By Samuel Indyk and Ankur Banerjee
LONDON (Reuters) -The dollar slipped to a five-month low on Wednesday and the euro touched a four-month peak on expectations that the Federal Reserve could soon cut interest rates, but thin year-end trading flows limited moves.
With many traders out for holidays, volumes are likely to be muted until the New Year.
The dollar index, which measures the U.S. currency against six rivals, fell to 101.41, its lowest level since July 28. The index is on course for a 1.9% drop in 2023 after two straight years of strong gains, driven by the anticipation of Fed rate rises and then the Fed’s actual rate increases to battle inflation.
“Overall, from a global perspective, I expect markets to remain quiet,” said Jens Magnusson, chief economist at SEB.
“We still have strong equity markets and that is likely to hold through to New Year. If nothing happens geopolitically then currency markets will stay fairly calm over the next few days.”
The recent weakness in the dollar – the index is set to clock a second straight month of losses – has been spurred by the markets anticipating Fed rate cuts next year, denting the dollar’s appeal.
Markets are now pricing in a 85% chance of a rate cut starting in March 2024, according to CME FedWatch tool, with over 150 basis points of cuts priced in for next year.
US data showing cooling inflation has emboldened bets on rates easing next year.
“Disinflation is proving entrenched (and) expectations are for central banks to pivot next year while growth is still trudging along,” said Christopher Wong, a currency strategist at OCBC in Singapore.
“This paints a goldilocks market that is favourable for risk proxies,” such as equities and higher risk currencies.
Meanwhile, the euro was up 0.1% at $1.1053, having touched a four-month high of $1.1055. The single currency is up nearly 3% in the year and is on course for a third straight month of gains, matching the run it had last year.
“Overall, as long as the soft landing narrative is alive and well and there’s healthy risk appetite, then I think people will be looking more towards the euro rather than the dollar,” said SEB’s Magnusson.
The Japanese yen weakened 0.1% to 142.52 per dollar and is headed for an 8% drop in the year although the Asian currency has witnessed a bout of strength in recent weeks reflecting expectations the Bank of Japan will soon exit its ultra-loose policy.
A summary of opinions at the central bank’s Dec. 18-19 meeting showed that BOJ policymakers saw the need to maintain its ultra-easy monetary policy for now, with some calling for a deeper debate on a future exit from massive stimulus.
The summary of opinions was somewhat dovish and showed no sense of urgency to end the ultra-loose policies, according to Saxo strategists.
The likely timing of the end of the policies will be later than what the market is anticipating, the Saxo strategists said in a note.
The Australian dollar and the New Zealand dollar both touched a new five-month peak earlier in the session. The Aussie last bought $0.6836, while the kiwi was at $0.6324.
(Reporting by Samuel Indyk in London and Ankur Banerjee in Singapore; Editing by Michael Perry, Muralikumar Anantharaman and Jane Merriman)
On an jungle island created over 100 years ago by the construction of the Panama Canal, some of the most comprehensive climate research into tropical forests around the world is taking place. It’s being conducted by the Smithsonian, an institution more famous for historic museums along the Mall in Washington, D.C. Senior national and environmental correspondent Ben Tracy has more.
source
Want to safeguard your money or achieve a short-term savings goal? Opening a CD can help.
source
TOKYO (AP) — Japanese nuclear safety regulators lifted an operational ban Wednesday imposed on Tokyo Electric Power Company Holdings, the operator behind the Fukushima plant that ended in disaster, allowing the company to resume preparations for restarting a separate plant after more than 10 years.
At its weekly meeting, the Nuclear Regulation Authority formally lifted the more than two-year ban imposed on the TEPCO over its lax safety measures, saying a series of inspections and meetings with company officials has shown sufficient improvement. The decision removes an order that prohibited TEPCO from transporting new fuel into the plant or placing it into reactors, a necessary step for restarting Kashiwazaki-Kariwa’s reactors.
The plant on Japan’s northern coast of Niigata is TEPCO’s only workable nuclear power plant since the March 2011 earthquake and tsunami put its Fukushima Daiichi plant out of operation. Now the company is burdened with the growing cost of decommissioning the Fukushima plant and compensating disaster-hit residents.
The NRA slapped an unprecedented ban on the operator in April 2021 after revelations of a series of sloppy anti-terrorism measures at TEPCO’s Kashiwazaki-Kariwa plant, the world’s largest nuclear power complex housing seven reactors.
The Kashiwazaki-Kariwa plant was partially damaged in a 2007 earthquake, causing distrust among local municipalities. The March 2011 disaster caused stoppages of all 54 reactors Japan used to have before the Fukushima disaster, and prompted utility operators to decommission many of them due to additional safety costs, bringing the number of usable reactors to 33 today. Twelve reactors have been restarted under tougher safety standards, and the government wants to bring more than 20 others back online.
TEPCO was making final preparations to restart the Kashiwazaki-Kariwa plant’s No. 6 and No. 7 reactors after regulators granted safety approvals for them in 2017. But in 2018, regulators gave the plant’s nuclear security a “red” rating, the lowest given to any operator, resulting in the operational ban.
The case raised questions about whether TEPCO learned any lessons from the 2011 Fukushima crisis, which was largely attributed to the utility’s lack of concern about safety.
NRA Chair Shinsuke Yamanaka told Wednesday’s meeting that the lifting of the restrictions is just the beginning, and TEPCO is still required to keep improving its safety precautions.
Before TEPCO can restart the reactors, it needs the consent of nearby residents. Prior to the NRA decision Wednesday, Niigata Gov. Hideyo Hanazumi told reporters that the will of the voters he represents must be taken into consideration.
The Japanese government recently began a push to restart as many reactors as possible to maximize nuclear energy and meet decarbonization targets. Prime Minister Fumio Kishida’s government has reversed Japan’s nuclear energy phaseout plan, instead looking to use atomic power as key energy supply accounting to more than one-fifth of the country’s energy supply.
A major winter storm, slamming parts of the U.S. with heavy snow, blizzard conditions and dangerous icing, is making holiday travel increasingly difficult across the country. All that and all that matters in today’s Eye Opener.
source
The decision from Michigan’s top court comes one week after the Colorado Supreme Court found that Trump is disqualified from holding office under the Constitution’s “insurrection clause.”
source
By Robert Harvey
LONDON (Reuters) -Oil prices stabilised on Wednesday after the previous day’s strong gains as investors monitored Red Sea developments, with some major shippers resuming passage through the trade route despite continued attacks and broader Middle East tensions.
Brent crude futures was down 17 cents, or 0.21%, at $80.90 a barrel by 0940 GMT. U.S. West Texas Intermediate crude eased by 34 cents, or 0.45%, to $75.23 a barrel.
The benchmarks settled more than 2% up in the previous session as fresh attacks on ships in the Red Sea prompted fears of shipping disruption, with further price support from hopes of U.S. interest rate cuts that could boost economic growth and fuel demand.
Despite the attacks by Yemen’s Iran-backed Houthi militia, large shipping companies such as Maersk and France’s CMA CGM were resuming passage through the Red Sea after the deployment of a multinational task force to the region.
“Despite shutting down shipping channels and re-routing vessels, how far the global supplies are impacted is still debatable,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
The prospect of a prolonged Israeli military campaign in Gaza also remains a major driver of market sentiment.
Israel’s Chief of Staff Herzi Halevi told reporters on Tuesday that the Gaza war would go on “for many months”.
Elsewhere, oil loadings at the Russian Black Sea port of Novorossiisk were suspended because of a storm on Wednesday, sources told Reuters.
But crude exports from the Caspian Pipeline Consortium (CPC) terminal near the port have already resumed, Kazakhstan’s energy ministry said.
U.S. crude stocks were expected to have fallen by 2.6 million barrels last week while distillate and gasoline inventories were likely expected to have risen, a preliminary Reuters poll showed on Tuesday.
Inventory reports from the American Petroleum Institute and the Energy Information Administration are expected on Wednesday and Thursday respectively, a day later than normal for both reports because of the Christmas holiday.
(Reporting by Robert Harvey in London and Jeslyn Lerh in SingaporeAdditional reporting by Andrew Hayley in BeijingEditing by David Goodman)
BERLIN (Reuters) – Wolfgang Schaeuble, who served as a member of the German parliament for over half a century, has died aged 81, ending one of Germany’s longest political careers in which he helped secure his country’s place at the heart of Europe.
Schaeuble, who spent much of his career devoted to re-unifying his country and later served as former chancellor Angela Merkel’s finance minister during the eurozone debt crisis, died peacefully late Tuesday, said a spokesperson for the centre-right Christian Democrats (CDU) on Wednesday.
Schaeuble had been a member of the CDU since 1965 and a member of parliament since 1972.
Chancellor Olaf Scholz mourned Schaeuble’s death in a social media post on X: “Germany has lost a sharp thinker, passionate politician and pugnacious democrat.”
CDU leader Friedrich Merz expressed his deep grief at Schaeuble’s death on X. “In Wolfgang Schaeuble, I lose the dearest friend and adviser I’ve ever had in politics,” Merz said.
Tributes also came in from France, where Finance Minister Bruno Le Maire expressed his “profound sadness” on X.
“He was a friend, a loyal and reliable partner, and a tireless craftsman of the friendship between Germany and France,” Le Maire wrote.
Once Merkel’s boss before their roles were reversed, Schaeuble pulled the strings of Germany’s policy response to the euro zone crisis, securing support on the right of their conservative bloc for three Greek bailouts.
In November 2015, soon after Merkel opened Germany’s borders to hundreds of thousands of migrants, he said the country risked “an avalanche” of refugees triggered by “careless” actions.
He subsequently defended Merkel’s open-door migrant policy, however, when the Alternative for Germany (AfD) waded into the debate, accusing the far-right party of fuelling xenophobia.
Over the final years of his career, the AfD grew into a more formidable opponent of the CDU, with critics accusing the centre-right party of adopting its rhetoric on migration under Merz.
Schaeuble used a wheelchair since 1990 after being shot three times at an election campaign event a few days after German reunification.
(Reporting by Klaus Lauer and Rachel More; Editing by Miranda Murray and Christina Fincher)
MOSCOW (Reuters) – Russia told South Korea on Wednesday not to be surprised if Moscow retaliates against Seoul for expanding the list of goods which cannot be exported from the East Asian nation to Russia without special permission.
Seoul said this week it would add over 600 types of goods which could potentially be used for military purposes to its export control list for Russia.
The list includes heavy construction equipment, rechargeable batteries, aeronautical components, and some cars.
Russian Foreign Ministry spokeswoman Maria Zakharova told a news briefing on Wednesday:
“This is an unfriendly move taken at Washington’s behest. It will damage South Korea’s own economy and industry.
“We reserve the right to take measures in response, and not necessarily symmetrical ones. They (the South Koreans) should not be surprised (if and when we do).”
(Reporting by Dmitry Antonov; Editing by Andrew Osborn)
