Category Archive: 4.) Marc to Market

Waller Pushes on Open Door: Push for Patience Lifts the Dollar, Complicating Japanese Efforts

Overview: Comments by Fed Governor Waller, urging patience on rates and wanting more evidence that price pressures are moderating has helped the greenback extend its recent gains. The yen is the notable exception as the fear of intervention has restrained the dollar bulls. Poor German data, including a sharp 1.9% drop in February retail sales, the fourth consecutive monthly decline, underscored the euro's negative divergence, and the single...

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Heightened Threat of Japanese Intervention Pushes Greenback Away from JPY152

Overview: The dollar neared JPY152, setting a new 34-year high. This appeared to spur a senior official meeting in Tokyo, ostensibly to talk about the response. Previously, we suggested that Friday, when most markets outside of Asia will be closed, could provide an interesting opportunity for intervention. The implicit threat was enough to take the dollar to JPY151.10 in the European morning. Most of the G10 currencies are softer against the dollar...

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Dollar’s Recent Gains Pared but Firm Undertone Remains Intact

Overview: After surging at the last week, the dollar consolidated yesterday and is continuing to do so today as slightly lower levels. The Swiss franc is the only G10 currency unable to gain traction against the greenback today. Still, the dollar's pullback has barely met the minimum retracement targets of the jump last Thursday and Friday. The PBOC lower the dollar's fix slightly, but the proverbial toothpaste is out of the tube and officials are...

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Greenback Consolidates Last Week’s Surge

Overview: After surging at the end of last week, the dollar is consolidating today. Stepped up verbal intervention by Japan's currency chief Kanda and a slightly weaker dollar fix by the PBOC seemed to take the wind from the dollar sails. Except for the Swiss franc and Swedish krona, the G10 currencies are showing a slightly firmer tone. Emerging market currencies are mixed, with central European currencies leading the advancers. The Taiwanese...

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Week Ahead: Enthusiasm for the Dollar Rekindled

Last week will be remembered for several things. First, the Bank of Japan lifted its interest rate target for the first time in 17 years and formally ended its Yield Curve Control and ceased buying ETFs. The yen sold off and the dollar approach the 2022 and 2023 cap slightly below JPY152. Japanese officials have used the language that has signaled heightened risk of intervention in the past. Second, the Swiss National Bank became the first G10...

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CNY7.20 Gives Way as Strong Greenback Proves Too Much

Overview: The dollar's post-FOMC sell-off has been completely reversed and the greenback has reached new highs for the week against most of the G10 currencies. Heightened intervention fears and softer US yields has helped steady the yen, which near unchanged now, and is the best performer. The Scandis and Antipodeans are the heaviest, off 0.65%-0.90%. For the first time since last November, the US dollar has risen above CNY7.20 and continued to...

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Market Hears a Dovish Fed and Sells the Greenback

Overview:  The Federal Reserve triggered a dollar sell-off yesterday and follow-through selling was seen in Asia before profit-taking emerged. That created a new dollar selling opportunity in early European turnover. The FOMC revised up this year's growth forecast, shaved the unemployment projection, and while maintaining the PCE deflator forecast, and the median dot remained for three cuts this year. The soft-landing scenario was underscored and...

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Dollar Extends Gains Against the Yen but Broadly Firmer Ahead of the FOMC

Overview: The US dollar remains bid ahead of the outcome of today's FOMC meeting. No change in policy is expected, but the forward guidance, partly delivered in the updated projections, is the focus. In the last iteration (December), the Fed "dot" was for three rate cuts this year. Japanese markets were closed for a national holiday today but dollar's gains against the yen have been extended and the greenback is nearing the peak seen in...

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Greenback Surges after BOJ Hikes and Ends YCC and RBA Delivers a Dovish Hold

The US dollar is surging today against most of the G10 currencies, and although the intraday momentum is stretched ahead of start of the North American session, there may be little incentive to resist before the end of the FOMC meeting tomorrow.

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Heightened Speculation of a BOJ Move Tomorrow did not Stop the Nikkei from Rallying or Yen from Slipping

Overview: The US dollar is trading with a mostly softer bias against the G10 currencies. The notable exceptions are the Japanese yen and Swiss franc. Ironically, speculation of a Bank of Japan rate hike appears to have increased, while there is a risk that the Swiss National Bank cuts rates this week. The Norwegian krone is the strongest of the major currencies. The central bank meets later this week but is widely expected to stand pat. The...

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Week Ahead: Central Banks

There has been a dramatic adjustment to US rates. The two-year yield was near 4.40% before the US employment report on March 8 and it reached near 4.73% before the weekend. The 25 bp surge is the largest weekly increase since last May. For the first time in four months, the Fed funds futures strip is no longer has at least three rate cuts discounted. The interest rate adjustment underpinned the dollar, which rose against all the G10 currencies last...

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Euro’s Recovery to $1.09 Looks Vulnerable while Yen Falls to New Lows for the Week After Strong Pay Raises Confirmed

At the end of last week, the derivatives market was again pricing in nearly four Fed cuts this year, but this week's data have seen expectations re-converge with the Fed's three rate cuts signaled in December, while cutting the odds of June hike to the lowest in the more than four months.

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Strong US Retail Sales may Help Extend the Dollar’s Recovery

Overview: We have put emphasis on today's US retail sales report. A recovery from the weather-induced weakness in January should underscore the resilience of US demand after another 200k jobs were created and personal income jumped 1%.

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Consolidation Featured Ahead of Tomorrow’s US Retail Sales and Friday’s Japanese Wage News

Overview: We came into this week expecting the dollar to rise on the back of a recovery in rates. The two-year note has risen from 4.40% after the jobs report to 4.60%. The dollar's rise has been less impressive.

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Ueda’s Comments Weigh on Yen as the Market Awaits US CPI

Overview: The US CPI has become one of the most important high-frequency economic reports for the capital markets. The dollar is going into the report narrowly mixed against the G10 currencies. Comments by BOJ Governor Ueda about the weakness in consumption of non-durable goods was seen by some as reducing the likelihood of a change in policy next week.

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Japan’s Q4 23 Contraction Revised Away, Helping Keep Yen Bid

Overview: News that the Japanese economy expanded rather than contracted in Q4 23 has fanned expectations that rates could be as early as next week. This is helping keep the yen supported, though it remains in the pre-weekend range, albeit barely.

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Week Ahead: Will Firm Headline US CPI and a Recovery in Retail Sales Help the Dollar Recover?

When everything was said and done last week, the market did not change its mind. There was still a better than 90% chance that the Federal Reserve delivers its first rate cut in June. Fed Chair Powell told Congress that the central bank was not far from the level of confidence needed to cut rates.

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Forex Becalmed with the Greenback Mostly Firmer in Narrow Ranges

(Business trip will interrupt the commentary over the next few days.  Check out the March monthly here.  Back with the Week Ahead on March 9. May have some comments on X @marcmakingsense.) Overview: Outside of the Australian and New Zealand dollars, which are off by 0.20%-0.25%, the other G10 currencies are little changed and mostly softer in narrow ranges. A firm Tokyo CPI, mostly on base effects and softer rates helped keep the US dollar below...

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Narrowly Mixed Dollar to Start the Big Week for Europe and North America

Overview: The dollar is narrowly mixed against the G10 currencies to begin the week that features a Bank of Canada and ECB meetings, US jobs data, Federal Reserve Chair Powell's two-day testimony before Congress, and US President Biden's State of the Union address.

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March 2024 Monthly

Rarely are officials able to achieve the proverbial economic soft-landing when higher interest rates help cool price pressures without triggering a significant rise in unemployment or a contraction.

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