Tag Archive: Bank of Japan

Fall of French Government Does Not Roil the Markets and a BOJ Dove did not Rule out Rate Hike this Month

2024-12-05

by

2024-12-05

Overview: The US dollar is mostly softer today. The only G10 currency that has not gained on it today is the Swedish krona, which is nursing minor losses. Still, the tone is one of consolidation and this may persist through the North American session, ahead of tomorrow US employment report. The median forecast in Bloomberg's survey has crept up to 215k. Most emerging market currencies have also gained on  greenback, but the South Korean won. The...

Read More »

Trump’s Tariff Talks Wobble Forex Market, Close Neighbors Suffer Most

2024-11-26

by

2024-11-26

Overview: As some market pundits were debating about a possible grand deal between the US and China. In exchange for a lighter tariff regime, Beijing would accept yuan appreciation. As far-fetched as such scenario may be, it was predicated on ideas that people like the Bessent, the Treasury Secretary-nominee, was pragmatic. Trump's comments hit in early Asia Pacific turnover specifically cited a 25% tariff on all product from Canada and Mexico and...

Read More »

Markets do Cartwheels in Response to Traditional Pick for US Treasury Secretary

2024-11-25

by

2024-11-25

Overview: The selection of Scott Bessent, the hedge fund manager as next US Treasury Secretary was greeted euphorically in the capital markets:  one of their own and, arguably, like many of new economics team could have been picked in any Republican administration. Risk appetites have been animated. Still, we suspect market positioning may have led to an exaggerated response. The dollar has been sold. Stocks have bought. The euro is leading the G10...

Read More »

Higher Yields Help Extend the Dollar’s Gains

2024-11-12

by

2024-11-12

Overview: The dollar continues to ride high. It is up 0.20%-0.50% today against the G10 currencies. Most pairs have extended last week's moves. The Dollar Index, which was near 100 in late September is approaching 106.00. Emerging market currencies are all weaker, as well. The dollar is being helped by higher US yields. After yesterday's holiday, the US 10-year yield is up five basis points to near 4.36%. The two-year yield also is five basis...

Read More »

Ueda Lifts Yen, Stocks Slump, Gilts Under Pressure Post-Budget

2024-10-31

by

2024-10-31

Overview: The main move in the foreign exchange market today is the recovery of the yen following what was seen as hawkish comments by BOJ Governor Ueda. Otherwise, the tone is one of consolidation. The equity market sell-off today may be weighing on the Scandis and dollar-bloc currencies amid risk-off impulses. Emerging market currencies are mixed. The Mexican peso, which fell to a new low for the year yesterday, is stabilizing today and is among...

Read More »

Eurozone Growth Surprises, Lifts Euro, while UK Budget is Awaited

2024-10-30

by

2024-10-30

Overview:  The US 10-year yield is off around a dozen basis points off yesterday's high and European growth in Q3 was better than expected. This appears to have encouraged some dollar liquidation today. The greenback is softer against the G10 currencies, but the Canadian dollar and sterling. The much-awaited UK Autumn budget will be announced shortly. Sterling is consolidating around $1.30. Most emerging market currencies also are enjoying a firmer...

Read More »

Japan’s LDP Loses Majority, Sending Yen Lower, and Oil Gaps Lower on Middle East Developments

2024-10-28

by

2024-10-28

Overview: The next couple of weeks in the capital markets are likely to be tumultuous, and the loss of the LDP majority in Japan get it started. The yen gapped lower amid the immediate uncertainty. The yen is off about 0.5% toward the middle of today's range. Leaving aside the Scandis, where are mixed, the other G10 currencies are little changed, +/- 0.15%. The euro has recovered above $1.08, where options for 2.3 bln euros expire tomorrow....

Read More »

Consolidation Featured, but the Yen and Mexican Peso are Under Pressure, While PBOC Fixed the Dollar Lower

2024-09-20

by

2024-09-20

Overview: The week is winding down and the US dollar is mostly consolidating against the G10 currencies. Two exceptions stand out. First, sterling is the only G10 currency higher on the day. It follows the BOE's cautious hold yesterday and stronger than expected retail sales today. The other exception is the Japanese yen, where the BOJ stood pat and did not seem to have the urgency after a move next month, even though the national CPI ticked up....

Read More »

Greenback Continues to Trade Heavily amid Heightened Speculation of a 50 bp Cut Wednesday

2024-09-16

by

2024-09-16

Overview: The markets are continuing to be impacted by the possibility that Fed officials planted a press report to put 50 bp cut back on the table after the market had moved away from it after the recent jobs data and CPI. In the Fed funds futures, there is around an 80% of a half-point move on Wednesday discounted and about an 80% chance of a second 50 bp cut this year. This has taken a toll on the greenback and cut short the technical correction...

Read More »

Consolidative Tuesday

2024-09-10

by

2024-09-10

Overview: The US dollar is mostly consolidating so far today with a slightly heavier bias against the G10 currencies and most emerging market currencies. The larger than expected Chinese trade surplus did not lift the yuan. The greenback is trading above its 20-day moving average against the Chinese yuan for the first time since late July. Sterling is rising for the first time in three sessions after a strong jobs report. The Canadian dollar is the...

Read More »

The Market Discounts around a 40% Chance of not One but Two 50 bp Cuts in last Three FOMC Meetings of the Year Ahead of Jobs Report

2024-09-06

by

2024-09-06

Overview: The US jobs report is front and center. The market is going into the report with about a 40% chance of a 50 bp Fed rate cut later this month. The Dollar Index is trading lower for the third consecutive session. Helped by the fifth consecutive decline in US 10-year yields, the yen approached last month's high but without the turmoil seen in July and August. Still, equity markets are under pressure. Most large markets in the Asia Pacific...

Read More »

Corrective Forces Weigh on G10 Currencies, with the Euro Threatening its Largest Loss in Two Months

2024-08-28

by

2024-08-28

Business travel prevents the commentary for the next two days.  It will return with the September monthly on August 31.  Overview: Corrective forces are helping lift the dollar against all the G10 currencies. The euro's 0.5% pullback is the largest in nearly two months. Sterling's 0.3% loss is the most in nearly three weeks. The dollar-bloc currencies are the most resilient and are off less than 0.2% today. Emerging market currencies are more...

Read More »

Sterling Shines

2024-08-27

by

2024-08-27

Overview: The US dollar is softer against all the G10 currencies but the Japanese yen. Sterling is leading the advance and is at new two-year highs, knocking on $1.3250. More generally, the dollar's consolidative tone remains intact, but it looks like a pause rather than a reversal, especially against the dollar-bloc currencies. The weaker yen is a headwind for most of the regional currencies, including the yuan. Most central European currencies...

Read More »

What Can Powell Say that the Markets Do Not Already Know?

2024-08-23

by

2024-08-23

Overview: The US is consolidating with a softer profile against most G10 and emerging market currencies today, ahead of Fed Chair Powell's speech at Jackson Hole (10 AM ET). He is unlikely to go much beyond confirming what the market already thinks it knows: namely, that the first rate cut will be delivered next month. By acknowledging that the economy has evolved broadly along the lines the central bank expected, it would be a gently push against...

Read More »

Consolidation Featured

2024-08-08

by

2024-08-08

Overview:  Yesterday's poor 10-year note US Treasury auction helped turn the equity market lower and this carried over into Asia Pacific and European activity today. Today, Treasury completes its quarterly refunding with the sale of $25 bln 30-year bonds. The general tone in the foreign exchange market is one of consolidation. Japanese investors were buyers of foreign stocks on bonds last week, according to the latest portfolio flow report, which...

Read More »

Equity Meltdown Continues as Attention turns to the US Employment Report

2024-08-02

by

2024-08-02

Overview: Federal Reserve Chair Powell said that although confidence has risen that inflation is on course back to 2%, the Fed is not quite confident enough to cut rates. The market effectively eased for it. Since the FOMC meeting began on Tuesday, the two-year US yield tumbled from 4.40% to 4.10%. The US 10-year yield settled below 4% for the first time in six months. The risk-off spurred by the weaker than expected US manufacturing ISM helped...

Read More »

Dollar Storms Back (but not Against the Yen) After Fed Signals Low Bar to September Cut

2024-08-01

by

2024-08-01

Overview: Neither the FOMC statement nor Fed Chair Powell's press conference dented the markets confidence that the Federal Reserve will begin an easing cycle at its next meeting in September. Yet, the dollar is bid against most of the G10 currencies, but the yen and Swiss franc. The Norwegian krone, apparently helped by a stronger PMI and the recovery in oil prices, is the strongest with a 0.25% gain. Most Asian emerging market currencies, but the...

Read More »

BOJ Delivers, Sending Greenback to Almost JPY150; Now Over to the Federal Reserve

2024-07-31

by

2024-07-31

Overview: A 15 bp hike by the BOJ and plans to halve its bond purchases by the end of FY25 (in March 2026), coupled with a hawkish press conference by Governor Ueda sent the dollar to nearly JPY150, its lowest level in four months. A soft-core inflation reading in Australia send the Aussie lower and is the weakest of the G10 currencies. The others are little changed. The focus is now on the Federal Reserve, which is expected to signal that its...

Read More »

Yen Slumps, Germany Contracts, and the Week’s Key Events Still Lie Ahead

2024-07-30

by

2024-07-30

Overview: An unexpected decline in Japan's unemployment did not prevent a retreat in the yen to a four-day low ahead of tomorrow's data and conclusion of the BOJ meeting. The dollar has probed the JPY155 area where nearly $3.5 bln options expire today. An unexpected contraction Germany's Q2 GDP was offset in the aggregate by better French, and especially Spanish figures, leaving the euro consolidating in a narrow range (~$1.0815-$1.0835). The...

Read More »

Market Boosts Odds of a BOE Rate Cut this Week

2024-07-29

by

2024-07-29

Overview: The US dollar is mostly firmer today ahead of what promises to be an eventful week. Sterling is bearing the brunt today, off a little less than half-of-a-cent as expectations creep up of a rate cut this week and Chancellor of the Exchequer Reeves plays up the poor state of public finances left by the Conservative government. Sterling (and the euro's) five- and 20-day moving averages have crossed. The yen is mostly within the pre-weekend...

Read More »