By Yew Lun Tian

BEIJING (Reuters) - China's bankers and business executives have become increasingly reliant on domestic capital in recent years as foreign funding has dried up, but a popular way to unlock that cash may very well involve "throwing eggs".

The term refers to Guandan, a poker-like card game that has been around for decades, but has gained fresh life among venture capitalists a few years ago as they awoke to its popularity among wealthy local government officials in eastern regions.

"Officials like this game, so we play along," said Yang Yiming, an investment banker whose job involves canvassing government funding for projects linked to semiconductors and defence.

The growing interest in business circles has spawned a craze for the game nationwide, driven partly by financial constraints stemming from souring ties with China's biggest trade partner, the United States.

This month U.S. President Joe Biden barred some investment in semiconductors and set controls on other sensitive sectors, aiming to curb trade and funding that could give rival Beijing an edge in technology.

Total U.S.-based venture-capital investment in China plummeted to $9.7 billion last year from $32.9 billion in 2021, PitchBook data shows.

Domestic private capital has also dwindled as President Xi Jinping signalled his preference for a bigger state presence in the economy by launching crackdowns over the last few years in areas from technology to real estate and private tutoring.

As investment prospects darken, financiers increasingly view the game as a way to build 'guanxi' or connections with officials who hold the purse strings on local projects, especially those overseas investors might consider too risky.

"In finance, information is currency," said Yang, for whom a game of guandan has become a standard gambit before wining and dining local officials.

"During a game which can stretch for hours, we are bound to chit-chat, and sometimes useful information gets passed around after people feel comfortable and trust you."

Yu Longze, a broker based in Beijing, said his boss this month ordered all staff to learn the game.

Like bridge, the classic staple, the game is played among four players paired up in teams. Using two decks, players must throw down poker and other special card combinations to clear their hands before opponents.

"From observing someone's playing style, you can tell if he is smart, aggressive or a team player. This can help you decide if you want him as a business partner," said a businessman surnamed Huang, who runs a private clubhouse where the game has become a favourite pastime of officials and company executives.

But not everyone treats guandan as a business tool.

Many players say they simply enjoy the mental stimulation from a game that is cheap, convenient to play and allows them to socialise - aspects that, taken together, explain its appeal to all walks of life.

Customers ranged from retired people to young professionals seeking to build new social ties, said Hua Min, who this year opened the first bar dedicated to hosting guandan games in Beijing, the capital.

Li Keshu, a lawyer, said playing with his friends in a park helped get through the social isolation and economic frustration of the COVID-19 years, when China threw up strict barriers against infection.

"It's cost-free. Unlike 'Texas Hold'em' or mahjong, this game doesn't need to be played with money to be fun. On the contrary, money spoils the friendship and the game."

While the players Reuters spoke to said they do not gamble, Chinese officials have been censured in the past for receiving bribes through the playing of card games or the traditional tile pastime of mahjong.

In April, the ruling Communist Party's anti-graft watchdog censured one of its officials in the eastern province of Anhui for playing guandan during a training course, among other misdeeds.

In a sign that Beijing is not perturbed by the growing interest in the game, however, China's national sports authority has organised the first nationwide guandan competition this year.

By Ankur Banerjee

SINGAPORE (Reuters) - The dollar eased from a 12-week peak on Monday as traders weighed the U.S. monetary path after the Fed Chair Jerome Powell left open the possibility of further interest rate increases, while the yen hovered close to its lowest in over nine months.

In an eagerly awaited speech at the annual Jackson Hole Economic Policy Symposium, Federal Reserve Chair Powell promised to move with care at upcoming meetings as he noted both progress made on easing price pressures as well as risks from the surprising strength of the U.S. economy.

"We will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data," Powell said in a keynote address.

"It is the Fed's job to bring inflation down to our 2% goal, and we will do so."

The dollar index, which measures the U.S. currency against six rivals, eased 0.115% to 104.05, but not far from the 12 week high of 104.44 it touched on Friday. The index is up over 2% in August and set to snap a two month losing streak.

Markets anticipate an 80% chance of the Fed standing pat next month, the CME FedWatch tool showed, but the probability of a 25 basis point hike in November is now at 48% versus 33% a week earlier.

"It remains unlikely we get a hike from the Fed in September, said Chris Weston, head of research at Pepperstone. "But November is shaping up to be a 'live' event, where data points have the potential to throw interest rate expectations around."

"When many other G10 central banks are already priced for an extended pause, the Fed potentially going again in November is supporting the dollar," Weston said.

A series of strong U.S. economic data releases has helped ease worries of a recession but with inflation still above the Fed's target, some investors are worried that the U.S. central banks will keep interest rates at elevated levels for longer.

With the Fed highlighting the importance of the upcoming U.S. economic data, investor focus this week will firmly be on reports on payrolls, core inflation and consumer spending.

"If the data continues to show an ease in labour market tightness and price pressures, then the Fed is likely done with its tightening cycle," said Rodrigo Catril, senior currency strategist at National Australia Bank (OTC:NABZY). "If the data doesn't play ball, then further tightening should be expected."

The yen weakened 0.03% to 146.45 per dollar, not far off the more than nine month low of 146.64 it touched on Friday as traders continue to watch out for any signs of intervention in the currency market from Japanese authorities.

The Bank of Japan will maintain its current ultra-easy policy as underlying inflation in Japan remains "a bit below" its target, the central bank's governor said on Saturday.

Meanwhile, the euro and the sterling came off two-month lows touched on Friday. The single currency was up 0.04% to $1.0804, while the pound was last at $1.2599, up 0.17% on the day.

The Australian dollar rose 0.55% to $0.644, while the New Zealand dollar gained 0.32% versus the greenback to $0.592.

========================================================

Currency bid prices at 0132 GMT

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

Previous Change

Session

Euro/Dollar $1.0806 $1.0794 +0.12% +0.85% +1.0810 +1.0794

Dollar/Yen 146.4950 146.3250 +0.06% +11.57% +146.6100 +146.4200

Euro/Yen 158.30 158.07 +0.15% +12.83% +158.3500 +158.0900

Dollar/Swiss 0.8838 0.8847 -0.10% -4.42% +0.8867 +0.8838

Sterling/Dollar 1.2598 1.2577 +0.20% +4.20% +1.2604 +1.2584

Dollar/Canadian 1.3588 1.3601 -0.12% +0.26% +1.3600 +1.3585

Aussie/Dollar 0.6431 0.6403 +0.44% -5.66% +0.6439 +0.6407

NZ 0.5920 0.5903 +0.38% -6.69% +0.5925 +0.5893

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

By Eliana Raszewski

BUENOS AIRES (Reuters) -Argentina's economy ministry on Sunday announced a series of benefits for workers and pensioners intended to soften the blow of a severe economic crisis which has seen inflation spiral and the government devalue the country's currency.

The government will give nearly 7.5 million pensioners a package of 37,000 pesos (around $105 at the current official exchange rate) over the next three months, Economy Minister Sergio Massa said in part of a series of messages on his Instagram account.

Massa, who is also the ruling party's presidential candidate for the Oct. 22 elections, will face ultra-libertarian outsider Javier Milei whose support from disillusioned voters propelled him to victory in a primary vote this month.

Massa said workers will receive 400 billion pesos in loans, while self-employed workers will be offered six months of tax relief and those on food benefits will receive additional stipends.

He also announced a suspension of export taxes for some industrialized regional goods such as wine, rice and tobacco, as well as funding for fertilizers to help farmers whose last harvest suffered from a historic drought.

The government, helped by bank financing, will also offer $770 million in funding to help boost export sales and companies have been ordered to provide bonuses to some 5.5 million workers who earn below 400,000 pesos per month, Massa said, equivalent to $1,140 at the official rate but roughly $500 at the informal parallel exchange rate.

"The goal is that every economic sector receives some state support," Massa said.

The move comes two weeks after the government devalued the peso by nearly 20%, accelerating annual inflation which already was hovering around 115% as Argentines saw their purchasing power dwindle further.

Massa said the devaluation resulted from a request from the International Monetary Fund as it renegotiates a $44 billion loan program with the South American government.

Polls for the October elections have narrowed giving an equal share of the vote to Massa, opposition candidate and former security minister Patricia Bullrich and Milei, who has pledged to dollarize the economy and shut the central bank.

Experts believe the vote could pass to a run-off in November. Meanwhile, tensions have risen and a series of lootings have taken place across the country.

By Leika Kihara

TOKYO (Reuters) - Japan may be seeing early signs of sticky inflation with several measures of broad price trends hitting record highs in July, data showed, heightening the case for a retreat from decades of ultra-loose monetary policy.

Based on the government's consumer price data, the Bank of Japan (BOJ) releases several measurements of underlying inflation that look at the distribution of price changes.

The indices are closely watched by the BOJ for clues on whether price rises are driven by one-off factors like fuel, or broadening enough to sustainably hit its 2% inflation target.

The "trimmed mean" index, which strips away the upper and lower tails of the distribution, rose a record 3.3% in July from a year earlier, data showed on Tuesday, accelerating from a 3.0% gain in June.

The "mode" index, which measures the most frequently seen rate of inflation in the distribution, was also up a record 3.0% in July, exceeding the BOJ's 2% target for six straight months.

The ratio of items that saw prices rise year-on-year hit a record 85.6% in July. The ratio kept rising after marking a low of 46.7% in January 2021.

"The results show not just that trend inflation accelerated in July, but that companies continued to steadily pass on costs," said Naoya Hasegawa, senior bond strategist at Okasan Securities. "The outcome could prod the BOJ to become more upbeat on the price outlook."

Japan's annual core consumer inflation hit 3.1% in July, slowing from 3.3% in June due to sliding utility bills but staying above the BOJ's target for the 16th straight month.

In a quarterly report in July, the BOJ said there were "signs of change" in corporate price- and wage-setting behaviour that could lead to sustained achievement of its price target.

The assessment was partly behind the BOJ's decision last month to allow long-term interest rates to rise more freely in line with increasing inflation - a move seen by markets as a slow shift away from decades of massive monetary stimulus.

BOJ Governor Kazuo Ueda has stressed the bank's resolve to keep ultra-loose monetary policy until the recent cost-driven price hikes turn into more sustainable inflation driven by robust domestic demand and higher wages.

By Ankur Banerjee

SINGAPORE (Reuters) - The U.S. dollar eased from a two-month peak on Wednesday as investors looked to the Federal Reserve chair's speech this week for cues on the path of monetary policy, while the yen loitered near 146 a dollar, keeping traders guessing on any intervention.

The dollar index, which measures the U.S. currency against six rivals, fell 0.145% to 103.44, but was not far from the two-month high of 103.71 it touched on Tuesday. The index is up 1.6% in August, on course to snap a two-month losing streak.

The currency market is subdued amid a lull in summer volatility and ahead of the Fed's central bank symposium at Jackson Hole, Wyoming, this week, said currency strategist Christopher Wong at OCBC in Singapore.

With traders reluctant to place major bets, the spotlight is firmly on Fed Chair Jerome Powell's speech at the event, which is set for Aug. 24-26. Investors will parse his words closely to gauge the Fed's monetary policy path.

A recent run of strong U.S. economic data has helped allay worries of an impending recession but with inflation still well above the Fed's target of 2%, investors are wary that the central bank may keep rates in a higher range for longer.

"Markets are looking out for hints of earlier (policy) shifts or extensions of higher for longer," said Wong.

Richmond Fed President Thomas Barkin said on Tuesday the Fed must be open to the possibility that the economy will begin to re-accelerate rather than slow, with potential implications for the U.S. central bank's inflation fight.

Markets are pricing in an 86% chance of the Fed standing pat at its policy meeting next month, the CME FedWatch tool showed, but the odds of the U.S. central bank hiking interest rates one more time this year toward the end of the year have been rising.

The potential for additional hikes after a likely pause at its September meeting, combined with a decrease in excess savings, could weaken consumer momentum toward the end of the year, said Saira Malik, CIO at Nuveen.

Investors' focus will be on the U.S., euro zone and UK August PMI data due later in the day.

The yen strengthened 0.12% to 145.71 per dollar in Asian hours but was not far off the nine-month milestone of 146.565 touched last week, leaving traders on tenterhooks as they warily watch for any signs of intervention.

When the dollar broke above 145 yen last year that triggered intervention, and speculation has begun mounting that Tokyo would soon step into the market to support its currency again.

Atsushi Takeuchi, who was head of the Bank of Japan's foreign exchange division when Tokyo intervened in 2010-2012, said Japan will forgo intervening unless the yen moves past 150 and becomes a huge political headache for premier Fumio Kishida.

"Authorities usually don't have a specific line-in-the-sand in mind. But key thresholds like 150 are important for political reasons, as they are easy to understand," Takeuchi said.

Both this time and in 2022, currency intervention itself would not be a fundamental solution to the yen weakness but could only buy time, strategists at BofA Global Research said.

"The key difference is that while Japan did not have any control over the fundamental cause of the dollar-yen rally in 2022, it can to some extent decide until when to buy time in cooperation with the Bank of Japan because the BOJ controls the short-end of the yen yield curve"

Another Asian currency that has worried investors is China' yuan, which is down over 5% this year against the dollar largely due to concerns over the country's deepening property crisis, which is putting further downward pressure on China's sputtering post-pandemic economic recovery.

The spot yuan opened at 7.2870 per dollar on Wednesday and was changing hands at 7.2807, 1.13% weaker than the midpoint, which was set at 7.1988 per U.S. dollar, over 1,000 pips stronger than market projections.

In other currencies, the euro up 0.15% to $1.086, inching away from the two-month low of $1.0833 it touched overnight.

The Australian dollar rose 0.23% to $0.644, while the New Zealand dollar inched up 0.08% to $0.595.

In cryptocurrencies, bitcoin last rose 0.7% to $26,030, having touched two-month low of $25,350 overnight.

By Jason Lange

WASHINGTON (Reuters) -Argentine Economy Minister Sergio Massa said on Tuesday that he expects the International Monetary Fund (IMF) board to approve the latest reviews of its huge loan program on Wednesday, unlocking $7.5 billion the embattled country desperately needs.

The board green light would come after the South American nation reached a staff-level agreement with the IMF in July to unlock the funds and complete the combined fifth and sixth reviews of its struggling $44 billion loan program.

"We are convinced that tomorrow the fifth and sixth reviews will be approved, which will allow us to access a disbursement for Argentina of $7.5 billion," he told reporters at an event in Washington.

The IMF did not respond to a request for comment on Massa's statement.

Argentina, a major grains exporter with large troves of lithium, shale oil and gas, is battling triple-digit inflation, rising poverty levels, and net foreign currency reserves that have slid into negative territory, putting payments at risk.

Massa added that a sharp peso devaluation in Argentina earlier this month would push up August inflation, a challenge for the government as it looks to claw back support ahead of Oct. 22 general elections.

"We understand that in August this will hurt people's pockets," he said. "We aim to correct this with measures that we are going to announce within a few days so that in some way in September and October we return to more reasonable levels."

LONDON (Reuters) - Pay deals awarded by British employers cooled for the first time this year in the quarter to July, which may calm the worries of Bank of England officials who fear wage growth is feeding inflation, a survey showed on Wednesday.

Median basic pay deals in the three months to the end of July fell to 5.7% following six consecutive quarters at a record 6%, human resources publication and data provider XpertHR said.

Pay awards remained below the rate of inflation. British consumer price inflation cooled to 6.8% in July from 7.9% in June.

The BoE, which hiked interest rates to 5.25% in August to tame stubborn inflation, is closely monitoring wage growth in the private sector and has said it will keep raising Bank Rate if inflationary pressure persists.

Sheila Attwood, senior content manager at XpertHR, said pay awards had likely hit their peak and expects the gap between pay deals and inflation to narrow.

"Our figures of a decrease in wage rises might ease minds at (the) Bank of England, fearful of the effects of a wage-price spiral," Attwood said.

However, official figures from the Office for National Statistics showed annual wage growth excluding bonuses rose to 7.8% in the three months to June, the highest in records going back to 2001.

XpertHR said median pay awards for the public sector stood at 5% in the year to July, up from 3.2% in the year before.

(Reuters) - The labels “dove” and “hawk” have long been used by central bank watchers to describe the monetary policy leanings of policymakers, with a dove more focused on risks to the labor market and a hawk more focused on the threat of inflation.

The topsy-turvy economic environment of the coronavirus pandemic sidelined those differences, turning U.S. Federal Reserve officials at first universally dovish as they sought to provide massive accommodation to a cratering economy, and then, when inflation surged, into hawks who uniformly backed aggressive rate hikes. Now, divisions are more evident, and the choices - to raise rates again, skip for now but stay poised for more later, or take an extended pause – more varied.

All 12 regional Fed presidents discuss and debate monetary policy at Federal Open Market Committee meetings, held eight times a year, but only five cast votes at any given meeting, including the New York Fed president and four others who vote for one year at a time on a rotating schedule.

The following graphic offers a stab at how officials stack up on their outlook for Fed policy and how to balance their goals of stable prices and full employment. The designations are based on comments and published remarks; for more on the thinking that shaped these hawk-dove designations, click on the photos in the graphic.

Dove Dovish Centrist Hawkish Hawk

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Note: Fed policymakers have been driving up borrowing costs since March 2022 to bring down high inflation, and in July they increased the target policy rate range to 5.25%-5.5%. Most policymakers as of June expected at least one more rate hike by year’s end. Longtime banker Jeff Schmid starts as Kansas City Fed president Aug. 21, and will be a voter in 2025. St. Louis Fed President James Bullard, a vocal policy hawk, left the Fed in July for a job in academia; the new chief will be a 2025 voter.

By Jamie McGeever

ORLANDO, Florida (Reuters) -Of all the economic and market curve balls investors have had to bat away this year, few will be as unexpected as the U.S. economy growing faster than China's.

This was not how the 2023 consensus looked in January, when China was poised to break out of its COVID lockdown like a coiled spring, and the United States would buckle under the Fed's most intense rate-hiking cycle in 40 years and slip into recession.

But China is struggling to get off the ground, and the narrative around the U.S. economy is shifting, remarkably, away from a 'soft landing' towards a 'no landing' scenario.

The contrast in the fortunes of the world's two economic superpowers has been extraordinary, perhaps the starkest reminder that investors' priors, rules of thumb and models have been completely ripped up by the pandemic.

China's economy grew by just 0.8% in the second quarter from the prior three months, down from 2.2% in a first quarter that was inflated by base effects as activity resumed after lockdown restrictions were lifted in December.

The U.S. economy expanded 1.2% in the second quarter, following 1.6% growth in the first three months of the year. Hardly gangbusters, but more than comparable to a rival that should have been powering ahead.

There's little to suggest the economic dynamics are about to reverse any time soon, while tensions between the two powers over tech and cyber security, espionage and trade remain heated.

According to the Atlanta Fed's GDPNow real-time growth tracker, the U.S. economy is set to expand at a 5.8% annualized rate in the third quarter, which would be more than double the rate of annualized growth in the first and second quarters.

Meanwhile, China's growth outlook continues to darken. Economists at Barclays (LON:BARC) just cut their third and fourth quarter GDP growth forecasts to 2.8% from 4.9% on a quarterly basis, and lowered their 2023 call to 4.5% from 4.9%.

That's comfortably below the Chinese government's full-year target of around 5%, a goal an increasing number of analysts think will be missed.

China's potential growth over the coming years is around double that of the United States, but there must be growing doubt about when China's GDP will surpass that of the U.S..

Analysts at Goldman Sachs still reckon it will be in 2035 but Desmond Lachman, a senior fellow at the American Enterprise Institute, told Reuters recently that it probably won't happen for at least 20 years.

TALE OF TWO LANDINGS

Ilaria Mazzocco, senior fellow with the Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies, says China is resilient and any talk of an economic collapse is far-fetched.

But the era of double-digit and even high single-digit growth is over, and concerns over China's weaknesses have proven to be well-founded.

"There was a lot of talk in the last decade or so about China's rise and America's decline. What we're seeing now is a reversal of that discourse" she said.

"We may see similar growth rates between the U.S. and China, which is a concern for China because it is much poorer per capita," she added.

China's GDP per capita last year was $12,720, according to the World Bank, six times smaller than the U.S. equivalent of almost $76,000.

There's a danger that the current narrative - U.S. optimism and Chinese pessimism - gets overblown. The historic highs and lows of U.S. and Chinese economic surprises, respectively, will likely revert to mean as analysts adjust their expectations.

The 'long and variable lags' of 525 bps of Fed tightening have yet to fully hit the U.S. economy, and the highest bond yields since around the time of the Great Financial Crisis could choke Wall Street and Main Street later this year.

Equally, authorities in Beijing could surprise markets and revive the economy with major monetary and fiscal stimulus. They've done it before.

But there are good reasons why investors have pulled huge sums out of Chinese markets this year, why the gap between 10-year U.S. and Chinese bond yields is the widest since 2007, and why the yuan is also close to its weakest level since 2007.

Deflation, record youth unemployment, an imploding property sector, historically low bank lending and plunging trade with the rest of the world are problems that are unlikely to be fixed quickly.

"With this string of data disappointments, markets are likely to remain worried over prospects of a China hard landing," Dirk Willer and his emerging market colleagues at Citi wrote this week.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(By Jamie McGeever; Editing by Kirsten Donovan)

By Lewis Jackson

SYDNEY (Reuters) - Australia's A$2.4 trillion ($1.54 trillion) pension sector grew its investments in local and foreign debt by more than A$20 billion over the past year as higher yields burnished an asset class overlooked in a country where equities traditionally rule.

The two largest pension funds grew fixed income investments in their primary vehicles, holding bulk of the pensions, in the last financial year. For the A$300 billion AustralianSuper, the country's largest fund, its fixed income allocation hit the highest level since at least 2013.

AustralianSuper told Reuters it had doubled debt assets to A$40 billion over the past year and added at least three new fixed income portfolio managers to its London office.

"We had a very low allocation to fixed interest for much of the last two or three years and are now building that back up again as rates start to normalise," said Katie Dean, head of fixed income, currency and cash at AustralianSuper.

Australian Retirement Trust, which manages A$240 billion, Sio lifted its fixed income allocation to 13.7% from 12.5%, according to filings.

The rotation into bonds is a step change for a sector long underweight the asset class by global standards. Norway's $1.4 trillion sovereign wealth fund and the $450 billion California public employees pension fund CalPERS hold about a quarter of assets in fixed income, for instance.

Australian investors have historically preferred stocks to bonds, in part due to dividend friendly tax laws since the 1980s that enhance income from stocks.

The decline in global yields after the 2008 financial crisis also sapped appetite for debt.

Australian government 10-year bond yields had dropped to around 1% in 2020 before the pandemic, from 6% in 2007. They are now above 4%.

"There's a huge market bias in Australia... it's ridiculous for an OECD country," said Amy Xie Patrick, head of income strategies at Pendal Group, which manages pension money.

Jay Sivapalan, head of Australian Fixed Interest at Janus Henderson, which manages money for local pension funds, said their past investments were mostly in private debt markets where yields come with a liquidity premium.

But the spectacular rise in benchmark sovereign yields since late 2020 is luring funds back to public markets, said Sivapalan.

Even funds reluctant to permanently change allocations to debt are trading bonds. Fixed income has been Aware Super's most actively traded asset class over the past few years, says its Head of Investment Strategy Michael Winchester.

The A$160 billion fund has roughly a tenth of its primary vehicle invested in fixed interest, according to its website.

In another sign of the sector's tentative embrace of fixed income, the country's fifth largest fund, the A$100 billion Hostplus, added debt in fiscal 2022 to its primary vehicle for the first time in five years, but the allocation was only 3%.

"Within the last year to 18 months, they've [the sector] been trying to get to some sort of neutral," said Patrick. "They're not necessarily going over their skis on fixed income."

($1 = 1.5584 Australian dollars)