Tag Archive: Bank of Canada
Greenback and Yen Extend Gains
Overview: The dollar's gains have been extended today, but in the risk-off mode, and unwinding of carry positions, the Japanese yen and Swiss franc are firmer. the dollar has stabilized in late European morning turnover. The Bank of Canada is widely expected to cut rates today and the greenback is pushing against CAD1.38, which it has not traded above for three-months. The US dollar gains, which we anticipated, are coming despite interest rates...
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Short Covering Squeezes the Yen Higher
The US dollar is firmer against all the G10 currencies but the Japanese yen. Local reports and the price action are consistent with short covering of the previously sold yen positions ostensibly ahead of next week's BOJ and FOMC meetings. Still, the greenback is holding above last week's low, slightly below JPY155.40.
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Dollar Mixed as Markets Digest US Political Developments
Overview: News that President Biden will not seek re-election has left investors unsure of the next step, but PredictIt.org still points to a Trump advantage of slightly better than 60-40. It is not clear yet whether Vice-President Harris will be challenged for the nomination. The dollar is mixed against the G10 currencies, with the dollar bloc and Norway weaker. The yen is up around 0.45% to lead the others higher. The Swiss franc, euro and...
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Dollar Consolidates to Start the New Week
Overview: The assassination attempt on former President Trump has injected a new dynamic as his chances of being re-elected appear to have risen. There are a few trades that seem to benefit from a second term: steepening yield curve, weaker Mexican peso, and stronger crypto. The dollar initially strengthened as the market's initially responded, while Tokyo markets were closed for Marine Day. As North American activity is about to begin, the dollar...
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Euro Sold After EU Parliament Elections and Macron’s Gambit
Overview: With mixed elements, the market took the
US jobs data as relatively strong and took the dollar and US rates higher. The
EU Parliament election has shaken up European politics, with the Belgium
government collapsing and French President Macron calling a snap legislative
election for the end of the month. Holidays in China, Hong Kong, Taiwan, and
Australia made for thinner Asia Pacific trading, but the euro was sold and has reached to...
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The Euro Remains Firm Ahead of the First Time the ECB will Cut Rates Before the Federal Reserve
Overview: The dollar is mostly softer today, ahead
of tomorrow's employment report. The ECB meeting and President Lagarde's press
conference are main events today. There is little doubt that it will cut rates
today and do so ahead of the Federal Reserve for the first time. The ECB's
forward guidance may be the key to the market's reaction. That said, the euro
is in the upper end of its recent range, near $1.09. The Mexican peso, which
was crushed...
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Yen Unwinds Yesterday’s Gains, while the Mexican Peso and Indian Rupee Stabilize
Overview: The foreign exchange market is calmer
today than Monday and Tuesday, and the dollar is mixed. The yen, which rallied,
yesterday, has given back most of its gains and the wage data gave the market
second thoughts about next week's BOJ meeting. The Mexican peso, which has been
sold aggressively in the face of the strong election showing of the Morena
party and allies, is the strongest currency today, though the greenback is
holding above...
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Dollar Pulled Back in Europe. New Buying Opportunity?
Overview: The dollar initially extended yesterday's
North American recovery but unwound most of the gains in the European morning. As
North American dealers return, the greenback is lower against most of the G10
currencies. After approaching levels believed to have been where the BOJ last
intervened, profit-taking pushed the dollar back to a marginal new low for the
week (~JPY156.55). The yen's recovery arguably helped the Chinese yuan rise for
the...
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Dollar Consolidates but Adjustment is Not Over
Overview: Higher than expected US CPI for the third consecutive month drove US interest rates sharply higher and lifted the greenback broadly. The market appears to be catching its proverbial breath today, but the shallow consolidation suggests the moves are not over.
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Dollar Consolidates Softer Ahead of Tomorrow’s CPI
Overview: The dollar is trading with
a softer bias in mostly narrow ranges against the G10 currencies. It did not
rally much ahead of the US jobs data, and it was not able to sustain the upside
momentum afterwards, despite the jump in US yields. Former St. Louis Fed President
Bullard, who still has a strong reputation in the market, told Bloomberg TV
yesterday that three cuts were his base case this year. The Scandis and
Antipodeans are the...
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Forex Becalmed with the Greenback Mostly Firmer in Narrow Ranges
(Business trip will interrupt the commentary over the next few days. Check out the March monthly here. Back with the Week Ahead on March 9. May have some comments on X @marcmakingsense.) Overview: Outside of the Australian and New Zealand
dollars, which are off by 0.20%-0.25%, the other G10 currencies are little
changed and mostly softer in narrow ranges. A firm Tokyo CPI, mostly on base
effects and softer rates helped keep the US dollar below...
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China’s CSI 300 Rises for Seventh Consecutive Session and Offshore Yuan Strengthens for the Sixth Session
Overview: The dollar is trading quietly
after being sold yesterday. It is still soft against the dollar bloc and the
Swiss franc but is firmer against the other G10 currencies. Narrow ranges have
dominated. Emerging market currencies are mixed, with central European
currencies and the Taiwan dollar trading softer. The offshore Chinese yuan is
firmer for the sixth consecutive session. The highlights of today's North
American session features minutes...
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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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Markets Catch Collective Breath
Overview: The US dollar is mixed today. The dollar-bloc currencies are firmer, while the euro and yen are softer. We had anticipated a recovery of the dollar on ideas that the market has too aggressively pushed down US rates, and pricing in more Fed easing with higher confidence than seems to be warranted by the recent data. However, US rates have not recovered, but the dollar has. Partly, this reflects that rates have fallen as faster if not...
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Tensions Run High Ahead of ECB Meeting and US Q3 GDP as JPY150 Breached
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
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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Battle for $1.07 in the Euro
Overview: Despite disappointing German
industrial output, where the 0.8% decline was twice expectations, the euro is
holding above $1.07, where large options exist that are expiring over the next
few sessions. The greenback is consolidating against the Japanese yen, where
the fear of intervention has increased. Sterling remains on its back foot after
yesterday's seemingly dovish comments by Bank of England Governor Bailey. Emerging
market...
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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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US CPI and Bank of Canada Highlight North American Session
Overview: The US dollar's losses have been extended
ahead of the June CPI. At the same time, speculation that the Bank of Japan
will adjust policy later this month saw the yen extend its gains for the fifth
consecutive session. Sterling made new highs since last April, while the Swiss
franc has risen to its best levels in about 2 1/2 years. The Dollar Index
gapped lower and through the trendline drawn off the April and May lows. The
greenback has...
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