Forex

Janet Yellen in South Korea: “supporting friends” and reducing dependence on China and Russia

Published

2 years ago

July 20, 2022

U.S. Treasury Secretary Janet Yellen said Monday in Seoul that the United States is going to prevent countries with “dictatorial policies,” such as China, from gaining dominance over certain resources and products and advocated stronger economic cooperation with South Korea.

During a visit to South Korea, U.S. Treasury Secretary Janet Yellen said the United States wants to end its unwarranted dependence on rare-earth metals, solar panels and other goods from China.

She explained that such a dependence would be dangerous if Beijing decided to stop supplying. She also noted that she is pushing for more trade ties with South Korea.

According to the minister, this would increase the sustainability of supply chains, and prevent possible manipulation by geopolitical rivals and security threats.

Janet Yellen said the U.S. is diversifying its supply chains so that it only relies on reliable partners. This will help combat inflation and China’s trade practices, which she called “unfair.

Yellen noted that South Korea has enormous advantages regarding resources, technology and capabilities, and that its companies are investing in the U.S. She also attributed an important role to semiconductor manufacturing.

The Minister recalled that earlier Beijing had stopped supplies to Japan and had tried to put pressure on Australia and Lithuania. The USA didn’t approve of such behavior.

At the same time, Janet Yellen admitted that China listened to the USA’s concerns in other areas.

She said that the United States had real concerns about China, but urged it not to create a picture of escalating hostilities with China.

U.S. Treasury Secretary Yellen threatened violators of the “world economic order

U.S. Treasury Secretary Janet Yellen said during a speech in Seoul that Russia is using economic integration “as a weapon” and threatened harsh consequences for those countries that violate the global economic order.

Yellen indicated that Washington was going to expand trade ties with South Korea and other reliable allies to improve supply security and avoid “possible manipulation by geopolitical rivals.” However, she did not specify which rivals she was referring to.

Before that, the U.S. threatened China with consequences because of possible circumvention of sanctions against Russia or provision of arms to it.

– We have publicly voiced the message that providing arms or any assistance from China to circumvent Russia’s unprecedented sanctions, export controls, or other financial measures imposed against Moscow would be very costly. Not just on the U.S. side, we are working with dozens of countries around the world,” said Ned Price, the head of the State Department press office.

South Korea is Ready to Participate in Measures to Restrict Russian Oil Prices

Chu Gen-ho, South Korea’s deputy prime minister for economics and part-time minister of strategy and finance, said in a meeting with U.S. Treasury Secretary Janet Yellen on Monday that the country is ready to join measures to curb the price of Russian oil, Renhap news agency reported.

Yellen is visiting Seoul on July 19-20. She also met with President Yoon Seok-El and is scheduled to meet with Bank of Korea Governor Lee Chang-Yong.

During her meeting with Chu Gen-ho, she reiterated the need for a price cap on Russian oil and asked South Korea to get involved.

“We are sympathetic to the goal of imposing (a restriction on the price of Russian oil – ed) and are ready to join it. The oil price restriction should be effectively designed to contribute to the stability of international oil prices and consumer prices,” Chu Gen Ho responded.

The head of the U.S. Treasury Department thanked the South Korean side for its understanding and looked forward to Seoul’s participation in developing a concrete cap system.

Also, the two sides agreed on the importance of strategic economic cooperation between South Korea and the United States in a difficult environment, including amid supply chain disruptions, soaring inflation and commodity prices due to the Ukraine crisis, and financial market volatility. Cooperation in clean energy, climate change, and health care was also discussed.

Forex

US dollar gains as US election draws nearer – UBS

Published

15 hours ago

October 17, 2024

Investing.com – The US dollar has gained more ground as the US presidential election draws near, UBS noted, with the market seeing rising odds of a win for Republican candidate Donald Trump.

A new USD-positive over the past week has been media reports of somewhat better outlook for Donald Trump in the latest polls, as outcomes that allow for policies such as more aggressive tariffs are viewed as more USD positive.

“Higher odds of a Trump presidency are likely to be associated with a stronger USD near term,” said analysts at UBS, in a note dated Oct. 16.

Where does this leave us now with our USD views?

Our expected ranges between Sep–Dec 2024 incorporated the possibility of a material USD rebound between now and year end, even if our year-end forecasts see a modestly lower USD from current levels.

Last week, with an eye to our year end forecast, we entered a long call reverse knockout, but we are not willing to implement a similar trade yet for and .

The spot is still far enough from our range extremes and high JPY implied volatility and negative carry make long JPY positions unattractive so close to US elections.

Turning to this week’s ECB meeting, the market is very confident that another 25bp rate cut will be delivered and we do not have a strong reason to disagree.

Market expectations are very muted for any form of surprise, and risk reversal skews bid again for EUR puts point to a market that is already primed for the risk of EUR softness.

With market pricing in line with our economists’ terminal rate expectations, we see EUR/USD as more exposed to US developments near-term, leaving us reluctant to fade recent softness on ECB reasons alone.

At 06:30 ET (10:30 GMT), EUR/USD rose 0.1% to 1.0894, USD/JPY gained 0.1% to 149.34 and AUD/USD fell 0.2% to 0.6685.

Forex

Sell euro rallies around the ECB meeting – Citi

Published

15 hours ago

October 17, 2024

Investing.com – The European Central Bank holds its latest policy-setting meeting later this week, and Citigroup advises selling any rallies in the euro around this key event.

Markets are pricing in around 49 basis points of easing over the remaining two ECB meetings this year, which could limit dovish repricing around Thursday’s event, according to analysts at Citi, in a note dated Oct. 15.

“We see scope for a tactical bounce in EUR around this Thursday’s ECB meeting, which we like fading into November as US election risk premium materializes,” Citi said.

That said, “we like fading any subsequent rallies in EUR as we approach November and US election risk premium gets better priced.”

There is some evidence of this unfolding, the bank added, as EUR looks undervalued on its short-term fair value model and as Citi’s FX Positioning data suggests adding to EUR shorts.

“But our broader FX election basket still screens as undervalued relative to Trump betting markets, and we remain short EURUSD in both spot and options,” says Citi. “We would look to sell any retest of the 1.10 double top neckline — any break above there risks a move towards our adjusted stop of 1.1050, but if that resistance holds, we have higher conviction of a move towards our (and the double top) target of 1.08, with potential overshoot towards 1.07.”

At 05:25 ET (09:25 GMT), traded largely flat at 1.0892, almost 2% lower over the last month.

Forex

Dollar gains on trimmed rate expectations; sterling weakens post inflation

Published

15 hours ago

October 17, 2024

Investing.com – The U.S. dollar edged higher Wednesday, trading near two-month peaks on expectations of modest rate cuts from the Federal Reserve this year, while sterling slumped after benign inflation data.

At 04:15 ET (08:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 103.180, remaining close to Monday’s two-month peak.

Dollar helped by trimmed rate cut expectations

Recent data indicating a resilient economy coupled with slightly hotter-than-expected inflation in September have led market participants to trim bets for an aggressive U.S. rate reduction.

Adding to these expectations were comments from Atlanta Federal Reserve President on Tuesday, who said he had penciled in just one more interest rate reduction of 25 basis points this year when he updated his projections for last month’s U.S. central bank meeting.

Most market participants see two more cuts this year, totaling 50 bps, and traders currently lay 92% odds for a 25-basis-point cut when the Fed next decides policy on Nov. 7, with an 8% probability of no change, according to CME Group’s (NASDAQ:) FedWatch Tool.

Sterling slumps after inflation release

In Europe, slumped 0.5% to 1.3003, after data showed British inflation fell more than expected in September, paving the way for a rate cut next month.

The UK’s fell to 1.7% on an annual basis, below the forecast 1.9% and the 2.2% recorded a month earlier.

This was the first time it had fallen below the Bank of England’s 2% target since April 2021, and added to data seen earlier in the week that showed British pay grew at its slowest pace in more than two years.

“The data is unequivocally dovish for the Bank of England and paves the way for rate cuts at the two remaining meetings this year (November and December),” said analysts at ING, in a note.

“Given the comments by Governor Andrew Bailey earlier this month suggesting the BoE could increase the pace of easing, markets may be tempted to price in some chance of a 50bp rate cut in November.”

traded 0.1% lower to 1.0882, ahead of Thursday’s policy-setting meeting by the European Central Bank.

The has already lowered rates twice this year and a cut to the 3.5% deposit rate this week is almost fully priced in by financial markets.

“EUR/USD is predominantly driven by external factors. The substantial drop in oil prices has narrowed the scope for a further drop based on market factors, but we continue to suspect that pre-US election positioning should favor a weaker EUR/USD,” said ING.

Yuan nurses weekly losses

fell slightly to 7.1179, with the yuan nursing losses this week as sentiment soured over the country’s plans for more stimulus.

China’s Ministry of Finance said it will enact a slew of fiscal measures to boost growth, but did not specify the timing or size of the planned measures, spurring uncertainty over its effectiveness.

rose 0.2% to 149.43, with the pair climbing closer to the 150 resistance level.

data due later this week is expected to offer more cues on the Bank of Japan’s plans to hike rates further.