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Yen drops to fresh 24-year low vs U.S. dollar

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© Reuters. FILE PHOTO: An Australia dollar note is seen in this illustration photo June 1, 2017. REUTERS/Thomas White/Illustration

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By Gertrude Chavez-Dreyfuss and Samuel Indyk

NEW YORK/LONDON (Reuters) – The Japanese yen plunged against the U.S. dollar on Tuesday to its lowest since October 1998, as the Bank of Japan’s ultra-loose monetary policy was in stark contrast to an aggressive Federal Reserve determined to stamp out soaring inflation.

The yen dropped to a new 24-year low of 136.455 per dollar, extending losses which have already seen it shed more than 18% of its value versus the greenback this year.

Colin Asher, senior economist at Mizuho said yen moves appeared mainly flow-driven.

“The dollar broke through the old high at 135.60 yen and triggered stops taking it through the big figure at 136.0 and beyond,” Asher noted.

“The rationale is the same as last week and the week before and the week before: The BoJ will be the last of the G10 to hike, the Fed is accelerating the pace, and (there is) a wider yield spread,” he added.

The yen lost more ground after the BoJ on Friday dashed any expectations of a change in policy and continued to stand alone among other major central banks in its commitment to ultra-easy monetary settings.

Instead it has been ramping up bond-buying to hold 10-year yields in a targeted 0% to 0.25% range. But despite its efforts, the yield remains at the upper end of that target

Earlier in the day, Japanese Prime Minister Fumio Kishida effectively gave the green light to sell yen when he said the BoJ should maintain its ultra-loose monetary policy.

By afternoon trading, the yen was at 136.20 yen per U.S. dollar, just off the earlier 24-year low. The yen was also down 1.3% at 143.78 per euro, its lowest since June 9.

The yen has lost more than any other major currency against the greenback, as the BoJ’s dovish policy stance diverged from the general hawkishness among global policymakers.

Graphic: Falling yen- https://fingfx.thomsonreuters.com/gfx/mkt/xmvjowrmwpr/falling%20yen.JPG

In other currencies, the dollar index was little changed at 104.41, but it was supported overall by expectations of hefty rate increases at the upcoming Fed meetings.

Richmond Fed President Thomas Barkin added to the U.S. central bank’s hawkish rhetoric on Tuesday, saying that Fed Chair Jerome Powell’s guidance of a 50 or 75 basis points rate hike in July is “reasonable.”

Earlier, the dollar slipped after data showed U.S. existing home sales tumbled to a two-year low in May as prices jumped to a record high and mortgage rates increased further, pushing out entry-level buyers from the market.

The euro, on the other hand, was firmer at $1.0529, up 0.2%. It rose after European Central Bank chief economist Philip Lane said the ECB will raise rates by 25 basis points at its July meeting, but the size of its September hike is still to be decided, suggesting a larger 50 basis points hike is possible.

Sterling also rose against the dollar, up 0.4% at $1.2290 on hawkish comments from Bank of England policymakers.

BoE chief economist Huw Pill said on Tuesday the central bank would need to raise rates further to tackle surging inflation.

========================================================

Currency bid prices at 3:02PM (1902 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 104.4000 104.4400 -0.02% 9.133% +104.5300 +103.9300

Euro/Dollar $1.0533 $1.0510 +0.22% -7.34% +$1.0583 +$1.0509

Dollar/Yen 136.5450 135.0600 +1.10% +18.61% +136.6150 +134.9400

Euro/Yen 143.83 141.97 +1.31% +10.35% +143.8900 +141.9600

Dollar/Swiss 0.9662 0.9677 -0.14% +5.94% +0.9683 +0.9632

Sterling/Dollar $1.2279 $1.2248 +0.26% -9.20% +$1.2324 +$1.2243

Dollar/Canadian 1.2920 1.2981 -0.47% +2.18% +1.2985 +1.2907

Aussie/Dollar $0.6976 $0.6954 +0.31% -4.04% +$0.6994 +$0.6935

Euro/Swiss 1.0177 1.0168 +0.09% -1.85% +1.0216 +1.0167

Euro/Sterling 0.8578 0.8579 -0.01% +2.10% +0.8610 +0.8569

NZ $0.6335 $0.6330 +0.09% -7.43% +$0.6363 +$0.6318

Dollar/Dollar

Dollar/Norway 9.8480 9.8920 -0.35% +11.89% +9.9015 +9.7770

Euro/Norway 10.3764 10.4119 -0.34% +3.63% +10.4236 +10.3170

Dollar/Sweden 10.0960 10.1052 +0.05% +11.96% +10.1297 +10.0380

Euro/Sweden 10.6355 10.6304 +0.05% +3.92% +10.6591 +10.6180

Economy

Futures rise as easing China COVID curbs lift travel, leisure stocks

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© Reuters. A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 22, 2022. REUTERS/Brendan McDermid

By Shreyashi Sanyal

(Reuters) – Travel and leisure shares propped up U.S. stock index futures after China relaxed some COVID-19 quarantine requirements for international travelers, raising hopes of a revival in global growth.

Airlines, cruises, casinos and hotels were among the gainers in premarket trading after China’s slashing of the quarantine time for inbound travelers by half boosted hopes of a big jump in international travel and spending.

Shares of Walt Disney (NYSE:DIS) Inc rose 2.5% to top the list of gainers on the Dow Jones Industrial Average, after the company’s Shanghai Disney Resort said it would reopen the Disneyland theme park on June 30 after being shut for more than three months.

Spirit Airlines (NYSE:SAVE) and American Airlines (NASDAQ:AAL) Group Inc were the biggest gainers in the sector, rising 4% and 2% respectively.

Melco Resorts jumped 10% and led the rise in the casino sector, closely followed by Wynn Resorts (NASDAQ:WYNN), MGM Resorts (NYSE:MGM) International.

Wall Street’s main indexes started the week on soft footing after worries of surging inflation and an aggressive Federal Reserve dominated sentiment amid few market moving catalysts till the start of earnings season in two weeks.

Investors are now looking at data to determine whether the economy can withstand large interest rate hikes by the U.S. central bank to stamp out inflation.

A survey from the Conference Board is expected to show its consumer confidence index slipped to a reading of 100.4 in June, from 106.4 in May, at 10 a.m. ET.

The S&P 500 and the Nasdaq are set to post losses in June and are on course to log two straight quarterly declines for the first time since 2015.

At 6:49 a.m. ET, Dow e-minis were up 175 points, or 0.56%, S&P 500 e-minis were up 20 points, or 0.51%, and Nasdaq 100 e-minis were up 52.25 points, or 0.43%.

Nike Inc (NYSE:NKE) shed 2.8% as it forecast first-quarter revenue below estimates on expectations of more discounts and pandemic-related disruptions in China, its most profitable market.

Occidental Petroleum Corp (NYSE:OXY) climbed 3.1% after top investor Warren Buffett raised stake in the shale producer.

China ADRs also rose on Beijing easing its COVID curbs, with e-commerce firms Alibaba (NYSE:BABA).com, JD (NASDAQ:JD).com and Pinduoduo (NASDAQ:PDD) up between 1.2% and 1.4%

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Economy

Euro below $1.06 as Lagarde keeps July policy options open

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© Reuters. A shopper pays with a ten Euro bank note at a local market in Nice, France, June 7, 2022. REUTERS/Eric Gaillard

By Saikat Chatterjee

LONDON (Reuters) – The Aussie and the Canadian dollar climbed on Tuesday on firmer oil prices while the euro held below $1.06 as European Central Bank (ECB) President Christine Lagarde offered no fresh insight on the central bank’s policy outlook.

The ECB is widely expected to follow its global peers by raising interest rates in July to check soaring inflation though economists are divided on the magnitude of the rate hike to protect a struggling economic recovery due to high oil prices.

Oil prices are up 10% in barely a week on supply constraint concerns with Brent crude holding above $117, pushing the Canadian dollar and the Australian dollar up 0.3% and 0.4% respectively. [O/R]

“Oil is helping the Norwegian crown and the Canadian dollar to outperform and the euro is again running into resistance at the 1.06 level,” said Kenneth Broux, an FX strategist at Societe Generale (OTC:SCGLY) in London.

The euro held below $1.06 after the ECB’s Lagarde said the central bank would move gradually but with the option to act decisively on any deterioration in medium-term inflation, especially if there were signs of a de-anchoring of inflation expectations.

Money markets are pricing in about 238 basis points (bps) of cumulative rate hikes by mid-2023 compared to around 280 bps two weeks ago.

Broader currency market moves were contained in a big week for markets in economic data terms. German inflation figures are due on Wednesday, French data on Thursday and euro zone numbers on Friday.

At the other end of the dial, higher oil prices caused the partially convertible Indian rupee to open at a record low, and fall further to 78.67 per dollar.

The U.S. dollar index struck a two-decade high of 105.79 this month and was last steady at 103.93.

Elsewhere, the offshore Chinese yuan moved higher after China reduced COVID quarantine for international travellers.

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Economy

China’s economy recovering but foundation not solid, premier says

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© Reuters. FILE PHOTO: Chinese Premier Li Keqiang is seen on a screen as he attends a news conference via video link after the closing session of the National People’s Congress (NPC) in Beijing, China March 11, 2022. REUTERS/Ryan Woo

BEIJING (Reuters) -China’s economy has recovered to some extent, but its foundation is not solid, state media on Tuesday quoted Premier Li Keqiang as saying.

China will strive to drive the economy back onto a normal track and bring down the jobless rate as soon as possible, Li was quoted as saying.

“Currently, the implementation of the policy package to stabilise the economy is accelerating and taking effect. The economy has recovered on the whole, but the foundation is not yet solid,” Li was quoted as saying.

“The task of stabilising employment remains arduous.”

China’s economy showed signs of recovery in May after slumping the previous month as industrial production revived, but consumption remained weak and underlined the challenge for policymakers amid the persistent drag from strict COVID-19 curbs.

China’s nationwide survey-based jobless rate fell to 5.9% in May from 6.1% in April, still above the government’s 2022 target of below 5.5%.

In particular, the surveyed jobless rate in 31 major cities picked up to 6.9%, the highest on record. Some economists expect employment to worsen before it gets better, with a record number of graduates entering the workforce in summer.

Li vowed to achieve reasonable economic growth in the second quarter, although some private-sector economists expect the economy to shrink in the April-June quarter from a year earlier, compared with the first quarter’s 4.8% growth.

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