Business

By Saqib Iqbal Ahmed

NEW YORK (Reuters) -The U.S. dollar rose against the euro on Wednesday in a choppy session, but its gains were capped as traders were hesitant to drive big moves ahead of a crucial European Central Bank policy decision on Thursday.

The single currency has rallied about 2% in the last three trading sessions on expectations the ECB might deliver a big 50-bps rate hike and a Reuters report that a key Russian gas pipeline would reopen on time after maintenance.

“The euro popped yesterday on the slight possibility that the ECB would consider a 50 basis point hike,” said John Doyle, vice president of dealing and trading at Monex USA.

“I think expectations of that have waned a bit this morning especially with the energy crisis back in the headlines.”

The European Union told member states on Wednesday to cut gas usage by 15% until March as an emergency step after President Vladimir Putin warned that Russian supplies sent via the biggest pipeline to Europe could be reduced further and might even stop.

Both events – the ECB meeting and the reopening of the Nord Stream 1 conduit after a 10-day shutdown – are due on Thursday, leaving markets on tenterhooks.

“Our expectation is the ECB will only hike 25 bps this month. But the chance of a upside surprise will keep EUR/USD choppy until the decision is released,” Doyle said.

The dollar was about 0.52% lower against the euro at $1.01675.

The common currency found little relief from selling pressure after Italian Prime Minister Mario Draghi won a confidence motion in the upper house Senate on Wednesday, but three main coalition parties refused to take part in the vote, effectively torpedoing his administration.

Against a basket of currencies, the dollar was 0.5% higher at 107.15, not far from the two-decade high of 109.29 touched last week.

The dollar was about 0.1% lower against the yen at 138.29 yen. The Bank of Japan is expected to stick to its dovish stance at its Thursday meeting..

Sterling weakened against the dollar, as data showed British inflation climbed to its highest rate in 40 years, but only slightly above forecast. Against the dollar, the pound was 0.3% lower at $1.1961.

The Canadian dollar slipped about 0.2% against the U.S. dollar after data showed inflation in Canada picked up speed again in June, though the gain missed forecasts.

In cryptocurrencies, bitcoin was about 1.67% higher at $23,795.2, on pace for its third straight day of gains, as traders bet the recent bout of weakness that had engulfed the market was over.

(Reporting by Saqib Iqbal Ahmed;Editing by Alison Williams and Richard Chang)

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By Rae Wee

SINGAPORE (Reuters) – The U.S. dollar retreated further on Wednesday as the euro extended its overnight bounce on relief Europe might avoid the worst fears concerning energy shortages, and on the chance the European Central Bank may deliver a more aggressive rate hike.

Russian gas flows via the Nord Stream 1 pipeline are seen restarting on time on Thursday after the completion of scheduled maintenance, Reuters reported on Tuesday.

The euro tacked on 0.25% to $1.0245, having risen 0.75% the previous day, its strongest daily gain in a month.

Aiding sentiment was news that the ECB is considering raising interest rates by a larger-than-expected 50 basis points at their meeting on Thursday.

“If we do see Russian gas flows resume tomorrow, that will be good news for the euro/dollar and in the near term, euro can get a little boost and get away further from parity,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

“But I am still worried about the euro/dollar, I think downsides still persist … the potential hawkish pivot from the ECB may not be able to give sustained support.”

The euro has lost about 2.3% since the beginning of July, and broke parity with the dollar for the first time in two decades last week following a red-hot U.S. inflation print and fears about a sharp economic downturn in the eurozone.

Other major currencies similarly rallied on the back of the weakening greenback, and as central banks around the world become more hawkish in their efforts to tame soaring inflation.

The U.S. dollar index measure against a basket of key currencies was down 0.14% to 106.52, well off its two-decade peak of 109.29 last week.

The U.S. currency’s retreat has also coincided with reduced expectations of a supersized 100-basis-point rate hike at next week’s Federal Reserve policy review.

The Aussie was up 0.4% at $0.6925, after rising 1.3% overnight, also the largest in a month.

Ahead of the Fed’s meeting next week, markets are pricing in a 23.2% chance of a 100 bp rate hike., with expectations of the jumbo rate increase easing after policymakers were quick to pour cold water on it.

Minutes of the Reserve Bank of Australia’s (RBA) July policy meeting out the day earlier showed that the central bank sees a need for more policy tightening to curb inflation.

Earlier on Wednesday, RBA Governor Philip Lowe also suggested that rates could at least double from current low levels.

Sterling likewise advanced 0.28% to $1.2031.

Bank of England Governor Andrew Bailey said on Tuesday that a 50-basis-point rate hike will be “among the choices on the table” at the BoE’s next meeting.

Conversely, the Japanese yen remained an outlier on Wednesday morning, and last traded 138.155 per dollar, as the Bank of Japan seems determined to stand by its dovish stance.

“Sticking to its dovish guns will entail sharpening policy trade-offs for the BOJ. The most pressing of which, is the sharp drop in the JPY; which has fallen a gut-wrenching 20-21% since the September FOMC,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore.

Over in the cryptoverse, Bitcoin was steady at $23,300, just off a five-week high hit the day before.

(Reporting by Rae Wee in Singapore and Alun John in Hong Kong; Editing by Shri Navaratnam)

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By Stephanie Kelly

NEW YORK (Reuters) – U.S. crude shippers are exporting huge amounts of oil to meet strong demand from Europe following Russia’s invasion of Ukraine and subsequent sanctions against Moscow. In coming years U.S. oil may find even more buyers overseas, but that could test the capabilities of U.S. export infrastructure.

HOW MUCH CRUDE DOES THE UNITED STATES TYPICALLY EXPORT?

U.S. crude exports averaged 3.7 million barrels per day (bpd) over the four weeks through late May, their highest since March 2020, according to the U.S. Energy Information Administration. More recently, exports are averaging 3.1 million bpd, making the United States one of the biggest crude exporters worldwide.

WHERE DOES THE UNITED STATES EXPORT OIL FROM?

The United States mostly exports from the Gulf Coast from ports including Houston, Corpus Christi and Beaumont, all in Texas. Corpus Christi is the largest, exporting about 2 million bpd of oil, followed by Houston at around 700,000 bpd, said Matt Smith, lead oil analyst for the Americas at Kpler.

In the first half of 2022, more than 99% of U.S. crude exports came out of the Gulf Coast, Kpler data showed.

HOW MUCH COULD THE UNITED STATES POTENTIALLY EXPORT?

Analysts say the U.S. Gulf could export roughly 5 million bpd; any more than that would cause substantial congestion in shipping channels, Smith said. However, that would also require an increase in U.S. production.

The weekly record for U.S. crude exports was nearly 4.5 million bpd in December 2019. The world’s top producer is pumping about 12 million bpd, and uses most of that oil domestically.

U.S. ports have been expanding in recent years, including major dredging projects to handle larger tankers that can carry more oil, and some, like Corpus Christi, could potentially handle more exports.

The Port of Corpus Christi is undergoing an improvement project that, once completed next year, would expand the ship channel to increase U.S. exports. It will, however, still require ship-to-ship transfers as the ship channel is not deep enough to fully load the Very Large Crude Carriers (VLCCs), which hold about 2 million barrels, favored in other major ports.

Gulf Coast exports are expected to surpass 4 million bpd in mid-2023 and reach 4.8 million bpd by late 2024, said Louise Dickson at Rystad Energy.

WHERE DOES U.S. OIL GO?

The United States sends the majority of its crude – about 1.4 million bpd – to Europe, around 1 million bpd to Asia, 250,000 bpd to Canada, and other barrels to Latin America, Kpler’s Smith said.

U.S. export demand is heavily determined by the price of U.S. crude relative to Brent crude, the global benchmark. Currently U.S. crude is trading at a discount of around $6.80 to Brent, making U.S. grades attractive to buyers in other countries.

WHY IS THE U.S. EXPORTING OIL WHEN LOCAL FUEL PRICES ARE HIGH?

Not all U.S.-produced oil is optimal for domestic refineries. The United States produces a lot of “sweet” crude, which is lower in sulfur content, and its refineries are generally geared toward processing more “sour,” heavier crude, Smith said.

That means more domestic barrels will be sent abroad to refiners that can process them, while U.S. refiners import barrels best suited to their use.

The United States has long been a crude importer, though net imports are steadily declining; the nation imported, on net, about 3.1 million bpd in 2021, more than halved from 6.8 million bpd in 2017, according to the EIA.

(Reporting by Stephanie Kelly; Editing by Marguerita Choy)

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By Clare Jim

HONG KONG (Reuters) – A revolt by Chinese homebuyers, who have threatened to stop paying mortgages on hundreds of unfinished housing projects, is spurring a shakeout among cash-starved property developers who have long relied on pre-sales of apartments.

    Many private-sector developers, already gasping for funds and facing an uncertain future, have stoked the unrest as they delayed projects.

Homebuyers are responding not just with protests and threats of mortgage boycotts, but by taking their business to deep-pocketed state-owned developers, or insisting only on buying completed apartments.

This shift in behaviour looks set to reshape China’s property sector, analysts and developers say, while a number of private companies, who last year sold as much as 90% of new housing units before construction was complete, may not survive the transition. “It’s a vicious cycle. If homeowners stop repaying mortgages … property recovery will be impacted,” said ANZ senior China economist Betty Wang. She said buyers of unfinished projects may balk not only because of construction delays, but because of falling home values as the market softens.

Uncertain job and financial prospects in the lagging economy and environmental issues have also stirred the agitation for mortgage boycotts.

The disruption comes at a sensitive time for China’s property sector, which accounts for a quarter of the country’s economic output and showed signs of stabilising in June when prices were unchanged after falling for two months.

The sector has been lurching from one crisis to another over the past year, as it grapples with mounting liabilities, a slowing economy and flagging demand, while its sources of fresh fundraising have been drying up.

Some private developers have already defaulted on offshore debt obligations and struggled to raise funds from other sources, including banks. “It’s a domino effect: No new homebuyers will buy our unsold apartments in the pre-sale, but we need to use the little money we get from selling half or two-thirds of the units to complete construction,” said an executive at a private developer that has missed its dollar bond payments but has not halted construction.

The executive declined to be named due to the sensitivity of the matter. “After repaying bank loans with the money left, if there is any, it’s almost impossible also to repay the onshore and offshore bonds.”

PROJECT DELAYS

Estimates vary widely on unfinished projects, with analysts contacted by Reuters putting the figure at 5% to 20% of projects nationwide.

ANZ estimates that 1.5 trillion yuan ($222 billion) worth of mortgages are tied to apartments at risk of remaining unfinished, or 4% of total outstanding mortgages. China’s banking regulator repeatedly sought to reassure homebuyers and financial markets over the past week that pre-sold homes would be properly delivered, while encouraging lenders to provide funds as needed to worthy real estate projects. State-owned developers have also taken over some troubled projects from heavily indebted non-state companies, and some analysts and sector players expect stepped-up takeovers to address the mortgage protests. Those protests have reached an unprecedented scale, with more than 200 projects by at least 80 property developers affected across China, E-house China Research and Development Institution said in a report this week. The turmoil is expected to accelerate changes already evident in the preferences of homebuyers, who have long favoured new properties still on the drawing board or under construction but grew wary of unfinished projects as high-profile developers – notably China Evergrande Group – plunged into a debt crisis over the past year. The ratio of pre-construction sales to sales of existing homes has dropped to 6.5 from a high of 9.9 in the first half of last year, according to ANZ. Homebuyers are also leaning towards more financially secure, state-owned developers. Jason Li, a 30-year old would-be homebuyer in eastern China’s Shangdong province, said he was delaying buying a home because he is worried about the economy and job security, and said he would avoid projects by private developers. “It took a few years for my friends to finally get their pre-sold homes, while many developers even failed to deliver the apartments as promised,” said Li.

Moody’s added in a report that the boycott would accelerate the shakeout of struggling developers.

“The rise in mortgage defaults …will further differentiate financially strong developers from their weaker peers,” it said.

($1 = 6.7468 Chinese yuan renminbi)

(Reporting by Clare Jim; Additional reporting by Liangping Gao in Beijing and Samuel Shen in Shanghai; Editing by Edmund Klamann)

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(Reuters) -Employees at a Miami investment firm had learned of a pending merger deal between former President Donald Trump’s social media company and a blank-check entity long before it was announced, the New York Times reported on Monday, citing three people familiar with the discussions.

Officials of the firm, Rocket One Capital, at the time talked about ways to profit off the soon-to-be-announced transaction with Trump Media & Technology Group by investing in the special purpose acquisition company, or SPAC, Digital World Acquisition Corp (DWAC), the Times reported https://nyti.ms/3ILscSe, citing two of the people.

“Mr. Shvartsman and Rocket One Capital intend to fully cooperate in the investigations. Any assertion that Mr. Shvartsman or Rocket One Capital had any advance knowledge of the potential transactions contemplated by DWAC is categorically false,” a lawyer representing Rocket One’s founder Michael Shvartsman said in an email to Reuters.

Trump Media did not immediately respond to Reuters’ request for comment.

Federal prosecutors and regulators are now investigating the merger, including the frenzied trading in the SPAC’s warrants, the report said, citing people familiar with the investigation and public disclosures.

Trump Media & Technology Group, the creator of social media platform Truth Social, agreed to merge with Digital World on Oct. 20. The deal was expected to close by the second half of this year.

Digital World shares soared as much as 350%, a day after the deal was made public.

(Reporting by Echo Wang in New York, Mrinalika Roy in Bengaluru; Editing by Anil D’Silva)

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By Tom Hals and Sheila Dang

(Reuters) -Twitter Inc began making its case on Tuesday for a September trial over its lawsuit seeking to hold Elon Musk to his $44 billion takeover, saying the uncertainty caused by Musk’s attempt to walk away was harming the company.

“The continued uncertainty inflicts harm to Twitter every hour of every day,” said William Savitt, an attorney for Twitter, at the hearing that was being conducted remotely after the judge, Chancellor Kathaleen McCormick, tested positive on Monday for COVID-19.

The San Francisco-based company is seeking to resolve months of uncertainty for its business as Musk tries to walk away from the deal over what he says are Twitter’s “spam” accounts that he says are fundamental to its value.

Twitter has asked McCormick of Delaware’s Court of Chancery to find Musk breached the merger agreement and to order him to complete the merger at the agreed price of $54.20 per share.

Twitter wants an expedited trial in September because it said Musk is smearing Twitter and undermining operations by refusing to approve business initiatives, such as an employee retention plan.

The company said adopting Musk’s “slow walk” proposal for a February trial leaves little time for additional litigation over deal financing if Musk is ordered to close. The deal financing expires in April.

A lawyer for Musk blamed Twitter for dragging its feet in responding to Musk’s requests for information regarding the methods for calculating the number of spam accounts and he said an expedited trial will prevent the truth from coming to light.

“When Mr. Musk started asking questions, the answers he got were alarming,” said Andrew Rossman, Musk’s lawyer. He said it will take months to analyze massive amounts of data to resolve Musk’s questions about Twitter’s spam accounts.

Rossman also pushed back on the notion that Musk was trying to harm Twitter, pointing out the billionaire held a larger stake than the combined holdings of the directors of Twitter.

Twitter’s stock has slumped from above $50 a share when the deal was announced to as low as $32.55 last week.

It was trading around $39.16 on Tuesday morning, up about 2% and near the highest level since Musk said he was walking away.

(Reporting by Tom Hals in Wilmington, Del. Additional reporting by Sheila Dang in DallasEditing by Noeleen Walder, Rosalba O’Brien and Matthew Lewis)

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By Uday Sampath Kumar

(Reuters) -Hasbro Inc’s higher-priced toys powered its quarterly profit jump, defying an inflation-driven demand slump gripping American retail and sending its shares 2% higher on Tuesday.

The company is leaning on product launches including new Nerf blasters and expansion packs for its “Magic: The Gathering” role-playing game at a time when fears of a slowdown have gained ground among toymakers.

Walmart Inc and Target Corp – which together account more for than a third of Hasbro’ sales, according to UBS – have in recent months warned of the toll rising prices were taking on shoppers.

Still, the company is yet to see any push back from consumers over price hikes and could raise rates further if costs increase, Chief Executive Officer Chris Cocks told Reuters.

“Toys tend to be resilient in a recession,” Cocks said. “Parents want to keep investing in their children, and toys and games are good entertainment value for the money.”

For the second quarter, Hasbro posted an adjusted profit of $1.15 per share, beating analysts’ estimates of 94 cents, according to Refinitiv data.

INVENTORY HEADACHE

Despite the strong sales, Hasbro’s inventories swelled by more than 73% as it expedited shipments to avoid the shortages it faced during last year’s holiday season.

Jefferies analyst Stephanie Wissink said the build-up could hurt margins if inflation starts weighing on consumer demand for toys.

“We initially assumed toy companies would be able to fully pass through pricing, but we’re seeing some signs that there’s emerging pushback from retailers and consumers,” Wissink said.

CEO Cocks said he expects Hasbro to end 2022 with roughly flat inventory levels compared with a year earlier.

(Reporting by Uday Sampath in Bengaluru; Editing by Aditya Soni)

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By Kevin Buckland

TOKYO (Reuters) – The U.S. dollar hovered on Tuesday just above a one-week low reached overnight versus major peers as markets reduced the odds of a percentage-point Federal Reserve rate hike this month.

Bets for supersized easing ramped up last week after data showed U.S. inflation, already at a four-decade high, continued to accelerate in June. But some Federal Reserve officials were quick to throw cold water on such talk, and figures from Friday showed a easing of consumer inflation expectations to the lowest in a year.

Traders in futures contracts tied to the Fed’s short-term federal funds policy rate, who had been leaning toward a full-percentage-point rise in interest rates, shifted their bets firmly in favour of a 0.75-percentage-point increase at the upcoming meeting, with the odds last seen at about 81%.

The dollar index – which gauges the greenback against six counterparts – was flat at 107.47. That was off Monday’s low of 106.88 but also well back from the high of 109.29 last week, a level not seen since September 2002.

The euro, which is the most heavily weighted currency in the dollar index, slipped 0.08% to $1.01355, but that came after putting on around 0.6% overnight for a second day of strong gains.

The common currency slid as low as $0.9952 on Thursday for the first time since December 2002, pressured by uncertainty about a potential energy supply crunch in the euro zone.

Traders are biting their nails ahead of Thursday, when gas is supposed to resume flowing through the Nord Stream pipe from Russia to Germany after a shutdown for scheduled maintenance.

Russia’s Gazprom declared force majeure on gas supplies to Europe to at least one major customer, in a letter dated July 14 and seen by Reuters on Monday.

Despite the uncertainty, the European Central Bank is poised to raise interest rates on Thursday for the first time in more than a decade. It has telegraphed a 25 basis-point move, but heated inflation has some traders punting for a half-point hike.

“The balance of risks is tilted to a weaker EUR (whereas) the path of least resistance for the USD is to continue trending higher because of the poor global growth outlook,” Commonwealth Bank of Australia analyst Carol Kong wrote in a client note, referring to the dollar’s role as a safe haven.

Elsewhere, the yen hovered near a 24-year low ahead of a Bank of Japan policy decision on Thursday, with the central bank committing repeatedly in recent days to continued ultra-easy settings.

The dollar was little changed at 138.135 yen, not too far from Thursday’s peak at 139.38, a level not seen since September 1998.

The risk-sensitive Australian dollar slipped 0.06% to $0.6809, after climbing to a one-week high at $0.6853 on Monday, from as low as $0.66825 on Thursday, the weakest in more than two years.

Sterling eased 0.13% to $1.1935, pulling away from Monday’s one-week high of $1.2032. It slumped to $1.1761 on Thursday for the first time since March 2020 as Britain faces an acrimonious and divisive contest to replace ousted prime minister Boris Johnson.

(Reporting by Kevin Buckland; Editing by Shri Navaratnam)

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SEOUL (Reuters) – U.S. Treasury Secretary Janet Yellen said on Tuesday that the United States will impose harsh consequences on those countries that abuse or break international economic order.

“Economic integration has been weaponized by Russia,” she said, calling for all responsible countries to unite in opposition to Russia’s war in Ukraine.

She said she was heartened by conversations with Korean counterparts on a proposed cap on Russian oil price while visiting South Korea, the final leg of her 11-day visit to the Indo-Pacific region.

(Reporting by Andrea Shalal; Writing by Joyce Lee; Editing by Himani Sarkar)

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TOKYO (Reuters) – The Japanese government has not yet received word that a new Russian company set to operate the oil and gas Sakhalin-2 project has been established, industry minister Koichi Hagiuda said on Tuesday.

“We will decide on our next steps once the terms of getting involved in the new company are made clear,” he added.

A decree issued by Russian President Vladimir Putin in late June that seizes control of gas and oil project Sakhalin-2 via a new company has threatened to cut off a crucial source of gas supplies for Japan.

(Reporting by Sakura Murakami; Editing by Kim Coghill)

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