The USD/CAD pair recaptures a seven-week high near 1.3650 in Tuesday’s European session. The Loonie asset strengthens amid weakness across the Canadian Dollar’s (CAD) performance ahead of Canada’s Employment data for September, which will be published on Friday.

The Canadian job report is expected to show that the economy added 28K workers, higher than 22.1K in August. In the same period, economists expect the Unemployment Rate to have risen further to 6.7%. Signs of further deterioration in labor market conditions would prompt speculation for more Bank of Canada (BoC) interest rate cuts. This year, the BoC has already reduced its interest rates by 75 basis points (bps) to 4.25% as inflation has returned to the bank’s target of 2% and the economic outlook is vulnerable.

Meanwhile, the US Dollar (USD) struggles to extend its upside as investors shift focus to the United States (US) Consumer Price Index (CPI) data for September, which will be published on Thursday. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to gains near 102.50.

The US inflation data is expected to influence market expectations for the Federal Reserve’s (Fed) interest rate outlook. Currently, financial market participants expect the Fed to reduce its key borrowing rates again in November but with a smaller rate cut of 25 basis points (bps).

In Tuesday’s late Asian session, the comments from Fed Governor Adriana Kugler indicated that the policymaker sees more rate cuts as appropriate if price pressures continue to decline as expected.

Source: FXSTREET

Bringing electricity supply to several hundred million of the world’s poorest would require investments of $21.3 billion by 2030.

This is according to the Global Association for the off-grid solar energy industry, which said the sum is six times larger than what it has managed to attract in investments so far, as Bloomberg reported.

The annual sum that needs to be spent on opening access to electricity to those without it would come in at about $3.6 billion over the period.

“Access to finance remains a significant challenge for the off-grid solar industry,” GOGLA said in a new report, as access to electricity actually worsens instead of improving. In 2022, the number of people without access to electricity rose for the first time in 20 years, to 685 million. This is the latest data available, the report noted.

The great majority of people without access to electricity live in sub-Saharan Africa and the numbers are rising. In 2010, 50% of those lived in the region. By 2022, this has risen to 85%, the industry association also reported.

The cheapest way to provide electrification to these no-access areas is off-grid solar, according to GOGLA, but it needs financial support from other entities. Per the organization’s proposal, a mix of debt, subsidies, and equity would do the job.

Africa has long been seen as a perfect destination for wind and solar investors but there have been obstacles. Lacking grid infrastructure is perhaps the biggest of these, along with poverty that makes it hard for many to afford electricity supply.

Currently, the World Bank and the African Development Bank are working on a plan to bring electricity to 300 million across Africa by 2030. The two have promised to provide $30 billion for the project, raising another $90 billion from other investors.

Source: OILPRICE

EUR/USD rises to near the psychological resistance of 1.1000 in Tuesday’s European session. The major currency pair recovers mildly as the US Dollar (USD) faces a slight correction, with investors shifting focus to the United States (US) Consumer Price Index (CPI) data for September, which will be published on Thursday.

The inflation data is expected to show that the annual core CPI – which excludes volatile food and energy prices – has grown at a steady pace of 3.2% year-over-year (YoY). The headline inflation is estimated to have decelerated to 2.3% YoY from 2.5% in August.

The impact of the inflation data is expected to be lower on the Federal Reserve’s (Fed) interest rate outlook as policymakers are more focused on reviving economic growth and consumer spending. The comments from Fed Governor Adriana Kugler in Tuesday’s European session suggested that the policymaker sees more rate cuts as appropriate if price pressures continue to decline as expected.

Meanwhile, financial market participants expect the Fed to cut interest rates again in November, but the rate-cut size is expected to be 25 basis points (bps), according to the CME FedWatch tool. Lately, market speculation for a Fed 50 bps rate cut waned after the US job report for September, which showed that labor demand remained robust and wage growth was stronger than expected.

Daily digest market movers: EUR/USD rises slightly despite ECB Nagel is open for more rate cuts

EUR/USD edges higher amid a mild correction in the US Dollar. The outlook of the Euro (EUR) remains fragile as a majority of European Central Bank (ECB) officials continue to emphasize the need to reduce interest rates further due to a sharp deceleration in Eurozone price pressures and poor economic growth.

In an interview with Table Media, ECB policymaker and Bundesbank President Joachim Nagel said, "I am certainly open to considering whether we could possibly make another interest rate cut.” Nagel has also agreed with the revision of the Eurozone’s Gross Domestic Product (GDP) forecast for 2024 to a 0.2% contraction against a prior projection of 0.3% growth.

However, the German Industrial Production for August has come in better than expected. On a monthly basis, Industrial Production grew at a robust pace of 2.9%, compared to estimates of 0.8% after contracting by 2.4% in July.

Meanwhile, ECB policymaker and Austrian central bank Governor Robert Holzmann advised to proceed with caution on further interest rate cuts as inflation has yet not been defeated, in his comments while interviewing with Sueddeutsche Zeitung published on Monday. In September, the Eurozone flash Harmonized Index of Consumer Prices (HICP) decelerated to 1.8% year-on-year.

Technical Analysis: EUR/USD remains below 1.1000

EUR/USD gathers strength to gain ground near the immediate support of 1.0950. The major currency pair is broadly under pressure as it has delivered a breakdown of a Double Top chart pattern formation on a daily timeframe. The above-mentioned chart pattern was triggered after the shared currency pair broke below the September 11 low of 1.1000.

The 14-day Relative Strength Index (RSI) slides below 40.00. A bearish momentum would trigger if the RSI sustains below the same.

Looking down, the pair is expected to find support near the 200-day Exponential Moving Average (EMA) around 1.0900. On the upside, the 20-day EMA at 1.1070 and the September high around 1.1200 will be major resistance zones.

Source: FXSTREET

South Korea and Singapore have agreed to embark on a strategic partnership next year, marking the 50th anniversary of their establishment of diplomatic relations, the city state's Prime Minister Lawrence Wong said on Tuesday.

The two nations signed an extradition treaty and will look to deepen cooperation in fields such as artificial intelligence, defence and climate change, as well as upgrade their free trade pact.

"The upgrade is not just a change in name; it also means more substantial cooperation," Wong told a joint press conference with South Korean President Yoon Suk Yeol, who is on a state visit.

Both countries have many attributes in common, Wong added. "We were both 'Asian Tigers' that successfully transformed our economies," he said.

"And because we have benefitted greatly from regional peace and stability, we now seek to do our part to contribute towards the rule of law and strengthening the rules-based global order."

In addition, South Korea, the world's No.3 importer of liquefied natural gas (LNG), and Singapore, an LNG hub, signed a deal on cooperation in LNG supplies to benefit (from the) stability of the international supply chain, Yoon said in televised remarks.

Joint efforts could range from LNG swaps and joint purchases, to cooperation in tackling LNG supply chain crises, the Yonhap news agency said.

The countries also signed four pacts on supply chains, technology cooperation, food safety, and start-ups.

Yoon, who visited the Philippines this week, wraps up his trip to Singapore on Wednesday, before heading to Laos for a regional summit of leaders of the Association of Southeast Asian Nations (Asean) and several other Asian countries.

Seoul will participate in joint military exercises with Asean, and step up defence industry cooperation, the Straits Times newspaper quoted Yoon as saying in a written interview.

It will also work jointly to combat emerging threats, such as cyber and transnational crime, he added.

Source: Theedgemarkets

Dubai Holding, a sprawling investment conglomerate owned by the emirate’s ruler, is considering setting up a real estate investment trust to capitalize on the city’s property boom, according to people familiar with the matter.

The firm has lined up banks including Citigroup Inc., HSBC Holdings Plc and Emirates NBD Capital for the property trust offering, the people said, asking not to be named because the information is private. Deliberations are still at an early stage and decisions on the vehicle’s size haven’t been finalized, the people said.

Representatives for Dubai Holding, HSBC and Citi declined to comment. An Emirates NBD spokesperson didn’t respond to a request for comment.

Dubai Holding is one of the city’s principal investment vehicles with assets of 265 billion dirhams ($72 billion), ranging from luxury hotel chain Jumeirah to theme parks and the world’s tallest but non-functioning Ferris Wheel.

Setting up a REIT would allow investors to gain exposure to a number of prime income-generating assets overseen by one of the city’s biggest developers. The REIT would include some community developments that were recently transferred to Dubai Holding, the people said.

The deliberations come as Dubai experiences a relentless rise in demand for its property, with thousands of millionaires, financial professionals and businessmen flocking to the emirate in recent years to take advantage of its low-tax regime. Home values in the city have risen for 16 straight quarters and office leasing activity continues to surge.

One of Dubai’s main goals is to deepen its capital market and offering a REIT would present another channel to funnel financial flows into the emirate. Attempts to bolster the domestic stock market have already resulted in a slew of initial public offerings in the past two years.

Still, local REITs have faced challenges. Emirates REIT’s manager was probed four years ago by the Dubai Financial Services Authority over its corporate governance and later fined by the government agency. The Shariah-compliant real estate investment trust also faced opposition from bondholders over a proposed debt restructuring some years ago. Earlier this month, however, it sold another major asset to pare down debt.

Nakheel, Meydan

Earlier this year, Dubai Holding took control of two state-backed developers: Nakheel and Meydan.

While Nakheel is best known as the developer of Dubai’s artificial palm-shaped islands, it also teetered on the brink of default during the property crash in 2009 that nearly bankrupted Dubai. It has since consolidated operations and cut costs.

Meydan, for its part, owns one of the world’s most opulent horse racecourses. In 2021, its total debt amounted to about $4 billion, of which $2.6 billion required restructuring.

By bringing them “under the umbrella” of Dubai Holding, the emirate’s ruler Sheikh Mohammed bin Rashid Al Maktoum is hoping to create a “more financially efficient entity,” he said earlier this year.

Both companies have benefited from Dubai’s status as one of the world’s best performing property markets. Last year, for instance, hundreds of brokers and investors queued in the summer heat for a chance to buy property on the undeveloped Palm Jebel Ali island, where homes started at 18.7 million dirhams.

Dubai Holding this year refinanced a 30 billion dirham loan to replace older facilities held by Nakheel and Meydan. That move, led by Dubai Holding Chief Executive Officer Amit Kaushal, was seen as a potential precursor to an eventual listing of some of the conglomerate’s units over the next few years, people familiar with the matter said at the time.

Source: Theedgemarkets

The RBA minutes for the September 2024 Board meeting were less hawkish about supply potential than the August minutes. However, we detect an increasing emphasis on assessments of financial conditions more broadly, and a willingness to see these as a reason to hold the cash rate where it is.

Underlying inflation was characterised as being too high still, although the minutes noted that headline CPI for August would print below 3% because of the electricity subsidies. The minutes also noted the slowing in growth of advertised rents, which will feed through to CPI rent inflation over time.

After highlighting in August the downward revision in the staff’s view of supply capacity, the minutes for the September meeting acknowledged that momentum in demand was also weaker than previously believed. Consumption had been weaker in the June quarter than the RBA expected and the response to the Stage 3 tax cuts had gotten off to a slow start in July. Even allowing for the reallocation of some electricity consumption from household spending to government subsidy (and so public demand), downside risks on household spending were front of mind.

In other words, some of the hawkishness of the August meeting was likely unwarranted. Indeed, it was toned down in the post-meeting statement and minutes for the September meeting. The RBA assesses that the output gap is still positive but closing. That said, we note that the median estimate of private sector economists for March quarter 2024 was just 0.1%. Against this downward revision to domestic demand, subsequent announcements by the Chinese authorities have mitigated some of the downside risks to Australia’s external demand. In addition, the Board noted the pick-up in credit growth and decline in longer-term interest rates. It therefore judged that financial conditions had eased in recent months.

The minutes described the labour market as still being tighter than full employment but easing broadly as expected. Some of the strength in labour supply was recognised as being a response to cost-of-living pressures, as we noted back in August. Job vacancies had not yet returned to pre-pandemic levels. However, we struggle to reconcile why that is the appropriate benchmark. Many advanced economies saw unemployment reach multi-decade lows in the late 2010s, while Australia still clearly had considerable labour market slack at that time.

The minutes acknowledged the point about productivity that Westpac Economics has been making for some time. A rising share of employment in the non-market sector is dragging down measured total productivity growth. Yes, some market sectors had also seen weak productivity growth, something we have also noted previously. This matters in the RBA’s framework for thinking about the economy because the relationship between wages growth and productivity growth determines unit labour cost growth and (assuming constant markups) so inflation. But since wages growth is indeed easing as expected, it is not clear why a trend common to other countries remains a medium-term concern.

The minutes also included the regular half-yearly update on financial stability and a review of the Term Funding Facility; the latter will also be the subject of a speech by Assistant Governor (Financial Market) Chris Kent, presumably the speech scheduled for this week. Neither section contained any news on the RBA’s current monetary policy thinking. However, there was a hint in the financial stability section that the Board is giving more thought to the risks to financial stability should financial conditions ease. This also plays into the risk discussed in the Considerations for Monetary Policy section, that financial conditions might ‘turn out to be insufficiently restrictive to return inflation to target’.

More broadly, the Board seems to be putting increasing weight on its assessment of financial conditions as a guide to where policy needs to be. Like ‘full employment’ or ‘the output gap’, ‘financial conditions’ is an invisible construct that can only be inferred, not observed directly. And like full employment and the output gap, the RBA has documented a checklist for how it assesses them. However, it has not yet explained what the mechanism is for looser financial conditions to result in higher inflation than expected or desired ‘even if the Board’s judgements about consumption, the labour market and supply potential prove correct’, as the minutes put it. Normally one would expect looser financial conditions to influence firms’ pricing decisions through stronger demand. Perhaps this will be explained further in future speeches.