measures the US currency against six rivals, was last at 101.82 after touching its lowest since Jan. 2 of 101.76 earlier in the European session.

The focus this week is Powell’s speech during an annual gathering of central bankers in Jackson Hole, but minutes of the Fed’s last meeting will also be in the spotlight.

Some analysts say the next few weeks will likely prove decisive on whether the Fed cuts by 50-75 bps this year or by 150 bps or more. The Jackson Hole conference is the first opportunity for the Fed to push back against the chance of a 50-bps cut at one of the year’s three remaining meetings, they add.

While labor market deterioration led to expectations for a quicker monetary easing, data since then has been mixed with upbeat retail sales.

Still, the US economy remains “susceptible to a recession if there’s a financial shock”, said Thierry Wizman, global forex and rates strategist at Macquarie.

“But that financial shock may not be forthcoming,” he added. “In that case, we may stay at below-trend growth and look ‘peakish’, until the Fed has eased sufficiently.”

Markets are pricing in a total of 94 bps of Fed rate cuts this year.

A slim majority of economists polled by Reuters expect the Fed to ease by 25 bps at each of the remaining three meetings.

Expectations for the presidential elections’ outcome are also weighing on the greenback.

“As her (Kamala Harris) chances of winning some key swing states have improved, traders have abandoned a few of the (Donald) Trump trades, among which was a stronger dollar,” Macquarie’s Wizman argued.

Investors expected the greenback to rise in case of a Trump victory as tariffs would prop up the currency and higher fiscal spending would boost interest rates.

UEDA AWAITED

The Japanese yen was slightly weaker at 146.98 per dollar, still close to the near two-week high it touched in the previous session but grinding away from the seven-month high of 141.675 it touched at the start of August.

Bouts of intervention by Tokyo at the start of last month and a surprise rate hike have pulled the yen away from the 38-year lows of 161.96 it was stuck at in early July and wrong-footed investors who sharply cut their bets against the yen.

Investor attention will be on Bank of Japan Governor Kazuo Ueda when he appears in parliament on Friday. Ueda is expected to discuss the BOJ’s decision last month to raise rates and the focus will be on whether he sticks to his recent hawkish tone.

Analysts said the yen’s pace of appreciation will likely be more gradual as the data shows most speculative short positions have been cleared.

The latest weekly data to Aug. 13 showed leveraged funds – typically hedge funds and various types of money managers – flipped their long-standing short yen position and are now net long for the first time since March 2021.

Barclays recalled that monthly data showed retail investors halved their net short US dollar/yen positions in July as the yen rallied amid a resurgence in BOJ rate hike expectations.

(Reporting by Stefano Rebaudo and Ankur Banerjee; Editing by Jamie Freed, Shri Navaratnam, Helen Popper, and Sharon Singleton)

Oil settles down 1% as Middle East tensions ease, China data weak

Oil prices fell about 1% to a two-week low on Tuesday as Middle East supply concerns eased after Israel accepted a proposal to tackle disagreements blocking a ceasefire deal in Gaza, and as economic weakness in China weighed on fuel demand.

Brent futures for October delivery fell 46 cents, or 0.6%, to settle at USD 77.20 a barrel. US West Texas Intermediate (WTI) crude for September delivery fell 33 cents, or 0.4%, to settle at USD 74.04 on its last day as the front-month.

The more actively traded WTI futures for October, which will soon become the front-month, lost about 49 cents to USD 73.17 per barrel.

US Secretary of State Antony Blinken visited Egypt and pushed for progress toward a Gaza ceasefire and hostage release deal. Major differences still need to be resolved in talks this week.

“There was probably around USD 4 to USD 8 of geopolitical premium baked into the price of crude oil before negotiations began on Thursday,” Bob Yawger, director of energy futures at Mizuho, said in a note.

Israel retrieved the bodies of six hostages from the Gaza Strip as negotiations continued in an effort to bring back more than 100 captives remaining in the besieged Palestinian enclave.

“Despite ongoing ceasefire negotiations, clashes between Israel and Hamas continue, and the markets will remain highly sensitive to any developments in the region,” said Rystad Energy’s senior analyst Svetlana Tretyakova.

“If the market fundamentals don’t break this bearish trend soon, OPEC+ may be hesitant to unwind their voluntary cuts anytime soon.”

OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, has said global oil demand growth must accelerate in coming months or the market will struggle to absorb the group’s planned increase in supply from October.

OPEC member Saudi Arabia, the world’s biggest oil exporter, said crude exports fell to 6.047 million barrels per day (bpd) in June from 6.118 million bpd in May.

Data from China, the world’s second-largest economy, showed new home prices fell in July at their fastest pace in nine years, industrial output slowed, export and investment growth dipped and unemployment rose.

Worries about fuel demand in the US, the world’s biggest economy, pressured prices for US heating oil HOc1 futures to their lowest since May 2023 for a second straight day. The heating oil crack spread, which measures refining profit margins, stayed near its lowest since November 2021.

Prices for US gasoline futures fell to their lowest since February 2024.

“Following Q2 (second quarter) earnings, multiple refinery companies have responded to (price and demand) concerns by announcing cuts to capacity rate, including PBF Energy, Phillips, and Marathon,” analysts at energy consulting firm Gelber and Associates said in a note.

US OIL INVENTORIES

Weekly US oil storage data is due from the American Petroleum Institute (API) trade group on Tuesday and the US Energy Information Administration (EIA) on Wednesday.

Analysts projected US energy firms pulled about 2.7 million barrels of crude out of storage during the week ended Aug. 16.

If correct, that would be the seventh time US crude stocks declined in the past eight weeks. There was a withdrawal of 6.1 million barrels during the same week last year and an average decrease of 3.4 million barrels over the past five years (2019-2023).

(Reporting by Scott DiSavino in New York, Arunima Kumar in Bengaluru, Emily Chow in Singapore, and Arathy Somasekhar in Houston; Editing by Shounak Dasgupta, Louise Heavens, and David Gregorio)

Markets buoyant, but China rate call

All signs point to another solid day of gains across Asian markets on Tuesday, with investors’ appetite for risk whetted by a lower dollar, subdued volatility, and the S&P 500 and Nasdaq chalking up their longest winning streaks this year.

The major exception may be Japanese stocks, which could come under pressure again thanks to the yen’s rise against the dollar, although it should be noted that the dollar’s decline on Monday was broad-based and even steeper against other major and emerging currencies.

Chinese stocks crept higher for a third day on Monday, edging away from last Thursday’s six-month low, as investors turn their attention to the People’s Bank of China’s latest interest rate decision on Tuesday.

Asia’s calendar on Tuesday also includes minutes of the Reserve Bank of Australia’s last policy meeting, New Zealand trade data, Hong Kong inflation, and export and current account figures from Taiwan.

Although China’s economy may be crying out for more stimulus, the PBOC is expected to eschew a repeat of July’s surprise rate cuts and keep borrowing costs on hold.

In a Reuters survey of 37 market watchers, all respondents expected both the one-year and five-year loan prime rates to be left on hold at 3.35% and 3.85%, respectively.

China surprised markets by cutting major short- and long-term interest rates in July, its first such broad move in almost a year, signaling policymakers’ intent to strengthen economic growth.

But shrinking interest margins at lenders remain the key constraint discouraging commercial banks from further lowering the lending benchmarks, market watchers said, and policymakers are also wary that lower interest rates may weaken the yuan further and spur capital outflows.

China’s bond market continues to signal lower policy rates ahead. The 10-year yield closed on Monday at 2.16%, near the 2.10% low from Aug. 5, which is the lowest since comparable records began nearly a quarter of a century ago.

The mood in Asia beyond China, however, is much brighter.

Stocks are poised to continue their rebound from the Aug. 5 slump and post their ninth daily gain in the 11 sessions since. The S&P 500 and Nasdaq on Monday both chalked up their eighth consecutive rise, marking their best runs this year.

US Treasury yields did ease slightly on Monday, but the feel-good factor for investors in Asia will have been boosted more by the dollar’s broad depreciation.

The dollar index, a measure of the dollar’s value against a basket of major currencies, fell to its lowest since Jan. 2, which helped lift MSCI’s international emerging market currency index 0.8% to a record high.

It was the EM currency index’s biggest rise this year, and Asian currencies like the Korean won, Malaysian ringgit and Thai baht led the charge.

Here are key developments that could provide more direction to Asian markets on Tuesday:

– China interest rate decision

– RBA minutes

– Taiwan exports (July)

(Reporting by Jamie McGeever)

Yields slip ahead of Powell’s Friday speech

NEW YORK – Yields on US government debt eased on Monday as the market counted down to Federal Reserve Chair Jerome Powell’s keynote speech at the Jackson Hole symposium at the end of the week.

There is little in the way of data to divert attention before then.

The Conference Board said on Monday its leading economic index fell 0.6% in July. That was worse than June’s 0.2% fall and the 0.3% decline expected by economists polled by Reuters. But the index is a secondary indicator and Treasuries stayed in their narrow ranges.

On Wednesday, the Labor Department will release a preliminary revision to 2024 payrolls through March, potentially a market factor if it shows a much different labor picture than the Fed has been banking on as it moves toward cutting interest rates.

Flash PMIs, July home sales, and weekly unemployment claims round things out on Thursday but, barring big surprises, are unlikely to upset markets.

The minutes of the Fed’s July meeting will be released on Wednesday, which will be backward-looking when investors are 100% focused on what the Fed will do at its Sept. 17-18 meeting.

“It’s super benign. The curve has barely moved, you are not seeing much happening in peripheral things like swap spreads and inflation expectations,” said Jan Nevruzi, US rates strategist at TD Securities in New York.

High rates may be on the way out, and Powell could provide more information about the approach to policy easing in his Friday speech at the Kansas City Fed’s annual conference in Wyoming.

Fed speakers in recent days have laid the groundwork for Powell’s Jackson Hole remarks.

In an interview with the Financial Times published on Sunday, San Francisco Federal Reserve Bank President Mary Daly said it is time to consider adjusting borrowing costs from their current range of 5.25% to 5.5%.

Minneapolis Fed President Neel Kashkari said the debate about potentially cutting rates in September is an appropriate one to have because of a rising possibility of a weakening labor market, the Wall Street Journal reported on Monday.

“The balance of risks has shifted,” Kashkari told the Journal in an interview conducted on Friday.

“The interesting things of the week will be the (Fed) minutes and then the benchmark revision on payrolls, both on Wednesday, and of course Powell on Friday morning,” said Lou Brien, market strategist at DRW Trading in Chicago.

Based on the fed funds futures term structure, traders see about a 78% chance of a 25 basis points easing of the policy rate, which has been in its current target range since the Fed stopped hiking rates in July 2023.

“On the one hand, Powell could just confirm what almost everyone already assumes: The Fed will cut rates next month. On the other hand, he could feel no compulsion to confirm it when there is still employment and inflation data to be released before the Sept. 18 decision,” Will Compernolle, macro strategist at FHN Financial said in a client note on Monday.

The yield on the benchmark US 10-year note fell 2.8 basis points from late Friday to 3.864%.

The two-year note yield, which typically moves in step with interest rate expectations, fell 0.4 basis points to 4.0618%.

The 30-year bond yield fell 4 basis points to 4.1114%.

The closely watched gap between yields on two- and 10-year Treasury notes, considered a gauge of growth expectations, was at negative 20 bps, a bit more inverted than Friday’s negative 17.1 bps.

The implied breakeven inflation rate on 10-year Treasury Inflation Protected Securities (TIPS) was slightly higher at 2.0712%.

The five-year TIPS breakeven inflation rate slipped to 1.9607%, suggesting that investors think annual inflation will average below the Fed’s 2% target rate for the next five years.

(Reporting by Alden Bentley; editing by Jonathan Oatis)

Gold subdued after record run as traders await cues from Fed

Gold subdued on Monday after piercing the USD 2,500 ceiling in the previous session, as investors booked profits from the record run and positioned for more cues from the US Federal Reserve and developments in the Middle East.

Spot gold was down 0.2% at USD 2,501.74 per ounce as of 01:41 p.m. ET (1741 GMT), shy of the record high of USD 2,509.65 hit on Friday. US gold futures settled 0.1% higher at USD 2,541.30.

“We will not be surprised to see some consolidation/pull-back in the gold market as traders may be disappointed if the Fed only indicates a likelihood of a 0.25 bp rate cut and does not hint at the possibility of a larger 0.50 bp cut,” David Meger, director of alternative investments and trading at High Ridge Futures, said.

Traders see a 77.5% chance of the Fed cutting interest rates by 25 basis points (bps) in September, according to the CME FedWatch Tool.

The focus will turn to minutes from the Fed’s last policy meeting on Wednesday and Chair Jerome Powell’s speech at an economic symposium in Jackson Hole on Friday.

Gold may fall into the USD 2,479-USD 2,487 range following its failure to break resistance at USD 2,507, according to Reuters technical analyst Wang Tao.

But UBS analyst Giovanni Staunovo said gold could rise further in the coming months, likely reaching USD 2,600/oz by end-year, adding all eyes will be on any indication of an imminent rate cut from Powell.

On the physical front, several Chinese banks have been given new gold import quotas from the central bank, anticipating revived demand despite record-high prices.

Gold demand is strong as geopolitical tensions, particularly from the Israel-Iran-Hamas conflict, drive safe-haven buying, Achilleas Georgolopoulos, investment analyst at forex broker XM, wrote in a note.

Silver rose 0.8% to USD 29.24 per ounce. Platinum gained 0.3% to USD 957.57, while palladium shed 2.1% to USD 930.92.

(Reporting by Anushree Mukherjee and Sherin Elizabeth Varghese in Bengaluru; Editing by Alan Barona, Barbara Lewis, and Shreya Biswas)

Oil falls by more than USD 2 a barrel on Gaza ceasefire talks and weak Chinese economy

NEW YORK – Oil prices fell by more than USD 2 a barrel Monday on the prospect of successful Middle Eastern peace talks reducing supply risks, while leading oil importer China’s economic weakness threatened to curb demand.

Brent crude futures settled at USD 77.66 a barrel, dropping USD 2.02, or 2.5%. US West Texas Intermediate crude futures settled at USD 74.37 a barrel, falling USD 2.28, or 3%.

“This market is under pressure under expectations that they’re going to continue to hammer away at the ceasefire talks,” said Bob Yawger, director of energy futures at Mizuho in New York.

US Secretary of State Antony Blinken on Monday said the latest diplomatic push by Washington to achieve a ceasefire deal in Gaza was “probably the best, maybe the last opportunity” and implored all stakeholders to get the agreement over the finish line.

Israeli Prime Minister Benjamin Netanyahu’s office said the he “reiterated Israel’s commitment to the latest American proposal regarding the release of our hostages – taking into account Israel’s security needs.”

“Much of the past week’s selling across the energy complex has represented a reduction in Mideast risk premium,” said Jim Ritterbusch, of Ritterbusch and Associates in Florida.

China’s economic problems also pressured oil prices, with data last week showing new home prices falling at the fastest pace in nine years. Chinese refineries sharply cut crude processing rates last month in response to weak fuel demand.

Both crude benchmarks fell nearly 2% on Friday as investors tempered their Chinese demand growth expectations, but ended the week largely unchanged after US data showed inflation was moderating despite robust retail spending.

“Persistent concerns about slow demand in China led to a sell-off,” said Hiroyuki Kikukawa, president of NS Trading, adding that the approaching end of peak driving season in the United States was another factor weighing on prices.

However, supply risks from continued tensions in the Middle East and escalation of the Russian-Ukraine war are underpinning the market, he said.

Energy investors also awaited clues on the US Federal Reserve’s next interest rates decision.

A slim majority of economists polled by Reuters said they expected that the Fed would cut interest rates by 25 basis points at each of the remaining three meetings this year, one more reduction than predicted last month, and that a recession was unlikely.

Rate cuts could stir economic activity in the world’s top oil-consuming country.

(Reporting by Laila Kearney in New York, Paul Carsten and Alex Lawler in London, Yuka Obayashi in Tokyo, and Colleen Howe in Beijing; Editing by David Goodman, Shounak Dasgupta, Jonathan Oatis, and Barbara Lewis)

Asia shares underpinned, dollar undermined by dovish Fed wagers

SYDNEY – Asian stocks edged up and the dollar slid on Monday after global equities enjoyed their best week in nine months on expectations the US economy would dodge a recession and cooling inflation would kick off a cycle of interest rate cuts.

The prospect of lower borrowing costs saw gold clear USD 2,500 an ounce for the first time and the dollar dip against the euro, while the yen made a sudden lunge higher that weighed on the Nikkei.

Federal Reserve members Mary Daly and Austan Goolsbee were out over the weekend to flag the possibility of easing in September, while minutes of the last policy meeting due this week should underline the dovish outlook.

Fed Chair Jerome Powell speaks in Jackson Hole on Friday and investors assume he will acknowledge the case for a cut.

“Although it may be too early to declare victory – and central bankers will certainly be prudent to avoid this in their official rhetoric – the inflation scare that had dominated the policy debate since prices started to soar during the pandemic has now largely vanished,” said Barclays economist Christian Keller.

“Inflation may not be quite at the 2% target yet, but it is close and going in the right direction.”

Futures are fully priced for a quarter-point move, and imply a 25% chance of 50 basis points with much depending on what the next payrolls report shows.

Analysts at Goldman Sachs cautioned that annual benchmark revisions to the jobs series are due on Wednesday which could see a large downward revision of between 600,000 and one million positions, though this would likely overstate the weakness of the labor market.

For now, the expectation of a softer-than-soft landing for the US economy has S&P 500 futures ESc1 up 0.2% and Nasdaq futures ahead by 0.3%, on top of last week’s gains.

EUROSTOXX 50 futures added 0.2% and FTSE futures eased 0.1%.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 1.0%, having rallied 2.8% last week.

Japan’s Nikkei fell 1.2% as the yen rose, though that followed a near 9% bounce last week. Chinese blue chips firmed 0.4%.

The Fed is hardly alone in contemplating looser policy, with Sweden’s central bank expected to cut rates this week, and possibly by an outsized 50 basis points.

In currency markets, the dollar lapsed 1.0% to 146.20 yen, and further away from last week’s top of 149.40. The euro firmed to USD 1.1030, just below last week’s peak of USD 1.1047.

“The overall Fed message this week is likely to reassure market participants looking for confirmation that policy rate cuts are now imminent,” said Jonas Goltermann, deputy chief markets economist at Capital Economics.

“As such, the greenback may well remain under pressure in the near term, although given the extent to which Fed easing is already discounted, we doubt there is that much further dollar weakness in store.”

A softer dollar combined with lower bond yields to help gold hold at USD 2,500 an ounce, and near an all-time peak of USD 2,509.69.

Oil prices dipped again as concerns about Chinese demand continued to weigh on sentiment.

Brent fell 11 cents to USD 79.57 a barrel, while US crude lost 20 cents to USD 76.45 per barrel.

(Reporting by Wayne Cole; Editing by Christopher Cushing)

China’s coal output rises as share of electricity slips: Russell

LAUNCESTON, Australia – China’s production of coal is rising while its share of electricity generation is declining, a seeming contradiction that will likely result in lower import volumes and lower prices.

Coal output rose 2.8% in July from the same month a year earlier, hitting 390.37 million metric tons, according to data released on Aug. 15 by the National Bureau of Statistics.

July’s output was down from June’s 405.38 million tons, which was the strongest month so far this year. July was also the third-highest monthly production so far in 2024 and output has been trending higher since April.

The rising availability of coal in the world’s biggest producer, importer, and consumer of the fuel hasn’t translated into an increased share of the total electricity generation, the primary use for the fuel.

Instead, China’s coal-fired power is losing market share to cleaner alternatives, a trend likely to continue, given the ongoing rapid installation of solar, and to a lesser extent, wind capacity.

China’s thermal power generation dropped in July for a third month on a year-earlier basis, despite rising overall power consumption.

Thermal power output, which is largely coal-fired with only a small amount of natural gas generation, fell 4.9% in July from the same month in 2023 to 574.9 billion kilowatt-hours (kWh).

Total generation rose 2.5% to 883.1 billion kWh, with hydropower output jumping 36.2% to 166.4 billion kWh.

China is experiencing a hotter-than-usual summer, which has boosted electricity demand for cooling.

Hydropower is increasing off a low base in 2023, when output was affected by low rainfall.

Other clean energy generation is also grabbing a higher share, with solar up 16.4% in July and nuclear increasing 4.3%.

China has ramped up installations of renewable energy, with 102 gigawatts (GW) of capacity being added in the first half of 2024, taking total capacity to more than 700 GW.

About 26 GW of wind capacity was added in the first six months of 2024, with the combined wind and solar additions being almost seven times the 18.3 GW of new coal-fired generation.

MARKET DYNAMICS

The recovery in hydropower and the rapid rollout of solar, coupled with rising coal production, are likely to alter the dynamics of the thermal coal market in China.

Domestic prices have started to decline, with the benchmark price of thermal coal at Quinhuangdao, as assessed by consultants SteelHome, slipping to end at 835 yuan ($116.55) a ton on Aug. 16.

It has trended lower since its most recent peak of 885 yuan a ton on May 28, and has dropped 11.2% since the peak so far in 2024 of 940 yuan on Feb. 27.

The lower domestic price has meant that thermal coal imported from Indonesia and Australia, the world’s two biggest exporters of the fuel and the top suppliers to China, has also had to adjust through lower prices.

Indonesian coal with an energy content of 4,200 kilocalories per kilogram (kcal/kg) IDIDX42GRW1=ARG, as assessed by commodity price reporting agency Argus, ended at $51.18 a ton in the week to Aug. 16.

This was the lowest in 11 months and the price has dropped 12% since its high so far this year of $58.17 a ton in the week to March 8.

Australian coal with an energy content of 5,500 kcal/kg API5IDXWKY=ARG finished at $86.78 a ton in the seven days to Aug. 16, down 10.2% from its peak so far in 2024 of $96.66 in the week to March 1.

The softer seaborne coal prices have helped keep import volumes strong so far in 2024, with official data showing imports of all grades of coal rising 13.3% in the first seven months of the year to 295.78 million tons.

But data from commodity analysts Kpler suggests that seaborne imports of thermal coal are starting to ease back.

Kpler assessed July seaborne thermal coal arrivals at 28.56 million tons, down from 29.38 million in June and 30.67 million in May.

For August, it’s possible that thermal coal imports will drop for a third month, with Kpler estimating arrivals of 28.26 million tons.

With domestic coal output recovering and prices easing, its likely that seaborne cargoes will have to decline in price to remain competitive.

The opinions expressed here are those of the author, a columnist for Reuters.

(By Clyde Russell; Editing by Christopher Cushing)

Dollar falls on bets for dovish Fed

SINGAPORE – The US dollar declined broadly on Monday and slid against the yen in particular as investors bet on a dovish tone emerging in the Federal Reserve’s July policy meeting minutes and Chair Jerome Powell’s upcoming speech at Jackson Hole.

The minutes, due on Wednesday, and Powell’s speech on Friday are likely to be the main drivers of currency movement for the week, which will also see inflation data from Canada and Japan alongside Purchasing Managers’ Index readings across the US, euro zone, and UK.

Against the yen, the greenback fell more than 0.8% to 146.37, retreating from a two-week high of 149.40 yen hit last week, though analysts said the sharp move lower was largely due to broad dollar weakness.

Bank of Japan (BOJ) Governor Kazuo Ueda is set to appear in parliament on Friday, where he is expected to discuss the central bank’s decision last month to raise interest rates.

The BOJ’s hawkish tilt last month contributed to the early August market turbulence in the wake of an epic unwinding of yen-funded carry trades, triggering a heavy selloff in risk assets and sending stock markets, including the Nikkei, crashing.

The volatility back then was compounded by a slew of softer-than-expected US economic data – in particular, a weak jobs report for July, as investors feared the world’s largest economy was headed for a recession and that the Fed was being slow in easing rates.

With those worries now moderating, the yen has since given up some of its strong gains, and Japanese investment data on Friday confirmed that investors were back to betting on the BOJ going slow on rate rises and on the yen staying cheap.

“The thing with carry trades is that it’s impossible to tell with any confidence about the size of the trades,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

“We aren’t so sure whether or not that unwind has more room to go or how much left of that unwinding (there is), but just based on the very sharp moves down in dollar/yen, I really doubt that pace will sustain going forward.”

Elsewhere, the euro last bought USD 1.1039, edging towards an over seven-month high of USD 1.10475 hit last week. Sterling rose to a one-month high of USD 1.2960 earlier in the session and was last at USD 1.2957.

Against a basket of currencies, the dollar lost 0.24% to 102.21, not far from a seven-month low of 102.15.

Traders have fully priced in a 25-basis-point rate cut from the Fed in September, with a 24.5% chance of a 50 bp move. Futures point to over 90 bps worth of easing by year-end.

“Markets will be laser-focused to what Powell has to say at the end of this week, and on that, I think it will be a great opportunity for Powell to either endorse or push back market pricing,” said CBA’s Kong.

“I think he’ll at least greenlight a rate cut at the September meeting. If anything, I think he’ll try to retain optionality because we do have some more data before the next meeting.”

The New Zealand dollar gained 0.43% to USD 0.6078, while the Australian dollar struck a one-month top of USD 0.6694, as risk sentiment picked up on expectations for a dovish Fed outcome.

The Aussie was also helped in part by the paring of bets for imminent rate cuts Down Under, after Reserve Bank of Australia Governor Michele Bullock said on Friday it was premature to be thinking about rate cuts.

(Reporting by Rae Wee; Editing by Christopher Cushing and Edwina Gibbs)

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