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Dollar touches 7-month low as Fed rate rise expectations slide

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Dollar touches 7-month low as Fed rate rise expectations slide

The greenback touched a seven-month low on Wednesday, reversing a development that dominated a lot of 2022 as decrease expectations of sharp Federal Reserve charge rises eased stress on world markets.

The autumn within the US foreign money, one of many steepest for the reason that aftermath of the worldwide monetary disaster, got here as US retail figures confirmed a 1.1 per cent year-on-year drop in gross sales in December — an even bigger than anticipated fall that highlighted persevering with weak point within the US economic system.

“The development has been very a lot in favour of greenback weak point, so it doesn’t take a lot to push it additional in that path,” stated Alan Ruskin, head of G10 FX technique at Deutsche Financial institution. “Any minor macro data can sway [the dollar].”

Expectations in regards to the Fed’s future actions are influential in foreign money buying and selling since increased rates of interest drive up yields on US debt, attracting overseas inflows that increase the greenback.

The greenback index measuring the foreign money towards a basket of its friends has fallen 10.7 per cent since September, the quickest charge of decline since 2009.

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Knowledge launched on Wednesday additionally confirmed a 0.5 per cent month-on-month decline in wholesale costs — the sixth consecutive fall — additional boosting hopes that the stress on the Fed to boost charges is relenting. US shopper inflation has fallen constantly for 5 months.

The commerce within the US foreign money grew to become generally known as “King greenback” because it rose on the again of massive Fed charge rises final yr, however the latest knowledge have bolstered market expectations that borrowing prices is not going to rise a lot additional in 2023.

The Fed has already pivoted from 0.75 proportion level to 0.5 level will increase and is more and more anticipated to shift to 0.25 increments.

“We presently have merchants placing a 5 per cent probability on a 0.50 proportion level improve on the subsequent Fed assembly. It’s not usually you get that form of certainty,” stated Ed Al-Hussainy, strategist at Columbia Threadneedle.

The Fed subsequent meets on February 1.

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The autumn within the US foreign money has taken the greenback index from over 114 factors in September to 101.53 by mid-morning on Wednesday in New York, its lowest level since Could 31. Nevertheless, the greenback recovered to 102.40 in noon buying and selling after Fed officers warned towards anticipating charges to fall quickly.

The sliding greenback has boosted rising market shares, with MSCI’s EM index rising 7 per cent this yr, in contrast with a fall of twenty-two per cent in 2022. The group’s debt and currencies have additionally rebounded this yr.

“Rising market belongings have begun 2023 on the entrance foot, posting sturdy positive aspects within the first two weeks . . . and broadly outperforming developed market friends,” stated Caesar Maasry, a strategist at Goldman Sachs.

“The elemental drivers relating to China reopening, softening inflation and higher progress on the European entrance have contributed to this rally however the pivotal shift in markets on the high of EM traders’ minds has been the reversal of the US greenback.”

Most commodities are priced in {dollars}, so a weaker greenback helps lower import payments for rising markets. It additionally makes it inexpensive to service debt priced within the foreign money.

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Further reporting by Adam Samson in London

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Joe Biden to raise solar import tariffs in bid to protect US industry

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Joe Biden to raise solar import tariffs in bid to protect US industry

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Joe Biden is set to impose tariffs on double-sided solar panel imports, as the president moves to protect US clean energy manufacturers and boost jobs ahead of November’s election.

US officials said the move would immediately end an exemption from Trump-era tariffs on imports of a type of panel unit often used in large solar projects, one of the fastest-growing forms of clean energy in the country. They will now attract a tariff rate of 14.25 per cent.

The steeper levy marks the latest protectionist move by the president, who is competing with Republican rival Donald Trump to court blue-collar voters in US manufacturing heartlands, with less than six months to go until the election.

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On Tuesday, Biden sharply increased tariffs on Chinese imports including electric vehicles and solar cells, deepening trade tensions with Beijing and thrusting trade policy to the centre of the election battle.

US officials have warned that China is producing more goods than its own market can absorb, triggering fears that Beijing could use cheap exports to undercut producers in other countries.

Ali Zaidi, Biden’s climate adviser, said the US solar “investment boom” was threatened by “unfair and non-market practices taking place overseas”. 

“The Chinese solar panel overcapacity, now projected to be double world demand, threatens to undercut panel manufacturing and solar supply chains around the world,” Zaidi said.

The announcement from the Biden administration comes as US imports of cheap solar panels and cells, largely from south-east Asia, have soared to record highs. An overproduction of solar panels from China has led to a collapse in global panel prices, threatening US manufacturing plans.

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The US imported 55 gigawatts of panels and 3.8GW of solar cells in 2023, with more than three-quarters of cell imports coming from Malaysia, South Korea and Vietnam, according to BloombergNEF.

Alongside the new tariff on double-sided panels, the US is also offering some relief to domestic developers still reliant on imported cells — the units that make up panels — by increasing the amount that can be imported without levies from 5GW to 12.GW.

While some companies have announced their intent to open solar cell factories since the passage of the Inflation Reduction Act — aimed at boosting the domestic clean energy industry, among other goals — the US does not have any manufacturing capacity in operation.

The relief applies to cells imported from Asian countries except China, whose cell exports to the US face a 50 per cent tariff under the new regime announced on Tuesday.

“We know that the process of onshoring, friendshoring and frankly just diversifying the supply chains is not one that can be executed overnight,” said Zaidi.

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Raising the quota would ensure manufacturers in the US would have solar cells available to them and would support expanded US solar manufacturing, he added. 

US manufacturers including First Solar and Heliene had called for the US International Trade Commission to remove the tariff exemption for double-sided panels.

But the increase in the cell quota could anger large US manufacturers that make their own cells, including First Solar and Qcells, which have petitioned for antidumping duties on south-east Asian solar cells.

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Authorities seek public's help identifying baby abandoned in shopping cart at Lomita business

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Authorities seek public's help identifying baby abandoned in shopping cart at Lomita business

LOMITA, Calif. (KABC) — Authorities are asking for the public’s help in identifying a baby who was left at a business in Lomita.

A photo of the child was released, along with a surveillance image of an unidentified pregnant woman who authorities say abandoned the infant inside the store.

The child is believed to be seven to nine months old.

Deputies responded around 5 p.m. Tuesday to a business in the 2000 block of Pacific Coast Highway. When they arrived, a store employee told them a pregnant woman with a baby had entered the store and asked for a taxi.

The woman went to the bathroom as the employee arranged for a taxi. When the taxi arrived, authorities say the woman got in the car and left the child behind in a shopping cart.

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The woman’s whereabouts are unknown, and the child is in the care of the Department of Children and Family Services, according to the Los Angeles County Sheriff’s Department.

Anyone with information is asked to contact the Lomita Sheriff’s Station at 310-539-1661. Anonymous tips can be made by calling Crime Stoppers at 800 222-8477.

Copyright © 2024 KABC Television, LLC. All rights reserved.

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When the customer is not always right

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When the customer is not always right

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One of the world’s best known luxury brands recently conducted a survey of its global store network, sending local platoons of secret shoppers to assess the level of customer service. Despite their stellar reputation, the outlets in Japan fared dismally.

“The problem was not the service. It was the shoppers,” relates the senior director in charge. “In reality, we knew the service in our Japan stores was by far the best anywhere in the world, but the Japanese customers that we sent found faults that nobody else on earth would see.”

Many will see an enviable virtuous circle in this tale — a parable of what happens when a service culture seems genuinely enthusiastic about and responsive to the idea that the customer is always right. High service standards have begotten high expectations, and who would see downside in this?

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The trouble is that, in Japan as elsewhere in the world, the “customer is always right” mantra is having a bit of a wobble. Perhaps existentially so.  

The concept has always come with pretty serious caveats; fuller versions of the (variously attributed) original quote qualify it with clauses like “in matters of taste” that shift the meaning. But in a tetchier, shorter-fused world the caveats are multiplying.

Japan’s current experience deserves attention. After many decades at the extreme end of deifying the customer (Japanese companies across all industries routinely refer to clients as kamisama, or “god”), there is now an emerging vocabulary for expressing a healthy measure of atheism. 

The term “customer harassment” has, over the past few years, entered the Japanese public sphere to describe the sort of entitled verbal abuse, threats, tantrums, aggression and physical violence inflicted by customers on workers in retail, restaurants, transport, hotels and other parts of the customer-facing service economy. One recurrent complaint has been customers demanding that staff kneel on the floor to atone for a given infraction.

However tame these incidents may appear in relative terms — comparing them with often violent equivalents in other countries — the perception of a sharp increase in frequency means the phenomenon is being treated as a scourge. The Japanese government is now planning a landmark revision of labour law to require companies to protect their staff from customer rage.

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The real breakthrough, though, lies in legislating the idea that customers can be wrong — a concept that could prove more broadly liberating.

Luxury goods and virtuous circles aside, customer infallibility has not necessarily been the optimal guiding principle for Japan, and is arguably even less so now that demographics are squeezing the ability to deliver the same levels of service as before. Excessive deference to customers came, during the country’s long battle with deflation, to border on outright fear that the slightest mis-step risked losing them forever.

So much deference was paid to the customer that companies were reluctant to raise prices even as they themselves bore the cost of maintaining high standards of service. Japan, during its deflationary phase, became one of the great pioneers of product shrinkflation: a phenomenon that, from some angles, made deference to customers look a lot like contempt for their powers of observation.

Perhaps the biggest dent left by Japan’s superior standards of service, though, has been the chronic misallocation of resources. The fabulous but labour-intensive service that nobody here wants to see evaporating has come at a steadily rising cost to other industries in terms of hogging precious workers. That has become more evident as the working-age population begins to shrink and other parts of the economy make more urgent or attractive demands. As with any large-scale reordering, the process will be painful.

Worldwide, though, the sternest challenge to the customer is always right mantra arises from its implication of imbalance. Even if the phrase is not used literally, it creates a subservience that seems ever more anachronistic. In a research paper published last month, Melissa Baker and Kawon Kim linked a general rise in customer incivility and workplace mental health issues to the customer is right mindset. “This phrase leads to inequity between employees and customers as employees must simply deal with misbehaving customers who feel they can do anything, even if it is rude, uncivil and causes increased vulnerability,” they wrote.

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Japan may yet be some way from letting service standards slip very far. It may be very close, though, to deciding that customers can have rights, without being right.

leo.lewis@ft.com

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