Category Archive: 4.) Marc to Market

Sterling Moves Back into Previous Trading Range, but will it Hold?

Overview:  The dollar is trading with a slightly heavier bias as some of its recent gains are pared. Sterling has moved back into the $1.26-$1.28 trading range that dominated since the middle of last December until the start of this week. The euro is also trading a little firmer despite another large drop in German industrial output (-1.6%). The Japanese yen, Swiss franc, and Norwegian krone are the notable exceptions with a softer profile....

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Greenback Consolidates Two-Day Surge

Overview: The US dollar is consolidating its the two-day surge since the jobs data at the end of last week. The Reserve Bank of Australia did not rule out additional rate hikes, and although the derivatives markets do not think it is likely, the Australian dollar is the best performer in the G10 today with a small gain. An unexpectedly strong German factory orders report failed to help the euro much and it languished near yesterday's low. Sterling...

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The US Dollar and Rates Rise Further

Overview: The US dollar and interest rates have continued to rise after the strong employment report before the weekend helped drive home the Fed's message at last week's FOMC meeting. The greenback has been bid to new highs for the year against the G10 currencies but the Canadian dollar. The dollar also rose to a marginal new high for the year against the Chinese yuan. Interest rates are jumping, and the market has downgraded the chances of a May...

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Week Ahead: Markets Digest New Economic Divergence after US Employment Report

The US employment data blew away expectations, jumping by 353k, nearly twice the median forecasts. That, coupled with the 0.6% rise in average hourly earnings, which was also twice expectations, helped drive home the Federal Reserve's reluctance to endorse what had been market speculation of a March rate cut and an aggressive rate cutting sequence. The dollar had softened as US rates eased following the FOMC meeting and new strains among regional...

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US Dollar Offered Ahead of Employment Data after US 10-year Yield Set New Low for the Year

Overview: The dollar is offered ahead of today's US jobs report, even though expectations are for solid if not spectacular jobs growth of around 185k. The Australian and New Zealand dollars are leading today's move, while the euro approached $1.09, which it has not traded above this week. Sterling neared the lower end of its $1.26-$1.28 trading range yesterday and set a new high for the week today, slightly above $1.2770. Emerging market currencies...

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The Euro and Australian Dollar Take Out January Lows to Start the New Month

Overview:  Federal Reserve Chair push against speculation of a March rate cut as explicitly as could be imagined at yesterday's press conference lifted the dollar, while weighing on stocks. US regional banks sold off sharply yesterday, and challenges emanating from US real estate adversely impacted a Japan's Aozora Bank and Deutsche Bank quadrupled its loss provisions for such exposure. The greenback remains bid. The euro and Australian dollar have...

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US Tech Sell-Off Challenges Risk Appetites Ahead of the FOMC

Overview: Ahead of the US Treasury's quarterly refunding announcement and the outcome of the FOMC meeting, the dollar is trading higher against all the G10 currencies. With US high-flying tech stocks posting steep losses after disappointing earnings reports, the currencies most sensitive to risk-appetites, the dollar bloc and the Norwegian krone are the weakest. Emerging market currencies are mixed. The South African rand, Philippine peso, and...

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EMU Q4 23 GDP Stagnates, Underscoring Divergence with the US

Overview: The US dollar is mixed ahead of the start of the FOMC meeting and is mostly in its recent ranges. The euro, which was sold below $1.08 yesterday for the first time since mid-December is holding above it today. The less-than-expected projection of US Treasury borrowing requirements for Q1 and Q2 weighed on US rates, which, in turn, dragged the greenback lower against the yen. It is trading near a four-day low, a little above JPY147.00. The...

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Oil Retraces Initial Surge, Euro Slips to Marginal New Low, while Sterling Hugs $1.27

Overview: Key developments today include the Hong Kong court ordered liquidation of China's Evergrande and the reversal of oil prices after a sharp rally initially in Asia after separate attack in the Middle East that killed US troops in Jordan and struck a Russian oil tank in the Red Sea. March WTI, which settled near $78 ahead of the weekend, its best level since the end of last November, rallied to about $79.30 before returning to almost $77.50...

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February 2023 Monthly

The coming weeks will likely continue the correction of the trends that began last month. The markets recognize that tightening cycle is over. However, they swung hard, pricing in aggressive easing by most of the G10 central banks, including the Federal Reserve and the European Central Bank. Official comments and some high-frequency economic data have encouraged participants to rein in their expectations, reducing the odds of a rate cuts in Q1 and...

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USD Looks Oversold on Intraday Basis Ahead of a Possible Risk-Off North American Session

Overview:  The US dollar is trading lower against most currencies, but the intraday momentum indicators are stretched, suggesting the selling pressure may not be sustained through in North America today. December US personal income and consumption data was contained in yesterday's Q4 23 GDP data, but the market want to see the monthly print, which is expected to see the core measure ease with the headline rate flat. Tokyo's January CPI was much...

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Attention turns to Lagarde’s Press Conference and US Q4 GDP

Overview: The US dollar is trading mostly quietly in narrow ranges against the G10 currencies ahead of the ECB's President Lagarde's press conference at the conclusion of the policy meeting and the first estimate of Q4 US GDP. With elevated price pressures, Norway's central bank left rates steady and reiterated its signal that rates will remain high for some time, and this has lifted the krone by about 0.5% to leader the major currencies. Most of...

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

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

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

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)

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

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

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

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

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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