Category Archive: 4.) Marc to Market

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PBOC Cuts Reserve Requirements, but USD Pullback may offer New Buying Opportunity in North America

2024-01-24

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2024-01-24

Overview: After a strong showing yesterday, the dollar was sold in Asia and Europe. China announced a cut in reserve requirements and took more informal action to support the stock market, which encouraged risk-taking. Yet, the dollar's decline has stretched intraday momentum indicators, which may provide early operators in North America a new dollar buying opportunity. The ECB and Norway's central banks meet tomorrow, and the US reports its first...

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BOJ Stands Pat, Exit Draws Closer, while HK Liquidity is Squeezed Easing Pressure on the Yuan

2024-01-23

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2024-01-23

Overview:  The dollar remains largely confined to its recent ranges as the consolidative phase extends. The Bank of Japan stood pat and revised its forecasts as it is seen drawing closer another adjustment in policy, with the market still favoring an April timeframe. A squeeze in the Hong Kong money market and talk of a large package to support the equity market helped lift the Chinese yuan for the third consecutive session and lifted Chinese...

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China Equity Slump Continues, while Dollar Extends Consolidation

2024-01-22

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2024-01-22

Overview: The foreign exchange market is quiet to start the new week. As the North American session is about to begin, the dollar is mostly +/- 0.10% against most of the G10 currencies. The Swedish krona is the notable exception, rising about 0.25% against the US dollar amid good demand for its bonds today. Emerging market currencies are mostly lower. The Taiwanese dollar is the strongest in the complex so far today, rising about 0.30% against the...

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Week Ahead: Too Early for Central Banks to Move, and Q4 GDP to Showcase US Economic Resilience (with the help of 6.5% budget deficit)

2024-01-20

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2024-01-20

The week ahead features the first estimate of US Q4 GDP, which will be revised for the next couple of years, and policy meetings by the Bank of Japan, the European Central Bank, the Bank of Canada, and Norges Bank, Norway's central bank. Although the market anticipates the beginning of an aggressive easing cycle by several central banks, and an exit of the BOJ's negative interest rate policy, the start is not expected until later in the first half....

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Quiet End to a Busy Week

2024-01-19

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2024-01-19

Overview: The dollar's surge in the first part of the week has given way to consolidation. The US dollar is sporting a softer profile against most of the G10 currencies. The Dollar Index is threatening to snap a three advance. Sterling is a notable exception following the weakest retail sales report since 2021. Most emerging market currencies, including China, Taiwan, and Mexico are slightly firmer. US President Biden is expected to sign a bill...

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Dollar Rally Pauses, but Fuel from Interest Rate Adjustment may not be Complete

2024-01-18

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2024-01-18

Overview: This week's dollar surge is consolidating today. Interest rates have steadied, but the adjustment, which involves pushing the first rate from March toward June does not appear complete. This suggests the dollar's recovery from last November-December's sell-off may not be complete either. Today, though, it is a little firmer against all the G10 currencies but the Swiss franc. Most emerging market currencies are also trading with a slightly...

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Stronger-than-Expected UK CPI Helps Steady Sterling after Dollar Rally Extended

2024-01-17

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2024-01-17

Overview: The sharp dollar advance is stabilizing after follow-through gains earlier today. A larger than expected rise in the UK's December CPI helped sterling recover from the push below $1.26, the lower end of a one-month trading range. It is the only G10 currency that is firmer against the dollar ahead of the North American session. ECB's Lagarde pushed back against the early rate cut speculation and this may have stemmed the euro's losses. The...

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Greenback Surges as Rates Back Up

2024-01-16

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2024-01-16

Overview: The US dollar is bid across the board and posting its best session of the month. It is up between about 0.5% (Canadian dollar) to almost 1.0% (Australian dollar) among the G10 currencies. Among the emerging market currencies, only the Russian ruble is holding its own.

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Week Ahead: Real Economy

2024-01-13

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2024-01-13

Given the world's turmoil, including the escalation, and broadening of the conflict in the Middle East and China's continued aerial harassment of Taiwan ahead of the election, the capital and commodity markets have remained firm. February WTI fell about 1.7% last week and March Brent slipped around 0.65%. Shipping costs are rising as the Rea Sea is avoided and supply chain disruptions are threatened. Still the MSCI index of developed equity market...

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China Data Dump Keeps Market Looking for a Rate Cut Next Week

2024-01-12

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2024-01-12

Overview:  The mostly consolidative week for the US dollar continues. Most for the G10 currencies are +/- about 0.25% today and only a slightly wider range for the week. The odds of a Fed rate cut in March is virtually unchanged on the week at around 75%. The JP Morgan Emerging Market Currency Index is practically flat on the day and week. The Russian ruble and Mexican peso lead today's advancers, while eastern and central European currencies are...

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Can the US CPI Break the Dollar out of its Consolidation?

2024-01-11

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2024-01-11

Overview: Stocks and bonds are trading higher, and the dollar is narrowly mixed ahead of the December US CPI report. Most of the large bourses in Asia Pacific advanced, led by Japan to new 30-year-plus highs. Hong Kong's Hang Seng snapped seven-day slide to post its first gain of 2024. Europe's Stoxx 600 is up about 0.33%, to recoup most of its losses in the past two sessions. US index futures enjoy a modest upside bias. Benchmark 10-year yields in...

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Don’t be Burned in the Churn

2024-01-10

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2024-01-10

Overview: The broad consolidation in the dollar after the gyrations at the end of last week continues, and within it the greenback is a bit softer today. Among the G10 currencies, only the yen is failing to post gains. Most emerging market currencies, led by central Europe, are also firmer today. A notable exception is a handful of Asian currencies, include the South Korean won, Taiwanese dollar, and the Philippine peso. The market's focus is on...

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The Dollar Goes Nowhere Quickly

2024-01-09

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2024-01-09

Overview: The dollar continues to consolidate broadly after the dramatic price swings at the end of last week. For the most part, the greenback remains inside yesterday's ranges, which were inside last Friday's. The G10 currencies are a little heavier today, except the Japanese yen and Norwegian krone, which are posting small gains. Indeed, the greenback is near session highs against most of the major currencies as we go to print. Emerging market...

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Consolidation Featured

2024-01-08

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2024-01-08

Overview: After dramatic intraday price swings after the US jobs data and service ISM figures before the weekend, the dollar is consolidating today in mostly narrow ranges. The prospect for a March cut by the Federal Reserve finished last Friday virtually unchanged (73% vs 70%) and is about 66% chance today. There was interest in Dallas Fed's Logan's suggestion that the tapering of QT be discussed, though it seems to simply confirm what many has...

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Week Ahead: Attention Turns Back to Inflation

2024-01-06

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2024-01-06

The terribly mixed US jobs report spurred dramatic intraday swings in exchange and US interest rates. But at the close, the dollar was little changed against most major currencies, and expectations for Fed policy was nearly unchanged. The futures market has about a 70% chance of a cut at the March meeting. The Dollar Index was off by less than 0.1%. Job growth held up better than expected in December, the unemployment rate held steady, and average...

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Greenback is Bid ahead of the Jobs Report

2024-01-05

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2024-01-05

Overview: The dollar is bid going into the December jobs report. After selling off into the end of last year, it has recovered this week. The five-day moving average is crossing the 20-day moving average against several of the currency pairs, capturing the shift in momentum. The greenback's gains have as interest rates have jumped. The 10-year Treasury yield finished last year near 3.88% and is now near 4.04%. European benchmark rates have mostly...

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Consolidative Tone Emerges Ahead of Tomorrow’s US Jobs and EMU CPI

2024-01-04

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2024-01-04

Overview: After gaining for the past couple of sessions to open the New Year, the dollar is mostly softer today. The yen is the main exception. The greenback was bid above the JPY144 area where chunky options expire today. Most emerging market currencies are also firmer though there are a few exceptions in Asia, like the South Korean won and Thai baht. Still, the general tone is consolidative ahead of tomorrow US jobs data and the eurozone's CPI....

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Holiday Moves Continue to be Unwound

2024-01-03

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2024-01-03

Overview: The dollar is firm. Rates are mostly higher and equities lower. The moves scored in the holiday-thin markets are at end of last year are being unwound. This does not appear complete yet. Geopolitical tensions remain high but do not seem to be having a direct market influence as both gold and oil are trading lower. Among the G10 currencies, sterling has been the most resilient today but nearly flat. Within the emerging market complex, the...

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Firm Start for the Greenback

2024-01-02

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2024-01-02

Overview: The US dollar begins the new year on a firm note. It is recovering against nearly all the G10 and emerging market currencies today after depreciating in the holiday-thin markets over the past couple of weeks. Japanese markets are on holiday until Thursday. The yen and Swiss franc are the poorest performers among the G10 currencies. Among emerging market currencies, the Mexican peso, Hungarian forint, and South African rand are bucking the...

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January 2024 Monthly

2023-12-30

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2023-12-30

The only thing that can be said with high confidence about the year ahead is that it will be different from 2023. Three broad forces will shape the business and investment climate in the year ahead.First, the post-Covid tightening cycle in the high-income countries, leaving aside Japan, has ended. The question is when and how fast rate cuts will be delivered. Moderating price pressures and weaker growth impulses have seen the pendulum of market...

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