Tag Archive: Australia

Market Awaits US Data and Leadership

Overview:  The dollar staged a major technical reversal yesterday, in a dramatic reaction to a considerably weaker JOLTs report than expected, spurring a large drop in US interest rates. And this is despite press reports that the participation rate in the survey is half of what was three years ago. We suspect the price action said as much about market positioning as it did about the data. The path to the US jobs data on Friday goes through...

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Aussie Recovers from Poor Jobs Data, but Nokkie is Weaker Despite Rate Hike

Overview: Encouraged by the continued stream of US data, which suggests that the world's largest economy is accelerating, the US 10-year yield is approaching last year's 4.33% high, and the dollar's run has lifted it to new highs for the year against the Japanese yen, Chinese yuan, and the Australian and New Zealand dollars. Even a rate hike by Norway did not stop the dollar from rising against the krone. The greenback is firmer against most of the...

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Markets Remain Unsettled, Bonds and Stocks Retreat, Dollar Gains Ahead of BOE

Overview: The global capital markets remain unsettled. The combination of the BOJ adjustment of its monetary policy, Fitch's downgrade of the US to AA+, ahead of a flood of supply, and new measures by China have injected volatility into the summer markets. The US dollar has extended it gains today against the G10 currencies and most emerging market currencies. The yen has recovered a bit after the BOJ stepped in and bought JGBs for the second time...

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BOJ Moves to Slow JGB Sell-Off, while Month-End is Making for Subdued Price Action in FX outside the Yen

Overview:  The Bank of Japan took the market by surprise with its adjustment of the cap on the 10-year yield before the weekend, and then stepped in to buy the government bond as yields rose in reaction today. The move helped lift the dollar to JPY142.50. from where it had settled on Friday (~JPY141.15). The dollar is mostly softer, however, with only the yen and Swiss franc weaker. The Australian dollar is leading the other currencies higher ahead...

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Dollar Sell-Off is Getting Stretched

Overview: Softer-than-expected US CPI, following weaker than expected job growth has sent the greenback tumbling. The dollar is stabilizing against the yen today, but the downside momentum is intact against the other major currencies. The euro approached $1.1175, sterling $1.3080, and the greenback slumped to almost CHF0.8615. The Australian dollar reached $0.6850, and the New Zealand dollar tested $0.6360. The Canadian dollar, often a laggard in a...

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Yen and Yuan Lead Move Against the Dollar

Overview: Stocks and bonds ae selling off today. The greenback is also trading heavily. Ironically, the yen is the strongest among the G10 currencies and the Chinese yuan is the strongest among emerging market currencies. The dollar is firmer against the Scandis and Canadian dollar. Most emerging market currencies, including the Mexican peso, which traded at its best level yesterday since 2015. While nearly all the bourses but India fell in the...

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The Greenback Starts H2 on a Firm Note

Overview: The dollar is recovering from the month-end losses seen at the end of last week. Only the New Zealand dollar among the G10 currencies is holding its own. Japanese reports indicate that Tokyo is in contact with the US Treasury about intervention, which is injecting a note of caution as the greenback holds below JPY145.00. Chinese officials also appear to be stepping up their efforts to stabilize the yuan. Among emerging market currencies,...

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PBOC Fixes Dollar Lower, but It Recovers Against the Yuan, Riksbank Hikes and Market Yawns

Overview: The US dollar is narrowly mixed against the G10 currencies. Stronger than expected Australian retail sales helped steady the currency after the soft inflation data took it down. Sterling has also steadied after it suffered its largest loss yesterday (~0.9%) in over a month. Sweden's 25 bp rate hike has not given the krona much of a lift. Central European currencies lead the emerging market currencies higher, while the PBOC set the...

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The Dollar Regains Composure

Overview: The dollar is better bid today. It is rising against nearly all the G10 currencies, with the Antipodeans bearing the brunt, after a softer than expected Australian inflation report. The yen has steadied after extending its losses to new lows for the year. Emerging market currencies are also mostly lower, though the Mexican peso is edging higher for the fourth consecutive session. The large Asia Pacific bourses rallied with the exception...

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PBOC Sends Signal in Lower Dollar Fix, while the Canadian Dollar makes a 9-Month High

Overview: Hawkish comments by ECB President Lagarde at the central bank symposium in Sintra and the PBOC's weaker dollar fix have weighed on the greenback today. It is lower against most of the G10 currencies, but the Japanese yen and Norwegian krone. It also slipped to a new nine-month low against the Canadian dollar. Emerging market currencies are also mostly firmer, with the notable exceptions of the Russian rouble and beleaguered Turkish lira....

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Greenback Jumps on Weak Flash PMIs

Overview: As the market reluctantly edges toward the Fed's guidance, the disappointing PMIs from Europe (but also Japan and Australia) helped boost the greenback. The Dollar Index is trading at seven-day highs above 103 after briefly dipping below 102 to set a new low since mid-May yesterday. The unwinding of cross positions is helping the yen hold its own today as it consolidates near its worst level of the year. The surging dollar and risk-off...

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Higher for Longer

Overview:  The central banks of Norway and Switzerland have hiked rates by 50 bp and 25 bp, respectively. Attention is on the Bank of England. A 25 bp hike is widely expected but after strong inflation report, the risk is clearly for a 50 bp hike. In fact, we suspect a quarter-point move could see sterling sold. With a new orthodox economics team in Turkey, a large rate hike is expected today. Late in the North American session, Mexico's central...

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Scandis and Antipodeans Lead the Greenback’s Recovery

Overview: The market continues to resist the Fed's signal that another 50 bp of hikes may be necessary to ensure inflation is headed toward its target. Previously, the market had rate cuts priced in, and it took some time for the Fed's push back to be accepted. The market converged with the Fed, and this helped the dollar recover. We suspect a similar pattern to play out again. The market does not have even one of the two Fed hikes discounted. As...

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ECB’s Turn

Overview: The Fed's hawkish hold and signal that it may raise rates two more time this year sent ripples through the capital markets. Risk appetites have been dealt a blow. However, China's rate cut and likely additional supportive measures after disappointing data, helped lift the CSI 300 by 1.6%, the most this year. The Hang Seng rose by nearly 2.2%, the most in three months. Europe's Stoxx 600 is snapping a three-day advance and US index futures...

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Japan’ Q1 GDP was Revised Up, While the Eurozone’s was Revised Down

Overview: The back-to-back surprise rate hikes by the Australia and Canada spurred speculation that the Fed could hike next week, and this lifted US rates and helped the dollar recover. The odds of a hike increased, according to the indicative pricing in the Fed funds futures market from about a 20% chance to a little above 35%. now. At yesterday's high, the two-year yield was up a little more than 25 bp since the low before the US employment data...

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Dollar Steadies After Fed’s Push Back

Overview: The market was gearing up for a June Fed hike and officials and this helped lift the greenback. However, the Fed Governor Jefferson, nominated to be the next vice-chair, pushed back against it. His views are thought to reflect the Fed's leadership. Philadelphia Fed's Harker, who is a voting member of the FOMC also backed a pause. This is not quite what we expected when we suggested the US interest rate adjustment was complete or nearly...

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The Greenback Stalls after Yesterday’s Surge as US Negotiators Move Closer to Last-Minute Deal

Overview: Yesterday's dollar surge has stalled. It is consolidating its gains and is softer against all the G10 currencies. After popping above JPY140 yesterday, there were no follow-through greenback buying in Tokyo. Most emerging market currencies are also firmer, including the South African rand, which plummeted by 2.8% yesterday on the back of the central bank's warning of downside currency risks as it delivered a 50 bp hike. The Chinese yuan...

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Fitch Puts US on Negative Credit Watch and the Dollar Extends its Gains

Overview: Concerned about the political wrangling over servicing US debt, Fitch put the US on negative credit watch. Besides chin wagging and finger pointing, it has had little perceptible impact. The dollar is mostly higher, reaching new highs for the year against the Japanese yen, Chinese yuan, and the Antipodean currencies. The euro and sterling met retracement objective we have targeted (~$1.0735 and $1.2435, respectively). The greenback is...

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Yen Recovers from New 2023 Low, while Sterling Sets a New Low for the Month

Overview:  The dollar is bid. Only the Japanese yen is holding its own against the greenback but only after it fell to new lows for the year. The Scandis and Antipodeans are the heaviest among the G10 currencies, while sterling has fallen to a new low for the month. The prospect of a rate hike tomorrow has not protected the New Zealand dollar much and it is off nearly 0.5%. Emerging market currencies are more mixed. Outside of the Russian rouble,...

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Yen and Yuan Fall to New Lows for the Year

Overview: Some creeping optimism about the US debt ceiling, easing of pressure on bank shares, and a continued rise in US rates helped the dollar extend its recent recovery. Over the past two weeks or so, the US 2-year premium has risen 25-30 bp against Germany and nearly 25 bp against the UK. The 10-year US Treasury has risen from the lower end of its seven-month range (~3.30%) earlier this month to approach the upper end of the range that has...

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