Category Archive: 4.) Marc to Market

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Markets Calm but Trepidation Runs High

2023-10-30

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2023-10-30

Overview: Fears that the Israel-Hamas war was going to widen this past weekend sent gold and oil sharply higher at the end of last week. A reportedly more restrained Israeli entrance into Gaza has seen gold pullback back below $2000 (~-0.6%) and December WTI soften (~-1.7%). The US dollar is mostly softer. Stronger-than-expected Australian retail sales fan the risk of a hike next week and this appears to be helping the Australian dollar lead the...

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November 2023 Monthly

2023-10-28

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2023-10-28

November may be an in-between month. It will be a month of limited monetary policy actions and a period of heightened geopolitical tensions. Fiscal policy may be more interesting, with a Japanese supplemental budget, more measures expected from China, and a debate in Europe over the re-implementation of the Stability and Growth Agreement. In the US, the drama that played out in the House of Representatives could still leave the federal government...

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Is the Market Putting on Risk Ahead of the Weekend?

2023-10-27

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2023-10-27

Overview: The US dollar is trading with a softer bias. Among the G10- currencies, only the euro and Swiss franc are the laggards and are nearly flat. In shifting expectations, the market sees the Reserve Bank of Australia as the most likely to hike rates again, while the swaps market appears to be bringing forward cuts by the European Central Bank and the Bank of Canada. The Australian dollar is the strongest G10 currency today and this week. After...

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Tensions Run High Ahead of ECB Meeting and US Q3 GDP as JPY150 Breached

2023-10-26

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2023-10-26

Overview: The market is on edge. Anxiety is running higher. It is partly geopolitics, and it is partly market stresses. The dollar is holding above JPY150 but so far, no reports or signs of intervention. Bank shares are under pressure. An index of Japanese banks has fallen for five of the past six sessions and are off about 8% from the year's high set last month. An index of European bank shares has fallen in six of the past seven sessions and...

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Divergence Continues to Underpin the Greenback

2023-10-25

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2023-10-25

Overview: The divergence reflected in the flash PMI readings seen yesterday underpinned the dollar, which is firmer in mostly quiet turnover. The initial Australian dollar gains scored in response to the slightly less decline in Q3 CPI have been unwound. The greenback also remains within striking distance of JPY150 where there are still some large options and some apprehension over possible BOJ intervention. Hungary's larger than expected rate cut...

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Poor Flash PMI from Japan and Eurozone

2023-10-24

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2023-10-24

Overview: Bonds and stocks are higher today, and the dollar is mixed. A weak PMI reading seemed to weigh on the euro, but the market shrugged the weak Australian PMI off and the Australian dollar is the G10 currencies while the euro is among the weakest. Yesterday, the North American session showed an appetite for foreign currencies and with some of their intraday momentum stretched to the downside, the stage is set for a possible repeat today. The...

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JPY150 Pierced but Market is Not Done

2023-10-23

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2023-10-23

Overview:  News that Israel's ground assault on Gaza is being delayed while hostage negotiations continue saw gold and oil ease, but tensions continue to run high. Gold peaked near $1997 before the weekend and pulled back to about $1964 today before steadying. December WTI peaked in front of $90 a barrel at the end of last week, and fell to about $86.85 today, but has also steadied. The dollar is firmer against the G10 currencies, with the Scandis...

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Week Ahead: Q3 US GDP to Underscore Divergence, while ECB and Bank of Canada Stand Pat

2023-10-21

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2023-10-21

The US dollar was mixed last week. One would have thought, based on the geopolitical tensions, the stronger than expected US economic data that resulted in upward revisions to Q3 GDP forecasts and a more than 30 bp surge in US 10-year yields, the greenback would have performed better. The Dollar Index fell by almomst 0.5% last week, its biggest weekly loss in three months. It is down so far this month. On the other hand, gold rallied 2.5% to extend...

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The Dollar Continues to Press Against JPY150; Risk Off Ahead of the Weekend

2023-10-20

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2023-10-20

Overview: True to the market's penchant, it heard a dovish Fed Chair Powell yesterday. He seemed to suggest that the bar to another hike was high. This helped cap the 10-year yield just in front of 5.00% and allowed foreign currencies to recover against the dollar. The US two-year yield reversed lower after rising above 5.25%. It is now around 5.15%. Still, Powell appeared to cover similar ground as several other officials, including Fed governors...

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Greenback Remains Bid and the Market has not Given Up on JPY150

2023-10-19

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2023-10-19

Overview:  The greenback did not strengthen yesterday in Asian and European turnover despite the deteriorating conditions in the Middle East, but it did rally as North American participants entered the fray. Indeed, the Dollar Index rose from a marginal new four-day low to a marginally new four-day high. The safe haven bid seen in gold and oil, was reflected in the foreign exchange market by the strength of the Swiss franc, the only G10 currency to...

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Geopolitical Tensions Lift Oil and Gold, but little Sign of Haven Buying in FX

2023-10-18

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2023-10-18

Overview: US economic data surprised to the upside yesterday, and although interest rates rose as one would expect, the dollar's initial gains were pared, and the Dollar Index finished slightly lower on the day. This seemed, in some respects, to echo how the greenback reacted to the recent jobs report. However, then, interest rates softened, but the inability to rally on seemingly good news is notable. The heightened tensions in the Middle East...

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Markets Remain on Edge

2023-10-17

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2023-10-17

Overview:  The markets remain on edge. The press reports US President Biden is planning an imminent trip to Israel while Iran warns of "multiple fronts" against Israel if the attacks on Gaza continued. The dollar, which was offered yesterday, is better bid today. Still, the capital markets are relatively quiet. Even the Swiss franc, which was the strongest G10 currency last week (~0.9%) is slightly heavier today. Among emerging market...

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Capital Markets are Calm though Anxiety Continues to Run High

2023-10-16

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2023-10-16

Overview: The risk that the war in Israel spreads remains palatable, and several observers have warned of the greatest risks of a world war in a generation. Still, the capital markets remain relatively calm. The US dollar is softer after closing last week firmly. The only G10 currency unable to post corrective upticks today is the Swiss franc. Among emerging market currencies, the Polish zloty has been boosted by the pro-EU election results, and...

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Week Ahead: Softness in US Real Sector, Key UK and Canadian Data, and China’s Q3 GDP

2023-10-14

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2023-10-14

The markets absorbed two shocks last week. The war in Israel that seems to know of no restraint underpinned oil prices and appeared to help boost gold and the Swiss franc, the only G10 currency to appreciate against the dollar. The other was the continued deluge of US Treasury supply, the coupon auctions that tailed and higher than expected PPI and CPI. Nevertheless, the US 10- and 30-year yields fell nearly 20 bp last week, snapping a six-week...

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Dollar Steadies after Yesterday’s Surge, Oil Jumps Ahead of the Weekend while Yields Soften

2023-10-13

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2023-10-13

Overview: The capital markets seemed to have an exaggerated response to the US CPI, where the headline rate, flattered by the rise in energy, rose by 0.1% in September than forecast. Rather than decline, the headline year-over-year rate was unchanged at 3.7%. The core rate was as expected slowing to 4.1% from 4.3%. Next week's US data, including retail sales, industrial production, existing home sales, and the index of leading economic indicators...

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Greenback Consolidates Ahead of September CPI

2023-10-12

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2023-10-12

Overview: The dollar is mixed against the G10 currencies. It is confined to narrow ranges ahead of today's CPI report. The Russian ruble is the strongest of the emerging market currencies following the imposition of new capital controls, forcing many exporters to repatriate their foreign earnings. After posting a key upside reversal at the end of last week, gold continues to recover. It nearly $1883 so far today, the best level in more than two...

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Bonds Extend Recovery

2023-10-11

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2023-10-11

Overview: Broadly speaking, the dollar's recent pullback was extended today but the momentum appears to be slowing, perhaps ahead of tomorrow's US CPI report. The Dollar Index slipped to its lowest level since September 25 before steadying. The greenback is mixed as the North American market is set to open. The dollar bloc and Swedish krona are the underperformers. The Swiss franc is the best, up about 0.2%, while the yen and euro are little...

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Sharp Fall in US Yields ahead of Large Supply

2023-10-10

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2023-10-10

Overview: The market continues to monitor developments in Israel and the Middle East. The economic calendar is light today and the market is showing a strong appetite for risk. Except for China and South Korea, large bourses in the Asia Pacific rallied. Japan's indices jumped more than 2% and Australia by 1% to lead the region. Europe's Stoxx 600 is up 1.5% near midday, which, if sustained would be the largest in nearly a month. US index futures...

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War in Israel Spurs Flight to Dollars, Yen and Gold, While Driving up the Price of Oil

2023-10-09

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2023-10-09

Overview: There are three main developments. First, the market is digesting the implication of the US employment data, where the optics were strong (336k increase in nonfarm payrolls compared with 170k median forecast in Bloomberg and Dow Jones surveys) but some details were disappointing (like the third consecutive decline in full-time posts, seasonally adjusted). Second, Chinese mainland market re-opened after a six-day holiday). Chinese stocks...

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Week Ahead: King Dollar Stalls

2023-10-07

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2023-10-07

The US reports September CPI on October 12 and the first decline in three months in the year-over-year rate is expected. However, the price action itself may overshadow not only the CPI but other high-frequency data in the week ahead. US grew more than twice the number of jobs in September as economists expected. US interest rates and the dollar jumped initially, and stocks were dumped. And then they reversed. Many narratives will be spun to...

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