Tag Archive: Bank of Canada
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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RBA Surprises with a Quarter-Point Hike and German Factory Orders Disappoint
Overview: The Reserve Bank of Australia surprised
many with a quarter-point hike and German factory orders unexpectedly fell.
Reports suggest that China has asked banks to cut deposit rates. The next
result is the Australian dollar is the strongest currency in the G10 and helped
lift the Canadian dollar ahead of the Bank of Canada meeting tomorrow. Australian
stocks sold off (~1.2%) while large markets outside of China rose in the region.
Europe's...
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US Dollar Slumps and China Surprises with Twice the Expected Trade Surplus
Overview: The market took US short-term rates and
the dollar lower after the CPI data, which was largely in line with
expectations. On the one hand, the odds of a quarter-point hike next month
increased slightly (73.6% vs. 71.6%) to 5.25%, but it reinforced that sense
that it is last hike and that the Fed will unwind this hike and more before the
end of the year. The year-end implied policy rate fell by about six basis points to
4.33%. The dollar...
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US CPI is Unlikely to Tell Us Anything We Don’t Already Know
Overview: Today's highlight is the March US
CPI, and while everyone is talking about it, it is unlikely to tell us anything
we do not already know. Headline price pressures are easing but the core rate
is sticky, and despite comments from the Chicago Fed president about the need
for patience, the odds of a hike next month have crept up. Understanding the
Fed's reaction function, it seems clear that for most officials, inflation is
remains too high...
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Yen Jumps Despite Poor GDP Ahead of Tomorrow’s BOJ Outcome
Overview: Seeing the drama he inspired on Tuesday,
the Fed chair tried soft-pedaling the idea that he was signaling a 50 bp hike
in March. The market did not buy it. And the odds, discounted by the Fed funds
futures rose a little above 70% from about 62% at Tuesday's close. The two-year
note yield solidified its foothold above the 5% mark. With the Bank of Canada
confirming its pause, the Reserve Bank of Australia does not seem that far
behind, and...
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Powell Sends the Two-Year Yield above 5% and Ignites Powerful Dollar Rally
Overview: Federal Reserve Chair Powell's comments to
the Senate Banking Committee were seen as hawkish by the market, even though it
has been clear to most observers that the 5.10% median terminal rate that the
Fed projected in December would be increased. Also, it seemed well appreciated
a few Fed officials support a 50 bp hike at the February 1 FOMC meeting, two
days before a "hot" jobs report that showed over 500k jobs were
filled. It...
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US Dollar is Better Bid Ahead of Powell, while Aussie Sells Off on Dovish Hike by the RBA
Overview: The US dollar is trading with a firmer bias against
nearly all the G10 currencies ahead of Federal Reserve Chairman Powell's
semi-annual testimony before Congress. Speaking for the Federal Reserve, the
Chair is likely to stay on message which is higher rates are necessary to cool
the overheating economy. This comes on the heels of the Reserve Bank of
Australia's 25 bp hike and indication that it is not pre-committing to an April
hike. The...
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Yields Pull Back to Start the New Week
Overview: The modest economic goals announced as
China's National People's Congress starts was seen as a cautionary sign after
growth disappointed last year. It seemed to weigh on Chinese stocks, though
others large bourses in the region advanced, led by Japan's Nikkei and South
Korea with gains of more than 1%. Europe's Stoxx 600 is little changed after
rising for the past two sessions. US index futures are slightly softer. Strong
gains were seen...
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Euro Closed above $1.09 but Follow-Through Buying Limited
Overview: After
some intraday penetration, the euro finally settled above $1.09 yesterday. However,
follow-through buying has been limited and technical and option-related
resistance is seen in the $1.0940-50 area. The dollar is more broadly mixed
today, with the dollar-bloc and Norwegian krone leading the advancers. The
euro, yen, and sterling are nursing small losses near midday in Europe. The
recovery of US equity indices yesterday after gap...
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Bank of Canada may say Pause, but the Market Hears Finished
Overview: Amid sharp losses in the US equity futures, the US dollar is mostly firmer against the G10 currencies. The notable exception is the Australian dollar, where high-than-expected inflation boosts the risk of a more aggressive central bank.
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No Follow-Through Euro Buying while S&P Holds Yesterday’s Breakout
Overview: A quiet consolidative session has been recorded
so far today as North American leadership is awaited. The preliminary PMI
readings are mixed. Japan and the eurozone look somewhat better, but Australia
and the UK disappointed. The dollar is trading with a mostly firmer bias,
but largely confined to yesterday's ranges. The markets seem to be looked
ahead toward next week's Fed, ECB, and BOE meetings, and the return of China
from this...
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Greenback’s Sell-off may Stall Ahead of Powell Tomorrow
Overview: Don't fight the Fed went the manta as the
market took the US two-year yield back up to 4.50% in the aftermath of the FOMC
minutes last week, the highest in over a month. The minutes warned of a
premature easing of financial conditions. And then bam, softer than expected
hourly earnings and a weak service PMI and bonds and stocks rallied, and the
dollar was sold. This is a key part of the backdrop for this week, for which
several Fed...
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Week Ahead: RBA and BOC Meetings Featured and China’s Inflation and Trade
The week ahead
is more than an interlude before five G10 central banks meet on December
14-15. The data highlights
include the US ISM services and producer prices, Chinese trade and inflation
measures, Japanese wages, household consumption, and the current account.
Also, the Reserve Bank of Australia and the Bank of Canada hold policy
meetings. Central banks from India, Poland, Brazil, Peru, and Chile also meet.The dollar appreciated in Q1 and Q2...
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Dollar Slumps, Yuan Rallies by Most this Year amid Intervention Talk
Overview: The US dollar is having one of toughest days of the year. It has been sold across the board and taken out key levels like parity in the euro, $1.15 in sterling, and CAD1.36. The Chinese yuan surged over 1%. Chinese officials promised healthy bond and stock markets.
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Macro and Prices: The Week Ahead
There are five macro highlights in the week ahead. After providing a thumbnail sketch of them, we will look more closely at the price action of the leading dollar-pairs. We suspect that the dollar is in the process of carving out a top amid ideas that a 5.0% terminal Fed funds rate is discounted.
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Greenback Holds Above JPY150, while BOJ goes MIA
Overview: The continued surge in US rates and inability of the equity market to sustain gains saw the post-Truss sterling rally unwind amid a broader recovery of the dollar. Sterling has been sold to new lows for the week.
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Currency and Bond Markets Challenge the Bank of Japan
Asia Pacific equities were mixed as the China, Hong Kong, Taiwan, and South Korean markets, among the large markets were unable to gain in the wake of a solid performance in the US. Europe is also struggling to maintain the upside momentum that has lifted the Stoxx 600 for the past four sessions.
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Turn Around Tuesday Aside, is the Dollar Topping?
Global equities moved higher in the wake of the strong gains in the US yesterday. US futures point to the possibility of a gap higher opening today. Most of the large Asia Pacific bourses rallied 1%-2%, with China’s CSI a notable exception, slipping fractionally.
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Sterling and UK Debt Market Respond Favorably to the Return of Orthodoxy
Overview: The markets have returned from the weekend with a greater appetite for risk. Equities and bonds are rallying, and the dollar is better offered. China, Hong Kong, South Korea, and Indian bourses advanced. Mainland shares edged higher even though Zhengzhou, a city of one million people, near an iPhone manufacturing hub was locked down due to Covid. Europe’s Stoxx 600 is up nearly 0.5% to extend its recovery into a third session.
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We Didn’t Print Money… Honest We Didn’t And More Baseless ClapTrap from Central Banks
2022-09-10
by Stephen Flood
2022-09-10
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