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Hot U.S. inflation drives dollar to 2021 peaks



November 11, 2021

By Tom Westbrook

SYDNEY (Reuters) – The dollar stood at its highest levels of the year against sterling and the euro on Thursday, while the yen was smarting from its sharpest drubbing in a month, after the hottest U.S. inflation reading in a generation fanned bets on rate hikes.

The euro was pummelled down 1% and through major support to $1.1476, its lowest since July 2020, after headline U.S. CPI came in at 6.2% overnight. It was pinned at that level early in the Asia session and lacks chart support until around $1.12.


Sterling dropped 1.2% to $1.3401, its lowest since December 2020 and the yen reversed a week of gains in a few hours and dropped 0.8% to 114.00 per dollar. [GBP/]

Emerging markets currencies also suffered from the dollar’s broad rise, with MSCI’s EM currencies index making its sharpest drop in two months as U.S. Treasury yields surged.

The rates moves, especially at the short end, suggest traders believe the Federal Reserve will step in to hike interest rates if prices keep running higher, said National Australia Bank’s head of FX strategy, Ray Attrill.

“The market is still conferring a degree of credibility on the Fed, that they are not going to allow very high inflation to persist indefinitely,” he said. If the dollar index moves higher than 95, investors might start to get out of the way, he said.

“It’s quite a big level technically and if we can break up through that then there will be more people throwing in the towel.” The index has climbed as far as 94.905.


The U.S. data showed price rises extending into rents, which could drive pressure on wages, both lengthening and broadening the pandemic’s inflationary pulse.

In its wake, the difference between five-year U.S. yields and yields at the same tenor in Japan and Germany stand at their widest – in favour of Treasuries – since early 2020. [US/]

The Australian and New Zealand dollars fell against the dollar’s broad rise on Wednesday, but have found support at around one-month lows as investors figure that rates are also going up to counter inflation in the Antipodes. [AUD/]

The Aussie steadied at $0.7331 in Asia and the kiwi at $0.7065.

Australian labour data is due at 0030 GMT but analysts say it will be difficult to interpret as the survey period only partially covers the reopening of major cities from pandemic-imposed restrictions.


Further dollar gains likely depend on clues about the Fed’s next moves, and on whether the inflation jump – which also sparked selling in stock markets – puts a broader weight on the mood.

“From an FX standpoint we are in a stand-off,” said Deutsche Bank strategist Alan Ruskin.

“On the dollar we have the classic dilemma – if Fed won’t respond to high inflation it is dollar negative; if the Fed brings forward tightening it is USD positive. Right now the dollar is broadly stuck between these two worlds.”

British growth data is due later in the day.



Currency bid prices at 0004 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change




$1.1482 $1.1477 +0.04% -6.02% +1.1487 +1.1476


113.9450 113.9000 +0.00% +10.27% +113.9450 +0.0000


130.82 130.72 +0.08% +3.07% +130.8500 +130.7200



0.9181 0.9182 +0.01% +3.79% +0.9182 +0.9180


1.3408 1.3402 +0.05% -1.85% +1.3413 +1.3405



1.2489 1.2499 -0.08% -1.92% +1.2495 +1.2472


0.7331 0.7326 +0.07% -4.70% +0.7334 +0.7325


Dollar/Dollar 0.7059 0.7058 +0.03% -1.69% +0.7068 +0.7060


All spots

Tokyo spots

Europe spots


Tokyo Forex market info from BOJ


(Reporting by Tom Westbrook.; Editing by Lincoln Feast.)

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Arnault-backed group launches second SPAC listing



December 7, 2021

By Emma-Victoria Farr

LONDON (Reuters) – France’s richest man Bernard Arnault and former UniCredit head Jean Pierre Mustier will publicly list a second blank cheque vehicle in Amsterdam, raising 200 million euros ($226 million), the bookrunners on the deal said.

Earlier this year, the duo raised half a billion euros from their special purpose acquisition company (SPAC), Pegasus Acquisition Company Europe B.V., which is searching for takeover targets in the financial sector.


On Tuesday, the same group of backers announced they would list a second vehicle with a similar focus, Pegasus Entrepreneurial Acquisition Company Europe, in Amsterdam.

SPACs are listed on a stock exchange by a group of entrepreneurs, who use the money raised to target a private company – allowing the target to get a stock market listing without the arduous process of launching a public listing.

Mustier is working with former Bank of America banker Diego De Giorgi and entrepreneur and investor Pierre Cuilleret in launching the 200 million euro listing.

Several SPACs have listed in Amsterdam, potentially boosting the Dutch financial capital’s credentials as a hub for fast-growing companies. London has only hosted one major SPAC in 2021, after updating its rules to make them easier.

Pegasus is backed by institutional sponsors Tikehau Capital and Financière Agache and by sponsors De Giorgi, Cuilleret and Mustier. Citi, Goldman Sachs and BNP Paribas are the bookrunners on the deal.


($1 = 0.8860 euros)

(Reporting by Emma-Victoria Farr; editing by John O’Donnell and Louise Heavens)

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Bulls back in charge as Omicron worries wane



December 7, 2021

By Marc Jones

LONDON (Reuters) – Waning Omicron COVID-19 variant worries and a timely booster shot of Chinese stimulus lifted world stock markets and oil on Tuesday and left traders offloading safe-haven currencies and bonds again.

The FTSEurofirst 300 index was on track for its first back-to-back run of plus 1% gains since February while Asia saw record bounces from some of China’s biggest firms such as Alibaba and Baidu. [.SS][.EU]


The risk-on mood also helped the dollar climb against safe haven currencies such as the Japanese yen,, which had lost 0.6% overnight, as the confidence-sensitive Australian dollar also found buyers. [FRX/]

Safe-harbour government bonds went the other way with yields – which move inverse to bond prices – up 2.5% on Germany’s benchmark 10-year Bund after falling to a three-month low on Monday. [GVD/EUR]

Reports in South Africa said Omicron cases there had only shown mild symptoms and the top U.S. infectious disease official, Anthony Fauci, told CNN “it does not look like there’s a great degree of severity” so far.

“Good news relating to the severity of Omicron should be taken with a pinch of salt. Faster transmission could offset the benefits of milder symptoms,” researchers at ING said in a note. “More broadly, it is still early days, even if markets are starting to display Omicron fatigue.”

The gains also came after China’s central bank on Monday injected its second shot of stimulus since July by cutting the amount of cash that banks must hold in reserve.


There was still uncertainty about its property sector as Evergrande teetered on the brink of default again but data showing much stronger import growth was “a positive sign on the strength of domestic demand”, RBC analyst Adam Cole said.

Elsewhere, Australia’s S&P/ASX200 rose 0.95%, while Japan’s Nikkei advanced 2.1% as risk-on sentiment pushed markets higher.

MSCI’s main Asia ex-Japan benchmark has lost about 5% so far this year, with Hong Kong markets figuring among the big losers, while Indian and Taiwan stocks outperformed.

Shares in embattled developer Evergrande edged up 1.7% after hitting a record low on Monday as markets waited to see if the real estate giant has paid $82.5 million with a 30-day grace period coming to an end.

Elsewhere, markets were supported by gains on Wall Street, where economically sensitive stocks outperformed.


“While epidemiologists have rightly warned against premature conclusions on Omicron, markets arguably surmised that last week’s brutal sell-off ought to have been milder,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, said in a note.

“After all, early assessments of Omicron cases have been declared mild, spurring half-full relief.”

Also supporting the dollar in FX markets was the expectation the Federal Reserve will accelerate the tapering of its bond-buying programme when it meets next week in response to a tightening labour market.

Oil prices jumped another 2% to $74.60 a barrel, adding to a near 5% rebound the day before as concerns about the impact of Omicron on global fuel demand eased. [O/R]

Copper prices also ticked higher while gold was steady at $1,778.5 per ounce on expectations U.S. consumer price data due later this week will show inflation quickening.


(Additional reporting by Anshuman Daga in Singapore; Editing by Nick Macfie)

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Exclusive: EU antitrust regulator seeks input on Microsoft’s $16 billion Nuance deal



December 7, 2021

By Paresh Dave

(Reuters) – EU’s antitrust regulator is taking a deeper look into Microsoft Corp’s $16 billion deal for transcription technology company Nuance Communications Inc, asking customers and competitors to draw up a list of concerns, according to a questionnaire from last month seen by Reuters.

The previously unreported outreach is the most extensive by an antitrust authority since the companies announced the acquisition in April, according to a person familiar with the matter.


Microsoft declined to comment, and Nuance did not respond to a request for comment.

After minimal review, the U.S. Department of Justice in June and the Australian Competition Commission in October said they would not contest the deal. The companies filed for approval from the European Commission’s competition bureau last month, and the regulator has until Dec. 21 to clear the deal or open a bigger investigation.

The companies had expected to close the deal by the end of this year, but said last month the timeline could slip to early next year.

The questionnaire asks whether Microsoft and Nuance are competitors and whether a tie-up could affect clients and rivals, including whether Microsoft could favor Nuance over competing services.

Nuance primarily sells transcription technology that is popular among doctors and call centers that want to automate note-talking. Analysts view the deal as bolstering Microsoft’s presence in the healthcare market, and bringing it new voice and medical data to train artificial intelligence offerings in health, speech and biometric security.


Like other big tech companies, Microsoft for years has grown its business through acquisitions, such as in advertising and video gaming. But in the last decade, Microsoft has avoided the target that recently has dogged its competitors Alphabet Inc’s Google, Facebook Inc, Apple Inc and Inc, all of which are facing antitrust lawsuits and investigations on numerous issues.

Steven Weber, a University of California Berkeley professor studying the intersection of technology and health care, said possible concerns about the pending deal could include Microsoft forcing its Office suite on Nuance customers by bundling them together.

Nuance has said it serves 77% of U.S. hospitals.

A key to its success has been has ensuring in deals with customers that it could use their data to advance its voice recognition systems, according to former chief executive Paul Ricci and another former employee.

For instance, a Nuance contract with Augusta University Medical Center, obtained by Reuters this year through a public records request, reads, “Customer shall provide Nuance access to voice and text data…and grants Nuance a perpetual, royalty-free license to copy, use and analyze such data for speech recognition research.”


Big cloud vendors such as Amazon and Microsoft typically do not have unfettered access to customers’ data for research and development. But the opportunity to acquire those relationships and data explains Microsoft’s interest in Nuance, the former employees said.

Other providers of health transcription technologies include 3M Co and Philips.

(Reporting by Paresh Dave; Editing by Kenneth Li and David Gregorio)

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