Dollar gains before manufacturing data, euro crumbles on German inflation

By Stanley White

TOKYO (Reuters) – The U.S. dollar traded near its highest in almost two weeks versus the yen before the release of data that is forecast to show the U.S. manufacturing sector returned to growth, which would ease concern about the impact of the ongoing Sino-U.S. trade war.

The euro teetered near its lowest in more than two years versus the greenback as weak economic data from Germany reinforced expectations that monetary policy in the euro zone will remain accommodative for an extended period.

The Australian dollar edged lower before an expected interest rate cut from the Reserve Bank of Australia (RBA) later on Tuesday.

A host of economic data and comments from central bankers this week will set the tone for major currencies as traders try to determine how far policymakers go to bolster growth.

“Economic data can be supportive of the dollar, and the Federal Reserve’s comments are not as dovish as some people think,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

“An RBA rate cut and the risk of a stagnant European economy both should be positive for the greenback.”

The dollar traded at 107.85 yen early in Asia, close to its strongest level in almost two weeks.

The yen remained weak after the Bank of Japan’s tankan showed business confidence in the third quarter slid to its lowest in six years.

Trading could be subdued in Asian time because China’s financial markets are closed until Monday for public holidays.

The () against a basket of six major currencies rose 0.03% to 99.402, approaching the highest in more than two years.

The Institute for Supply Management’s measure of U.S. manufacturing activity due later on Tuesday is forecast to show a return to expansion in September, but just barely.

In August U.S. manufacturing activity contracted for the first time in three years due to the U.S.-China trade war.

Several Fed policymakers are scheduled to speak this week, but traders said they will focus most on comments from Fed Chairman Jerome Powell on Friday for hints about the direction of U.S. monetary policy.

The Fed has cut interest rates twice this year, but there are signs that the Fed is reluctant to ease policy further because the jobs market remains strong.

The euro stood at $ 1.0900 () in Asia, nursing a 0.4% decline in the previous session when it slid to $ 1.0885, which is the lowest since May 12, 2017.

Annual inflation in Germany, Europe’s largest economy, slowed to the lowest in almost three years, data on Monday showed.

The European Central Bank unleashed a new round of monetary easing measures on Sept. 12, but there is growing concern that the central bank is reaching the limits of what it can achieve and the burden will fall to eurozone governments to boost fiscal spending.

The Australian dollar fetched $ 0.6751 , down 0.02% in early trade.

Australia’s central bank is all but certain to cut its cash rate to a record low of 0.75% on Tuesday and will likely ease again in early 2020 to boost inflation and support a stuttering economy, a Reuters poll showed.

The New Zealand dollar traded at $ 0.6264 , which is within striking distance of a four-year low. The has taken a hit as weakening business confidence bolstered expectations for monetary easing.

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Erdogan Puts Stamp on Economic Vision That Rests on Flimsy Base

(Bloomberg) — President Recep Tayyip Erdogan’s quest for Turkey’s economic rebirth is already struggling to keep its numbers straight.

Targets laid out by Treasury and Finance Minister Berat Albayrak on Monday make official what the president gave as a sneak preview weeks ago, setting out a goal of 5% growth for 2020-2022 after slashing this year’s forecast near zero. Despite the expectation of the economy’s sudden awakening months after recession, the rest of the outlook is leaving analysts with a case of whiplash.

The assumption is that Turkey’s liftoff will require little fiscal stimulus, even after the central bank said its “front-loaded” dose of monetary easing has left limited policy space. It also anticipates that the spurt is possible without heating up inflation and generating the yawning gap in the current account that haunted Turkey’s previous upswings.

  • Consumer price growth will ease to an annual 12% at the end of this year, dropping to 8.5% in 2020 and 6% the following year, according to Albayrak’s presentation to reporters in Ankara
  • The ratio of the central government budget deficit to gross domestic product is seen at 2.9% in 2019, up from a previous forecast of 1.8%; the gap is projected at 2.9% in 2020 and 2021, and 2.6% in 2022
  • The current account will return to deficit of 1.2% of GDP in 2020 and 0.8% in 2021 after a slight surplus this year
  • Unemployment will stagnate at 11.8% in 2020 from an estimated 12.9% this year, little changed from a previous forecast

“High growth, low inflation, a small fiscal deficit and a small current-account-deficit,” said Tim Ash, a strategist at BlueBay Asset Management in London. “How is this all possible?”

It “needs a massive positive shock from somewhere to make this happen, or policy rates much lower and the lira weaker,” he said.

Erdogan, who advocates an unorthodox theory that high interest rates cause rather than curb inflation, has made credit stimulus and easier monetary policy the centerpiece of Turkey’s efforts to replicate growth levels last seen before a currency crash last year. The risk is that the fixation on growth at all costs could once more spook the market and expose the vulnerabilities that pushed Turkey to the brink a year ago.

Albayrak said the statistical effect of the recent downturn will play a role in catapulting Turkey’s growth from just 0.5% in 2019 to 5% in 2020. A decline in interest rates and the risk premium will also likely gain momentum next year, with the economy also set to get a boost as consumers make up for delayed spending, he said.

Under a new governor installed by Erdogan in July, the central bank has already cut borrowing costs by 7.5 percentage points.

Albayrak’s predictions also show policy makers remain cautiously optimistic on prices. In his presentation on Monday, the minister said government spending would be in line with the targeted inflation path.

The central bank has recently said inflation might end this year below its July prediction of 13.9%, citing downside risks from weak demand. Price growth has slowed thanks to a stronger currency and a moderation in food costs.

Investors took Albayrak’s message in stride. The lira kept gains and traded 0.4% stronger against the dollar as of 1:26 p.m. in Istanbul. The yield on the government’s two-year note is near the lowest since April 2018.

But Turkish assets are hardly in the clear, according to Piotr Matys, a London-based strategist at Rabobank. The International Monetary Fund has already warned that “the current calm appears fragile.”

“If those forecasts were supported by a comprehensive package of economic reforms, that would increase confidence among investors that Turkey is indeed on the path to strong — and more importantly — well-balanced growth,” Matys said.

“Such crucial details, unfortunately, were not included, leaving investors with the view that the administration intends to achieve 5% growth mainly using credit stimulus,” he said.

(An earlier version of this story corrected fiscal targets for 2021 and 2022 after the Treasury and Finance Ministry said its presentation contained inaccurate information.)

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Dollar supported as fears of ramp up in Sino-U.S. trade war ease

© Reuters. FILE PHOTO: United States one dollar bills are curled and inspected during production at the Bureau of Engraving and Printing in Washington © Reuters. FILE PHOTO: United States one dollar bills are curled and inspected during production at the Bureau of Engraving and Printing in Washington

By Tom Westbrook

SINGAPORE (Reuters) – The dollar was supported on Monday in cautious trade as worries of an immediate widening of the Sino-U.S. trade war eased and markets awaited the latest Chinese manufacturing data for a glimpse into the health of the world’s second-largest economy.

The greenback was steady against most major currencies, rising marginally against the Japanese yen to buy 107.94 yen, flat against the euro and slightly weaker on British pound, to trade at $ 1.0936 per euro () and $ 1.2292 per pound .

The New Zealand dollar was knocked by diving business confidence, while its Australian counterpart drifted lower as dovish expectations build ahead of a central bank meeting on Tuesday.

Three sources had told Reuters on Friday that the U.S. Administration was mulling de-listing Chinese companies from U.S. stock markets.

The reports initially sent major stock indices and the slipping, but losses were pared as it became clearer that a decision on such moves was not imminent. On Saturday a U.S. Treasury official said such ideas were not being contemplated “at this time”.

“The tensions between the U.S. and china are certainly now multi-dimensional,” said Rodrigo Catril, senior forex strategist at National Australia Bank in Sydney. “It’s not just about trade or buying more soy beans…it’s about the structural tensions that exist between those two countries.

“Now there is a capital war angle,” he said, adding that currency market reaction was modest, because the ideas were only proposals.

Traders are expecting fewer trade-war headlines during the week, Catril said, since China has a week-long holiday beginning on Tuesday, which marks the 70th anniversary of the People’s Republic of China.

The Chinese yuan , the most sensitive to trade tensions, trod water at 7.1361 per dollar in offshore trade ahead of the release of Chinese factory activity surveys around 0100 GMT.

The figures are expected to show a fifth straight month of contraction.

Against a basket of currencies () the dollar was flat around 99.100. The dollar greenback firmed a little against the Australian and New Zealand dollars. The slipped 0.2% $ 0.6280 after a gauge of national business confidence fell.

The edged down to $ 0.6764.

Financial markets are now pricing in a better-than 70% chance of the Reserve Bank of Australia reducing the cash rate for the third time this year to 0.75% at its Oct. 1 board meeting, while most economists also expect a cut.

“There is a view to sell AUD on the idea the RBA is to cut,” said Chris Weston, head of research at brokerage Pepperstone Group in Melbourne.

“(But) given what’s priced, if the bank cut, the AUD downside should be limited. So, the extent of any selling will also be driven by the RBA’s tone and outlook,” he said.

GRAPHIC: World FX rates in 2019 – http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html

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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Dallas man allegedly kills burglar then heads back to bed

michael-mayer-horizontal.png
This booking photo, provided Sunday, September 29, 2019, by the Dallas County Sheriff’s Office, shows James Michael Meyer, 72, of Dallas, charged with murder in the fatal shooting early Thursday, September 26, of a man that police say Meyer reported as a burglary. Dallas County Sheriff’s Office

One man’s shot in the dark last week turned into a fatal situation. James Michael Meyer, a 72-year-old man from Dallas, Texas, has been charged with murder after authorities said he fatally shot a suspected robber at his home and headed back to bed before reporting the incident two hours later.

According to The Associated Press, Meyer claims he woke up around 5 a.m. Thursday to the sounds of someone breaking into a storage shed in his backyard with a pickax. The arrest warrant affidavit states that Meyer went outside — shotgun in hand — and yelled at the suspected burglar to stop what he was doing or else Meyer would shoot. 

Meyer said he fired his gun when the burglar allegedly moved toward him. The burglar then ran toward a park behind the home, dropping his pickax in the process. Meyer said he then fired another shot “into the night.” He claims he did not know that he shot the burglar when he returned to bed following the incident. 

Trending News

Upon waking up at around 7 a.m., Meyer thought he saw a “black bag” in the park and discovered soon after that the shape was the body of the alleged robber. He and his wife called an attorney for advice before reporting what happened to 911. Police found the alleged robber face down with a gunshot wound on the back of his neck, according to CBS Dallas/Fort Worth. The man was pronounced dead at the scene. 

Meyer was arrested Friday and is being held on $ 150,000 bail.

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U.S. – CBSNews.com

Japan’s LDP (Abe’s ruling party) will propose tax breaks to encourage retained earnings into new businesses

The headline is my generous reading of this news in the Nikkei

  • Japan’s ruling party will propose tax breaks to encourage businesses to channel their record stashes of cash into mergers and acquisitions that fuel new thinking and businesses.

Akira Amari, the Liberal Democratic Party’s tax policy chief, to the Nikkei in an interview.

  • considering a tax credit to encourage business to invest retained earnings in new businesses
  • seek to incentivize investments in other companies and startups 
The headline is my generous reading of this news in the Nikkei

I quite like it. 

ForexLive

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Two killed when rollercoaster car jumps rails

A speeding rail car on a rollercoaster flipped over mid-ride at a Mexican amusement park on Saturday, killing two people and injuring two others. The Mexico City attorney general’s office said two men aged 18 and 21 died of head and other injuries when the last car on the coaster derailed at the La Feria amusement park. Two women were hurt.

Preliminary investigations indicate a mechanical failure caused the car to come loose and fall from a height of 33 feet above the ground, said Ulises Lara López, spokesman for the attorney general’s office.

Authorities are treating the accident as a case of negligent homicide.

Trending News

Video circulating on social media showed the car flipping nearly upside down and smashing into a metal loop on the rollercoaster. Images from the aftermath showed first responders attending victims and a single metal rail car on the ground, on its side, near blood stains.

The towering Quimera coaster in Chapultepec Park can be seen from afar in the capital, its three nearly vertical yellow and red loops visible from a major highway. The Feria park closed following the accident. 

ap-19272032816190.jpg
Agencia EL UNIVERSAL/Hugo Garca/EELG (GDA via AP Images

A vendor at the park told local news outlet El Universal that she saw a passenger thrown from the car, and that other riders hit their heads as the coaster advanced at high speed while dragging the flailing, final car. 

The decades-old coaster, like many rides in La Feria, was featured at other parks around the world before finding a home in Mexico City. 

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World – CBSNews.com

IMF Says Greece Needs More Fiscal Space From European Partners

(Bloomberg) — A reduction of Greece’s fiscal targets would support the country’s economic and social recovery, the International Monetary Fund said.

In 2020, the IMF recommends that “the government and European partners build consensus around a lower primary balance path, given ample economic slack and critical unmet social spending and investment needs,” according to the fund’s statement after the conclusion of its Article IV mission in Athens.

Greece has to achieve a primary surplus of 3.5% of gross domestic output every year until 2022 under the terms of a deal with its European creditors. The new Prime Minister, Kyriakos Mitsotakis, who took over in July, has called these targets “a relic of the past,” and he is now trying to convince his country’s partners to reduce them, starting in 2021.

For 2019, Greece is going to meet its primary surplus target “more or less,” Peter Dolman, IMF mission chief for Greece told reporters in Athens on Friday. But there is a gap for 2020, and the question is what the quality of the measures taken to fill this gap will be, he said.

Cutting public investments is not a quality measure and the country should improve its sales-tax compliance and broaden its tax base to create more fiscal space for social policies and tax cuts, Dolman said.

The fund forecasts that Greece’s growth rate for both 2019 and 2020 will be around 2%. It “will take another decade and a half for real per capita incomes to reach pre-crisis levels,” the IMF said in the statement.

To support growth, the new government “should use its political mandate and improving investor sentiment to deploy a full range of policy tools and overcome long-standing vested interests,” it said.

Fixing banks must be a top priority for the new government given that they are a misfiring engine. Apart from the implementation of an Italian-style project to massively cut bad loans, which is about to be approved by European authorities, the government should take further actions to make judicial processes more efficient and improve insolvency law, according to the IMF.

While Mitsotakis’s administration “deserves credit for unblocking privatization and pushing through business deregulation and digitalization,” much of the needed structural transformation of the Greek economy still lies ahead, the IMF said.

The IMF expects Greece’s public debt-to-GDP ratio to decline over the next decade with relatively low liquidity risks in the medium term also noting that the country has a large cash buffer to use if needed. But, in terms of debt sustainability analysis “we think the long-term sustainability is not assured,” Dolman said.

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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Canada’s Heaton takes fumble memes in his stride

(Reuters) – Canadian Matt Heaton is staying positive by seeing the funny side of things of his error-prone Rugby World Cup debut against Italy on Thursday.

Italy smashed Canada 48-7 at the Fukuoka Hakatanomori Stadium with Heaton fumbling the ball right at the line, getting a yellow card and giving up a penalty try.

“You have to have a brain of a goldfish and try and forget negatives,” Heaton told reporters. “It’s definitely always at the back of your mind. Now I’m getting tagged in all the Instagram memes and things like that. It’s quite funny. You have to have a laugh about it.

“You have to, otherwise you’ll just burn yourself out with stress. That’s no way to play. Just move on and catch the next one. I can’t do any worse any more.”

Heaton started the game on the bench but was thrust in due to an early injury to teammate Lucas Rumball.

“You try and play the cool cucumber all day,” the 26-year-old said. “I thought I had a good mental prep, but then as soon as I saw that I was coming on, the nerves were through the roof. It was baptism by fire.

“It’s the third-largest sporting event for viewership in the world so when I got on, I was like, I better not do anything like pick my nose or scratch my ass because everyone’s going to be watching.”

Soon after he came on, captain Tyler Ardon burst clear and passed to set up what should have been their opening try only for Heaton to drop the ball with the line gaping.

“Tyler took on a defender and then the ball came out of his hands and I went ‘oh crap, I better not drop this’, and as soon as you think about something like that, that’s how it works,” he said, hoping to put on a better show against New Zealand.

“I’m going to have to do something big to get me out of it. I have to pull a stunt or something like that. Hopefully, the opportunity comes and I’ll hold it with two hands this time.”

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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Italy expects budget deficit to rise next year, debt to fall: source

© Reuters. FILE PHOTO: French President Emmanuel Macron and Italian Prime Minister Giuseppe Conte meet in Rome © Reuters. FILE PHOTO: French President Emmanuel Macron and Italian Prime Minister Giuseppe Conte meet in Rome

By Gavin Jones

ROME (Reuters) – Italy will target its budget deficit at around 2.2% of gross domestic product next year, falling to 1.8% in 2021 and 1.4% in 2022, a political source said on Saturday.

Economic growth is seen around 0.6% next year, and rising to 1.0% in each of the following two years, according to a draft of the targets seen by the source.

The Cabinet is due to sign off on the new targets contained in the Treasury’s Economic and Financial Document (DEF) at a meeting on Monday.

The targets are still subject to possible marginal revisions ahead of Monday’s meeting, the source said. In particular the 2020 deficit goal could be lowered to 2.1% depending on ongoing negotiations with the European Commission.

This year’s deficit is seen at around 2.0% of GDP, Deputy Economy Minister Antonio Misiani said this week.

The new government of the anti-establishment 5-Star Movement and the center-left Democratic Party intends to avoid an increase in sales tax worth some 23 billion euros ($ 25 billion)scheduled for January, which was promised to the European Union as a backstop to ensure Rome respected the bloc’s fiscal rules.

However Prime Minister Giuseppe Conte, in comments on Friday, did not rule out possible adjustments to value added tax (VAT) rates.

Under an unchanged policy scenario, which includes the full VAT tax hike, next year’s deficit would fall to around 1.5% of GDP, two sources told Reuters earlier this week.

Italy has proportionally the second highest public debt in the EU after that of bailed-out Greece, and has made little progress in reducing its deficit toward a balanced budget in recent years as EU rules prescribe.

The debt is forecast to rise this year from last year’s 134.8% of GDP, the political source said, before declining in 2020, 2021 and 2022.

Italy has urged the EU to ease what it calls the “excessive rigidity” of EU fiscal rules to head off the risk of recession in the 19-nation euro currency bloc.

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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