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Due of debt anxiety, the dollar is trading close to multi-month lows.

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– A wavering dollar teetered near multi-month lows on Monday in a market unsettled by the U.S. Treasury’s ​promise to buy back more long bonds, while traders awaited details of sanctions on Iran and on policy ‌speeches this week in the U.S. and Japan.

The Canadian dollar slipped 0.2% in early trade, to C$1.3798 per dollar, after trade talks with the U.S. collapsed and Washington imposed 50% tariffs on Canadian goods, with Canada retaliating in kind.

The Australian and New Zealand dollars traded just shy of three-month highs at $0.7171 and $0.5979 ​respectively.

The euro was comfortably above $1.16 at $1.1685 while the yen kept to the strong side of 159 per dollar.

Friday data showing ​the strongest U.S. services growth in nearly two years in August held off dollar sellers in steady early ⁠trade.

The dollar logged its largest weekly drop against bitcoin in nearly three-and-a-half years on Sunday and it’s been sliding sharply on gold over revived fears the ​currency will suffer if the U.S. tries to hold down yields.

Long-end yields have been climbing globally on a combination of a solid economic ​growth outlook, rising inflation expectations and nerves about ballooning sovereign debts.

Last week, after 30-year yields hit almost two-decade highs, the U.S. Treasury announced it would double buybacks at the long end to $4 billion per operation.
The size is paltry in a market worth $32 trillion but the interventionist signal spooked traders and hit the dollar.

“The ​U.S. Treasury’s attempts to artificially hold down long-term bond yields appears to be reigniting the $US debasement trade,” said Shane Oliver, head ​of investment strategy at Australian financial services firm AMP.

The mood was keeping Australian dollar above 71 cents, he said.
Sterling was firm at $1.3650 in morning trade ‌and the ⁠yuan , which notched an eighth straight weekly rise last week, hovered near a 3/1-2 year high at 6.7222 per dollar.

SANCTIONS AND WARSH

Later on Monday, at 1800 GMT, U.S. Treasury Secretary Scott Bessent is due to hold a press conference after threatening “the toughest sanctions in history” on Iran, with markets focused on whether he will target China.

Iran’s foreign minister has dismissed the threat of new U.S. sanctions as a sign of ​desperation.

Market participants will also be ​hoping for some clarity on ⁠the outlook for U.S. interest rates when Federal Reserve Chairman Kevin Warsh speaks in Jackson Hole, Wyoming, on Friday.

He is also sure to face questions about Treasury’s buybacks.

“Any comments on the balance sheet, ​duration supply, or term premium could move the long end more than the data itself. That ​said, given Warsh’s ⁠typically restrained style, we aren’t holding our breath,” said BNY strategist Geoff Yu.

A Thursday appearance by Bank of Japan deputy governor Ryozo Himino will also be closely watched as a prelude to next month’s policy meeting. In particular, investors will be looking to see if he pushes back ⁠on a ​shift in market pricing to see a faster pace of hikes.

“Himino may signal ​the BOJ is moving closer to another interest rate hike,” said Commonwealth Bank of Australia strategist Joe Capurso.

“However, any hawkish comments are likely to exert only modest downward ​pressure on USD/JPY. Developments in the U.S. bond market area are a more important driver of USD/JPY.”

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Nine companies prequalified for GEPCO privatisation

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The Privatisation Commission Board has shortlisted nine companies to take over 51% to 100% of the shares and control of Gujranwala Electric Power Company (GEPCO).

This decision was made during a meeting of the Privatisation Commission Board, led by Prime Minister’s Adviser Muhammad Ali, where the progress on GEPCO’s privatisation and other state-owned companies was discussed.

The board received 11 applications for GEPCO’s privatisation, and nine of them were approved to move forward.

The companies that made it through the first round include Aktor Electric and Genvira Energy from Türkiye, and Engro Energy, Hub Power, Sapphire, Shirazi Investments, Artistic Milliners, and AKD Securities from Pakistan.

K-Electric officially pulled out of the bidding, and Al-Sharif Contracting did not submit the required paperwork.

The Privatisation Commission said the nine approved companies will now start the due diligence process using a virtual data room.

The meeting also looked at the progress on outsourcing Islamabad, Karachi, and Lahore airports.
The board agreed to reorganize the team handling the airport outsourcing deals.

Additionally, the board has decided to speed up the privatisation of Zarai Taraqiati Bank Limited (ZTBL) and the House Building Finance Company Limited (HBFCL), asking advisers to work quickly on these deals.

A spokesperson from the Privatisation Commission stated that all privatisation deals will be handled in a fair, competitive, and professional way.

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IMF talks likely to clear way for 1.2 billion dollar tranche

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Ongoing talks between Pakistan and the International Monetary Fund (IMF) are likely to end this week, which might lead to a staff-level agreement and the release of about $1.2 billion, according to officials from the Finance Ministry.

The discussions have centered around Pakistan’s economic performance and how well the country is meeting important goals set by the IMF program.

Officials said the IMF is happy with Pakistan’s foreign exchange reserves and liked the performance of the Federal Board of Revenue in reaching its revenue targets during the July-September period.

Meeting the tax collection target was called a major achievement for the first quarter of the current financial year, according to the sources.

Both sides also talked about a plan to start a fixed tax system for farmers by the end of the current financial year.

The State Bank of Pakistan shared details with the IMF team about steps taken to keep foreign exchange reserves stable and reduce inflation.

The central bank told the delegation that foreign exchange reserves are at $21.4 billion, and commercial banks hold an additional $5.4 billion, the sources added.

The IMF delegation is set to give Pakistan’s economic team a draft of the Memorandum of Economic and Financial Policies (MEFP).

Reaching an agreement on the MEFP would help move forward with a staff-level agreement, which could lead to the release of a $1.2 billion funding amount, the sources said.

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Oil rises after Houthis claim attack on Saudi Aramco facilities

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After the Iran-aligned Houthi rebels in Yemen claimed to have attacked Saudi Aramco, the kingdom’s state oil corporation, the price of oil increased internationally.

On October 4, Reuters reported that the Houthis claimed to have fired drones and ballistic missiles targeting Aramco installations in the Khurais region and in Riyadh, the Saudi capital.

Prices increased due to worries that Saudi Arabia, one of the main exporters of crude in the Middle East, would experience production disruptions.

Brent crude futures were up 81 cents, or 0.79%, at $103.06 per barrel as of 10:02 p.m. GMT. West Texas Intermediate crude futures in the United States increased by 46 cents, or 0.50%, to $91.57 per barrel.

One of Saudi Arabia’s primary oil-producing regions is Khurais, which the Houthis designated as a target.

Whether the attack actually damaged any infrastructure or interfered with the production of crude oil was not immediately apparent.

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