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Economy

Dollar edges lower, Australian dollar calms after inflation jump

LONDON (Reuters) – The U.S. dollar slipped as European markets opened on Wednesday, while the Australian dollar pared gains, having jumped following surprisingly strong inflation data which raised the possibility of sooner-than-planned rate hikes.

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Dollar edges lower, Australian dollar calms after inflation jump
© Reuters. FILE PHOTO: A Japan Yen note is seen in this illustration photo taken June 1, 2017. REUTERS/Thomas White/Illustration

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LONDON (Reuters) – The U.S. dollar slipped as European markets opened on Wednesday, while the Australian dollar pared gains, having jumped following surprisingly strong inflation data which raised the possibility of sooner-than-planned rate hikes.

Currency markets have been generally quiet in recent sessions as investors wait for the U.S. Federal Reserve meeting next week.

Investors are also looking to policy announcements this week from the European, Canadian and Japanese central banks for clues on the outlook for rates amid a backdrop of supply-side driven global inflation pressures.

At 0802 GMT, the was down less than 0.1% at 93.877.

Short-term U.S. Treasury yields spiked overnight as investors bet that inflation would bring forward interest rate rises.

Standard Chartered (OTC:) FX analysts wrote in a client note that they expect currency market risk sentiment to be limited until the Fed next week, where “hawkish risks are still under-priced”.

The Australian dollar was up 0.2% at $0.7513, having reached as high as $0.7536 overnight after data showed that Australian core inflation sped to a six-year high in September, surprising the market. The data prompted a spike in short-term yields.

The Reserve Bank of Australia meets on Tuesday next week and market pricing is at odds with RBA policymakers’ insistence that there will be no rate hikes before 2024.

“The Reserve Bank of Australia (RBA) might be forced into action after all,” wrote Commerzbank (DE:) analyst Antje Praefcke in a note to clients, referring to rising 3-year yields.

“The market is likely to increasingly assume that the RBA will have to rethink its expansionary monetary policy further due to economic and inflationary developments, which is likely to principally support AUD.”

The U.S. dollar was down around 0.4% against Japan’s yen, with the pair changing hands at 113.745 – still within recent ranges and close to the four-year high of 114.695 the dollar touched against the yen one week ago.

“Short-JPY positions have clearly become a very popular trade among speculators… but it still seems hard to see the yen finding  sustained support at the moment,” wrote ING FX strategists in a client note.

“115.00 in now appears a matter of when, rather than if.”

The Bank of Japan meets on Thursday and is widely expected to downgrade its economic assessment, with markets betting on no rate hike in the foreseeable future.

The Canadian dollar was little changed at $1.2402 ahead of Canada’s central bank policy announcement later in the session.

The central bank is expected to raise its inflation forecast and to largely end stimulus from its pandemic-era bond buying program, starting a countdown of sorts to the first interest rate hike since October 2018

The euro was up around 0.1% at $1.1605. The European Central Bank, which meets on Thursday, is expected to take a dovish stance.

The British pound was down 0.2% against the euro at 84.39 pence per euro. The UK’s budget forecasts will be unveiled later in the session but are not expected to impact the pound.

In cryptocurrencies, bitcoin was down 2% at around $59,114, having been knocked off the all-time high of $67,016.50 it reached last week.

Economy

Mexican Workers Abroad Keep Sending Record Cash Back Home

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Mexican Workers Abroad Keep Sending Record Cash Back Home
Mexican Workers Abroad Keep Sending Record Cash Back Home

(Bloomberg) — Mexico’s remittances reached another record in October, powered by the U.S. economic recovery and a weaker peso that encourages workers abroad to send money back home to support their families. 

Latin America’s second-largest economy posted $4.82 billion in money sent by Mexicans abroad in October, the biggest inflow on record and a 34% gain compared to a year ago, the central bank said on its website Wednesday. The result topped all analyst estimates in a Bloomberg survey, which had $4.58 billion as the average forecast. 

The number of individual transactions grew to over 12.5 million, up from 11.6 million in September, according to the central bank.

Alberto Ramos, an economist at Goldman Sachs Group Inc (NYSE:)., wrote in a note that generous wages in the U.S. combined with a contraction of economic activity in Mexico and a competitive exchange rate led to the record amount.

“Solid workers’ remittance flows have been adding support to the current account and to private consumption, particularly for low-income families, who have a high propensity to consume and are the overwhelming recipients of such transfers,” he wrote. “The moderating activity and income growth profile in the U.S. should lead to a moderation in remittance flows to Mexico in coming quarters.”

Mexico’s President Andres Manuel Lopez Obrador has for months lauded the contribution of workers abroad, stating earlier this month that Mexico was on track to reach a total of $50 billion in remittances by the year’s end. Remittances to Mexico surpassed $42 billion so far in the first ten months of the year.

©2021 Bloomberg L.P.

 

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Economy

U.S. CFPB says considering guidance aimed at curbing banks’ reliance on overdraft, non-sufficient fees revenue

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U.S. CFPB says considering guidance aimed at curbing banks' reliance on overdraft, non-sufficient fees revenue
© Reuters. FILE PHOTO: The seal of the Consumer Financial Protection Bureau (CFPB) is seen at their headquarters in Washington, U.S., May 14, 2021. REUTERS/Andrew Kelly/File Photo

WASHINGTON (Reuters) – The head of the U.S. Consumer Financial Protection Bureau (CFPB) told reporters on Wednesday that he has asked staff to consider additional agency guidance aimed at curbing banks’ reliance on overdraft, non-sufficient fees.

“The [consumer watchdog] is considering a range of regulatory interventions to help restore meaningful competition in this part of the checking market, rather than allowing large institutions to rely on overdraft and non-sufficient revenue fees forever.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Economy

Schumer sees “good progress” in talks to avoid U.S. gov’t shutdown

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Schumer sees
© Reuters. FILE PHOTO: U.S. Senate Majority Leader Chuck Schumer (D-NY) speaks to reporters following the Senate Democrats weekly policy lunch at the U.S. Capitol in Washington, U.S., November 30, 2021. REUTERS/Elizabeth Frantz

WASHINGTON (Reuters) – U.S. Senate Majority Leader Chuck Schumer said on Wednesday that talks with his Republican counterpart Mitch McConnell to avoid a government shutdown were making “good progress,” adding that the two leaders must prevent a group of Senate Republicans from causing “total chaos” by delaying action.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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