Category Archive: 4) FX Trends
Calm Markets with Japan on Holiday Today and the US Tomorrow
Overview: The capital markets are quiet today with
Japan on holiday and the US on holiday tomorrow. Asia Pacific equities were
mostly firmer after yesterday’s rally on Wall Street. Europe’s Stoxx 600 is
about 0.25% higher and at its best level in three months. US futures are steady to
slightly higher. Benchmark 10-year yields are little changed. The dollar is narrowly
mixed against the major currencies, with Scandis leading the way. Sweden is...
Read More »
Read More »
Consolidative Session, even if Not Turn Around Tuesday
Overview: The US dollar is trading with a somewhat heavier bias after bouncing
higher yesterday. All the G10 currencies are higher, led by the New Zealand
dollar, where the central bank is expected to hike first thing tomorrow. Most emerging
market currencies are also firmer. Those that are not, like the South Korean
won and Mexican peso, are nursing minor losses. The surge in Covid cases
weighed on Chinese shares that trade in Hong Kong, while the...
Read More »
Read More »
Dollar Jumps, while Surge in Covid Cases Raise Questions about China’s Pivot
Overview: Surging Covid cases in China and Hong Kong
are undermining hopes of a Covid-pivot and the US dollar is broadly higher.
Equities are under pressure to start the week. Most of the large bourses in the
Asia Pacific but Japan, fell earlier today. Europe’s Stoxx 600 is paring last
week’s minor gain, which was the fifth consecutive weekly rise. US stock futures
are lower, while the 10-year US Treasury yield is flat near 3.83%. European
yields...
Read More »
Read More »
Macro and Prices: Data and Psychology in the Week Ahead
The week ahead has a relatively light economic schedule, punctuated by the US Thanksgiving Day holiday on November 24. Nevertheless, the data highlights include the preliminary November PMIs, Tokyo's November CPI, and the FOMC minutes from this month's meeting.
Read More »
Read More »
Higher Japanese CPI Won’t Change the BOJ’s Stance
Overview: The capital markets are heading into the
weekend mostly quietly in a consolidative fashion. Ambiguous signals from yesterday’s US
equities saw a narrowly mixed performance among the large Asia Pacific bourses,
but of note, Hong and China markets saw this week’s gains trimmed. Europe’s
Stoxx 600 is up around 1% near midday and is slightly above last week’s
close. US equity futures are trading
with a firmer bias ahead of a large...
Read More »
Read More »
The Dollar Comes Back Better Bid
Animal spirits are retreating today. Asia Pacific and European equities are lower, and US futures are narrowly mixed. US 2- and 10-year yields are edging higher, while European benchmark 10-year yields are mostly softer. Italy and the UK are notable exceptions.
Read More »
Read More »
Markets are Less on Edge as the Darkest Scenarios seem Less Likely
The situation in central Europe is still intense but it appears top US, European and Polish officials are more reluctant than some market participants to attribute the darkest of intentions and paint extreme narratives.
Read More »
Read More »
Poor Chinese and Japanese Data Are Not Deterring Euphoria
Overview: Recent developments have spurred a euphoria
that is exciting the animal spirits. Greater confidence that US inflation has
peaked, and new initiatives from China, and yesterday’s Biden-Xi meeting are all
feeding this narrative. The dollar, which
slumped last week, is sliding anew today. Strategically, we anticipated the
turn, but tactically, we thought last week’s move had stretched the near-term
technical condition. The dollar is...
Read More »
Read More »
The Dollar Posts Corrective Upticks, while the Market Digests China’s Initiatives
Overview: China’s new initiatives to support the property sector helped lift the Hang Seng. And while the China’s CSI 300 edged higher both the Shanghai and Shenzhen composites fell. Most Asia Pacific markets fell, while Europe’s Stoxx 600 is posting a small gain.
Read More »
Read More »
Dollar Turn More Credible but Maybe Too Much Too Fast
Even before the softer-than-expected US inflation, we had been suggesting the dollar was in the process of carving out a significant high. Our strongest conviction was that sterling bottomed in late September at a record low near $1.0350. Our conviction had also been growing that the greenback has topped against the Canadian dollar, a little shy of our CAD1.40 target.
Read More »
Read More »
Capital Flows Outstrip Trade Flows and that is Where to Look for Drivers of FX
Policymakers have often said that exchange rates should reflect fundamentals. What does that really mean? Can they do anything but that? It begs the question of which fundamental factors they should reflect.
Read More »
Read More »
Caution Advised in Chasing FX, but Wow!
Overview: The softer than expected US inflation figures unleashed significant market adjustment that continue to ripple through the capital markets. The modification of some of China’s Covid stance may have also fanned some optimism, but we suggest that measures are modest tweaks, and the surge in infections will prevent the end of disruptive restrictions.
Read More »
Read More »
High Anxiety: China’s Covid and US Inflation
Overview: Anxiety is running high. Rather than ease its Covid restrictions, a surge in cases is seeing more areas in China come under restrictions. The US reports CPI and of the ten reports this year, seven of them have been stronger than expected.
Read More »
Read More »
Markets Consolidate After US Election
Overview: It is difficult to see the impact of the US midterm election in the immediate aftermath. The dollar is stronger against all the major currencies, but this seems to be mostly position adjusting ahead of tomorrow’s CPI report after a pullback in recent days.
Read More »
Read More »
Federal Reserve speakers coming up on Wednesday, 9 November 2022 – Williams, Barkin
The talking heads at the US Federal Reserve have pivoted to talking about how high rates will go before they top out as against how quickly they will rise.
Read More »
Read More »
The Dollar Edges Higher
Overview: After selling off amid
speculation that China’s Covid policy was going to ease, we expected the greenback
to recover and consolidate ahead of Thursday’s CPI. This did not materialize
yesterday, but the dollar has come back better bid today. Equity markets are
mostly firmer, but nearly all the large markets, but China/Hong Kong, rising in
the Asia Pacific region. Europe’s Stoxx 600 is posting small gains. It is the third
session in a row...
Read More »
Read More »
Risk Appetites Survive China Keeping Zero Covid Policy
Overview: Chinese officials denied plans to end the zero-Covid policy
and after a brief wobble, risk assets have traded better. Asia Pacific equities
rallied, led by Hong Kong and mainland stocks that trade in Hong Kong. Europe’s
Stoxx 600 opened lower but recovered and is around 0.5% higher after the 1.8%
gain before the weekend. US futures are firm. Benchmark 10-year yields are mostly
2-4 bp softer in Europe and the US. The dollar is mixed. The...
Read More »
Read More »
Can the Dollar Sell Off Much More Before the CPI?
The apparent hawkishness of Fed Chair Powell's comments at the press conference following the FOMC's fourth consecutive rate hike extended the dollar's recovery, which had begun in late
October.
Read More »
Read More »
The Week Ahead: How Sticky is US Inflation and How Soft is China’s?
There are three potential inflection points. The first is a
pause from the Fed; if nothing else, Powell signaled it was too early to think
about it. The second is for the Bank of Japan to change monetary policy.
Governor Kuroda has signaled that it is not time. Conventional wisdom is there
will not be a change until Kuroda's term ends next April. However, we note that
the surveys suggest economists and BOJ inflation forecasts for next year have...
Read More »
Read More »
US Dollar Offered Ahead of the Employment Report
Overview: Risk appetites have returned but may be
tested by the US jobs report. News of progress with US auditors in China helped
lift Hong Kong and Chinese equities. Most of the large bourses in the region
also rose. Europe’s Stoxx 600 is up a little more than 1% near midday after
shedding 1.3% over the past two sessions. US futures also are trading with an
upside bias. Benchmark 10-year yields are mostly a little softer today. The 10-year
US...
Read More »
Read More »