Category Archive: 4.) Marc to Market

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The Dollar Heads into the Weekend Well Bid

2022-09-16

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2022-09-16

Overview:  The dollar is well bid. It has risen to new two-year highs against the dollar bloc and Chinese yuan. Aided by worse than expected retail sales, sterling, on its anniversary of leaving the European Exchange Rate Mechanism fell to its lowest level since 1985. This fits into the broader risk-off move. The S&P 500 fell to new two-month lows yesterday, and FedEx warnings after the bell yesterday add to the string of worrisome comments...

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Calmer Capital Markets…for the Moment

2022-09-15

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2022-09-15

Overview: The capital markets are quiet today. Equity markets and bond yields have a slight upside bias, while the dollar is little changed. Despite reports that the lockdown in Chengdu is easing, Chinese equities underperformed in the Asia Pacific region.

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Markets Remain on Edge

2022-09-14

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2022-09-14

Overview: The firmer than expected US CPI set off a major reversal of the recent price action. It is a two-prong issue. The first is about inflation and the squeeze on the cost-of-living.

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Will the Dollar Recover After CPI?

2022-09-13

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2022-09-13

Overview: The US dollar remains offered ahead of today’s CPI report. Most European currencies are outperforming the dollar bloc, and the greenback is holding inside yesterday’s range against the yen. Most emerging market currencies are firmer, as well.

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Careful about Chasing the Dollar Lower in North America Today

2022-09-12

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2022-09-12

The bout of profit-taking on long dollar positions begun last week has carried into the start of this week. Despite the escalating rhetoric, the yen is not participating today and is trading within the pre-weekend ranges. The greenback’s lows have been set in the European morning and have stretched the intraday momentum indicators, suggesting that North American dealers may not follow suit.

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The Dollar: Was it the ECB and BOJ or the Bounce in Equities?

2022-09-11

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2022-09-11

After extending its recent gains, the dollar fell sharply at the end of last week. Many factors could have sparked the pullback, including the stronger expressions of concern by Japanese officials with an implicit threat of intervention and perceptions of an increased likelihood that the ECB will deliver another 75 bp hike next month.

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US CPI in Focus

2022-09-10

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2022-09-10

The US dollar rally is of historic proportions. Its climb is relentless, though there was around a 4-7% pullback for a few weeks beginning in mid-July. Since then, the greenback has made up for lost time and appreciated to multiyear highs against most of the major currencies. The first real bout of profit-taking in nearly a month seen in recent days looks corrective in nature.  

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Sharp Dollar Setback may offer Bulls a Bargain

2022-09-09

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2022-09-09

The dollar is having one of the largest setbacks in recent weeks. We expected the dollar to soften ahead of next week’s CPI, which may fan ideas/hopes of a peak in US price pressures, but the magnitude and speed of the move is surprising, and likely speaks to the extreme positioning.

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ECB: Coping with Conflict, Covid, and Climate

2022-09-08

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2022-09-08

Overview: Heightened warnings from Japanese officials has helped the dollar steady against the yen, while the euro hugs parity ahead of the outcome of the ECB meeting, where a 75 bp hike is anticipated. Most Asian equity markets rallied in the wake of yesterday’s gains in the US.

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The Yen and Yuan Continue to Weaken

2022-09-07

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2022-09-07

While the US dollar appears to be consolidating its recent gains, the Japanese yen and Chinese yuan remain under pressure. Officials seem more concerned about the pace of the move than the level it has reached. New and large fiscal initiatives that the new UK government has floated has failed to change sentiment toward sterling, which is the second weakest major currency today after the Japanese yen.

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Aussie Sells Off After RBA Hikes 50 bp while Sterling Bounces on UK New Initiative

2022-09-06

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2022-09-06

Overview: A GBP130 bln initiative by the new UK government to protect households from the surge in power costs helped lift sterling from 2.5-year lows. The Reserve Bank of Australia delivered the expected 50 bp rate hike, but the prospect of smaller moves going forward saw the Australian dollar sold through yesterday’s lows.

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What Happened Monday

2022-09-05

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2022-09-05

The US and Canada may have been on holiday on September 5, but the world waits for no one and there were several significant developments. First, Gazprom's decision to indefinitely suspend gas shipments through the Nord Stream 1 pipeline announced before the weekend saw the European natgas benchmark soar 23.7.

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Nord Stream’s Indefinite Shutdown Keeps Dollar Bulls in Control

2022-09-04

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2022-09-04

Over the past month, the yen and sterling have been the weakest of the major currencies, off 5.00%-5.40%. The yen is at 24-year lows, while sterling swooned nearly eight cents in less than four weeks toward the March 2020 extreme (~$1.14). The yen's weakness is more clearly a function of the divergence of policy.   The correlation with US Treasuries has been too strong and too stable to dismiss easily. Back in July, when the dollar had approached...

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RBA, BOC, and ECB Meetings and more in the Week Ahead

2022-09-03

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2022-09-03

All three major central banks that meet in the coming days will hike rates. The question is by how much. The Reserve Bank of Australia makes its announcement early Tuesday, September 6. One of the challenges for policymakers and investors is that Australia reports inflation quarterly. The Q2 estimate was released on July 27. It showed prices accelerating to 6.1% year-over-year from 5.1% in Q1. The trimmed mean rose to 4.9% from 3.7%, and the...

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Can the US Employment Report be Anti-Climactic Ahead of Long North American Weekend?

2022-09-02

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2022-09-02

Overview:  Nothing is decisive, but the recent string of data pushes the needle a little more to a soft landing for the US economy and gave the US dollar another leg up. The risk is that some of the buying drained some of the interest that may materialize after today's US jobs report. The greenback is softer against the major currencies except the Japanese yen. The dollar is extending its rally against the yen for the sixth consecutive session and...

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September 2022 Monthly

2022-09-01

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2022-09-01

The highlights of September include continued substantial rate hikes by the major central banks, save Japan. The Tories will pick a new leader, who will become the next prime minister of the UK. Italy looks determined to have a right-wing government. Sweden goes to the polls in mid-September.

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New Lockdown in China and the First Drop in South Korea’s Chip Exports in 2 years Euthanizes Animal Spirits

2022-09-01

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2022-09-01

Overview: The precipitous fall in equities continues while the dollar remains buoyant. Nvidia’s warnings about US curbs on sales to China and the first drop in South Korea’s chip exports in two years, coupled with the largest lockdown in China since Shanghai encouraged investors to move to the sidelines.

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EMU August CPI at 9.1%, while the Core Rate Jumps to 4.3%

2022-08-31

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2022-08-31

Overview: The rise in global interest rates continues. The US 10-year yield is a few basis points near 3.15% and European benchmarks are mostly 5-6 bp higher. Of note, the sharp sell-off in UK Gilts has being extended. Yesterday’s 10 bp rise has been followed by another 14 bp surge today. Italian bonds are also getting hit. The 10-year yield is up a little more than 10 bp.

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Turn Around Tuesday Began Yesterday, Likely Ends before Wednesday

2022-08-30

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2022-08-30

Corrective pressures were evident yesterday and they extended today in Asia and Europe but seem to be running their course now. Market participants should view these developments as countertrend and be wary of waning risk appetites in North America today.

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Stocks and Bonds Sell Off, while the Dollar Rallies

2022-08-29

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2022-08-29

Overview: The reverberations from last week continue to roil the capital markets today. Equities and bonds have been sold and the greenback bought. Most of the large markets in Asia Pacific fell by more 2%, including Japan’s Nikkei, Taiwan’s Taiex, and South Korea’s Kospi.

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