By Rae Wee

SINGAPORE (Reuters) - The dollar held just above an over one-year low on Wednesday as traders assessed the U.S. rate outlook, while the New Zealand dollar spiked briefly after a higher-than-expected inflation reading pushed back prospects of policy easing further out.

The U.S. dollar managed to nudge up after a mixed retail sales report overnight, with sales growth missing forecasts in June but consumers boosted or maintained spending elsewhere, pointing to consumer resilience that is likely to keep the economy on a solid growth path.

Against a basket of currencies, the U.S. dollar rebounded from a 15-month low hit in the previous session, with its index steadying at 99.943 in early Asia trade.

"The (data) showed retail sales being resilient, and I think that's because the U.S. wage growth is still strong," said Tina Teng, market analyst at CMC Markets.

The greenback has paused its steep decline from last week in the wake of a cooler-than-expected U.S. inflation reading that led to traders pricing in an imminent peak in U.S. rates.

Economists polled by Reuters expect the Federal Reserve to deliver a 25-basis-point rate hike at its upcoming policy meeting this month, with a majority betting that to bring an end to the central bank's current monetary tightening cycle.

Across the Atlantic, European Central Bank (ECB) policymakers are also adopting a more dovish tone on the rate outlook, with governing council member Klaas Knot saying in an interview on Tuesday that the ECB will look closely for signs of inflation cooling down in the coming months to avoid overly tightening policy.

The euro was last steady at $1.1230, away from the previous session's 17-month peak of $1.1276.

Sterling bought $1.3035, ahead of UK inflation data due later on Wednesday.

"The stickiness of UK inflation measures has contrasted notably with price measures in both the euro zone and the U.S. which have been moving lower," said Rabobank's head of FX strategy Jane Foley.

"If the UK economy remains resilient, we expect that (the pound) is likely to react well to hawkish expectations regarding (Bank of England) policy.

"However, if recession risks rise in the UK, the pound may revert to pushing lower on rate rises as investors take fright on the overall UK economic backdrop and cut back their long (pound) positions."

Over in New Zealand, consumer inflation came in slightly above expectations in the second quarter, data out on Wednesday showed, causing a brief spike in the kiwi as traders pushed out expectations for when the Reserve Bank of New Zealand might start cutting its cash rate.

It was last 0.25% higher at $0.6291, after jumping more than 0.6% to a session high of $0.6315 following the release.

"While inflation is 'lower', it is not 'low' by any stretch of the imagination. Importantly, measures of core inflation are continuing to run at rates of around 6%, and some have actually picked up in the June quarter," said Satish Ranchhod, senior economist at Westpac in New Zealand.

"That points to lingering strength in underlying price pressures."

The Australian dollar was last 0.08% lower at $0.68065.

Elsewhere, the Japanese yen fell marginally to 138.88 per dollar.

Bank of Japan Governor Kazuo Ueda said on Tuesday there was still some distance to sustainably and stably achieving the central bank's 2% inflation target, signalling his resolve to maintain ultra-loose monetary policy for the time being.

By Safiyah Riddle

(Reuters) - Applications to start new U.S. businesses surged to the highest level in two years in June, despite high interest rates and uncertain economic outlook, according to a Commerce Department report released on Monday.

Business applications increased 6.2% in June compared with May with a seasonally adjusted 465,906 new applications.

Filings from applicants that have a high likelihood of creating a payroll and adding jobs to the economy, such as those from existing corporate entities or those indicating they are already hiring, rose 6.0% to 149,536 new applications. The data is collected from business applications for tax identification numbers.

Start-up activity flourished during the coronavirus pandemic with the help of historic stimulus money from the federal government and ultra-low interest rates, hitting a record high in July 2020 and remaining well above pre-pandemic levels since then. They slowed somewhat last year as the Federal Reserve kicked off aggressive interest rate hikes to lower inflation, but have been climbing again this year.

June's resurgence emphasizes growing optimism among small businesses inspired by the Fed's recent pause in rate hikes, as well as the growing expectation that the central bank's aggressive rate hiking strategy is nearing an end.

The report's forward-looking business formation projections also improved after two months of declines. The Census Bureau estimated that 32,148 new business startups with payroll tax liabilities will actually form within four quarters of application, a 4% increase compared to estimates from May.

By Ali Kucukgocmen

ISTANBUL (Reuters) - Turkey's central bank is expected to raise its policy rate by 500 basis points to 20% this week, a Reuters poll showed on Monday, making good on its pledge of further tightening with another sharp hike to curb inflation which is set to rise again.

The central bank raised its policy rate by 650 basis points in June to 15%, while promising to continue tightening until a significant improvement in the inflation outlook is achieved.

The rate hike and the hawkish tone were the strongest signals of a reversal after years of loose policy under President Tayyip Erdogan, who was prioritising growth and investments.

The tightening still remained below expectations, with economists saying that Erdogan's influence over the central bank limits how far they can go in tightening policy. Real rates are also still deeply negative.

Economists see a further hike this week to 20%, according to the median estimate of 23 economists in a Reuters poll, with forecasts ranging between 17% and 21.50%.

"Anything less than a move to hike the policy rate to 20% will be seen as disappointing and a signal that Erdogan is constraining what (Finance Minister Mehmet) Simsek and (Central Bank Governor Hafize Gaye) Erkan can do," said Tim Ash of BlueBay Asset Management.

Turkey's annual inflation surged to a 24-year high of 85.51% last October, mainly due to the constant depreciation of Turkey's lira due to Erdogan's policy of low rates.

Inflation eased to 38.21% by June but is expected to rise again. The year-end forecast stood at 51.50% in the latest Reuters poll, but economists now say it will likely be around 60% after Ankara hiked several tax rates to support its deteriorating budget and as the lira continues to decline.

The central bank was expected to keep hiking rates in coming months, with the median estimate of 13 economists in the Reuters poll for the policy rate at year-end standing at 25%.

The forecasts ranged between 24% and 35%.

The central bank's one-week repo rate had been slashed to 8.5% from 19% since 2021 under Erdogan's economic programme. The bank had also used foreign exchange reserves to prop up the lira, which nonetheless plunged to a series of record lows.

As a result of the recent policy reversals, the central bank's net international reserves rose to $13.17 billion in the week to July 7, continuing to rebound from a record low of $-5.7 billion it touched in June.

The central bank will announce its rate decision at 1100 GMT on Thursday.

By Selena Li

HONG KONG (Reuters) - Asian stocks fell on Tuesday as weak Chinese economic data released the previous day continued to weigh on sentiment, while investors were waiting to see if U.S. retail sales data would shine a light on the path for U.S. interest rates.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.63% in the morning session.

Investors are waiting for stronger signs of inflation cooling, with the readings on U.S. retail sales and U.S. industrial production to be released later on Tuesday. Economists reckon retail sales in June will show a 0.5% rise from May.

"People think of the tug of war between growth and inflation still. This week we have a number of US economic data that will give a clear indication on whether further rate hikes are needed," said Gary Ng, senior economist at Natixis Corporate and Investment Bank.

The U.S. Federal Reserve, European Central Bank and Bank of Japan are holding policy reviews next week.

After the cancellation of trading on Monday due to a typhoon, Hong Kong stocks were catching up with the fall in Chinese stocks triggered by data showing the post-pandemic bounce in China's economy was over, with quarter-on-quarter growth of 0.8% in the second quarter.

Ng said Asian investors were struggling to find some positivity after the "very poor Chinese economic data".

The benchmark Hang Seng index dropped 1.74%% while the technology sector fell 1.89%. China A shares were down 0.4% during early session on Tuesday. Japan's Nikkei, however, eked out a gain of 0.18%.

A possible divergence of U.S. Federal Reserve and European Central Bank on rate hikes has recently caused dollar to weaken.

Money markets have largely priced in a 25-basis-point rate hike from the Fed at its policy meeting later this month, though there are expectations that rates will come down as early as December.

Conversely, investors expect the European Central Bank and the Bank of England to extend their rate-hike cycle.

The Bank of Japan (BOJ) holds its monetary policy meeting next week, with investors on the lookout for whether it will start phasing out its ultra-dovish policy stance.

The U.S. dollar index dipped slightly to 99.85 in early Asia trade, having struck its lowest since April 2022 on Friday. The euro firmed 0.11% to $1.1246.

Benchmark 10-year notes were flat, with a yield of 3.7989%.

U.S. crude rose 0.22% to $74.31 per barrel and Brent was at $78.64, up 0.18%.

Spot gold added 0.1% to $1,957.50 an ounce. U.S. gold futures were up by 0.26% at $1,960.19 an ounce.

By Rae Wee

SINGAPORE (Reuters) - The dollar wobbled near an over one-year low against its major peers on Tuesday, as investors awaited fresh catalysts to gauge if the greenback has further downside in the wake of last week's cooler-than-expected U.S. inflation report.

The U.S. dollar index, which measures the greenback against a basket of six currencies, dipped slightly to 99.84 in early Asia trade, after having tumbled to its lowest since April 2022 on Friday.

The index also clocked its worst week of 2023 last week, after data showed U.S. inflation subsided further with consumer prices registering their smallest annual increase in more than two years, taking pressure off the Federal Reserve to continue raising interest rates.

"I think the dollar can stay under selling pressure," said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY). "Markets are focused on the end of the FOMC tightening cycle."

Against the greenback, the euro hit a fresh 17-month high of $1.1256, while sterling gained 0.15% to $1.3094, not far from last week's top of $1.3144, also its highest since April 2022.

Money markets have largely priced in a 25-basis-point rate hike from the Fed at its policy meeting later this month, though see rates coming down as early as December.

Conversely, investors expect the European Central Bank and the Bank of England to have further to go in their rate-hike cycle.

Elsewhere, the Japanese yen rose marginally to 138.66 per dollar and remains more than 4% clear of a seven-month low it hit last month.

The Bank of Japan (BOJ) holds its monetary policy meeting next week, with investors on the lookout for whether the central bank will start phasing out its ultra-dovish policy stance.

"More market participants have priced in chances of BOJ widening its yield curve control policy's trading band by 25 bps in the next meeting," said Ryota Abe, an economist at SMBC.

In other currencies, the Australian dollar pared some earlier gains after minutes of the Reserve Bank of Australia's July policy meeting showed the decision to keep interest rates on hold came as policy was clearly restrictive.

The Aussie was last 0.07% higher at $0.6821.

The New Zealand dollar was nursing losses from the previous session, rising 0.1% to $0.6332.

The Antipodean currencies, often used as liquid proxies for the Chinese yuan, had dipped on Monday after China's second quarter GDP data showed the world's second largest economy growing at a frail pace as demand weakened at home and abroad.

The offshore yuan edged marginally higher to 7.1749 per dollar.

"Everyone is just waiting for the (Chinese) authorities to come out with concrete measures," said Khoon Goh, head of Asia research at ANZ.

"The rhetoric coming out from the government has been, in a sense, saying they want to support growth, but I think for the markets, they actually want to see the follow up, concrete action, to back up those words."

MOSCOW (Reuters) - Inflationary expectations for the year ahead among Russian households climbed to 11.1% in July from 10.2% in June, the central bank said on Monday, just days before it is widely expected to raise its key interest rate from 7.5%.

A Reuters poll on Monday suggested the Bank of Russia would hike rates to 8% at its meeting on Friday, increasing the cost of borrowing for the first time in over a year as the rouble's sharp slide adds to inflationary pressures.

The central bank targets inflation at 4%, which it aims to achieve by next year. It has forecast inflation will fall to 4.5%-6.5% this year.

BRASILIA (Reuters) - Economic activity in Brazil declined in May, showed a central bank index on Monday, signaling a non-linear trajectory for the country's growth, even as analysts have been consistently revising their forecasts upward for the year.

The IBC-BR economic activity index, a key gauge of gross domestic product (GDP), declined by a seasonally adjusted 2.0% compared to April, disappointing analysts who had expected zero growth according to a Reuters poll.

This marked the largest monthly drop since March 2021. The observed data series recorded a 2.15% increase on a year-on-year basis, resulting in an accumulated growth rate of 3.43% over the past 12 months.

Gabriel Couto, economist at Santander (BME:SAN) Brazil, stated that the frustrating outcome could be attributed to the end of contribution from the record grain production witnessed during the 2022-23 summer crops.

Speaking to reporters, Finance Minister Fernando Haddad said the numbers came in "as expected" amid an environment marked by persistently high borrowing costs.

"The economic slowdown intended by the central bank has arrived strongly, and we need to be cautious about what may happen," he said, emphasizing that current real interest rate levels are imposing a heavy burden on the economy.

The central bank has held its benchmark interest rate steady at a cycle-high of 13.75% since September to tackle inflationary pressures. Still, it has recently indicated the possibility of a rate cut in August if the inflation scenario continues to improve.

Andres Abadia, chief Latin America economist at Pantheon Macroeconomics, wrote in a note to clients that the performance underscores the need for interest rate cuts.

"Several key economic sectors are under pressure, on the back of tighter financial conditions, but low inflation, a resilient labor market, and still-supportive external conditions for Brazil’s key exports, suggest that economic growth will not grind to a halt," he said.

Economists have continuously revised their expectations for the performance of Latin America's largest economy this year, particularly following a stronger-than-anticipated first quarter, buoyed by a thriving agricultural sector.

However, due to seasonal factors, the farm sector is expected to decelerate in the year's second half.

According to a weekly survey conducted by the central bank among private economists, GDP growth for 2023 is now estimated at 2.24%, a decrease from 2.9% in 2022 but still significantly higher than the approximately 0.8% initially forecast when the year started.

Nevertheless, expectations going forward point to a slowdown amid financial constraints and high borrowing costs.

By Tom Westbrook

SYDNEY (Reuters) - A bruised dollar took respite on Monday after suffering its worst weekly drop of the year, as traders waited on economic data and policy decisions before selling it down any further.

The euro, which jumped 2.4% last week to a 16-month high, held just below that peak at $1.1223. The yen, also up 2.4% last week, held at 138.56 per dollar.

Chinese growth data landed a little above low expectations on Monday, but without sparking much currency market response as traders had already priced in a sluggish quarter and are waiting to see if the government steps up stimulus to promote spending.

The Australian and New Zealand dollars pulled back slightly, with the Aussie last at $0.6821 - off last week's peak of $0.6895 - and the kiwi down 0.2% at $0.6355 after hitting a five-month high of $0.6412 on Friday.

"The data suggests that China's post-COVID boom is clearly over," said Commonwealth Bank of Australia (OTC:CMWAY) strategist Carol Kong. "But markets already had low expectations, and reaction from here is fairly limited."

Last week's dollar slide began with yen buying, as investors unwound yen-funded positions in emerging markets, but extended sharply after softer-than-expected U.S. inflation data leant support to wagers that U.S. interest rates will soon peak.

Hikes are expected from the Federal Reserve and European Central Bank next week, but beyond that market pricing implies the Fed will likely stop, before cuts next year, while in Europe another hike probably beckons.

"The FX market is front running possible normalisation of Fed policy in 2024," said Chris Weston, head of research at broker Pepperstone in Melbourne.

"The question then is whether the dollar sell-off has gone too far and we are at risk of mean reversion early this week."

The U.S. dollar index dropped 2.2% last week, its sharpest one-week fall since November, and was steady at 99.936 in the Asia session.

Sharp (OTC:SHCAY) gains in the yen have slowed as traders weigh whether the ultra-dovish Bank of Japan is really likely to make any shifts at its policy meeting next week, given rhetoric suggests they are in no hurry.

The Swedish and Norwegian crowns made gains of more than 5% on the dollar last week, and have paused for breath. At $1.3086 sterling was parked just below last week's 15-month peak.

"The dollar may remain on the backfoot as the market re-positions itself for a less hawkish Fed," said Rabobank's head of FX strategy, Jane Foley.

"That said, the outlook for the latter few months of the year is less clear cut," she said.

"By then other major central banks including the ECB will also likely have reached their peak policy rates ... interest rate dynamics may therefore swing back in favour of the dollar."

By Shivangi Acharya, Sarita Chaganti Singh and Nikunj Ohri

NEW DELHI (Reuters) - India will push its Group of 20 partners at a meeting it is hosting to support its proposal to raise the share of taxes multinational companies pay to countries where they earn "excess profits", government officials said.

India's proposal, which has not been previously reported, could temper optimism among G20 members such as Australia and Japan that the meeting of finance ministers and central bankers in Gujarat would make progress on a long-awaited overhaul of global corporate taxation.

More than 140 countries were supposed to start implementing next year a 2021 deal overhauling decades-old rules on how governments tax multinationals. The present rules are widely considered outdated as digital giants like Apple (NASDAQ:AAPL) or Amazon (NASDAQ:AMZN) can book profits in low-tax countries.

The deal, pushed by the U.S., would levy a minimum 15% tax on large global firms, plus an additional 25% tax on "excess profits", as defined by the Organisation for Economic Cooperation and Development (OECD).

But several countries have concerns about the multilateral treaty underpinning a major element of the plan, and some analysts say the overhaul is at risk of collapse.

"India has made suggestions to get its due share of taxing rights on excess profits of multinational companies," one official said. The suggestions have been made to the OECD and will be discussed "extensively" during the G20 meeting on Monday and Tuesday, the official said.

Three officials, who asked not to be named as discussions with the OECD were ongoing and the G20 meeting had not begun, said India wants significant increases in the tax paid in countries where the firms do business. They did not specify how much India is seeking.

India's finance and external affairs ministries and the OECD did not respond to requests for comment.

Under the agreement, global corporations with annual revenues over 20 billion euros ($22 billion) are considered to be making excess profits if the profits exceed 10% annual growth. The 25% surcharge on these excess profits is to be divided among countries.

India, fighting for a higher share of taxes for markets where firms do business, is the world's most populous country and set to become one of the biggest consumer markets. Indian people's average income is set to grow more than 13-fold to $27,000 by the end of 2047, according to a survey by the People's Research on India's Consumer Economy.

The G20 host nation will also propose that withholding taxation be de-linked from the excess profit tax principle. The rules now say countries offset their share of taxes with the withholding tax they collect.

Withholding tax is collected by companies while making payments to vendors and employees, and remitted to tax authorities.

The OECD in a document issued on Wednesday said a few jurisdictions have expressed concerns over allocating taxing rights among countries.

"Efforts to resolve these issues are underway with a view to prepare the Multilateral Convention for signature expeditiously," it said.

($1 = 82.0490 Indian rupees)

($1 = 0.8907 euros)

By Aftab Ahmed

GANDHINAGAR, India (Reuters) -The United States is working with India to develop an investment platform to lower the cost of capital and increase private investment to fast-track India's energy transition, U.S. Treasury Secretary Janet Yellen said on Monday.

After a bi-lateral meeting with India's finance minister Nirmala Sitharaman on the sidelines of a G20 meeting, Yellen said the two nations have been collaborating across a range of economic issues, including commercial and technological collaboration and strengthening supply chains.

"In particular, we look forward to working with India on an investment platform to deliver a lower cost of capital and increased private investment to speed India's energy transition," she said.

She also said the two countries are close to reaching an agreement on the global minimum tax system.

The visit is Yellen's third to India this year, indicating the growing closeness between the two countries.

The improvement in bilateral relations was highlighted during Prime Minister Narendra Modi's state visit to Washington last month which saw a slew of defence and high technology deals being signed.

Sitharaman said she was looking forward to furthering bilateral interests through development cooperation and new investment opportunities through alternate investment platforms for renewable energy.

"As we look ahead, we reaffirm our commitment to achieve substantial outcomes through close engagement," she added.

Yellen will visit Vietnam after the G20 finance meetings end on July 18.