(Reuters) -Bitcoin is back in the headlines, having roared to a new record high, just as many of the world's major central banks are starting to pave the way towards cutting interest rates, but only if inflation behaves.

Investment flows into cryptocurrencies, inflation numbers from the United States, China and the UK, as well as a potentially market-moving snap election in Portugal will all be under the microscope in the coming week.

Here is your week-ahead look at global markets from Lewis Krauskopf in New York, Li Gu in Shanghai and Dhara Ranasinghe, Elizabeth Howcroft and Amanda Cooper in London.

1/ BOOMING BITCOIN

Bitcoin has hit a new all-time high above $70,000, bringing it back above where it was in November 2021, when rates were low and "blockchain" and "Web3" were all the rage.

That 2021 boom was followed by a "crypto winter" fraught with bankruptcies and collapses at the biggest crypto firms that left millions out of pocket. Various crypto executives were hit with criminal charges and regulators stepped up their warnings about the risks.

But this does not seem to have deterred a new wave of money from coming in. No one knows for sure what's driving the gains, although analysts point to the billions of dollars that have flowed into U.S. spot bitcoin ETFs that launched this year.

Crypto fans say the industry has matured, but central bankers and regulators are still wary. Now investors are wondering: how much bigger can it get and is it different this time?

2/ EYE ON CPI

    Tuesday's U.S. inflation report could help answer one of the key questions hovering over markets -- when can the Federal Reserve start cutting interest rates?

    The consumer price index for February is expected to rise 0.4%, after January's CPI rose at a faster-than-expected 0.3%.

    Investors have dialled back expectations for the number of interest rate cuts in 2024 amid lingering concerns about strength in the economy reigniting inflation. Fed Chair Jerome Powell told Congress in recent days that rate reductions will still "likely be appropriate" later this year, if officials gain more confidence in the steady decline of inflation.

    With the fourth-quarter corporate earnings season ending, economic and inflation data is front and centre ahead of the Fed's next meeting later in March.

3/ OPENING DAY DISAPPOINTMENT

Investors weren't throwing any parties after the opening of China's week-long National People's Congress, as Beijing announced a stable and as-expected 5% growth target for 2024, but didn't break down what stimulus it would deploy to get the economy up and dancing.

The ailing property sector may be getting worse instead of better, with bonds in state-backed developer Vanke having sold off sharply. New home prices could fall further this year as support measures so far have had little impact, with the latest data due on March 15.

There is potentially room to loosen monetary policy, because although Chinese interest rates are already low compared with the U.S., the deflationary environment means real rates could come down. Weekend data showed price pressures in China picked up more than expected in February, but investors are still wary about deflation.

4/ PAY DAY

Britain's economy has narrowly avoided recession, as business activity is expanding at a healthy clip and consumers hit the shops in earnest - even with interest rates at 16-year highs and persistent inflation.

The Bank of England is less concerned about growth and far more focussed on inflation. The jobs market is showing signs of moderating. Vacancies fell for the 19th time in a row in the three months to January. But businesses are still struggling to find and retain staff. High levels of long-term sickness are also hampering employers.

Average regular pay - key for the BoE - decelerated to a rate of 6.2% in December, the slowest pace of growth in over a year, but not slow enough to convince policymakers rates will need to fall sooner rather than later. Data on March 12 might shift that thinking.

5/ PORTUGAL VOTES

Portugal's centre-right Democratic Alliance (AD) won Sunday's election, but its leader Luis Montenegro said it was unclear if he could govern without the support from far-right Chega, with whom he has refused to negotiate.

Chega's position in parliament more than quadrupled to at least 48 lawmakers in the 230-seat legislature, giving the combined right a majority.

Markets have largely ignored political uncertainty, with the election not expected to change the downward trajectory of debt.

The premium investors demand to hold Portuguese bonds over top-rated Germany is around 65 bps and near its tightest level in two years.

Ratings agency S&P Global just raised Portugal's rating to "A-" from "BBB+", citing an improved debt outlook.

But the election underscores a political tilt to the far right across Europe. With EU elections in June, the rise of right-wing populism is one to watch.

By Satoshi Sugiyama

TOKYO (Reuters) -Japan's economy avoided a technical recession, revised government data showed on Monday, even though the upward change in the fourth quarter was weaker than expected and highlighted concerns about the sluggish economic recovery.

Japan's revised gross domestic product (GDP) expanded at an annualised clip of 0.4% in the October-December period from the previous quarter, better than the initial estimate for a 0.4% contraction, according to the Cabinet Office.

It was, however, below economists' median forecast for a 1.1% uptick in a Reuters poll.

On a quarter-on-quarter basis, GDP grew 0.1%, compared with the initial reading of a drop of 0.1.% drop and a median forecast for a 0.3% rise.

"The headline is an upward revision, but domestic demand is remains lacklustre, particularly in consumption," said Saisuke Sakai, senior economist at Mizuho Research and Technologies.

The upward revision came amid growing market expectations the Bank of Japan could ditch its negative interest rates as early as this month, fuelled in part by board members' recent hawkish comments that Japan was moving towards the central bank's 2% inflation target.

Capital expenditure, which increased 2.0% quarter-on-quarter, anchored the upward revision. It was better than better than the preliminary 0.1% decrease but still below a median market forecast of a 2.5% rise.

Private consumption, which makes up about 60% of Japan's economy, fell 0.3% in October-December, slightly worse than the 0.2% drop in the initial estimate. Seafood and household appliances contributed to downward pressure in the category, a Cabinet Office official said.

External demand contributed 0.2 percentage points to real GDP, unchanged from the preliminary reading.

In the current January-March quarter, the Japanese economy could suffer contraction after factoring in slowdown in the Chinese economy, production halt at a unit of Toyota Motor (NYSE:TM) Corp and weak consumption, Sakai said.

LOOMING BOJ DECISION

Despite the pockets of weakness shown in the data, the BOJ will likely abandon the negative interest rates by next month citing a growing prospect of hefty pay hikes at annual wage talks with labour unions, said Marcel Thieliant, head of Asia-Pacific at Capital Economics.

"The Bank of Japan tends to put more emphasis on its own consumption activity index and doesn't seem to be particularly concerned about the recent sluggishness in activity," Thieliant said.

The BOJ is scheduled to hold a two-day policy-setting meeting on March 18-19.

Japan's largest trade union confederation, Rengo, has demanded pay rises of 5.85% this year, topping 5% for the first time in 30 years.

The Japanese central bank has long contended that robust wage growth was a prerequisite for rolling back more than a decade of a radical monetary experiment.

Japan last week saw inflation-adjusted real wages in January shrinking for the 22nd month in a row, while year-on-year household spending in the same month marked the biggest drop in 35 months.

By Yousef Saba and Maha El Dahan

DUBAI (Reuters) -Saudi Arabia's state-owned oil giant Aramco (TADAWUL:2222) boosted its dividend despite net profit falling 24.7% to $121.3 billion in 2023 on lower oil prices and volumes, showing the state's continued reliance on oil revenue as it seeks to diversify.

The profit, down from $161.1 billion in 2022, was still the company's second-highest on record, Aramco said on Sunday as it reported total dividends for the year of $97.8 billion, up 30%. Oil revenues made up 62% of total state revenues last year.

The Saudi government, which directly holds about 82.2% of Aramco, relies heavily on the oil giant's generous payouts, which also include royalties and taxes. The world's top oil exporter is spending billions of dollars trying to diversify its economy and find alternative sources of wealth having relied on oil for decades.

"Our balance sheet remains strong, even after our significant growth programme and dividend payouts," Chief Executive Amin Nasser said.

Nasser expects global oil demand for 2024 at 104 million barrels a day, up from an average of 102.4 million barrels in 2023.

The state's ambitious economic agenda, known as Vision 2030, is spearheaded by the sovereign Public Investment Fund, which owns 16% of Aramco, after a fresh transfer by the government of 8% to companies PIF owns last week.

Aramco declared a base dividend, paid regardless of results, of $20.3 billion for the fourth quarter. It expects to pay out $43.1 billion in performance-linked dividends this year, including $10.8 billion to be paid out in the first quarter.

The base dividend was increased 4% year on year, and the performance-linked dividend was about 9% higher.

The company said capital investments were at $49.7 billion in 2023, up from $38.8 billion in 2022. It forecast capital investments between $48 billion and $58 billion this year, growing until the middle of the decade.

That range is wide because for external investments, "there's an element of timing that we don't fully control," Chief Financial Officer Ziad Al-Murshed said on a media call.

The Saudi government in late January ordered Aramco to scrap its expansion plan to boost production capacity to 13 million barrels a day (mbpd), returning to the previous 12 mbpd target.

The capacity decision "is expected to reduce capital investment by approximately $40 billion between 2024 and 2028," Aramco said.

Most of the savings are expected in the latter years, so how it will be spent will be decided as opportunities arise, Al-Murshed said. Priorities for using the extra cash include sustaining capex, the base dividend, growth capex, additional distributions and further deleveraging, he added.

Free cash flow fell to $101.2 billion in 2023 from $148.5 billion in 2022.

Upstream investments including gas will be almost 60% of capex in 2024-2026, including external investments, Chief Executive Amin Nasser said. Downstream will be around 30% and "new energies" around 10%.

"As we go beyond that, over the next 10 years, upstream will be around 50%, downstream is around 35% and new energies around 15%," Nasser said.

Investing in gas will help free up more oil for export, as well as produce more liquids associated with gas extraction, he said.

Aramco's shares were up about 1.7% to 32.3 riyals a share, slightly above their 2019 IPO price of 32 riyals. Sources told Reuters last month that Saudi Arabia is poised to sell more shares of Aramco.

"That's a question for the government," Al-Murshed said on whether more government-owned shares would be sold.

($1 = 3.7505 riyals)

By Fergal Smith

(Reuters) -Canada's main stock index edged lower on Friday but still notched its fourth straight weekly gain as bigger-than-expected U.S. and Canadian jobs gains bolstered prospects of a soft economic landing.

The Toronto Stock Exchange's S&P/TSX composite index ended down 57.03 points, or 0.3%, at 21,737.53, after posting on Thursday its highest closing level in nearly two years.

For the week, the index was up 0.9%. The weekly winning steak was the longest since April 2023.

"The U.S. still seems very much on course for a soft landing. In Canada, it's a little bit more nuanced I think, but by all indications the market is holding up relatively well," said Elvis Picardo, a portfolio manager at Luft Financial, iA Private Wealth.

U.S. job growth accelerated in February, but that likely masks underlying softening labor market conditions as the unemployment rate increased to a two-year high of 3.9%.

Canada's economy added 40,700 jobs in February, double the expected gain but and wage growth slowed for a second consecutive month as the central bank continues to hold interest rates at a 22-year high.

The energy sector fell 0.7% as oil settled 1.2% lower at $78.01 a barrel and shares of uranium miners declined. Nexgen Energy Ltd lost 8.7% and Cameco Corp (TSX:CCO) was down 6.2%.

Consumer-related stocks also lost ground, with the consumer staples sector falling 1% and consumer discretionary ending 0.4% lower.

The materials index which includes precious and base metals miners and fertilizer companies, edged up 0.2% as gold added to its record-setting rally.

"Despite gold being at an all-time high, despite the geopolitical uncertainty, the resource sector which is a big driver hasn't really taken off. That's impeding the TSX's progress a little bit," Picardo said.

Investing.com – February data including consumer prices and retail sales will offer more cues on the prospects for potential Federal Reserve rate cuts. Bitcoin hits record highs, while Wall Street could be in for another volatile week. Here’s what you need to know to start your week.

US inflation data

Investors will be looking to Tuesday's U.S. inflation data as they try to gauge how soon the Fed could start cutting interest rates.

Economists are expecting February's consumer price index to rise 0.4% after a faster than expected increase of 0.3% in January.

On Thursday, Fed Chair Jerome Powell said it would likely be appropriate to cut rates “at some point this year,” but made it clear that he and his colleagues aren’t ready yet.

Market watchers will also be looking to Thursday’s retail sales data for February, which is expected to rebound 0.8% after falling the same amount a month earlier.

The economic calendar also features updates on industrial production, consumer sentiment and weekly data on initial jobless claims.

Fed officials will be entering the traditional blackout period ahead of their upcoming meeting next week.

Bitcoin boom

Bitcoin has hit a new all-time high above $70,000, boosted by investor demand for new U.S. spot bitcoin ETFs that launched this year and expectations for global interest rates to fall.

Billions of dollars have flowed into ETFs in the past few weeks, while the market has also been underpinned ahead of an expected upgrade to the ethereum blockchain platform, home to the second-largest digital ether, and a bitcoin "halving" event, which slows the flow of bitcoin minting, in April.

The previous bitcoin boom in 2021 was followed by a "crypto winter", when bankruptcies and collapses at the biggest crypto firms left millions of investors out of pocket, prompting regulators to step up warnings about the risks.

But this does not seem to have deterred a new wave of money from coming in. Crypto fans say the industry has matured, but central bankers and regulators are still wary. Now investors are wondering: how much bigger can it get and is it different this time?

Oil prices

Oil prices closed 1% lower on Friday and fell even more for the week as markets remained wary of soft Chinese demand even as producer group OPEC+ extended supply cuts.

Both benchmarks fell in the week, with Brent down 1.8% and Crude Oil WTI Futures losing 2.5%.

China last week set an economic growth target for 2024 of around 5%, which many analysts say is ambitious without much more stimulus.

On the supply side, OPEC+ members led by Saudi Arabia and Russia agreed last Sunday to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter, giving extra support to the market amid concerns over global growth and rising output outside the group.

Energy traders have also been focused on the timing of possible rate cuts by the Fed and the ECB. Lower interest rates could increase oil demand by boosting economic growth.

Stock market

Wall Street's three main indexes ended lower on Friday, closing out a turbulent week with artificial intelligence darling Nvidia (NASDAQ:NVDA) going into reverse after a recent rally.

For the week the S&P 500 lost 0.26% while Nasdaq fell 1.17% and the Dow Jones Industrial Average dropped 0.93%.

Nvidia ended Friday down more than 5% in its worst one-day performance since late May. Shares in the company still ended the week with gains of over 6% amid a rally that has added more than $1 trillion to its market cap so far this year.

Analysts say investors are locking in profits after the recent run higher in markets.

Given that the upcoming inflation data likely won’t be enough to reassure the Fed that price pressures are cooling quickly enough to warrant a near-term move market participants are likely to remain somewhat cautious.

UK jobs data

The UK is to release its latest jobs report on Tuesday, with investors and the Bank of England alike focusing on wage growth amid speculation over the timing of a first rate cut.

Average hourly pay decelerated to a rate of 6.2% in December, the slowest pace of growth in over a year, but not slow enough to convince BoE officials that interest rates - at 16-year highs - will need to come down sooner rather than later.

Meanwhile, the Eurozone is to release industrial production data for January. December’s report showed a large increase in production which erased a full year of declines. Another strong reading would be an encouraging sign for first quarter GDP growth.

--Reuters contributed to this report

By David Lawder

WASHINGTON (Reuters) -U.S. President Joe Biden vowed Thursday to raise taxes on wealthy Americans and large companies, announcing plans in his State of the Union address to hike corporate minimum taxes and cut deductions for executive pay and corporate jets.

Biden previewed the steps that will be part of a proposed fiscal 2025 budget released next week that aims to decrease the federal deficit by $3 trillion over 10 years while cutting taxes for low-income Americans and aiding middle-class homebuyers.

He proposed a new tax credit that would help Americans buy first homes or trade up to larger ones by providing the equivalent of $400 per month for the next two years to offset high mortgage rates. Biden also called for the elimination of title insurance on refinancings of federally backed mortgages, a move that can save homeowners $1,000 or more.

The tax plans are expected to form a core part of the Democratic president's re-election campaign, contrasting with Republican candidate Donald Trump, who signed a 2017 law that slashed taxes on companies, the wealthy and many middle-class Americans.

"I'm a capitalist. You want to make a million, or millions of bucks? That's great. Just pay your fair share in taxes," Biden said, adding that the Trump-era tax cuts "exploded the federal deficit."

Most of Biden's tax proposals have little chance of enactment unless Democrats win strong majorities in both chambers of Congress in November, a sweep that polls suggest is unlikely.

In addition to previous calls to raise the corporate income tax rate to 28% from 21% currently, he called for an increase to "at least 21%" for the 15% corporate minimum tax that he won as part of 2022 clean energy legislation. The tax applies to firms reporting over $1 billion in profits.

Biden administration officials also told reporters he wants to quadruple the 1% tax on corporate stock buybacks approved in 2022.

TAX BREAK CURBS

Biden also urged Congress to approve far stricter limits on business income deductions for executive pay, limiting them to $1 million for any given employee.

Current law prohibits deductions on compensation for chief executive officers, chief financial officers and other key positions. White House officials said the new proposal would cover all employees paid more than $1 million, and raise more than $250 billion in new corporate tax revenue over 10 years.

Biden also called for Congress to go after business income deductions for the use of corporate jets, an area already targeted for audits by the Internal Revenue Service. This includes extending the depreciation period for corporate jets to seven years, the same as commercial aircraft, from five years currently, reducing annual deductions, an administration official said.

Biden renewed his call for a "billionaire tax" that would impose a 25% minimum tax on income for those Americans with wealth of more than $100 million, saying it would raise $500 billion over 10 years to help fund benefits such as child care and paid family leave.

The average American worker paid about a 25% tax rate in 2022, the OECD reported. Biden said the average tax rate for some 1,000 billionaires was 8.2%, adding: "No billionaire should pay a lower tax rate than a teacher, a sanitation worker, a nurse."

He pledged to extend Trump-era tax cuts for those earning under $400,000 and revive a COVID-era expansion of the Child Tax Credit and increase a tax credit for low-wage workers.

Biden's latest proposals drew a sharp rebuke from the U.S. Chamber of Commerce, which has made preserving the 2017 Republican tax cuts a top priority.

Biden's policies "would actually result in lower economic growth, fewer new business starts, less job creation, and fewer choices for American families," said Neil Bradley, the Chamber's chief policy officer.

But Chuck Marr, who heads tax policy at the left-leaning Center on Budget and Policy Priorities, said Biden's "course correction" would make the U.S. tax system fairer.

“President Biden's tax proposals recognize that the 2017 Trump tax law - as exemplified in the corporate tax rate cut - was skewed to the wealthy, expensive, and failed to deliver on its promises," Marr said.

FIGHTING 'JUNK FEES'

As consumers continue to face high prices, Biden also said his administration would continue to crack down on "price gouging" including "junk fees" added to stated prices, and smaller package sizes - the "shrinkflation" bemoaned on Monday by Sesame Street muppet Cookie Monster in an X social media post.

After a move this week to cap credit card late fees at $8, Biden said this would save Americans $20 billion and banks were "mad" about it.

"I'm not stopping there. My new administration is proposing rules on cable, travel, utilities, online ticket sellers, telling you the total price upfront. So there are no surprises. It matters," he added.

By Harshit Verma

(Reuters) - Gold prices were poised for their biggest weekly jump in five months on Friday, hovering near a historic high, as Federal Reserve Chair Jerome Powell's remarks cemented mid-year rate cut bets, ahead of a key jobs report later in the day.

Spot gold was little changed at $2,157.16 per ounce, as of 0350 GMT, hovering around a record peak of $2,164.09 hit in the previous session.

U.S. gold futures were flat at $2,164.40.

Spot prices have gained more than 3.5% so far this week, on track to log their biggest weekly percentage gain since mid-October, when the Israel-Hamas conflict first escalated. This will also be bullion's third straight weekly climb, if gains hold.

While a spur of short-term speculative activity primarily driven by CTAs (Commodity Trade Advisors) and algorithmic trading prompted the gold rally, it's very much this expectation of interest rate cuts in the not-too-distant future that's backing it, said Nikos Kavalis, managing director at Metals Focus.

Powell said that Fed was "not far" from gaining the confidence it needs in falling inflation to begin cutting rates, which he said are likely to happen in the coming months.

Traders are pricing in three to four quarter-point (25 bps) U.S. rate cuts, with a 75% chance for the first in June, as per LSEG's interest rate probability app.

Lower rates boost the appeal of non-yielding bullion.

Another factor on why gold has been so solidly supported in recent weeks is the rally in procyclical asset classes, particularly equities as investors seek to diversify their risk exposure, Kavalis said.

The dollar headed for its sharpest weekly drop of the year, making bullion less expensive for other currency holders. [USD/]

Market focus will be on key U.S. jobs data due at 1330 GMT.

Spot platinum fell 0.3% to $916.30 per ounce, silver fell 0.1% to $24.29, while palladium rose 0.5% to $1,039.17. All three metals were poised for a weekly gain.

By Rae Wee

SINGAPORE (Reuters) - Asian stocks rose to a seven-month peak on Friday, tracking global peers as investors cheered the prospect of an imminent rate easing cycle led by major central banks, keeping the dollar and Treasury yields under pressure.

Japan remained an outlier as expectations mount that the Bank of Japan (BOJ) could finally exit negative interest rates this month. That lit a fire under the yen and sent domestic bond yields rising.

MSCI's broadest index of Asia-Pacific shares outside Japan peaked at 538.47 points in early Asia trade, its strongest level since August. It was last 1% higher, and was eyeing a weekly gain of nearly 2%.

Global stock indexes had in the previous session rallied to record highs after the European Central Bank (ECB) laid the ground for a potential rate cut in June, while Federal Reserve Chair Jerome Powell struck a similar tone on the path of U.S. rates.

"Very seductive words when it is uttered by the Fed Chair, it appears, in the context of confidence to initiate rate cuts," said Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank. "Markets were certainly not shy in construing this as an open invitation to pivot-type rallies."

The two-year U.S. Treasury yield, which typically reflects near-term rate expectations, fell to a one-month low of 4.499% on Friday as traders added to bets of imminent Fed rate cuts.

The benchmark 10-year yield was last at 4.0923%. [US/]

Focus now turns to the closely watched nonfarm payrolls report due later on Friday for further clues on the U.S. rate outlook, particularly after January's blowout jobs report which stunned markets.

Friday's labour market data comes ahead of a reading on U.S. inflation next week.

"If we do get that hot nonfarm payrolls data tonight, followed by a hotter-than-expected CPI, it could unravel very, very quickly across equity markets, across assets including gold, bitcoin and then to currency markets," said Tony Sycamore, a market analyst at IG.

"It's something to be aware of. It's not my base case, but it's certainly a risk."

In the meantime, expectations of an imminent Fed easing cycle kept the dollar broadly weaker and it hit a roughly two-month low on the euro on Friday.

The single currency was last at $1.0948, after peaking at $1.0956 earlier in the session. Sterling similarly rose to an over two-month high of $1.2820.

BOJ PIVOT

The yen hit a one-month high against the greenback on Friday at 147.54 per dollar, helped by recent commentary from BOJ officials which fuelled speculation that the central bank could soon move away from its ultra-easy monetary policy stance.

The Japanese currency was poised for its best week since December with a nearly 1.5% rise.

BOJ governor Kazuo Ueda and board member Junko Nakagawa said on Thursday the Japanese economy was moving towards the central bank's 2% inflation target, while the country's largest trade union group said the average wage hike demand hit 5.85% for this year, topping 5% for the first time in 30 years.

The BOJ has long set broad-based and sustained wage increases as a prerequisite for a stimulus exit.

Reflecting expectations of a near-term BOJ pivot, the two-year Japanese government bond (JGB) yield rose to its highest since April 2011 at 0.2%, while the 10-year JGB yield was up 1.5 basis points at 0.74%. [JP/]

"We've had enough hawkish rhetoric of late... from BOJ members that they're telling us what's likely to happen," said IG's Sycamore. "They have everything now in place whereby they can deliver that exit from negative interest rate policy."

While a stronger yen is typically bad for Japanese stocks, the Nikkei nonetheless rode global equities higher on Friday and was last up 0.67%.

CHINA HOPES

Elsewhere in Asia, Chinese stocks started the session on a strong footing, with blue chips rising 0.4% and the Shanghai Composite Index gaining 0.25%. Both indexes, however, were set to end the week little changed.

Hong Kong's Hang Seng Index jumped more than 1%.

Data on Thursday showed China's export and import growth in the January-February period beat forecasts, though that did little to turn battered sentiment around, as investors were left underwhelmed by the lack of details for strong stimulus from Beijing to shore up the country's economic recovery at this week's annual parliament session.

"China's 2024 National People's Congress met expectations with respect to key policy actions, but disappointed in terms of sentiment - market participants (were) clearly hopeful the new year would bring a more aggressive policy style," said Elliot Clarke, head of international economics at Westpac.

In commodity markets, Brent rose 31 cents to $83.27 a barrel, while U.S. crude gained 40 cents to $79.33 per barrel. [O/R]

Spot gold edged 0.1% lower to $2,157 an ounce after touching an all-time high of $2,164.09 in the previous session, as the prospect of an imminent Fed easing cycle boosted the appeal for the non-yielding yellow metal. [GOL/]

By Tetsushi Kajimoto

TOKYO (Reuters) - Japan's current account extended its surplus for a full year in January, Ministry of Finance data showed on Friday, as rises in overseas interest rates boosted gains from foreign bond holdings.

The data showed Japan's current account surplus stood at 438.2 billion yen ($2.96 billion) in January, compared with economists' median forecast for a deficit of 330.4 billion yen in a Reuters poll.

It followed 744.3 billion yen of surplus in December.

A breakdown of the data showed exports grew 7.6% year-on-year in January driven by demand for cars, car parts and chip-making equipment while imports fell 12.1% reflecting declines of coal, liquefied natural gas and communications equipment.

Primary income gains, or returns from past direct investment and portfolio investment overseas, saw Japan log a primary income surplus of 2.8516 trillion yen.

In addition, the current account data showed a record gain in travel account due to a boost from inbound tourism.

($1 = 148.0500 yen)

By Howard Schneider

WASHINGTON (Reuters) -Federal Reserve Chair Jerome Powell said on Thursday the U.S. central bank was "not far" from gaining the confidence it needs in falling inflation to begin cutting interest rates.

"I think we are in the right place," Powell said of the current stance of monetary policy in a hearing before the Senate Banking Committee. "We are waiting to become more confident that inflation is moving sustainably down to 2%. When we do get that confidence, and we’re not far from it, it will be appropriate to begin to dial back the level of restriction so that we don’t drive the economy into recession.”

The comment showed Powell's faith that recent higher-than-expected inflation readings and other strong economic data won't interrupt the ongoing decline in price pressures that took root last year.

The Fed chair has been reluctant to declare the inflation battle finished, and cautioned in testimony to the Senate panel, as he did Wednesday before the House Financial Services Committee, that further progress back to the Fed's 2% target was not assured.

The most recent data showed headline inflation, as measured by the Fed's preferred Personal Consumption Expenditures price index, at 2.4%, with a related measure of underlying inflation at a slightly higher 2.8%.

But both have been "coming down sharply since the middle of last year," Powell said. "We've got a ways to go on that, but we've made a lot of progress."

Yields on 2-year Treasury notes fell slightly after Powell's remarks, and investors firmed bets that an initial Fed rate cut would occur in June.

The central bank next meets on March 19-20, and will issue a new policy statement as well as updated rate and economic projections that should shed more light on policymakers' expectations for the year.

Powell's appearance before the Senate committee and a House panel on Wednesday, as is often the case in the twice-yearly round of hearings, was dominated less by monetary policy and more with an ongoing debate about Fed bank regulatory proposals, as well as a host of other issues, including housing policy and whether the Fed would issue a central bank digital currency.

But Powell's update on monetary policy kept intact the sense that the central bank is nearing the point where the current policy rate of interest, held at a more than 20-year high since July in a range between 5.25% and 5.5%, will be lowered in the months ahead.

Pressed at the start of the hearing by the panel's chair, Ohio Democrat Sherrod Brown, on why the Fed was not quicker to cut rates "to prevent workers from losing their jobs," Powell said that was a top-of-mind concern, while nodding also to the economy's resilience.

"We're well aware of that risk, of course, and very conscious of avoiding it," Powell said. "If what we expect and what we're seeing - continued strong growth, strong labor market and continuing progress in bringing inflation down - if that happens, if the economy evolves over that path, then we do think that the process of carefully removing the restrictive stance of policy can and will begin over the course of this year."