Category Archive: 4.) Marc to Market

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French Government on Precipice, Presses Euro Lower

2024-12-02

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2024-12-02

Overview: The US dollar is beginning the new week and month on a firm note. It is rising against all the G10 currencies and nearly all the emerging market currencies. US-President-elect Trump's threat to BRICS if they abandon the dollar is symbolic than substantive, as we have argued, despite the occasional claim to the contrary, a BRICS currency is not realistic, and the China has little interest in fostering another competitor to the yuan. Still,...

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December 2024 Monthly

2024-11-30

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2024-11-30

The trends were already entrenched before the US election and continued through most of last month. The trend toward higher rates and higher equities stalled, while the dollar remained strong. Investors and business continue to wrestle with the implications of the Republican sweep in the US elections.There are two broad issues that are the source of uncertainty. The first is the broad tariff Trump has advocated on the campaign trail: 60% on China...

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Yen Jumps on Rate Hike Speculation

2024-11-27

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2024-11-27

Overview: The US dollar has a softer profile today. All the G10 currencies are higher, led by 1%+ surge in the yen amid heightened speculation of a rate hike next month, while the US 10-year yield is near 4.25% today, the lowest since the election. Although the Reserve Bank of New Zealand allows for another half-point cut after delivering the second one this year earlier today, the New Zealand dollar has popped up amid sell the rumor buy the fact...

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Trump’s Tariff Talks Wobble Forex Market, Close Neighbors Suffer Most

2024-11-26

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2024-11-26

Overview: As some market pundits were debating about a possible grand deal between the US and China. In exchange for a lighter tariff regime, Beijing would accept yuan appreciation. As far-fetched as such scenario may be, it was predicated on ideas that people like the Bessent, the Treasury Secretary-nominee, was pragmatic. Trump's comments hit in early Asia Pacific turnover specifically cited a 25% tariff on all product from Canada and Mexico and...

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Markets do Cartwheels in Response to Traditional Pick for US Treasury Secretary

2024-11-25

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2024-11-25

Overview: The selection of Scott Bessent, the hedge fund manager as next US Treasury Secretary was greeted euphorically in the capital markets:  one of their own and, arguably, like many of new economics team could have been picked in any Republican administration. Risk appetites have been animated. Still, we suspect market positioning may have led to an exaggerated response. The dollar has been sold. Stocks have bought. The euro is leading the G10...

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Week Ahead: Little to Stop the Surging Dollar

2024-11-23

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2024-11-23

The dollar's Q4 rally continued last week. The Dollar Index has risen in the first eight weeks of the fourth quarter, gaining a little more than 7%. Half of the G10 currencies (the euro, the Swedish krona, the Norwegian and Danish krone, and New Zealand dollar) fell to new lows for the year last week. Part of the story is the paring of Fed cut speculation. The derivatives market no longer has even 50 bp of cut discounted between now and the middle...

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Euro and Sterling are Trying to Stabilize after Sharp Drop on Back of Disappointing Flash PMI

2024-11-22

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2024-11-22

Overview: Weak preliminary PMI readings in Europe, Japan, and Australia, underscore the apparent divergence with the US, sending the dollar broadly higher. The euro is currently recovering from the sell-off that took it to $1.0335 and sent sterling below $1.25. Only the yen, among the G10 currencies, has weathered today's dollar surge. Most emerging market currencies, especially from central Europe, are weaker. Despite the stronger dollar, gold is...

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Ueda Lifts Yen, Leaving Euro and Sterling Pinned Near Lows

2024-11-21

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2024-11-21

Escalating tensions in Europe and comments from Bank of Japan Ueda that spurred speculation of a December hike are the main drivers of the foreign exchange market today. The yen is the strongest of the G10 currencies, up about 0.65%, while the euro is the weakest, off a little more than 0.25%, and sterling is down almost as much.

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Sterling and Gilts Pressed Lower by Firmer CPI

2024-11-20

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2024-11-20

US dollar and rates are firmer today. All the G10 currencies are lower, led by the Japanese yen. The UK reported firmer than expected CPI and this may have deflected some of the selling pressure away from sterling, which is off less than 0.2% to put it atop the pack ahead of the US open.

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Geopolitics Roil Capital Markets

2024-11-19

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2024-11-19

Within hours of the US giving permission to Ukraine to use US weapons to strike Russian territory, which it did, Moscow announced a change it is nuclear doctrine that allow for the use of nuclear weapons against a conventionally armed adversary that is backed by nuclear powers.

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Fragile and Consolidative Tone Starts the Week in FX

2024-11-18

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2024-11-18

Overview: The US dollar has begun the new week consolidating in a mixed fashion against the G10 currencies. Bank of Japan Governor Ueda remains circumspect and did not provide guidance about next month's central bank meeting. Without positive guidance, the market sold the yen, but the swaps market shows about 13 bp of tightening has been discounted, up a couple of basis points from a week ago. Leave aside the New Zealand dollar, which is also under...

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Week Ahead: Powerful Forces Rippling Through the Capital Markets Do Not Appear Exhausted

2024-11-16

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2024-11-16

There are powerful forces in the capital markets, and they do not appear exhausted even if there is some near-term consolidation. The Dollar Index has risen for seven weeks, which is to say that it has not fallen on a weekly basis so far here in Q4. The US two-year yield has risen for the past four weeks and six of the past seven. It has surged from about 3.55% at the end of September to 4.38% last week. The US 10-year yield has fallen in only two...

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FX and Rates Unwind Yesterday’s Powell Effect, US Index Futures Slide

2024-11-15

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2024-11-15

Overview:  The dollar bounced, and US rates rose yesterday afternoon in response to comments by Fed Chair Powell. But he did little more that reiterate what he had said at the recent press conference. Powell expressed a lack of urgency to move after having led the central bank in delivering a 50 bp cut to start the easing in September while indicating that direction of travel will be to a less restrictive rate. The dollar has come back lower today...

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The Dollar’s Surge Continues

2024-11-14

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2024-11-14

Overview: The dollar's surge continues. Most G10 currencies are off 0.45%-0.65%. The US dollar is trading above CAD1.40 for the first time since the pandemic, but the Canadian dollar is faring the best of the G10 today (~-0.15%). Since US election, it is the only major currency not to have fallen by at least 2%. All the emerging market currencies are lower today, as well. The greenback is being underpinned by the continued rise in US rates and...

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Dollar Bulls Catch Breath

2024-11-13

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2024-11-13

Overview: Surging US yields helped send the dollar higher but wobbled the stock market yesterday. A fragile consolidative tone has emerged today for the foreign currencies. The greenback remains mostly within yesterday's ranges. All but a few emerging market currencies are trading with a firmer bias. Beijing's weaker dollar fix may have been the first protest of the yuan's weakness since the election. The highlight of the North American session is...

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Higher Yields Help Extend the Dollar’s Gains

2024-11-12

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2024-11-12

Overview: The dollar continues to ride high. It is up 0.20%-0.50% today against the G10 currencies. Most pairs have extended last week's moves. The Dollar Index, which was near 100 in late September is approaching 106.00. Emerging market currencies are all weaker, as well. The dollar is being helped by higher US yields. After yesterday's holiday, the US 10-year yield is up five basis points to near 4.36%. The two-year yield also is five basis...

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The Dollar Remains Bid, While the Euro and Swiss Franc are Sold Through Last Week’s Lows

2024-11-11

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2024-11-11

Overview: The dollar is bid to start the new week. It has taken out last week's high against the Swiss franc, and the euro has been sold through last week's lows. The divided opposition allowed Ishiba to continue as Japan's prime minister, heading up a minority government. The German government collapsed last week. Chancellor Scholz wanted to hold off holding (and losing) a vote of confidence until January, setting the stage for elections, but it...

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Week Ahead: US Dollar Poised to Extend Gains

2024-11-09

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2024-11-09

Two of the most tumultuous weeks of the year are behind us. The sweeping GOP victory in the US cannot be considered anything but a mandate. The shock experienced in 2016 is not being repeated, but there is limited visibility  Perhaps, the stance articulated at the press conference by Fed Chair Powell that the central bank does not "guess, speculate, or assume" about the policies of the next administration and the impact on efforts to...

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Searching for Direction

2024-11-08

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2024-11-08

Overview: The capital markets have been choppy as pre-existing positioning meets new thoughts on the implications of a second Trump administration. The dollar has found better footing today after giving back a chunk of Wednesday's gains yesterday. The yen is an exception, but it is not exception that the dollar trades heavier against the yen as the US 10-year yield drifts lower. On the week, the most G10 currencies are holding on to gains against...

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Serenity Now

2024-11-07

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2024-11-07

Overview:  The markets are calmer after yesterday's post-US election drama. A consolidative tone has emerged in the foreign exchange market, and the dollar is softer against all the G10 currencies, led the 1% gain in the Norwegian krone, after the central bank left rates on hold. Sweden's Riksbank delivered the expected half-point cut and the krona is up 0.5%. Japanese officials warned against excessive moves, and the PBOC set the dollar's...

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