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Wielding chainsaw and huge dollar bill, Argentine radical taps into voter fury

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Wielding chainsaw and huge dollar bill, Argentine radical taps into voter fury
© Reuters. Argentine presidential candidate Javier Milei for La Libertad Avanza coalition gestures next to Carolina Piparo, candidate for Governor of the Province of Buenos Aires, during a campaign rally in La Plata, Buenos Aires, Argentina, September 12, 2023. REUT

By Horacio Soria and Juan Bustamante

LA PLATA, Argentina (Reuters) – Wielding a chainsaw above his head in the Argentine city of La Plata this week, radical presidential front-runner Javier Milei riled up thousands of supporters angry with 124% inflation and a painful cost-of-living crisis.

The economist and TV pundit only got into politics two years ago but he has already shaken up the South American nation’s political landscape, coming first in an open primary in August. With momentum behind him, he is seen as the candidate to beat in October’s election.

His angry, theatrical and at times expletive-laced tirades against the traditional political elite have caught fire with voters furious over years of economic volatility and decline, compounded more recently by soaring costs, a tumbling currency, and poverty that now affects 40% of the country.

“We need resounding change. We must remove all the people who have left this country destroyed,” said Rosalia Garcia, 51, a public accountant at Milei’s rally in La Plata, the capital of Buenos Aires province. Behind her was a sign that said “Milei, the only solution.”

Amid the crowd, Milei held aloft a huge $100 bill with his face on it, a reference to his pledge to dollarize the economy, a plan criticized by economists as unrealistic but that has won over some voters fed up with watching the value of their pesos evaporate.

He has also pledged to “dynamite” the unpopular central bank, take down the political “caste,” shrink the government, take a tough line on crime, and has railed against what he calls “woke” behavior. He opposes abortion and supports expanded gun rights.

“The political caste is afraid,” he yelled in La Plata.

Milei is up against conservative former security minister Patricia Bullrich and ruling Peronist party economy chief Sergio Massa, who has looked to gain ground with popular tax cuts for workers in the run-up to the Oct. 22 vote.

A candidate needs 45% of the vote – or over 40% with a ten-point lead – to win outright in October. Otherwise the top two will go to a November run-off. Milei got just under 30% in the August primary, just ahead of Bullrich and Massa.

While Milei’s aggressive style has put some voters off, his frenetic energy has appealed to others. Opinion polls show him likely coming first in October, though confidence in the forecasts is low after they failed to predict the primary race.

“I’m tired of the same old faces, of the same rulers,” said Eduardo Murchio, a Cabify driver in Buenos Aires, criticizing rising debt levels and inflation.

“This Argentina hurts me. It is an Argentina that no longer works. I’m 40 years old and it’s always the same story.”

Milei also appeals to younger generations who see little reason for optimism in the current climate.

Sebastian Pedrozo, 21, an economics and finance student in the capital, said he liked Milei’s libertarian plans to free up labor markets and dollarize, saying it offered more “stability” in a country where many already strive to save in greenbacks.

“That will allow all of us, young people, and I think also adults, to begin to look to the future a bit more,” he said.

Back in La Plata, high school student Roman Lopez, 16 – who will be a first-time voter this year – said he previously wasn’t interested in politics, but Milei’s energy had attracted him.

“All the presidents that came and went, I didn’t feel like they did anything. This one I see having drive, he has that desire to do something and change the country.”

Forex

Dollar steady, while yen strengthens ahead of BOJ meeting

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Investing.com – The U.S. dollar traded in a stable fashion in Europe Tuesday, while the yen soared in the wake of suspected intervention by the government last week.  

At 05:40 ET (09:40 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, edged 0.1% higher to 104.067, bouncing from last week’s four-month low. 

Dollar takes a breather

The dollar steadied Tuesday, with traders appearing to take a breather as they digest the volatile political situation with little in the way of economic data until the release of U.S. personal consumption expenditure inflation figures for June on Friday.

Vice President Kamala Harris appears on course to be the Democratic Party’s presidential nominee, but will still need to be formally nominated.

Still, Republican nominee Donald Trump was seen polling ahead of Biden and Harris as of last week, CBS and HarrisX data showed. 

Expectations of a Trump presidency has resulted in some strength in the dollar, as analysts said he would be likely to enact protectionist trade policies. 

The main economic data release this week will arrive on Friday, with June’s index set to test market expectations that the Federal Reserve is all but certain to cut interest rates in September.

Euro lower ahead of key activity data

In Europe, fell 0.2% to 1.0873, drifting lower ahead of key activity data later in the week. 

While economic growth in the eurozone remains sluggish, strength in the dominant services sector, boosted by tourism, has kept price pressures uncomfortably high.

This has posed a challenge to the ECB, so data on Wednesday will be closely watched after the kept interest rates on hold at 3.75% last Thursday and resisted offering future guidance, saying it was “data-dependent.”

Markets are pricing in almost two ECB rate cuts for the rest of the year.

traded 0.1% lower at 1.2919, falling back from the 1.30 level that the pair saw last week for the first time in a year.

The pound has received a boost from the political stability brought about by the Labour Party’s dominant electoral victory at the start of this month.

However, at the heart of this latest leg higher in the pound is the belief that British interest rates will take longer to decline than those elsewhere.

Many big central banks have started cutting rates, with the and the U.S. Federal Reserve among the last still standing still.

Data earlier this month showed that remains stubbornly high, pushing the likely starting date of the BOE’s rate-cutting cycle from August to later in the year.

Yen strengthens ahead of BOJ meeting 

In Asia, fell 0.7% to 155.94, not far from Thursday’s five-week low of 155.375, with the yen continuing to strengthen against the dollar after suspected intervention by the government last week.

A senior member of the Japanese government called for more clarity on interest rate hikes by the Bank of Japan, the reported on Tuesday. The comments come just a week ahead of a , where some analysts expect the bank to hike interest rates by 10 basis points. 

edged higher to 7.2743, remaining close to levels last seen in November. 

The currency was battered by increasing uncertainty over the Chinese economy, especially after recent data showed it grew less than expected in the second quarter.

 

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Asia FX firms as dollar stalls amid rate cut bets, political uncertainty

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Investing.com– Most Asian currencies drifted higher on Tuesday, while the dollar retreated as the greenback’s rebound was held back by continued expectations of interest rate cuts and uncertainty over the 2024 presidential election. 

Still, sentiment towards Asia remained constrained by concerns over China, amid signs of a slowing economic recovery and uncertainty over how U.S. policies will treat the country in the coming months. 

Japanese yen outperforms, USDJPY down to 156

The Japanese yen was the best performer for the day, continuing to strengthen against the dollar after suspected intervention by the government last week.

The pair fell 0.4% to 156.41 yen, coming close to a 1-½ month low.

A senior member of the Japanese government called for more clarity on interest rate hikes by the Bank of Japan, the reported on Tuesday. The comments come just a week ahead of a , where some analysts expect the bank to hike interest rates by 10 basis points. A recent increase in countrywide inflation supported this notion, although inflation still remained relatively sluggish.

Uncertainty over the BOJ has been a key weight on the yen in recent months, as the central bank provided few cues on when it will tighten policy further. 

Dollar dips with presidential race, rate cuts in focus 

The and both fell 0.1% each in Asian trade, stalling after a sharp rebound over the past two sessions. 

The greenback turned volatile amid increased uncertainty over the U.S. presidential race, after President Joe Biden said he will not seek reelection, and endorsed Vice President Kamala Harris as the Democratic nominee. 

Reports on Monday said Harris had won enough support from Democratic delegates to become the party’s presidential nominee, but will still need to be formally nominated.

Still, Republican nominee Donald Trump was seen polling ahead of Biden and Harris as of last week, CBS and HarrisX data showed. 

Expectations of a Trump presidency had enabled some strength in the dollar, as analysts said he would be likely to enact protectionist trade policies. 

But the dollar was nursing steep losses in recent weeks amid growing conviction the Federal Reserve will cut interest rates in September. The central bank is set to at a meeting next week.

Broader Asian currencies drifted higher. The Singapore dollar’s pair fell 0.1%, while the South Korean won’s pair fell 0.3%. South Korean producer inflation picked up slightly in June, data showed. 

The Indian rupee’s pair fell slightly but remained close to record highs hit earlier in July. Focus was on the Indian government’s , set to be unveiled later in the day. 

Chinese yuan fragile amid economic uncertainty

The Chinese yuan moved little on Tuesday, seeing little relief after an unexpected interest rate cut by the People’s Bank of China. 

The pair hovered around 7.2738 yuan, remaining close to levels last seen in November. 

The currency was battered by increasing uncertainty over the Chinese economy, especially after recent data showed it grew less than expected in the second quarter.

Speculation over a Trump presidency also weighed on the yuan, given that Trump’s administration had sparked a trade war with Beijing in the late-2010s. 

Concerns over China pressured some Asian currencies. The Australian dollar’s pair fell 0.1%, pressured by the country’s large trade exposure to China.

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US dollar rises slightly after Biden ends presidential campaign

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By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) -The U.S. dollar was slightly higher on Monday in quiet trading overall, as investors digested U.S. President Joe Biden’s decision to end his re-election campaign, a scenario which could inject more volatility into the currency market.

Against the yen, however, the dollar weakened after two straight days of gains.

Market participants also looked to next week’s crucial Federal Reserve and Bank of Japan monetary policy meetings. The Fed could signal it is ready to start its easing cycle by its next meeting in September, while the BOJ, in contrast, could start to raise interest rates, giving the yen a bit of a boost.

Investors, however, remained fixated on the U.S. presidential race.

The dollar and Treasury yields fell slightly earlier on Monday, a day after Biden announced he was ending his re-election campaign, but that has since been unwound. Former President Donald Trump, the Republican nominee, sits well ahead in betting markets.

“Overall, these moves still suggest investors are, for the most part, looking to (Donald) Trump’s first term as the best available guide for what to expect from a potential second one,” wrote Jonas Goltermann, deputy chief markets economist at Capital Economics.

“In other words, higher Treasury yields, a stronger dollar, and a generally constructive environment for equities.”

Biden has endorsed Vice President Kamala Harris to replace him as the Democratic candidate in the Nov. 5 election.

Harris quickly received the backing of many within the party, but several high-profile names stayed quiet, including former U.S. President Barack Obama. Former U.S. House of Representatives Speaker Nancy Pelosi on Monday afternoon officially endorsed Harris.

The – a measure of its value relative to a basket of foreign currencies – rose 0.1% to 104.32.

Amo Sahota, executive director of currency advisory firm Klarity FX in San Francisco said of all the currency pairs, the dollar/Mexican peso had the most tangible reaction to the Biden exit. The dollar was last down 0.6% at 17.925 pesos.

“Even though the polls have narrowed only slightly and not significantly, the peso liked the news that there’s another candidate other than Biden,” Sahota said.

The U.S. election aside, analysts noted that the yen could be at a turning point against the dollar after falling since the beginning of 2024, as the Fed is close to cutting rates and the BOJ is widely expected to tighten monetary policy soon.

The U.S. central bank’s rate-setting Federal Open Market Committee (FOMC) and the BOJ will hold two-day policy meetings on July 30-31. Money markets have nearly fully priced in a Fed rate cut by September.

The greenback fell 0.3% versus the yen to 157.10., while the euro was last flat against the dollar at $1.0886.

Analysts flagged that the European Central Bank offered no concerted pushback at its policy meeting last week on the heavy pricing for a rate cut in September, which remains a strong base case.

The dollar firmed 0.1% to 7.29 yuan in offshore trading after the People’s Bank of China unexpectedly cut the seven-day reverse repo rate to 1.7% from 1.8%, saying the move would improve open market operations and support the real economy. That was followed minutes later by surprise reductions to the one- and five-year loan prime rates.

The Australian dollar, a proxy for China risks, sank 0.7% to U.S.$0.6640, giving up earlier gains following news of Biden’s withdrawal.

In cryptocurrencies, investors are bracing for the launch of exchange-traded funds tracking ether, the world’s second-largest cryptocurrency, over the next few days. Market players, however, are not expecting the massive inflows that bitcoin ETFs garnered when they first launched in January.

“The ether ETF launch is a sign of validation to the space,” said Darius Tabai, the CEO of Vertex (NASDAQ:), a decentralized exchange.

“Whether the ether ETF brings a lot of new money is unclear. itself has become this kind of isolated asset. And there’s not much spillover from bitcoin into the rest of crypto.”

Ether was last down 0.3%% at $3,496, while bitcoin rose 1.8% to $68,182.

Currency              

bid

prices at

22 July​

08:00

p.m. GMT

Descripti RIC Last U.S. Pct YTD Pct High Low

on Close Change Bid Bid

Previous

Session

Dollar 104.3 104.22 0.1% 2.89% 104.42 104.

index 18

Euro/Doll 1.0888 1.0883 0.04% -1.36% $1.0903 $1.0

ar 873

Dollar/Ye 157.08 157.48 -0.24% 11.38% 157.615 156.

n 3

Euro/Yen 1.0888​ 171.38 -0.21% 9.89% 171.65 170.

08

Dollar/Sw 0.8895 0.889 0.06% 5.69% 0.8902 0.88

iss 71

Sterling/ 1.2929 1.2911 0.15% 1.61% $1.2942 $1.0

Dollar 873​

Dollar/Ca 1.3752 1.3728 0.19% 3.75% 1.3775 1.37

nadian 06

Aussie/Do 0.6641 0.6685 -0.65% -2.59% $0.6702 $0.6

llar 632

Euro/Swis 0.9682 0.9672 0.1% 4.26% 0.9689 0.96

s 57

Euro/Ster 0.8418 0.8422 -0.05% -2.88% 0.8431 0.84

ling 14

NZ 0.5978 0.6009 -0.49% -5.37% $0.6027 0.59

Dollar/Do 72

llar

Dollar/No 10.9631​ 10.9225 0.37% 8.17% 11.0062 10.8

rway 781

Euro/Norw 11.9341 11.8737 0.51% 6.33% 11.9695 11.8

ay 58

Dollar/Sw 10.7209 10.6789 0.39% 6.5% 10.7383 10.6

eden 279

© Reuters. FILE PHOTO: U.S. Dollar banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Euro/Swed 11.6732 11.6129 0.52% 4.92% 11.6834 11.6

en 001

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