Category Archive: 4.) Marc to Market

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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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US Dollar Soars and US Rates Jump

2024-11-06

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2024-11-06

Overview: Shortly after the North American markets closed, before any results were known, the market jumped back into the "Trump trade," which it had pared on Tuesday. The dollar and US interest rates soared. The euro is the hardest hit among the G10 currencies today, off about 1.6% and the Canadian dollar, the best performer … Continue...

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Nervous Calm Hangs over the Markets

2024-11-05

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2024-11-05

Overview: A nervous calm hangs over the markets as the US goes to the polls. The proximity of the presidential contest warns that the results may not been known as soon as people hope. Indeed, many fear the voting simply begins the next phase of the contest, with premature declarations of victory and disputes over votes. The dollar is in mostly narrow ranges today, but the Antipodeans and Scandis are the strongest, and the Reserve Bank of Australia...

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US Polls Spur Position Adjusting Ahead of Tomorrow’s Election

2024-11-04

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2024-11-04

Overview: Weekend polls in the US made it seem that the Trump victory, which many large pools of capital, had discounted, was not so inevitable after all. The most dramatic market response was taking US yields and the dollar lower. The US 10-year yield is off about nine basis points to straddle 4.30% and the two-year yield down four basis points to around 4.16%. The greenback is also against all the G10 currencies. Most emerging market currencies...

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November 2024 Monthly

2024-11-02

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2024-11-02

We have all experienced how capital markets exaggerate. A few months ago, the focus was on the carry-trade, then the unwind. More recently, it was the euphoria around the numerous measures Beijing announced to support the property and stock markets and the attempt to reduce the risk of the local government debt. And now, as the US election approaches, it has become an important market driver. If the markets were fully rational, we might explain...

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US Job Report may Offer Little Relief ahead of Next Week’s US Election and Meetings by Half of the G10 Central Banks

2024-11-01

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2024-11-01

Overview: The first of what promises to be two tumultuous weeks is winding down. The US jobs data is the last big event. It is widely recognized that it will be skewed to the downside because of hurricanes and some mostly temporary factors. Anticipating the market’s reaction is also complicated by the weekend, and reports that Iran may strike back at Israel (through bases in Iraq?), and next Tuesday's US election, and five G10 central bank meetings...

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Ueda Lifts Yen, Stocks Slump, Gilts Under Pressure Post-Budget

2024-10-31

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2024-10-31

Overview: The main move in the foreign exchange market today is the recovery of the yen following what was seen as hawkish comments by BOJ Governor Ueda. Otherwise, the tone is one of consolidation. The equity market sell-off today may be weighing on the Scandis and dollar-bloc currencies amid risk-off impulses. Emerging market currencies are mixed. The Mexican peso, which fell to a new low for the year yesterday, is stabilizing today and is among...

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Eurozone Growth Surprises, Lifts Euro, while UK Budget is Awaited

2024-10-30

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2024-10-30

Overview:  The US 10-year yield is off around a dozen basis points off yesterday's high and European growth in Q3 was better than expected. This appears to have encouraged some dollar liquidation today. The greenback is softer against the G10 currencies, but the Canadian dollar and sterling. The much-awaited UK Autumn budget will be announced shortly. Sterling is consolidating around $1.30. Most emerging market currencies also are enjoying a firmer...

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Consolidative Tone in FX Ahead of Key Events and Data

2024-10-29

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2024-10-29

Overview: A consolidative tone is emerging in the foreign exchange market as the week's key events begin tomorrow:  UK budget, eurozone and US Q3 GDP, and the US ADP private sector jobs estimate, and quarterly refunding. Outside of the Norwegian krone, which is up nearly 0.5%, the other G10 currencies are largely +/- 0.1%. The yen, Swiss franc, and antipodeans are trading with a slightly heavier bias. Among emerging market currencies, most from the...

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Japan’s LDP Loses Majority, Sending Yen Lower, and Oil Gaps Lower on Middle East Developments

2024-10-28

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2024-10-28

Overview: The next couple of weeks in the capital markets are likely to be tumultuous, and the loss of the LDP majority in Japan get it started. The yen gapped lower amid the immediate uncertainty. The yen is off about 0.5% toward the middle of today's range. Leaving aside the Scandis, where are mixed, the other G10 currencies are little changed, +/- 0.15%. The euro has recovered above $1.08, where options for 2.3 bln euros expire tomorrow....

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