Category Archive: 4.) Marc to Market

The Greenback is Mostly Softer

Overview: The dollar initially extended its pre-weekend and yesterday's heavier tone before finding a better bid in the European morning. Still, as North American dealers return to their posts the dollar is still mostly softer against the G10 currencies, but it is little changed to slightly firmer against the Japanese yen. Most emerging market currencies are firmer, but the South African rand is softer ahead of their election, the Mexican peso is...

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Holiday Overview: The State of Play

FX:  The dollar traded mostly higher last week.  I suspect more near-term gains, but I am less convinced than I was a week ago.  Given the FOMC minutes and more recent commentary from Fed officials, I suspect the market is exaggerating the chances of two cuts this year.  That had been my leaning too, but I think the recent resilience of the labor market and sticky inflation has shifted the views at the Fed.  The...

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Week Ahead: Near-Term Dollar Outlook Less Clear than a Week Ago

Stronger than expected data and hawkish FOMC minutes helped lift US rates and the greenback last week. That market continues to also reduce the extend of ECB easing this year is notable but did not prevent the euro from snapping a five-week advance. The 10-year Japanese government bond yield rose above 1% last week for the first time since 2012, but the US dollar traded above JPY157 for the first time since the BOJ is believed to have intervened...

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Calmer Markets Ahead of the Weekend

Overview: The dollar is paring yesterday's advance that was spurred by the rise in US rates following the preliminary PMI, which reached its best level in two years. The survey also picked up higher prices. The dollar is in narrow trading ranges but softer against nearly all the G10 currencies today. The Swiss franc and Japanese yen are laggards. Despite a large disappointing miss on UK retail sales, sterling has steadied after falling yesterday...

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After Hawkish FOMC Minutes, the Dollar Comes Back Softer

Overview:  The dollar was aided yesterday by the hawkish FOMC minutes and the backing up of US rates. The greenback has stabilized today and is softer against all the G10 currencies. The stronger eurozone PMI masks divergence between Germany and France but keeps the recovery narrative intact. The dollar's broad gains pressured the yuan, and the PBOC's dollar reference rate was set at its highest since January. Favorable guidance by Nvidia is...

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UK CPI Disappoints

Overview: A hawkish hold by the Reserve Bank of New Zealand and a firmer than expected UK CPI reading have allowed the New Zealand dollar and sterling to show resilience in the face of the US dollar's broadly firmer tone. And even there, the Kiwi and pound have seen their early gains pared. The Swiss franc is the weakest of the G10 currencies today and has fallen to a new 12-month low against the euro. Emerging market currencies are mixed. Central...

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Jump in Japanese Bond Yields Fails to Lift the Yen

Overview: The foreign exchange market is quiet. Most of the G10 currencies are +/- 0.1% against the dollar. The crash that took the of Iran's president and foreign minister may have helped lift gold to new record highs ($2450), the impact seems more muted, as poor weather rather than foul play, seems to be main narrative. July WTI reached nearly $80, its best level since May 1 but is hovering around unchanged levels (~$79.50). Canadian markets are...

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Week Ahead: After Rallying Since mid-April, are the G10 Currencies Tired?

The monthly cycle of central bank meetings and high-frequency data slow in the week ahead, though the UK and Canada report on prices and demand (retail sales). The highlight of the week may be the preliminary May PMI estimates. We play down its significance in the US because its strength seems to be an outlier and it is in expansion territory while the ISM not. The dollar has generally been trending lower, with the yen being the only exception...

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The Dollar Continues To Recover

Overview: The dollar's recovery begun yesterday has extended into today's activity. The greenback is higher against all the G10 currencies and most emerging market currencies, but the Indian rupee and Mexican peso. The BOJ did not reduce its bond buying at today's operation and the market sold the yen on the news. After reaching JPY153.60 yesterday, the greenback is near JPY156 now. New initiatives to support the beleaguered property market was not...

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After Limited Follow-Through Selling, the Dollar has Come Back Bid

Overview: Three of the G10 currencies rose by more than 1% against the US dollar yesterday after the softer inflation and weak retail sales readings. The Dollar Index lost almost 0.65% yesterday, the most this year. Among emerging market currencies, only the Mexican and Chilean pesos rose by at least 1%. After extending its losses against most of the major pairs, the dollar has come back bid. Only the yen and Swiss franc are firmer on the day. The...

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Will USD be Bought on the Fact after Being Sold on Expectations of a Softer CPI?

Overview: The dollar is trading heavily against the G10 currencies and most of the currencies from emerging markets. The market expects softer US CPI (and retail sales) today. Any decline in the year-over-year core rate would put it at its lowest level since April 2021. Still, this has been anticipated, and the market seems vulnerable to "sell the rumor, buy the fact" type of activity. After all, the Fed will see another employment and...

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Powell, PPI, and US Tariff Announcement on China Featured

Overview: The tone in the foreign exchange market today is mostly consolidative. The two notable exceptions are the yen and yuan. Despite higher JGBs yields amid speculation that the BOJ will scale back bond purchases, as it did yesterday, to support the yen, the greenback is at its best level since the suspected intervention. The next important technical area is near JPY157.00. The US is set to announce a new set of tariffs on a wide range of...

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Consolidative Tone to Start the Week

Overview: The new week has begun off quietly. The dollar is in narrow ranges against the G10 currencies, +/- 0.15% as the North American market prepares to open. The Dollar Index is trading inside the narrow pre-weekend range. With softer US CPI, retail sales, and industrial production due this week, we have a downside bias for the greenback. Most emerging market currencies are firmer. A few Asian currencies, including the Chinese yuan and...

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Riksbank Cuts, Oil Slips, and the Yen Remains Under Pressure

(On business trip over next few days. Commentary to resume Monday.  Thanks for your patience.) Overview: Sweden's Riksbank became the second G10 central bank to cut rates this year. The Swiss National Bank cut its deposit rate in March. A couple other large central banks, including the European Central Bank, and possibly the Bank of Canada, may cut rates next month. The Swedish krona is the weakest of the G10 currencies today, off by about 0.45%,...

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Market Pushes the Yen Lower, Helped by a Broadly Firmer Greenback

Overview: The dollar is firmer against all the G10 currencies today. The market is somewhat less fearful of intervention and the yen is extending yesterday's losses. It is rivaling the Australian dollar for the weakest of the major currencies after the Reserve Bank of Australia left rates on hold and played down speculation of possibility of a rate hike. Both currencies are off around 0.4% in late European morning turnover. Disappointing German...

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Yen Slips, Yuan Jumps, Dollar is Mostly Softer

Overview: The dollar is mostly a little softer today in thin market conditions, with Tokyo, Seoul, and London closed for holidays. The Japanese yen is the weakest G10 currency, losing about 0.5% and slipping through last Friday's lows. At first, after Fed Chair Powell did not endorse rate hike speculation, the market thought he was dovish. But after the softer than expected jobs data and weakness in the ISM services, the market shifted from...

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May 2024 Monthly

The resilience of the US economy and stickiness of price pressures spurred a reassessment of the trajectory of Fed policy. This sparked a sharp rise in US interest rates and extended the dollar’s advance. The somewhat disappointing April jobs report and a softer CPI report in the middle of May could signal that the interest rate adjustment is over. Federal Reserve Chair Powell played down the likelihood of the need to lift rates again, and as it...

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Dollar is Softer Ahead of the Employment Report

Overview: The greenback is trading with a softer bias ahead of the US jobs report. Solid, even if not spectacular job growth, is expected. However, recent survey data warns of the downside risks. Moreover, counter-intuitively, the dollar has not often rallied this year into the employment data, but frequently has in response. The dollar is softer against the G10 currencies. The Norwegian krone is the strongest, up about 0.6% after the central bank...

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Japan Drives Home Message

Overview: The US dollar is mixed, but the spotlight is on the Japanese yen. It appears that with the market challenging Monday's intervention, Japanese officials entered the market shortly after the US equity market closed yesterday, as the Asia Pacific session got underway and sold dollars again. Initial estimates suggest the intervention amount was two-thirds of Monday's. The timing caught the markets wrongfooted. Tokyo markets are closed Friday...

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