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

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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.


Dollar at 2-week high, euro softer as market bets on rate cuts

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Dollar at 2-week high, euro softer as market bets on rate cuts
© Reuters. U.S. Dollar banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

By Hannah Lang

WASHINGTON (Reuters) -The U.S. dollar was at a two-week high on Wednesday, while the euro was weak across the board as markets ramped up bets that the European Central Bank (ECB) will cut interest rates as early as March.

Although markets are still pricing at least 125 basis points of interest rate cuts from the U.S. Federal Reserve next year, the dollar was able to hold steady as rate cut bets for other central banks intensified.

The , which measures the currency against six other majors, was last up 0.19% at 104.16. The euro was down 0.29% to $1.0764.

Traders are betting that there is around an 85% chance that the ECB cuts interest rates at the March meeting, with almost 150 basis points worth of cuts priced by the end of next year. Influential ECB policymaker Isabel Schnabel on Tuesday told Reuters that further interest rate hikes could be taken off the table given a “remarkable” fall in inflation.

The euro also touched a three-month low against the pound, a five-week low versus the yen and a 6-1/2 week low against the Swiss franc.

“It’s a reasonably sized sell-off and the market is trying to digest, is it just a correction? Did the market get over-exuberant in the previous weeks? I think there is definitely an element of that,” said Amo Sahota, director at FX consulting firm Klarity FX in San Francisco.


The ECB will set interest rates on Thursday next week and is all but certain to leave them at the current record high of 4%. The Fed and Bank of England are also likely to hold rates steady next Wednesday and Thursday respectively.

The Bank of Canada on Wednesday held its key overnight rate at 5% and, in contrast to its peers, left the door open to another hike, saying it was still concerned about inflation.

Traders have priced around a 60% chance of the U.S. central bank cutting rates in March, according to CME’s FedWatch tool.

“Markets have aggressively priced in rate cuts, without any kind of confirmation from central banks,” said Adam Button, chief currency analyst at ForexLive in Toronto. “As December continues, we need either a change in tune from central bankers or a repricing in markets.”

If the Fed were to cut rates as markets expect, it could result in the dollar loosening its grip on other G10 currencies next year, dimming the outlook for the greenback, according to a Reuters poll of foreign exchange strategists.

The spotlight in Asia was on China, as markets grappled with rating agency Moody’s (NYSE:) cut to the Asian giant’s credit outlook.

The offshore was flat at $7.1728 per dollar, a day after Moody’s cut China’s credit outlook to “negative”.

China’s major state-owned banks stepped up U.S. dollar selling forcefully after the Moody’s statement on Tuesday, and they continued to sell the greenback on Wednesday morning, Reuters reported.

Elsewhere in Asia, the Japanese yen weakened 0.15% versus the greenback at 147.38 per dollar. The Australian dollar fell 0.02% to $0.65495.

In cryptocurrencies, bitcoin eased 0.06% to $44,049, still near its highest since April 2022.

The world’s largest cryptocurrency has gained 150% this year, fueled in part by optimism that a U.S. regulator will soon approve exchange-traded spot bitcoin funds (ETFs).

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Canadian dollar forecasts turn less bullish as BoC rate cuts eyed: Reuters poll

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Canadian dollar forecasts turn less bullish as BoC rate cuts eyed: Reuters poll
© Reuters. FILE PHOTO: A Canadian dollar coin, commonly known as the “Loonie”, is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch/File Photo

By Fergal Smith

TORONTO (Reuters) – Analysts see less upside for the Canadian dollar than previously thought over the coming year as recent data showing a slowdown in the domestic economy brings forward the expected start of Bank of Canada interest rate cuts, a Reuters poll found.

The median forecast of 35 foreign exchange analysts surveyed in the Dec. 1-5 poll was for the Canadian dollar to strengthen 0.4% to 1.3533 per U.S. dollar, or 73.89 U.S. cents, in three months, compared with 1.3450 in a November poll.

It was then expected to advance to 1.3130 in a year, versus 1.3000 in last month’s forecast.

“Our view is the Canadian dollar is going to face a difficult next three months as the data starts to look like the Canadian economy is teetering on the edge of recession if not in a mild recession,” said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada.

The Canadian economy unexpectedly contracted at an annualized rate of 1.1% in the third quarter, avoiding a recession after an upward revision to the previous quarter but showing growth stumbling.

Soft domestic data “should bring forward expectations of BoC easing, especially relative to the Federal Reserve,” Harvey said. “Earlier Bank of Canada easing is going to widen rate differentials in favor of USD-CAD.”

Money markets expect the Canadian central bank to leave its benchmark interest rate on hold at a 22-year high of 5% at a policy announcement on Wednesday and then begin easing policy as soon as March. As recently as October, there were no rate cuts priced in for 2024.

A separate Reuters poll, from last week, showed economists expect the BoC to start cutting rates in the second quarter of next year and borrowing costs will drop by at least one percentage point by the end of next year.

The Canadian 2-year yield has fallen further below its U.S. equivalent in recent weeks to a gap of 54 basis points, which is the widest since March.

A lower yield tends to make a currency less attractive to investors.

(For other stories from the December Reuters foreign exchange poll:)

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Dollar edges lower; euro hit by weak German factory orders

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Dollar edges lower; euro hit by weak German factory orders
© Reuters. – The U.S. dollar edged lower in early European trade Wednesday, but remained near a two-week high, ahead of key employment data, while the euro headed lower after weak German factory orders.

At 04:35 ET (09:35 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.925, having climbed 0.3% overnight. 

The index is up 0.5% this month, after sliding 3% in November, its steepest monthly decline in a year.

Labor market data in focus

Recent data has generally pointed towards a slowing U.S. economy, although signs still point to a likely soft landing. 

Tuesday’s release showed U.S. fell to more than a 2-1/2-year low in October, the strongest sign yet that higher interest rates were dampening demand for workers. 

The labor market will remain in focus Wednesday, with the later in the day, setting up Friday’s monthly report.

“We suspect markets are holding a more cautious stance as we head into the key U.S. payroll figures on Friday and the Fed meeting next week, where there is a good probability the FOMC will deliver a protest against rate cut bets – especially if data fails to turn lower,” said analysts at ING, in a note.

Euro continues to weaken

In Europe, edged lower to 1.0794, close to Tuesday’s three-week low, after slumped 3.7% on the month in October, a sharp drop after gaining 0.7% the prior month.

Recent data has pointed to the eurozone heading into a recession in the final quarter of the year, as its economy contracted 0.1% in the third quarter, according to official data.

Eurozone are seen rising 0.2% monthly in October later in the session, an annual drop of 1.1%, as consumers in the region continue to struggle, ahead of the festive period.

This economic slowdown, coupled with inflation across the euro zone falling more quickly than most anticipated, has led many to think that the could deliver its first rate cut by March. 

“Shorting the euro appears to be one of the most popular bets in FX at the moment,” ING added. 

rose 0.1% to 1.2604, ahead of the release of the latest Bank of England .

Yuan hit by Moody’s downgrade

In Asia, rose 0.4% to 0.6576, recovering from two days of steep losses even as data showed Australia’s grew less than expected in the third quarter, hit chiefly by declining export demand in China. 

traded 0.1% higher to 147.21, steadying after the yen recorded a sharp recovery against the dollar in recent sessions.

traded 0.2% higher at 7.1589, with sentiment towards the yuan battered by ratings agency Moody’s, which downgraded the country’s credit outlook to negative and flagged increased economic risks from a property market downturn.


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