Tag Archive: Canada

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

2023-08-17

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2023-08-17

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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Dollar’s Rally Pauses Near Key Levels

2023-08-16

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2023-08-16

Overview: The US dollar is trading with a slightly heavier tone in the European morning. It has stalled in front of JPY145.90, where the BOJ intervened last September and ahead of CNY7.30, which some observers think Chinese officials are defending. We are less convinced that either central bank has drawn a line at a particular level and suspect it is too early to be confident that the greenback has peaked against either. On the back of yesterday's...

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Surprise-Packed Tuesday: China Cut Rates, Japan’s Q2 GDP Rises Twice as Fast as Expected, and UK Wages Accelerate

2023-08-15

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2023-08-15

Overview: Today's highlights include a surprise rate cut from China after another series of disappointing data and much stronger than expected Japanese Q2 GDP (6% annualized pace). The UK reported an unexpected sharp jump in average weekly earnings, which were sufficient to get renew speculation of a 50 bp hike by the Bank of England next month. The US dollar is mixed. The Swedish krona and dollar-bloc currencies are struggling, while the Swiss...

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Risk Appetites Squashed by Weak Chinese Imports/Exports and Moody’s Downgrade of 10 US Banks

2023-08-08

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2023-08-08

Overview: The combination of falling Chinese imports and exports, Moody's downgrade of ten US small and medium-sized banks is serving to squash risk appetites. Equities are weak, but bond markets are strong despite the surprise tax on Italian banks announced yesterday and the kick-off of the US $103 bln refunding today. Outside of Japan and Australia, Asia Pacific equity markets were lower led by a 1.8% drop in the Hang Seng and a nearly 2.2% loss...

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Dollar Comes Back Bid

2023-08-07

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2023-08-07

Overview: The US dollar is recovering today after it was sold following the jobs report before the weekend. It is enjoying a firmer bias against nearly all the G10 currencies. The dollar-bloc is faring best, while the Scandis are off close to 0.5%. Most emerging market currencies are also softer, with only a few Asian currencies edging higher today, including the South Korean won, Indian rupee, and Taiwanese dollar. With a stronger dollar and...

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US Jobs Report and OPEC Statement Featured Ahead of the Weekend

2023-08-04

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2023-08-04

Overview: The capital markets are calmer today but the US (and Canadian) jobs data stand in the way of the weekend. While equity markets are firmer, the rise in yields continues with new highs for the week being recorded today. European benchmark yields are 2-3 bp higher and the US 10-year Treasury yield is approaching 4.20%. Most of the large market in the Asia Pacific region advanced, but South Korea and Taiwan where the superconductor...

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Fitch Roils Markets

2023-08-02

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2023-08-02

Overview: Late yesterday, on the eve of the quarterly refunding announcement, Fitch cut the US rating to AA+ from AAA, citing project fiscal deterioration over the next few years and "the erosion of governance". S&P also has the US as an AA+ credit. Ironically, many observers who have been critical of the US monetary and fiscal policies, like former Treasury Secretary Summers and El-Erian, were also critical of Fitch's decision. The...

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RBA Holds Fire, Greenback Rebounds

2023-08-01

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2023-08-01

Overview: The dollar has come back bid. It is rising against all the major currencies today. The Reserve Bank of Australia left rates steady and the poor Chinese Caixin PMI is weighing on the Australian dollar, which is off about 1.25% today. Sterling is the best G10 performer, off about 0.1%. Perhaps, the BOE's meeting on Thursday is helping to deflect some of the selling pressure. Emerging market currencies are also nearly all lower, led by the...

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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

2023-07-31

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2023-07-31

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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Bond Rally Continues, Greenback Consolidates with Softer Bias

2023-07-18

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2023-07-18

Overview: The main development in the capital markets is the decline in yields. In Europe, benchmark 10-year yields are off 7-11 bp today, extending the move that began last week. The 10-year Germany Bund yield peaked last Thursday near 2.68% and is near 2.40% now. Similarly, the 10-year Italian yield has fallen from 4.42% to below 4.05% today. The 10-year US Treasury yield fell in five of the last six sessions and is off almost five basis points...

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The Greenback Stabilizes After Pre-Weekend Drop

2023-07-10

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2023-07-10

Overview: The US dollar is mostly firmer after selling off hard before the weekend in response to the jobs data. Ranges are mostly narrow, but the Australian and New Zealand dollars are the heaviest following news of China's deflation. Emerging market currencies are mixed, but of note the liquid, freely accessible currencies, South African rand, Hungarian forint, and Mexican peso are atop the leader board. Despite repeatedly lower US dollar fixes...

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Yen Extends Recovery on Wage Data, Yuan Ticks Up Too

2023-07-07

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2023-07-07

Overview: A powerful short squeeze has lifted the yen by the most in two months this week. The dollar's push today below JPY143 was encouraged by the stronger than expected wage growth. The US jobs report will test its strength. The PBOC fixed the yuan sharply higher today and it is the only emerging market currency that is higher on the day, ahead of the Latam open. The dollar has not drawn much support for the surge in US yields. The 10-year...

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Yen and Yuan Lead Move Against the Dollar

2023-07-06

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2023-07-06

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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What Happened Today

2023-07-04

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2023-07-04

The US dollar was mostly softer. The New Zealand dollar was the strongest (~0.85%) helped by cross rate gains against the Australian dollar, following the RBA’s decision to stand pat. The Australian dollar fell to one-month lows below NZD1.08. There is scope for another 0.5%, or so to the next target near NZD1.0750. The RBA’s decision to leave its cash target at 4.10% was not surprising, and despite the hawkish rhetoric, the market downgraded the...

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The Greenback Starts H2 on a Firm Note

2023-07-03

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2023-07-03

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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Market Continues to Converge With Fed’s Forward Guidance

2023-06-30

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2023-06-30

Overview:  A key development in recent days has been the market's convergence with the Federal Reserve's forward guidance regarding scope for two quarter-point hikes in the second half. The US two-yield is up about six basis points today, extending yesterday's 15 bp increase. It is approaching 5%. The Fed funds futures strip implies one hike has been fully priced in and about a third of the next one. The dollar has risen against all the G10...

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The Dollar Regains Composure

2023-06-28

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2023-06-28

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

2023-06-27

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2023-06-27

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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Calm Start to the Week, with Little Impact from Russia’s Drama

2023-06-26

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2023-06-26

Overview:  The drama in Russia captured the imaginations but failed to have much impact on the capital markets. Conventional wisdom sees it as a sign of Putin's weakness, but he has been underestimated, including by many Ukrainians who did not think Russia was going to invade despite America's repeated warnings. It may take some time for the implications for the two main protagonists, Wagner head Prigozhin and Defense Minister Shoigu. The war in...

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Higher for Longer

2023-06-22

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2023-06-22

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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