Connect with us


Dollar Soars to Two-Decade High; Safe Haven Demand on Global Growth Fears



© Reuters

By Peter Nurse – The U.S. dollar soared to a two-decade high in early European trade Monday, with traders seeking out this safe haven amid concerns about global economic growth as well as searching for yield. 

At 2:50 AM ET (0650 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, gained 0.5% to 104.170, rising to levels not seen in 20 years after rising for a fifth week in a row last week.

The war in Ukraine and tighter lockdowns against COVID-19 in Beijing and Shanghai have created uncertainty over economic growth in Europe and Asia.

This week sees the release of Germany’s ZEW sentiment index and preliminary first quarter GDP data from the U.K., and these are likely to point to slowing growth in two of Europe’s largest economies.

Data earlier Monday from China showed the country’s export growth slowed to single digits in April, growing 3.9% in April from a year earlier, compared with the 14.7% growth reported in March. The growth was the slowest since June 2020.

By contrast, data released on Friday showed that U.S. nonfarm payrolls increased 428,000 in April, more than expected. This suggests the demand for labor remains strong, with businesses scrambling to hire enough workers to keep up with resilient consumer demand.

EUR/USD fell 0.4% to 1.0509, marginally above its recent low of 1.0469, USD/JPY rose 0.4% to 131.12, at a two-decade high, while GBP/USD fell 0.5% to 1.2277, at a new 22-month low, despite the Bank of England’s decision to lift interest rates on Thursday for the fourth meeting in a row.

“One of the big differences between the Fed and the BoE is that U.S. inflation is more domestically generated from tight labor markets and the huge fiscal stimulus seen over recent years,” said analysts at ING, in a note.

The U.S. Federal Reserve last week announced a 50 basis point hike, its largest increase since 2000, and the yield on benchmark 10-year U.S. government bonds has continued to climb ahead of Wednesday’s inflation figures on fears of an upside surprise.

Futures markets are pricing a 75% chance of a 75 bp rate rise at the Fed’s next meeting in June and more than 200 bps of tightening by year’s end.

Policy members at the European Central Bank have also started talking more openly about hiking rates, with Austrian central bank governor Robert Holzmann, a known hawk, stating in a newspaper interview over the weekend that the central bank should raise interest rates as many as three times this year to combat inflation.

However, “given that around 90bp of ECB tightening is already priced by year-end, we do not think a further round of ECB hawkish talk is enough to provide much support to EUR/USD,” added ING.

“Instead, the Fed story and weak growth in Europe and China are likely to see EUR/USD trading on the soft side of a 1.0500-1.0650 range, with risks skewed towards a break down to the 2016 lows of 1.0350.”

Elsewhere, USD/CNY rose 0.8% to 6.7200, at a fresh 18-month low after the country’s trade data and with Covid-19 lockdowns remaining in place, while AUD/USD fell 1.1% to 0.7000, just off January’s low.




U.S. considering move to block Russian debt payments -Treasury



© Reuters. FILE PHOTO: Russian Rouble coins are seen in front of displayed U.S. Dollar banknote in this illustration taken, February 24, 2022. REUTERS/Dado Ruvic/Illustration

By Steve Holland

WASHINGTON (Reuters) -The United States is considering blocking Russia’s ability to pay its U.S. bondholders by allowing a key waiver to expire next week, a U.S. administration official said on Tuesday, which could put Moscow closer to the brink of default.

Russia has so far managed to make its international bond payments despite Western sanctions, which have complicated the process of paying. The country has $40 billion of international bonds and last month made a late U-turn by making overdue bond payments to avoid default.

Russia has not defaulted on its external debt since the aftermath of its 1917 revolution and was rated investment grade up until its Feb. 24 invasion of Ukraine.

Now Russia has a looming May 25 deadline when a U.S. license allowing it to make payments is due to expire.

Bloomberg News reported earlier on Tuesday that the Biden administration is poised to allow the waiver to expire as scheduled.

“It’s under consideration but I don’t have a decision to preview at this time,” the official told Reuters. “We are looking at all options to increase pressure on (Russian President Vladimir) Putin.”

Bloomberg said the administration has decided against extending the waiver as a way to maintain financial pressure on Moscow.

Western sanctions introduced following Russia’s invasion of Ukraine ban transactions with Russia’s finance ministry, central bank or national wealth fund.

The temporary general license 9A, issued by the Treasury Department’s Office of Foreign Assets Control on March 2, had made an exception for the purposes of “the receipt of interest, dividend, or maturity payments in connection with debt or equity.”

That license has allowed Moscow to keep paying investors and avert default on its government debt, and allowed U.S. investors to continue to collect coupon payments.

It expires on May 25, after which Russia will still have almost $2 billion worth of external sovereign bond payments to make before the end of the year.

Some market participants had speculated that the Biden administration may extend the waiver, so as not to punish U.S. bondholders.

The U.S. Treasury Department did not immediately respond to a request for comment.

Continue Reading


Analysis: Food inflation pain puts emerging markets between rock and hard place




© Reuters. FILE PHOTO: Seref Geyik, a 53-year old seller, waits for customers at his stall at a local market in Fatih district in Istanbul, Turkey January 13, 2021. REUTERS/Murad Sezer


By Karin Strohecker, Ezgi Erkoyun and Sarah El Safty

LONDON/ISTANBUL/CAIRO (Reuters) – Like for millions of people in developing and emerging market countries around the world, shopping for staple foods has turned from a necessity into a luxury for Selcuk Gemici.

The 49-year-old, who works in an auto repair shop in Turkey’s largest city Istanbul and lives with his wife and two children in his father’s house, says fresh produce is often out of reach with his family living on pasta, bulgur and beans.

“Everything became so expensive, we cannot buy and eat what we want – we only buy what we can afford now,” said Gemici. “My children are not properly nourished.”

Global food prices have climbed for two years, fuelled by COVID-19 disruptions and weather woes. Supply shocks to grains and oils from Russia’s invasion of Ukraine saw them hit an all-time record in February, and again in March.

Inflation rates have soared, with energy price rises adding to pressure. Turkey or Argentina with annual inflation of 70% and around 60% might be outliers, but readings are into double-digits in countries from Brazil to Hungary. It makes U.S. inflation at 8.3% look modest in comparison.

Rising food prices are a hot topic in emerging market, raising the risk of civil unrest with echoes of the Arab spring and putting policy makers in a bind between stepping in with fiscal support to ease the pain on their population or preserve government finances.

Food is the single largest category in inflation baskets – the selection of goods used to calculate the cost of living – in many developing nations, accounting for around half in countries like India or Pakistan and on average for some 40% in low-income countries, International Monetary Fund data shows.

Food producers have become more protective: India on the weekend announcing a ban on wheat exports while Indonesia halted exports of palm oil to control soaring prices at home in late April.

Soaring wheat and rising food prices fuel inflation

And with the war in Ukraine not only disrupting food but also fertilizer supplies, food inflation could be more longer-lasting, Marcelo Carvalho, head of global emerging markets research at BNP Paribas (OTC:BNPQY) told Reuters.

“This is here to stay,” said Carvalho. “Food is very salient – when there is a change in food prices, the perception about inflation is magnified – that feeds into inflation expectations that are more easily unanchored.”


For Um Ibrahim, a 60-year-old widow and street vendor selling headscarves in front of a mosque in the middle-class district of Madinet Nasr in Egypt’s capital Cairo, feeding her four children has become much harder.

“All prices rose – clothes, vegetables, poultry, eggs – what am I going do?” she asked, laying out her ware on a cloth.

Egypt, one of the world’s biggest wheat importers, has seen inflation soar more than 13% in April, and is expected to hike interest rates again at a meeting this week after it devalued the currency by 14% in mid-March.

Emerging market policy makers, having jacked up interest rates by hundreds of basis points cumulatively since 2020 to curb price pressures and ensure a bond premium to rising U.S. yields for investors, have to perform a balancing act between taming inflation and keeping fragile growth alive at a time of rising global interest rates.

Emerging economies may expand just 4.6% this year, the World Bank forecasts, compared with an earlier 6.3% prediction.

Emerging market inflation

Polina Kurdyavko, head of EM debt at BlueBay Asset Management, says governments have three options: Provide bigger subsidies to consumers or bite the bullet that is to let prices rise and face inflation and social unrest, or do something in between.

“There are no easy solutions,” Kurdyavko said.

A raft of countries have introduced measures: Turkey has raised the minimum wage by 50% in December to address a currency crash and inflation spike. Chile will up minimum pay this year as well.

South Africa’s government is debating whether to increase a social relief grant launched in 2020 and make the scheme permanent.

Economists fear emerging economies are facing a fresh wave of unrest on the back of the latest increases in food prices. North Africa, where food inflation was a contributor to the Arab Spring revolts a decade ago, looked particularly vulnerable, said Beata Javorcic, chief economist at the European Bank for Reconstruction and Development.

“The irony of this war is that while everybody expected Russia to have a crisis, it is actually North African countries that are closer to having an emergency situation due to high food prices,” she said.

But pain is expected to stretch further: Three quarters of nations expected to be at high-risk or extreme risk of civil unrest by the fourth quarter of 2022 were middle-income countries, risk consultancy Verisk (NASDAQ:VRSK) Maplecroft said last week.

Appeasing inflation pressures through spending will come at a fiscal cost that could spell trouble further down the line, said BNP’s Carvalho.

“In emerging markets, fiscal sins are forgiven but not forgotten,” he said. “Over the last couple of years, everybody felt like they have a blank cheque … in part because rates were so low. Now that interest rates are rising, it gets a bit trickier.”

Continue Reading


Dollar Up, but Falls From 20-Year High While Yuan Pauses Tumble



© Reuters.

By Gina Lee – The dollar was up on Tuesday morning in Asia as it continues its fight for a footing. The Chinese yuan found a floor from its recent drop, however, with investors reducing bets on rising U.S. interest rates leading to further gains for the U.S. currency.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.02% to 104.04 by 11:29 PM ET (3:29 AM GMT). The index is around 0.8% below Friday’s 20-year peak of 105.100.

The USD/JPY pair edged up 0.13% to 129.32.

The AUD/USD pair was up 0.39% to 0.6997 and the NZD/USD pair was up 0.26% to 0.6323.

The USD/CNY pair was down 0.23% to 6.7709 while the GBP/USD pair edged up 0.13% to 1.2334.

The dollar edged from a two-decade high in the week so far and kept losses small in early Asia trade. U.S. bond yields, on the other hand, have pulled back slightly as traders calculate that aggressive near-term interest rate hikes from the U.S. Federal Reserve will drag on long-term U.S. growth.

Across the Atlantic, the euro rose about 0.1% on the dollar to $1.0446, and the pound jumped around 1.5% from a two-year hold. The yen is holding above a two-decade low, while the riskier Australian and New Zealand dollars inched up around 0.1% and are off multi-year lows.

The Chinese yuan was steady at 6.7953 per dollar in offshore trade and looked like it was finding a base after falling more than 6% in a month. Shanghai reportedly hitting a milestone of three days of zero community transmission and the city could start easing out of its grueling lockdown. This could help offset Monday’s disappointing economic data.

Signs of more policy support are also emerging, with China cutting mortgage rates for first-home buyers over the weekend. Authorities also asked some financially healthy property developers to sell bonds, sources told Reuters on Monday.

Dollar/CNH has been a big driver of G10 currencies,” Pepperstone head of research Chris Weston told Reuters, in reference to the offshore yuan. A pause in its slide, as well as calmer market volatility, generally has paused dollar gains for now, he added.

“A lot has been priced in and we’re not getting any new news from Fed officials,” he said. “I think people are just taking some of that money off the table at the moment.”

Global interest rate expectations are also becoming more hawkish, with the gap between 10-year German and U.S. real yields narrowing by more than 30 basis points in May 2022 to date.

and central banks in the U.K. and Australia have also hiked interest rates.

The Reserve Bank of Australia also released the minutes from its latest policy meeting earlier in the day, with G-7 finance ministers and central bankers due to meet a day later.

Investors now await speeches from Fed Chairman Jerome Powell and other Fed policymakers later in the day, with Philadelphia Fed President Patrick Harker speaking a day later.

Continue Reading


World26 mins ago

Republican Budd, backed by Trump, wins North Carolina Senate nomination

2/2 © Reuters. A woman wears a t-shirt falsely claiming that former U.S. President Donald Trump won the 2020 election,...

World26 mins ago

Trump-endorsed Ted Budd wins Republican primary for North Carolina’s Senate seat

© Reuters. FILE PHOTO: U.S Representative Ted Budd speaks during a rally hosted by former U.S. President Donald Trump in...

Cryptocurrency55 mins ago

US federal judge approves of Justice Dept criminal complaint on using crypto to evade sanctions

US federal judge approves of Justice Dept criminal complaint on using crypto to evade sanctions The United States Department of...

World55 mins ago

Mariupol defenders surrender to Russia but their fate is uncertain

7/7 © Reuters. A bus carrying wounded service members of Ukrainian forces from the besieged Azovstal steel mill in Mariupol...

World55 mins ago

Polls close in North Carolina in Senate primary that tests Trump clout

2/2 © Reuters. A woman wears a t-shirt falsely claiming that former U.S. President Donald Trump won the 2020 election,...

Stock Markets1 hour ago

Dow Futures Tick Higher as Major Indices Rebound

By Oliver Gray – U.S. stock futures moved modestly higher on Tuesday evening after major benchmark indices rebounded from...

World1 hour ago

U.S. Justice Dept requests Jan 6 committee transcripts -panel chair

© Reuters. FILE PHOTO: A mob of supporters of U.S. President Donald Trump fight with members of law enforcement at...

Economy1 hour ago

Fed’s Evans backs ‘front-loaded’ rate hikes, then measured pace

© Reuters. FILE PHOTO: Chicago Federal Reserve Bank President Charles Evans looks on during the Global Interdependence Center Members Delegation...

Cryptocurrency1 hour ago

BIFI gains 100%+ after Beefy Finance adds new vaults and stablecoin liquidity pools

BIFI gains 100%+ after Beefy Finance adds new vaults and stablecoin liquidity pools Winston Churchill’s statement to “never let a...

Stock Markets2 hours ago

Glass Lewis backs McDonald’s directors in boardroom fight with Carl Icahn

2/2 © Reuters. FILE PHOTO: A sign with the logo is on display near a McDonald’s restaurant in Moscow, Russia...

Economy2 hours ago

Australian banks enter tech arms race as rising rates squeeze profit

4/4 © Reuters. FILE PHOTO: A view of a Commonwealth Bank of Australia branch in Sydney, Australia, April 18, 2018....

Stock Markets2 hours ago

China Eastern crash probe eyes intentional action – sources

© Reuters. FILE PHOTO: Rescue workers work at the site where a China Eastern Airlines Boeing 737-800 plane flying from...

Stock Markets2 hours ago

U.S. accuses casino tycoon Wynn of acting as Chinese agent

2/2 © Reuters. FILE PHOTO: Steve Wynn, Chairman and CEO of Wynn Resorts, speaks during the Milken Institute Global Conference...

Cryptocurrency2 hours ago

Commissioner Kristin Johnson to sponsor CFTC Market Risk Advisory Committee

Commissioner Kristin Johnson to sponsor CFTC Market Risk Advisory Committee United States Commodity Futures Trading Commission (CFTC) commissioner Kristin N....

World2 hours ago

Pollution killing 9 million people a year, Africa hardest hit – study

5/5 © Reuters. FILE PHOTO: A boy swims in the polluted water of the Makoko community in Lagos, Nigeria March...

Politics2 hours ago

McConnell urges Biden administration to ensure sustained aid to Ukraine

© Reuters. FILE PHOTO: U.S. Senate Minority Leader Mitch McConnell (R-KY) listens as another Republican senator speaks to reporters following...

Stock Markets2 hours ago

Prominent hedge funds invested in Twitter before Musk unveiled plans

© Reuters. FILE PHOTO: The Twitter logo and trading information is displayed as a trader works on the floor of...

World2 hours ago

N.Korean leader Kim slams officials’ ‘immature’ response amid COVID outbreak

© Reuters. FILE PHOTO: People wearing protective face masks walk amid concerns over the new coronavirus disease (COVID-19) in front...

Stock Markets2 hours ago

Architect of Allianz fraud made $60 million as he lied to investors, U.S. says

3/3 © Reuters. FILE PHOTO: Allianz Global Investors logo is pictured at the company’s headquarters in Frankfurt, Germany August 16,...

Cryptocurrency3 hours ago

Crypto users react to Terraform Labs legal team purportedly leaving company

Crypto users react to Terraform Labs legal team purportedly leaving company The ongoing saga with Terraform Labs, the blockchain developer...

World3 hours ago

Michigan judge blocks enforcement of state’s pre-Roe v. Wade abortion ban

© Reuters. FILE PHOTO: Pro-Choice supporters of Planned Parenthood rally outside a Planned Parenthood clinic in Detroit, Michigan, U.S. February...

Stock Markets3 hours ago

U.S. sues to compel former casino magnate Wynn to register as agent of China

2/2 © Reuters. FILE PHOTO: Steve Wynn, Chairman and CEO of Wynn Resorts, speaks during the Milken Institute Global Conference...

World3 hours ago

Burkina Faso rescuers find no survivors in flooded mine’s rescue chamber

© Reuters. A view shows one of the galleries during a rescue operation inside Perkoa mine where water is still...

Politics3 hours ago

U.S. lawmakers unveil FDA emergency funds bill to address baby formula shortage

2/2 © Reuters. Empty shelves show a shortage of baby formula at a Target store in San Antonio, Texas, U.S....

Commodities3 hours ago

Oil falls 2% on Powell comments, hopes for Venezuela supply

© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the...

Commodities3 hours ago

Venezuela’s Maduro, opposition expected to talk; U.S. eases some sanctions -sources

© Reuters. FILE PHOTO: Venezuela’s President Nicolas Maduro and his wife Cilia Flores dance during the May Day celebrations in...

Stock Markets3 hours ago

U.S. Senator Manchin backs Michael Barr for top Fed regulatory job

© Reuters. FILE PHOTO: The Federal Reserve building is seen before the Federal Reserve board is expected to signal plans...

Sports & General3 hours ago

Dallas hair salon shooting suspect had delusions about Asians, police say

2/2 © Reuters. An image shows the suspect in the shooting at the Hair World Salon in Dallas on May...

Commodities3 hours ago

Oil Inventories Unexpectedly Drop by 2.4M Barrels Last Week: API

© Reuters. By Yasin Ebrahim — U.S. crude oil inventories unexpectedly dropped last week, the API reported Tuesday, following a...

Cryptocurrency3 hours ago

Do Kwon proposes Terra hard fork to save ecosystem

Do Kwon proposes Terra hard fork to save ecosystem On Monday, Do Kwon, co-founder of the troubled Terra Luna blockchain,...