Currency traders are getting no joy from one of the market’s most crowded trades.
US dollar bulls have reason to be gloomy after the greenback ended last week little changed against a basket of peers following a three-week decline. The US currency struggled to lure buyers after a mixed jobs report and a US Federal Reserve meeting in which officials signaled no change to their interest-rate policy outlook.
With centrist French presidential candidate Emmanuel Macron leading in the polls heading into the final round of the election yesterday, market participants have become more optimistic about the euro’s prospects. In the options market, the likelihood of the US dollar rising against the euro this year has tumbled from a month ago.
“The [US} dollar is at a tipping point,” said AG Bisset Associates chief executive officer Ulf Lindahl, who manages about US$1 billion from Norwalk, Connecticut.
The greenback “is likely poised to drop sharply in the months ahead” as US economic data soften, he said.
Inflation and retail sales will be among the indicators to watch this week, as well as speakers including New York Fed President William Dudley.
This month’s consumer-price report might show inflation cooled from the same period last year, echoing last week’s reading on average hourly earnings.
The US dollar fell 0.9 percent last week to US$1.0998 per euro and is down more than 4 percent this year. The likelihood of the greenback posting an annual gain this year has dropped to 17 percent from 32 percent a month ago, options imply.
While the Fed has signaled two more rate hikes this year, traders aren’t convinced the economy is strong enough.
“The [US] dollar has peaked,” Societe Generale global strategist Kit Juckes wrote in a note last week.
While the Fed is on track for a rate increase this month, “that won’t be enough to drive the dollar very far unless the market rethinks the longer-term rate outlook,” he said.
San Francisco Fed President John Williams said his outlook for three or four rate increases this year has not shifted, as the US labor market shows signs of expanding beyond its sustainable rate and the economy is operating above potential.
“I haven’t changed, again, my views on what appropriate policy is” for the remainder of the year, Williams told reporters on Friday after a speech in New York, referring to his comments last month that three or four hikes would be required.
On Saturday, at an event in California, Williams said the economy “is operating above potential.”
Williams, who took over from now-Fed Chair Janet Yellen at the San Francisco Fed in 2011 when she joined the Fed’s Board of Governors, next votes on monetary policy next year.
POWERING UP: PSUs for AI servers made up about 50% of Delta’s total server PSU revenue during the first three quarters of last year, the company said Power supply and electronic components maker Delta Electronics Inc (台達電) reported record-high revenue of NT$161.61 billion (US$5.11 billion) for last quarter and said it remains positive about this quarter. Last quarter’s figure was up 7.6 percent from the previous quarter and 41.51 percent higher than a year earlier, and largely in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$160 billion. Delta’s annual revenue last year rose 31.76 percent year-on-year to NT$554.89 billion, also a record high for the company. Its strong performance reflected continued demand for high-performance power solutions and advanced liquid-cooling products used in artificial intelligence (AI) data centers,
SIZE MATTERS: TSMC started phasing out 8-inch wafer production last year, while Samsung is more aggressively retiring 8-inch capacity, TrendForce said Chipmakers are expected to raise prices of 8-inch wafers by up to 20 percent this year on concern over supply constraints as major contract chipmakers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co gradually retire less advanced wafer capacity, TrendForce Corp (集邦科技) said yesterday. It is the first significant across-the-board price hike since a global semiconductor correction in 2023, the Taipei-based market researcher said in a report. Global 8-inch wafer capacity slid 0.3 percent year-on-year last year, although 8-inch wafer prices still hovered at relatively stable levels throughout the year, TrendForce said. The downward trend is expected to continue this year,
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS