Category Archive: 4.) Marc to Market

Filter archive by: Show All Show only Articles Show only Videos

Nervous Calm Shrouds FX, while February 1 US Tariffs Look Less Likely

2025-01-30

by

2025-01-30

Overview:  There is a nervous calm in the foreign exchange market. The Federal Reserve indicated that the relatively good economic performance allow is to bide its time for the economic and policy picture to clarify and policy remained "meaningfully" restrictive. The disappointing GDP figures from Germany, France, and Italy today provide a weak backdrop for the ECB, which is set to deliver a quarter-point cut. The BOJ signaled its...

Read More »

Fed Day: Vigorous Defense of Independence While Standing Pat

2025-01-29

by

2025-01-29

Overview:  Tariffs and the Federal Reserve meeting are center stage today. Yesterday, the White House reiterated that tariffs on Canada and Mexico could be announced this weekend. The Canadian dollar is softer, and the Bank of Canada is widely expected deliver a quarter-point cut today and hint at a pause. There is practically no question about the Fed. It will stand pat, and we expect it to defend its independence. The Mexican peso, on the other...

Read More »

New Tariff Threat Fuels Turn Around Tuesday ahead of Tomorrow’s FOMC Decision

2025-01-28

by

2025-01-28

Overview: The US dollar recorded lows for the month against many of the major currencies yesterday but has come back bid today. We had anticipated some consolidation ahead of the conclusion of the FOMC meeting tomorrow, and the dollar's downside momentum faded. Yet, today’s gains have been fueled by new tariff threats. In particular, Bessent, the new Treasury Secretary, said to be a moderate, reportedly was advocated increasing a universal tariff...

Read More »

DeepSeek Sends US Stocks Sharply Lower, Dragging Rates Down, while Resolution of Tiff with Colombia Weighs on the Dollar

2025-01-27

by

2025-01-27

Overview: There have been two significant developments that are rocking US equities and sending US yields sharply lower. First, Chinese-made AI has taken the world by storm. Apparently, DeepSeek is cheaper to build, consumes less energy, and is faster than the other AIs. There seems to be innovations outside of replication. The second is a brouhaha over Colombia's initial refusal to accept US military planes bringing back illegal immigrants. There...

Read More »

Week Ahead: Can the Dollar’s Downside Correction Withstand the Divergence of Policy?

2025-01-25

by

2025-01-25

US President Trump's tariff threats roiled the foreign exchange market at the start of last week, but by the end, the market seemed to have taken what many see increasingly as negotiating positions in stride. The dollar had topped out against several of the major currency pairs a week or so before the election as some participants began moving to the sidelines. We anticipated "buy the rumor, sell the fact" type of activity but thought the...

Read More »

Dollar Slides

2025-01-24

by

2025-01-24

Overview: The US dollar is broadly lower. The tariff-threat inspired gains stalled and the BOJ rate hike and stronger PMI in Europe have dragged the greenback lower against all the G10 currencies and nearly all of the emerging market currencies. While the market remains vulnerable to pronouncements from Washington, and next week's policy divergence as the ECB, Bank of Canada, and probably Sweden's Riksbank cut interest rates while the Federal...

Read More »

Foreign Exchange Market Becalmed (Momentarily?)

2025-01-23

by

2025-01-23

Overview:  After wild swings in recent days, there is a nervous calm in the foreign exchange market so far today. The US dollar is narrowly mixed against the G10 currencies and is +/- about 0.15%. The dollar bloc and Scandis are softer. Among emerging market currencies, central European currencies and the Mexican peso lead the advancers, while Asia Pacific currencies, including the Chinese yuan and Indian rupee are sporting softer profiles. It is...

Read More »

US Dollar Extends Losses after North America Faded Yesterday’s Tariff-Threat Induced Gains

2025-01-22

by

2025-01-22

Overview: The US tariff threat was extended to China and the EU yesterday but after the North American market shrugged it off yesterday, for the most part, the market seemed to take it in stride. It is too early to say the market is becoming immune to the rhetoric. Still, the dollar is mostly softer today. Ironically, despite high confidence of a BOJ rate hike on Friday, the yen is the only G10 currency is lower on the day as the North American...

Read More »

Tariff Tuesday

2025-01-21

by

2025-01-21

Overview: The little emphasis on tariffs initially yesterday saw the US dollar pullback, the renewed threat of 25% tariffs on Canada and Mexico as of February 1 roiled the foreign exchange market and the dollar has come back bid. The Canadian dollar, among the G10, and the Mexican peso, among emerging market currencies have been the hardest hit, but the greenback is broadly higher. All the G10 currencies, but the yen and Swiss franc are off at...

Read More »

Week Ahead: Book-Ended by Trump’s Inauguration and the BOJ Rate Decision

2025-01-18

by

2025-01-18

There were four important macro developments to note in recent days. First, the recent string of US economic data was firmer than expected and GDP looks to have expanded close to 3% in Q4. With the help of guidance by Federal Reserve Waller, who is thought to be a possible successor to Chair Powell, played up the possibility of a cut in H1, and the market implemented the guidance and has next cut nearly priced in for the June FOMC meeting. Second,...

Read More »

Chinese Economy Grew 5% in 2024 (if You Believe it), UK Retail Sales Disappoint, and “Day One” Looms

2025-01-17

by

2025-01-17

Overview: The US dollar is firmer against most of the G10 currencies, but the tone is one of consolidation. Trump's inauguration on Monday, and the US markets are closed for the Martin Luther King holiday. Investors, businesses, and foreign countries have been warned of action on day one. Meanwhile, the yen is paring yesterday's gains, though the market anticipates a BOJ rate hike at the end of next week. The UK's retail sales cap a string of soft...

Read More »

Week Ahead: Fed to Cut, but Should it? BOJ and BOE to Stand Pat, but Should They?

2024-12-14

by

2024-12-14

(Happy Holidays. Daily Commentary will resume on January 6.  January monthly will post on January 4) The Swiss National Bank and the Bank of Canada delivered 50 bp rate cuts last week, and the European central bank cut by a quarter-point. The monetary easing cycle looks set to carry into next year. The Reserve Bank of Australia remains on hold and a stronger than expected employment report dampened speculation of a cut in Q1 25. The US CPI was in...

Read More »

Japan’s Tankan was Uninspiring and UK Disappoints with Contracting Economy in October

2024-12-13

by

2024-12-13

Overview: The US dollar is mixed against the G10 and emerging market currencies to finish out the week. Among the G10, sterling and the yen are the heaviest. Japan's Tankan survey was unimpressive and does nothing to reanimate speculation of a BOJ rate hike next week. Sterling has been dragged down by unexpected news that the economy contracted in October for the second straight month. The euro is being aided by the unwinding of cross positions...

Read More »

SNB Slashes Policy Rate in Half

2024-12-12

by

2024-12-12

Overview:  The US dollar is mostly softer today, but the tone is mostly one of consolidation. The Swiss National Bank surprised with a 50 bp cut and the franc is the only G10 currency that has not edged up against the greenback today. Australia reported a stronger than expected employment report. This boosted Australian yields and the Aussie, which is the strongest of the G10 currencies. Shortly, the ECB is expected to announce a quarter-point rate...

Read More »

Greenback Bid Ahead of CPI

2024-12-11

by

2024-12-11

Overview: The dollar is on fire. Ahead of today's US November CPI and tomorrow's anticipated rate cuts by the European Central Bank and the Swiss National Bank, the greenback is rising against all G10 currencies and nearly all emerging market currencies (but the Hong Kong dollar and the Indian rupee, which slipped to a record-low earlier today). There is a press report claiming that Beijing is considering allowing the yuan to fall further but it is...

Read More »

Dovish Hold Sends the Aussie Lower

2024-12-10

by

2024-12-10

Overview: The US dollar is little changed against most of the G10 currencies today. The antipodean currencies are the main exception. A modest change in tone from the Reserve Bank of Australia, boosting the chances of a rate cut early next year sent the Australian dollar back toward yesterday's lows, and the New Zealand dollar fell in sympathy. Most of the G10 currencies sporting softer profiles within the consolidative price action. The greenback...

Read More »

US Dollar is Offered and China’s Politburo Promises more Monetary and Fiscal Support

2024-12-09

by

2024-12-09

The dollar is offered. Neither the 227k rise in nonfarm payrolls, nor the above 3% Q4 growth that the Atlanta Fed sees the economy tracking, or the uptick in November CPI expected to be reported on Wednesday has been sufficient to dampen speculation of a rate cut next week.

Read More »

Week Ahead: 4 G10 Central Banks Meet, Three to Cut, Brazil to Hike 75 bp and US CPI may hold Key to FOMC

2024-12-07

by

2024-12-07

The US dollar advanced against all the G10 currencies last week but the Swiss franc but turned in a most mixed performance against emerging market currencies. The US 10-year yield fell for the third consecutive week and near 4.16%, it is around a dozen basis points below where it settled the night before the US election. The two-year yield fell for the second consecutive week and settled near 4.10% is about half a dozen basis points below the...

Read More »

Will a Solid US Jobs Report Dampen Expectation for a Fed Cut This Month?

2024-12-06

by

2024-12-06

Overview: There are two broad developments in the G10 currencies ahead of the US jobs report. The euro, Swiss franc, sterling, Swedish krona, and the Canadian dollar are in tight ranges with a heavier bias. The others are off a 0.3%-0.7%. There have been various distortions, like storms and industrial action, which exaggerated the weakness of the US labor market, which does seem to be slowing but gradually. Today's report should show a rebound, and...

Read More »

Fall of French Government Does Not Roil the Markets and a BOJ Dove did not Rule out Rate Hike this Month

2024-12-05

by

2024-12-05

Overview: The US dollar is mostly softer today. The only G10 currency that has not gained on it today is the Swedish krona, which is nursing minor losses. Still, the tone is one of consolidation and this may persist through the North American session, ahead of tomorrow US employment report. The median forecast in Bloomberg's survey has crept up to 215k. Most emerging market currencies have also gained on  greenback, but the South Korean won. The...

Read More »