'Peace' Can Look Different To Trump, Putin And Zelenskyy And

The dollar dithered on Monday ahead of a key meeting between U.S. President Donald Trump and his Ukrainian counterpart Volodymyr Zelenskiy, while investors also looked ahead to the Federal Reserve's Jackson Hole symposium for more policy clues.

Currency moves were largely subdued in the early Asia session, though the dollar steadied after last week's fall as traders further pared back bets of a jumbo Fed cut next month.

The euro was little changed at $1.1705, while sterling edged up 0.07% to $1.3557.

Against a basket of currencies, the dollar advanced slightly to 97.85, after losing 0.4% last week.

Markets are now pricing in an 84% chance the Fed would ease rates by a quarter point next month, down from 98% last week, after a raft of data including a jump in U.S. wholesale prices last month and a solid increase in July's retail sales figures dimmed the prospect of an oversized 50-basis-point cut.

"While the data don't all point in the same direction, the U.S. economy looks to be in okay shape in the third quarter," said Bill Adams, chief economist at Comerica Bank.

"The Fed is likely to cut interest rates by year-end, either in September, when markets now price in a cut, or a few months later, when Comerica forecasts a cut."

The main event for investors on Monday is a meeting between Trump and Zelenskiy, who will be joined by some European leaders, as Washington presses Ukraine to accept a quick peace deal to end Europe's deadliest war in 80 years.

Trump is leaning on Zelenskiy to strike an agreement after he met Kremlin chief Vladimir Putin in Alaska and emerged more aligned with Moscow on seeking a peace deal instead of a ceasefire first.

Also key for markets this week will be the Kansas City Federal Reserve's August 21-23 Jackson Hole symposium, where Fed Chair Jerome Powell is due to speak on the economic outlook and the central bank's policy framework.

"I think (Powell) will also talk about the current economic conditions in the U.S., and that will be more policy relevant, that will be more interesting to markets," said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.

"Given market pricing is very high for a rate cut in September, I think the risk is that Powell is hawkish, or is perceived to be hawkish, if he gives a balanced view of the U.S. economy."

In other currencies, the dollar rose 0.11% against the yen to 147.34, after falling roughly 0.4% last week.

Japan's government on Friday brushed aside rare and explicit comments from U.S. Treasury Secretary Scott Bessent who said the Bank of Japan was "behind the curve" on policy, which appeared to be aimed at pressuring the country's central bank into raising interest rates.

Source: Yahoo Finance

Oil prices slipped on Monday as the U.S. did not exert more pressure on Russia to end the Ukraine war by implementing further measures to disrupt Russian oil exports after the presidents from both countries met on Friday.

Brent crude futures dropped 26 cents, or 0.39%, to $65.59 a barrel by 0028 GMT while U.S. West Texas Intermediate crude was at $62.62 a barrel, down 18 cents, or 0.29%.

U.S. President Donald Trump met Russian President Vladimir Putin in Alaska on Friday and emerged more aligned with Moscow on seeking a peace deal instead of a ceasefire first.

Trump will meet Ukrainian President Volodymyr Zelenskiy and European leaders on Monday to strike a quick peace deal to end Europe's deadliest war in 80 years.

The U.S. president said on Friday he did not immediately need to consider retaliatory tariffs on countries such as China for buying Russian oil but might have to "in two or three weeks", cooling concerns about a disruption in Russian supply.

China, the world's biggest oil importer is the largest Russian oil buyer followed by India.

"What was primarily in play were the secondary tariffs targeting the key importers of Russian energy, and President Trump has indeed indicated that he will pause pursuing incremental action on this front, at least for China," RBC Capital analyst Helima Croft said in a note.

"The status quo remains largely intact for now," Croft said, adding that Moscow will not walk back on territorial demands while Ukraine and some European leaders will balk at the land-for-peace deal.

Investors are also watching Federal Reserve Chairman Colin Powell's comments at the Jackson Hole meeting this week to search for clues on the path of interest rate cuts that could boost stocks to more record highs.

"It’s likely he will remain non-committal and data-dependent, especially with one more payroll and CPI (Consumer Price Index) report before the September 17th FOMC meeting," IG market analyst Tony Sycamore said in a note.

Source: Yahoo Finance

Battery investors are piling into Australia, chasing profits from the world’s most volatile power market by deploying storage that buys low and sells high.

Australia this month overtook the UK to become the world’s third-largest market for big batteries by installed capacity, after the US and China, according to Rystad Energy. That growth is set to continue, with utility-scale battery power uptake expected to jump eightfold from 2024 levels by 2035, when most of the coal plants that form the backbone of the grid are set to retire, according to BloombergNEF.

The nation of almost 28 million is phasing out aging coal plants and aims to more than double renewable generation to 82% of the total by 2030, making it a test case for the global energy transition. A rooftop solar boom has aided the shift but also created midday power gluts, giving big batteries the chance to buy electricity cheaply and sell it back when prices rebound.

“Australia has a unique situation — or maybe you could call it a challenge — where all this surplus energy spills into the market every day,” said David Guiver, vice president and general manager of trading at the local unit of Shell Plc, which has stakes in several big batteries. “That why we have seen a lot of large scale battery energy storage investment.”

Large amounts of solar coming online, and frequent breakdowns at coal plants, have created an imbalance between supply and demand — even causing an unprecedented market failure in 2022. Prices are often negative around midday — meaning users are paid to consume electricity — and soar during peak demand hours in the early evening, providing arbitrage opportunities.

Australia is the latest market where energy traders are betting on batteries to pad profits. After making fortunes hauling oil, gas and metals around the world, trading houses in Europe including Vitol Group and Trafigura Group have been turning their attention to opportunities to store and sell energy back to the grid. In the US, batteries have helped to prevent blackouts, although their rapid rollout has been hampered as tariffs add to costs.

Electricity prices in Australia’s main grid were negative or zero during a record 23% of the grid’s five-minute intervals in the fourth quarter of last year, which includes most of the southern hemisphere spring. That number fell to almost 11% in the first quarter, but is still above the rates seen in most European markets.

Last year, A$3.7 billion ($2.4 billion) was committed to large-scale battery projects in Australia, following a record A$6.9 billion in 2023, according to the Clean Energy Council. Meanwhile, rooftop solar installations were the most since 2021 — despite one in three homes already having panels, the highest penetration globally.

“Volatility is a massive opportunity that’s highly undervalued by the market,” said Nick Carter, chief executive officer of Akaysha Energy, a Blackrock Inc. unit that has battery projects in Australia, Japan and the US. That spread will likely hold or even widen over the next five to 10 years, he said.

Utility-scale batteries connected to the National Energy Market earned A$120.8 million in revenue from arbitrage last quarter — more than quadruple their income a year earlier. Batteries set prices in the grid 8% of the time, and were the highest-cost source at more than triple that of hydro, the most frequent price-setter.

That is a relatively new phenomenon — battery owners used to get most of their revenue by being paid to help balance demand and supply in the grid, known as ancillary services. However, the business model and technology have evolved rapidly since Elon Musk’s successful bet in 2017 that he could get the world’s first 100-megawatt model up and running in 100 days to help prevent outages in South Australia.

“Arbitrage is replacing ancillary services as the primary revenue stream for batteries, which we anticipate to remain the case,” said Andrew Steil, head of energy markets at Edify Energy Pty, a John Laing Group-backed renewable and storage developer. “This is the new normal.”

Akaysha, which doesn’t own power-generation assets or have retail customers, looks to arbitrage or government contracts for revenue. The company earlier this month started an A$1 billion super battery that’s set to be one of the world’s biggest at more than eight times the size of the original one Tesla Inc. helped build.

However, for traditional power utilities such as AGL Energy Ltd. and Origin Energy Ltd., batteries also serve as a means of limiting financial losses. They help manage portfolio risk due to outages, coal plant retirements and increasing price swings.

Origin has committed about A$1.7 billion to developing two utility-scale batteries and has secured offtake agreements for two more that are under construction. Meanwhile, AGL — Australia’s biggest coal generator — operates two grid-scale batteries and expects to start a third early next year.

“Batteries have solved the need for short duration storage and quick response capacity,” said Simon Sarafian, general manager trading and origination at AGL. “We’ve been very happy with how our batteries have been performing, and we’re looking to roll out more.”

Earnings from the units will more than offset higher coal and gas procurement costs from 2028, AGL Chief Executive Officer Damien Nicks said during the company’s half-year earnings presentation on Wednesday.

“So many batteries and so much capacity needs to be built in this market,” he said. “Don’t underestimate the sheer amount of batteries that are required in this market over the coming decade. It is enormous.”

Source: Bloomberg

European leaders will join Volodymyr Zelenskiy to meet Donald Trump in Washington, they said on Sunday, seeking to shore up Zelenskiy's position as the U.S. president presses Ukraine to accept a quick peace deal to end Europe's deadliest war in 80 years.

Trump is leaning on Zelenskiy to strike an agreement after he met Kremlin chief Vladimir Putin in Alaska and emerged more aligned with Moscow on seeking a peace deal instead of a ceasefire first. Trump and Zelenskiy will meet on Monday.

"If peace is not going to be possible here and this is just going to continue on as a war, people will continue to die by the thousands ... we may unfortunately wind up there, but we don't want to wind up there," Secretary of State Marco Rubio said in an interview with CBS' "Face the Nation."

Trump on Sunday promised "BIG PROGRESS ON RUSSIA" in a social media post without specifying what this might be.

Sources briefed on Moscow's thinking told Reuters the U.S. and Russian leaders have discussed proposals for Russia to relinquish tiny pockets of occupied Ukraine in exchange for Kyiv ceding a swathe of fortified land in the east and freezing the front lines elsewhere.

Top Trump officials hinted the fate of Ukraine's eastern Donbas region - which incorporates Donetsk and Luhansk and which is already mostly under Russian control - was on the line, while some sort of defensive pact was also on the table.

"We were able to win the following concession, that the United States could offer Article 5-like protection," Trump envoy Steve Witkoff told CNN's "State of the Union" on Sunday, suggesting this would be in lieu of Ukraine seeking NATO membership. He said it was "the first time we had ever heard the Russians agree to that."

Article 5 of NATO's founding treaty enshrines the principle of collective defense, the notion that an attack on a single member is considered an attack on them all.

That pledge may not be enough to sway leaders in Kyiv to sign over Donbas. Ukraine's borders were already meant to have been guaranteed when Ukraine surrendered a Soviet-era nuclear arsenal in 1994, and it proved to be little deterrent when Russia absorbed Crimea in 2014 and then launched its full-scale invasion in 2022. The war has now dragged on for 3-1/2 years and killed or wounded more than 1 million people.

German Chancellor Friedrich Merz, French President Emmanuel Macron, and British Prime Minister Keir Starmer hosted a meeting of allies on Sunday to bolster Zelenskiy's hand, hoping in particular to lock down robust security guarantees for Ukraine that would include a U.S. role.

The Europeans are keen to help Zelenskiy avoid a repeat of his last Oval Office meeting in February. That went disastrously, with Trump and Vice President JD Vance giving the Ukrainian leader a public dressing-down, accusing him of being ungrateful and disrespectful.

European Commission President Ursula von der Leyen will also travel to Washington, as will Finland's President Alexander Stubb, whose access to Trump included rounds of golf in Florida earlier this year, and Italian Prime Minister Giorgia Meloni, who is an admirer of many of Trump's policies.

EUROPEAN SHOW OF UNITY

European leaders at the Sunday meeting projected unity, welcoming U.S. talk of a security guarantee but stressing no discussions over territory could take place without Kyiv's involvement and clear arrangements to safeguard the rest of Ukraine's land.

Some called for an immediate ceasefire, something Trump originally said he was trying to secure during his summit with Putin. Trump later changed course and agreed with the Russians that peace negotiations could come without a ceasefire, an idea that was dismissed by some of Ukraine's European allies.

"You cannot negotiate peace under falling bombs," Poland's foreign ministry said in a statement.

A joint communique released by Britain, France and Germany after the meeting said their leaders were ready "to deploy a reassurance force once hostilities have ceased, and to help secure Ukraine's skies and seas and regenerate Ukraine's armed forces."

Some European countries, led by Britain and France, have been working since last year on such a plan, but other countries in the region remain reluctant to become involved militarily, underlining how fraught peace discussions are even among Kyiv's allies.

Zelenskiy said on social media platform X there had been "clear support for Ukraine's independence and sovereignty" at the meeting. "Everyone agrees that borders must not be changed by force."

He added that any prospective security guarantees "must really be very practical, delivering protection on land, in the air, and at sea, and must be developed with Europe's participation."

Rubio said both Russia and Ukraine would need to make concessions to reach a peace deal and that security guarantees for Ukraine would be discussed on Monday. He also said there would have to be additional consequences for Russia if no deal was reached.

"I'm not saying we're on the verge of a peace deal, but I am saying that we saw movement, enough movement to justify a follow-up meeting with Zelenskiy and the Europeans, enough movement for us to dedicate even more time to this," Rubio told broadcaster CBS.

For his part, Putin briefed his close ally, Belarusian President Alexander Lukashenko, about the Alaska talks, and also spoke with Kazakhstan's President Kassym-Jomart Tokayev.

Trump said on Friday that Ukraine should make a deal to end the war because "Russia is a very big power, and they're not."

After the Alaska summit, Trump phoned Zelenskiy and told him the Kremlin chief had offered to freeze most front lines if Ukraine ceded all of Donetsk, a source familiar with the matter said. Zelenskiy rejected the demand.

Source: Reuters

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