Latest news with #KirstineKundby-Nielsen
CNBC
23-06-2025
- Business
- CNBC
Dollar surge could be short-lived after U.S. strike on Iran
The U.S. dollar surged in early trading on Monday, benefiting from its traditional safe-haven status after U.S. military strikes on Iran — but analysts are warning the gains may be short-lived. The dollar index was up 0.45% at one point, indicating a gain against currencies such as the Japanese yen, the euro and the British pound, as well as the Canadian, Australian and New Zealand dollars. The greenback was last seen trading around 0.4% higher at 9.30 a.m. London time. "The escalation of the Middle East crisis after the US attacks Iran during the weekend is expected to lead to some of the traditional safe haven effects in the market [such] as the oil price is rising, lower equity prices and a stronger dollar," said Kirstine Kundby-Nielsen, fixed income and currency research at Danske Bank. Despite the initial rally, a growing consensus among investment banks suggests the dollar's strength may prove temporary. Some analysts say the Middle East conflict is merely masking concerns over U.S. fiscal policy, trade wars, and weakening international demand for U.S. assets, which are likely to regain focus once the immediate crisis-driven demand fades. The dollar index is down more than 8% this year, reflecting the long-term concern. The U.S. dollar's immediate strength is tied to fears of how Iran might retaliate, with a closure of the Strait of Hormuz — a waterway vital to the transit of oil — at the top of those concerns. Yet, RBC Capital Markets analysts caution that the situation is more complex, noting that Iran has asymmetric capabilities to "strike individual tankers and key ports." "Hence, we do not believe it is a 'full closure or nothing' scenario when it comes to the waterway, and Iran may deploy their asymmetric capabilities to raise the economic cost of the combined US/Israeli operations," said RBC's Halima Croft, a former CIA analyst, in a note to clients. Jordan Rochester, head of FICC strategy for the EMEA region at Mizuho, also expressed some optimism when it came to the possibility of a Strait of Hormuz closure. "It's a bold call but I doubt the strait of Hormuz is blocked and we avoid the $100-130pb oil levels touted by the sell side with Iranian allies such as China likely to be applying pressure to keep oil flows ongoing," he said in a Monday morning note. "The US is also likely to have made energy infrastructure a red line attached to its support of Israel." However, a key indicator of safe-haven demand — the U.S. Treasury market — appears to be telling an entirely different story through its unusually muted reaction. A global crisis typically sends investors flocking to U.S. government debt, but Danske Bank's Kundby-Nielsen said the "impact on US Treasuries is a bit more uncertain given the significant trade deficit and tariffs combined with a potential increase in the supply of Treasuries given the soft fiscal policy". A global trade war is compounding these fiscal concerns. With a July 9 deadline approaching until a reprieve on levies expires, the U.S. is threatening tariffs of up to 50% on most imports from the European Union. "As far as the USD goes, we'd suspect that the USD would be sinking lower if it weren't for the War, largely because the news pertaining to US import tariffs is not particularly good, and because data from outside the US, while weak, does not point to further deterioration relative to the US," said Thierry Wizman and Gareth Berry, Macquarie's currency and rates strategists, in a June 20 note to clients that preceded the U.S. strike on Iran. FX strategists from Bank of America also point out that investors are betting heavily on the decline of the U.S. dollar, which adds momentum to any downward move for the currency. According to the BofA global fund manager survey released on June 16, fund managers currently see short-U.S. dollar as the third most crowded trade — although the survey was carried out before to the United States' involvement in the Middle East conflict.
CNBC
10-06-2025
- Business
- CNBC
Sterling weakens as soft labor market data supports UK rate cut bets
The British pound fell against the dollar and the euro on Tuesday as soft UK labor market data bolstered investors' bets for more rate cuts this year from the Bank of England. Pay growth slowed sharply while the unemployment rate rose to its highest level in nearly four years in the three months to April, Britain's Office for National Statistics said. The downturn appeared to gather pace in May as more timely tax office data showed a slump of 109,000 in the number of employees on company payrolls, the biggest decline since May 2020 at the height of the Covid-19 pandemic. "The latest official read on UK labor market activity provided broad confirmation that conditions were easing," said Nikesh Sawjani, senior UK economist at Lloyds. "Should the labor market continue to cool further in the coming months and quarters, consistent with the indication provided by a range of surveys, we believe that should give the Bank of England confidence to deliver further cuts in the Bank Rate over the next year or so." The pound was last down 0.5% against the dollar at $1.3488, having earlier dropped to its lowest since June 2 at $1.3458. The Bank of England meets next week and although it is expected to stand pat on rates, money market traders added to bets for additional rate cuts this year. Short-term rate futures priced in about 48 basis points of cuts by the end of the year, implying about two quarter-point cuts, compared with 39 bps before the data. "This (labor market data) puts a question mark on the hawkish bias that we've seen from the Bank of England," said Kirstine Kundby-Nielsen, FX analyst at Danske Bank. "Markets are very firm that we won't get a cut next week, and I think that's definitely the case, but it can open the door when we get to the August meeting." The pound was down about 0.4% at 84.6 pence per euro, its weakest level against the single currency since May 9.
Yahoo
10-03-2025
- Business
- Yahoo
Sterling extends drop versus euro after German fiscal boost
By Samuel Indyk LONDON (Reuters) - The pound extended a slide against the euro on Thursday, dropping to its weakest level since January as the single currency benefited from an improving growth outlook after Germany announced plans to massively boost fiscal spending. Sterling was last at 83.85 pence per euro, down about 0.2% on the day. It's dropped about 1.5% this week, and is on course for its biggest one-week fall since January 2023. "It's all to do with the broad-based euro optimism that we've seen with this shift in fiscal policy in Germany," said Kirstine Kundby-Nielsen, FX analyst at Danske Bank. On Tuesday, the parties looking to form the next government of Germany, Europe's largest and the world's third largest economy, agreed to loosen fiscal rules and create a 500 billion euro special fund to boost infrastructure. That sent the euro surging against major peers and pushed bond yields higher on expectations for more borrowing. Major investment banks have been quick to lift their growth forecasts for Germany and the euro zone bloc, while some now expect fewer interest rate cuts from the European Central Bank. The ECB announces policy later on Thursday and is widely expected to lower its deposit rate by 25 basis points, the sixth reduction in the easing cycle. Bank of England rate setters, meanwhile, are generally sticking to their "careful" approach to interest rate cuts, having lowered borrowing costs for the third time since August last month. Against the dollar, the pound was down 0.1%, having earlier risen to its highest in four months at $1.2924. Britain's construction sector contracted sharply last month, a survey showed on Thursday. The preliminary reading of the S&P Global/CIPS UK Construction Purchasing Managers' Index fell to 44.6 last month from January's 48.1, its weakest level since May 2020. "Rocketing uncertainty around global trade policy, rising materials prices, and the looming payrolls tax hike in April all conspired to further sap confidence," said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics. The all-sector PMI, which combines services, manufacturing and construction, fell to a 16-month low of 50, down from 50.3 in January. Sign in to access your portfolio
Zawya
06-03-2025
- Business
- Zawya
Sterling extends drop versus euro after German fiscal boost
The pound extended a slide against the euro on Thursday, dropping to its weakest level since January as the single currency benefited from an improving growth outlook after Germany announced plans to massively boost fiscal spending. Sterling was last at 83.85 pence per euro, down about 0.2% on the day. It's dropped about 1.5% this week, and is on course for its biggest one-week fall since January 2023. "It's all to do with the broad-based euro optimism that we've seen with this shift in fiscal policy in Germany," said Kirstine Kundby-Nielsen, FX analyst at Danske Bank. On Tuesday, the parties looking to form the next government of Germany, Europe's largest and the world's third largest economy, agreed to loosen fiscal rules and create a 500 billion euro special fund to boost infrastructure. That sent the euro surging against major peers and pushed bond yields higher on expectations for more borrowing. Major investment banks have been quick to lift their growth forecasts for Germany and the euro zone bloc, while some now expect fewer interest rate cuts from the European Central Bank. The ECB announces policy later on Thursday and is widely expected to lower its deposit rate by 25 basis points, the sixth reduction in the easing cycle. Bank of England rate setters, meanwhile, are generally sticking to their "careful" approach to interest rate cuts, having lowered borrowing costs for the third time since August last month. Against the dollar, the pound was down 0.1%, having earlier risen to its highest in four months at $1.2924. Britain's construction sector contracted sharply last month, a survey showed on Thursday. The preliminary reading of the S&P Global/CIPS UK Construction Purchasing Managers' Index fell to 44.6 last month from January's 48.1, its weakest level since May 2020. "Rocketing uncertainty around global trade policy, rising materials prices, and the looming payrolls tax hike in April all conspired to further sap confidence," said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics. The all-sector PMI, which combines services, manufacturing and construction, fell to a 16-month low of 50, down from 50.3 in January. (Reporting by Samuel Indyk Editing by Bernadette Baum)
Reuters
06-03-2025
- Business
- Reuters
Sterling extends drop versus euro after German fiscal boost
LONDON, March 6 (Reuters) - The pound extended a slide against the euro on Thursday, dropping to its weakest level since January as the single currency benefited from an improving growth outlook after Germany announced plans to massively boost fiscal spending. Sterling was last at 83.85 pence per euro , down about 0.2% on the day. It's dropped about 1.5% this week, and is on course for its biggest one-week fall since January 2023. "It's all to do with the broad-based euro optimism that we've seen with this shift in fiscal policy in Germany," said Kirstine Kundby-Nielsen, FX analyst at Danske Bank. On Tuesday, the parties looking to form the next government of Germany, Europe's largest and the world's third largest economy, agreed to loosen fiscal rules and create a 500 billion euro special fund to boost infrastructure. That sent the euro surging against major peers and pushed bond yields higher on expectations for more borrowing. Major investment banks have been quick to lift their growth forecasts for Germany and the euro zone bloc, while some now expect fewer interest rate cuts from the European Central Bank. The ECB announces policy later on Thursday and is widely expected to lower its deposit rate by 25 basis points, the sixth reduction in the easing cycle. Bank of England rate setters, meanwhile, are generally sticking to their "careful" approach to interest rate cuts, having lowered borrowing costs for the third time since August last month. Against the dollar, the pound was down 0.1% , having earlier risen to its highest in four months at $1.2924. Britain's construction sector contracted sharply last month, a survey showed on Thursday. The preliminary reading of the S&P Global/CIPS UK Construction Purchasing Managers' Index fell to 44.6 last month from January's 48.1, its weakest level since May 2020. "Rocketing uncertainty around global trade policy, rising materials prices, and the looming payrolls tax hike in April all conspired to further sap confidence," said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics. The all-sector PMI, which combines services, manufacturing and construction, fell to a 16-month low of 50, down from 50.3 in January.
