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One month high-Dollar, Evergrande risks

The dollar held below a near one-month high. This is because the investors focused on two key risks. One is the Chinese property developer Evergrande and the other one expected pace of U.S. monetary policy tightening. The dollar index stood at 93.226 in early Asian trade. The euro changed hands at $1.1725. The common currency dropped to 127.93 yen. The dollar traded at 109.165 yen. The Bank of Japan is expected to keep its policy on hold.

Tohru Sasaki, head of Japan markets research at JP Morgan said that due to worries about Evergrande, the market is still in risk-off mood. This is with the support of both the dollar and the yen. The yen has been generally shorted by many players so there can be room for more short-covering, as per his view. Evergrande was once China’s top-selling property developer. It is now inching closer to a key deadline. The bonds would be deemed in default, when Evergrande fails to settle the interest within 30 days.

If incoming data holds up, there are rising expectations that the central bank will signal its plans to start reducing its massive bond purchases in November. The dot plot charts policymakers economic and rates projections, will attract attention for clues. JP Morgan’s Sasaki said that perhaps tapering is already baked in. What will matter the most for the currency market is how dot-plots or comments from Powell will affect U.S. rate expectations. Then the Canadian dollar stood little changed. The United States unveiled sanctions against a cryptocurrency exchange.

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Euro zone ministers expect inflation to slow in 2022

The acceleration of euro zone inflation, driven energy prices, is mostly temporary. Then the price growth will slow down again. The euro zone finance ministers agreed that, that too the next year as forecasted by the European Central Bank and the European Commission.

Paschal Donohoe, chaired the talks of the ministers in Luxembourg. In a news conference he said that there was also agreement that the inflation spike was not an argument against the transition to renewable sources of energy. This is under the EU’s ambitious plan of reducing CO2 emissions to zero by the year 2050.

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Under new rules, borrowing for investment sensible

British finance minister Rishi Sunak said that the government borrowing to fund investment was a sensible thing. This is to allow under new fiscal rules that he is likely to announce, unlike borrowing for day-to-day spending. He said that borrowing for capital investment that is going to drive up their growth is probably a sensible thing for them. And that too particularly in an environment of slightly lower interest rate. Sunak stated this in an event on the sidelines of the annual conference of Britain’s ruling Conservative Party. This event was organized by the Taxpayers’ Alliance advocacy group. Sunak stated in that event, that borrowing for more day-to-day spending is probably less something that you would want to have as part of your framework.

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IMF board to interview Georgieva-sources

The International Monetary Fund’s executive board is going to interview Managing Director Kristalina Georgieva. This is regarding that; its reviews claims that she pressured World Bank staff to alter data to favor China in her previous role. Board members were initially expected to meet with Georgieva. But spent their time working on other regular business matters.

The board members spent hours for questioning lawyers from the WilmerHale firm. This is about their World Bank investigation report which alleged that Georgieva, as the bank‘s CEO applied undue pressure on staff, to alter data in the flagship “Doing Business” report to benefit China. Then, an IMF spokesperson said that the IMF board remains committed to a thorough, objective, and timely review of the matter. Georgieva has strongly denied the accusations.

The upcoming interviews could prove pivotal in either increasing support for Georgieva. This is with many IMF shareholders are keen to wrap up the board’s deliberations on the matter. The fund’s most influential member governments, including the top shareholder the United States, have withheld public judgment. The World Bank tasked WilmerHale with investigating the “Doing Business” data irregularities identified in 2020. The law firm’s report contends Georgieva. The former World Bank President Jim Yong Kim’s office pressured staff to manipulate data so that the China’s global ranking in the “Doing Business 2018” study of investment climates rose to 78th from 85th.

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