Category Archive: 4.) Marc to Market
Becalmed FX Market doesn’t Conceal the Greenback’s Strength
Overview: The foreign exchange market is
becalmed today, with most of the major pairs trading in narrow ranges. The
economic calendar is light and the North American session features benchmark
revisions in US CPI and Canada's January employment figures. The US quarterly
refunding supply has been absorbed without much fanfare. The dollar-bloc
currencies and the Norwegian krone are firmer today. A bank forecast that the
central bank will hike rates...
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Yen Tumbles to New Low on BOJ Comments
Overview: The dollar is narrowly mixed against most
of the G10 currencies as it continues to consolidate its recent gains. The yen is the notable exception, and
it was sold today, not in response to developments in the US Treasury market, a
frequent driver, but in response to comments by a deputy governor of the central bank,
suggesting a rate adjustment would not necessarily signal the start of a
tightening cycle, which some economists expected....
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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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