Argentina new economy chief will not allow ‘irrational’ run on peso

By Hugh Bronstein and Hernan Nessi

BUENOS AIRES (Reuters) – Argentina will not allow a chaotic fall in the peso and will use its dollar reserves to bolster the currency against political uncertainty that has swept the country since the Aug. 11 primary election, Treasury Minister Hernan Lacunza said on Wednesday.

The peso opened 0.47% weaker at 55 to the U.S. dollar and the country’s risk spread was 8 basis points tighter at 1,855 over safe-haven U.S. treasury bonds , reflecting a calming of recent market jitters.

“We will not allow an irrational run on the currency. That’s why we have international reserves,” Lacunza told local radio station Mitre in an early morning interview, less than 24 hours after being sworn in as treasury chief.

Later on Wednesday, Lacunza was scheduled to meet with economic advisors to center-left presidential candidate Alberto Fernandez, who crushed business-friendly incumbent Mauricio Macri in the presidential primary vote. The primary result sent the peso spiraling down 18% last week.

“Since the market pays as much attention to the future as it does to the present, in addition to what the government in charge can do, it also matters what the other candidates and their economic teams say, to generate certainty towards the future,” Lacunza said, when asked about the meeting with the Fernandez team scheduled for later in the day.

Fernandez is now the clear front-runner ahead of the Oct. 27 presidential election. Macri has enacted a series of emergency economic measures, including cuts in food and personal income taxes, aimed at helping families stung by Argentina’s recession and 55% inflation rate.

Nicolas Dujovne, the former treasury minister, quit on Saturday, saying he believed the country needed “significant renewal” of its economic team.

The currency stabilized on Tuesday, after the central bank poured $ 112 million of its reserves into dollar auctions.

Including last week’s interventions, the bank had auctioned off $ 615 million in dollar reserves as of Tuesday afternoon, traders said.

Lacunza said Argentina would hit its target of erasing the country’s primary fiscal deficit this year, under a $ 57 billion standby financing pact signed in 2018 with the International Monetary Fund. Macri negotiated the pact to halt a run on the peso last year.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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German industry association says companies have no choice but to prepare for a hard Brexit

Not exactly a good backdrop ahead of talks between Johnson and Merkel

Germany
  • UK PM Johnson’s call to reopen withdrawal agreement is irresponsible

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I don’t think it is much of a coincidence to see these comments ahead of Johnson’s visit to Berlin today. With the German economy already on the brink of a technical recession, a hard Brexit will no doubt exacerbate the downturn experienced.

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Dollar nudged off three-week peak as U.S. yields dip before Jackson Hole meet

By Shinichi Saoshiro

TOKYO (Reuters) – The dollar was on the defensive on Wednesday, elbowed off a three-week peak by a reversal in U.S. yields as they headed south again ahead of a meeting of central bankers, at which the Federal Reserve is expected to give clues on further rate cuts.

Central bankers will gather at Jackson Hole, Wyoming, on Friday with markets focused on a scheduled speech by Fed Chair Jerome Powell.

His comments will take center stage especially after last week’s inversion of the U.S. yield curve -widely regarded as a recession signal- boosted expectations for the Fed to lower interest rates at its September policy meeting. Faced with rising risks to the U.S. economy, the central bank in July cut rates for the first time since the financial crisis.

The () against a basket of six major currencies was flat at 98.210 after shedding 0.2% overnight.

The index had climbed to 98.450 on Tuesday, its highest since Aug. 1, as U.S. yields bounced back from multi-year lows at the week’s start on signs global policymakers were ready to step up stimulus support to stave off a steep economic downturn.

U.S. yields, however, declined overnight on the prospect of more easing by the Fed.

Takuya Kanda, general manager at Gaitame.Com Research Institute, believes U.S. President Donald Trump’s “strong desire for deep rate cuts” may raise hopes among some traders of strong easing signals at Jackson Hole. But he also warned that Powell may opt to give little away in his speech as the Fed prepares for the September policy review.

Investors will also be looking for clues on the Fed’s plans in minutes of its July policy meeting due later on Wednesday.

The dollar was little changed at 106.330 yen after shedding 0.4% the previous day, while the euro was steady at $ 1.1094 (), having put on 0.2% overnight.

The single currency dipped briefly after Italy’s Prime Minister Giuseppe Conte announced his resignation on Tuesday.

“Conte’s resignation won’t have a strong impact on the euro in the longer run as it is only a chapter in the ever-shifting Italian politics,” said Kanda at Gaitame.Com Research.

Sterling traded at $ 1.2162 , holding a bulk of the gains made on Tuesday when it advanced 0.4%.

The pound rose after German Chancellor Angela Merkel said the European Union would think about practical solutions regarding the post-Brexit Irish border.

The Australian dollar was largely flat at $ 0.6775 after edging up 0.2% on Tuesday.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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EUR/USD likely to edge lower in coming weeks – SocGen

SocGen on the euro

Societe Generale Research flags a scope for EUR/USD and GBP/JPY to edge lower lower over the coming weeks.

“We don’t think the market is short enough of euros to prevent yet another new, marginal low in this move and it’s worth re-emphasising that thanks to the weakness of the yuan and sterling this summer, the trade-weighted euro is reached its best level of the year a week ago.

Given recent economic data and likely ECB moves, it seems likely, in fact,that we will see EUR/USD edge lower in the weeks ahead, unless we get clear signals of further Fed easing or clear signals of European fiscal easing. And if we get the former, we w much rather be long the yen than the euro, thanks,” SocGen notes. 

“More Brexit noise is likely too as Europe ‘responds’ to PM Johnson’s demands. GBP/JPY looks more likely to fall to 125 than rise to 130,” SocGen adds.

For bank trade ideas, check out eFX Plus.

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UK government reportedly to stick with current stance on backstop in response to EU

Sky News deputy political editor, Sam Coates, tweets

Brexit

Citing a government source on the matter, says that the UK government is readying up a response after the EU shot down Boris Johnson’s letter with the view:

“We have made reasonable proposal, the EU is not negotiating and instead spending its efforts trying to undermine proposals amongst the EU 27, the reality the backstop has to be removed or else it’s no deal.”

ForexLive

The remark on undermining the proposal is a bit of a stretch. It’s not like they didn’t know what the EU’s stance is and that hasn’t changed since even when Theresa May was in-charge.

If anything else, this continues to show that negotiations later in the week between Johnson with Merkel and Macron are not going to lead to anything.

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Aussie modestly higher ahead of European markets open

Major currencies are mostly little changed overall

WCRS 20-08
ForexLive

The aussie is holding a little higher after the RBA minutes release continued to suggest that the central bank will likely stay on hold at its September meeting.
WIRP AU 20-08

The kiwi is also lifted higher as such but the rest of the major currencies remain more subdued to start the new day. Changes against the dollar are less than 0.1% and the trading ranges remain relatively narrow ahead of European trading.

As for risk sentiment, equities are hold more steady around flat levels awaiting for fresh direction. With the market focus slowly shifting towards Jackson Hole, only trade headlines will matter at this point in between now and then.

Looking ahead, do continue to keep an eye on the bond market in the days ahead. Treasury yields are holding a little lower currently and a bigger drop may see other asset classes start reacting more profoundly once again.

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Japan media reports the G7 summit this weekend may end acrimoniously due to trade dispute

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ADVISORY WARNING: FOREXLIVE™ provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect’s individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FOREXLIVE™ specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FOREXLIVE™ expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

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Yuan wobbles on Trump trade comments, details of China rate reforms awaited

HONG KONG (Reuters) – The yuan wavered on Monday after U.S. President Donald Trump said he was not ready yet to make a trade with China.

Traders were also cautious ahead of the debut of China’s new benchmark lending rate on Tuesday, which was announced at the weekend.

Analysts believe the reforms will open the door to rate cuts, possibly as early as Tuesday, but are divided over the size of any initial reduction and how much it may help struggling smaller companies in the near term.

Spot yuan traded at 7.0447 per dollar at midday, pretty much unchanged from the last session close and 0.12 percent away weaker than the midpoint , which was set by the People’s Bank of China at 7.0365.

The central bank on Saturday unveiled long-awaited interest rate reforms to help lower borrowing costs for companies and support slowing growth, which has been dragged by its protracted trade war with the United States.

The revamped loan prime rate (LPR), effective on Tuesday and linked to rates in medium-term lending facility (MLF), is the equivalent of a 45 basis point rate cut on loans, ANZ analysts wrote in a note on Monday. Several traders said they expect the new LPR to trim by 10 to 15 basis points.

The tweak will help achieve the State Council’s goal of easing financing costs for small businesses by 1 percentage point, but tax cuts will also shoulder part of that, according to a Shanghai-based trader.

“We need to hear more about the supplementary measures,” to gauge how far LPR and MLF rates will fall, said another trader in Shanghai.

However, unlike more open markets such as the United States, China’s capital control will likely cap the pressure from lower interest rates on its managed currency, said a Hong Kong-based trader, adding “it will trade where the PBOC wants it to be.”

Traders said the U.S.-China trade talks will continue to dominate the yuan’s direction in the near term.

White House economic adviser Larry Kudlow said on Sunday trade officials from the two countries would speak within 10 days and a Chinese delegation is flying to the United States to follow up.

But Trump said on the same day he is “not ready” for a deal with Beijing, hinting again that he would like to ongoing protests in Hong Kong resolved first.

Trump also said he would not like to deal with Huawei Technologies Co Ltd – even after Reuters and other media outlets reported on Friday the U.S. Commerce Department is expected to extend a reprieve for the company to buy supplies from U.S. companies.

The was trading 0.14 percent softer than the onshore spot at 7.0545 per dollar.

The global () rose slightly to 98.207 from the previous close of 98.142.

US China interest rate – Aug 19, 2019 – https://fingfx.thomsonreuters.com/gfx/mkt/12/4892/4849/US%20China%20interest%20rate%20-%20Aug%2019,%202019.jpg

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Forex – Dollar Hovering Near 2-Week Highs, Sterling Edges Up

© Reuters.  © Reuters.

Investing.com – The U.S. dollar was hovering near two-week highs against a currency basket on Monday as U.S. Treasury yields bounced back from recent lows amid hopes that major economies will seek to prop up slowing growth with fresh stimulus.

The , against a basket of six major currencies was at 98.05 by 03:01 AM ET (07:01 GMT), not far from the two-week high of 98.20 reached on Friday.

The stood at 1.57%, having pulled away from a three-year trough of 1.47% marked last week in the wake of global slowdown fears.

Falling yields last week caused the two-year/10-year Treasury curve to invert for the first since 2007, a phenomenon widely regarded as a recession signal that puts the Federal Reserve interest rate deliberations into focus.

“This week’s main event is the Jackson Hole symposium and Fed Chairman (Jerome) Powell’s speech,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

Powell will deliver a speech on Friday at an annual meeting of central bankers in Jackson Hole, Wyoming.

“What Powell has to say is in focus as the discrepancy remains between what he said on interest rates and what the markets have come to expect the Fed will do,” Ishikawa said.

Powell said after the Fed lowered rates in July that the easing was not the start of a series of cuts. But market expectations for the Fed to cut rates by another 25 basis points at the next policy meeting in September have increased.

The was steady at 1.1092 while the edged up 0.15% to 1.2166.

The dollar was little changed against the at 106.37.

The was slightly lower after U.S. President Donald Trump said he was not ready yet to make a trade with China.

Traders were also cautious ahead of the debut of China’s new benchmark lending rate on Tuesday, which was announced at the weekend.

The People’s Bank of China on Saturday unveiled interest rate reforms to help lower borrowing costs for companies and support slowing growth, which has been hit by the trade war with the U.S.

–Reuters contributed to this report

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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AUD spot currently above fair value model mid point

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.

ADVISORY WARNING: FOREXLIVE™ provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect’s individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FOREXLIVE™ specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FOREXLIVE™ expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

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