Tag Archive: capital flows
Disappointing US Data Followed by Better Japanese Wages and Stronger German Factory Orders Weigh on the Greenback
Overview: The one-two punch of the disappointing US job opening report and the downbeat Beige Book weighs on the US dollar, which is softer against all the G10 currencies. The Canadian dollar is a notable exception. Prime Minister Trudeau's minority Liberal Party lost key support and the Bank of Canada affirmed expectations for more rate cuts. Japan's wage growth was stronger than expected, underscoring the divergence of policy and the dollar was...
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Dollar Comes Back Bid
Overview: The dollar fell alongside US rates
yesterday after the softer than expected CPI. The move on both rates and the
dollar were pared after the FOMC meeting which held rates steady as widely
expected, but the median dot now anticipated one cut this year rather than
three. The dollar has recovered more ground today and is trading with a
slightly firmer bias G10 currencies. However, trading is quiet and mostly
narrow ranges have dominated....
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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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Quiet End to a Busy Week
Overview: The US dollar is winding down this week on
a quiet note. Most of the G10 currencies are trading within yesterday's ranges.
On the week, only the Scandis are set to close with gains, though with a little
effort, the Australian dollar could too. The Japanese yen and Swiss franc are
the laggards off 0.65%-0.75% this week. Most emerging market currencies outside of
central Europe are firmer. The South African rand is the strongest this...
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Food Prices Drive China’s CPI Lower while the Greenback is Mostly Firmer in Narrow Ranges
Overview: The dollar is mostly firmer against the
G10 currencies and has been confined to tight ranges through the European
morning. Outside of the China's deflation and Japan's monthly portfolio flow
data that showed Japanese investors bought the most amount of US Treasuries
(~$22 bln) in six months in September, the news stream is light. Most emerging
market currencies are trading with a softer bias today. The Philippine peso is
the strongest...
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BRICS to Expand a Little, USD Steadies after Yesterday’s Retreat, Attention Turns to Jackson Hole
Overview: Strong Nvidia's earnings after the US
markets closed yesterday helped lift Asia Pacific markets today. All the large
bourses were higher but India. Hong Kong, South Korea, and Taiwan indices rose
more than 1%. Europe's Stoxx 600 is higher for the fourth consecutive session
and US index futures are higher, led by the NASDAQ. European benchmark bond
yields have extended yesterday's PMI-induced decline and are mostly 1-2 bp
lower. The...
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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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The Greenback is Softer Ahead of CPI but Key Chart Points Remain Intact
Overview: The deluge of Treasury supply is nearly
over for this week. On tap today are 4- and 8-week T-bills and $23 bln 30-year
bonds to finish the quarterly refunding. The sales will come after the July CPI
print that is expected to see the first year-over-year increase since last June.
The market is going into the report with about a 15% chance of a Fed hike next
month discounted. Meanwhile, September crude oil extended its recover from $80
seen...
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RBNZ Delivers a Dovish Hike and UK Inflation Surprises to the Upside
Overview: Equities in the Asia Pacific region and
Europe are being led lower by the sell-off in the US yesterday. All the large
Asia Pacific markets fell with Hong Kong and mainland shares setting the pace.
Europe's Stoxx 600 is off nearly 1.5%, which would be the largest loss in two
months. Consumer discretionary, financials and real estate sectors are off
nearly 2%. US equity futures have a softer bias. European 10-year yields are
mostly 2-3 bp...
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Equities Retreat while the Dollar is Confined to Narrow Ranges
Overview: Equities are mostly lower, while bonds have risen. The
dollar is trading in narrow ranges and mixed against the G10 currencies and
emerging markets. Most Asian bourses were lower. The Nikkei (though not the
Topix) and Hong Kong were the chief exceptions. Europe's Stoxx 600 is off for
the second consecutive day, in what looks like the first back-to-back loss
since early this month. US equity futures are lower, with the NASDAQ, which
eked...
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Dollar Soft but Stretched
Overview: While bank stress seems to continue
to ease, the dollar languishes against most of the major currencies. The
Japanese yen is the notable exception. It is off about 1.5% this week. The
Dollar Index has given back the gains scored at the end of last week but
remains inside the range set last Thursday and Friday (~101.90-102.35). Perhaps
the participants are waiting for Friday. In addition to month-, quarter, and
fiscal-year ends, it is...
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Firmer Rates and Higher Bank Stocks Give the Greenback Little Help
Overview: Financial strains eased yesterday, and
short-term yields jumped. The two-year US yield jumped 25 bp to pierce 4%. Yet,
the dollar fell against most of the major currencies yesterday and is mostly
softer today. Banking stress is ebbing. The Topix bank index snapped a
three-day decline and jumped nearly 2% today to recoup the lion's share of its
three-day decline. The Stoxx 600 index of EMU banks is extending yesterday's
1,7% advance. The...
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Higher for Longer Helps the Dollar while Weighs on Equities
Overview: The jump in prices paid in yesterday's US
ISM manufacturing coupled with the stronger eurozone inflation, with a new
cyclical high reported in the core rate, underscores the market theme of
higher-for-longer. This is seen as dollar supportive but also negative for
risk-assets, including and especially equities. European benchmark 10-year
yields are up another couple of basis points today and the 10-year US Treasury
yield is pushing above...
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Ueda Day
Overview: Rising rates and falling stocks provided the
backdrop for the foreign exchange market this week. The dollar appreciated
against all the G10 currencies but the Swedish krona, which is still correcting
higher after the hawkish pivot by the central bank. The market looks for a
later and higher peak in the Fed funds rate. This coupled with the risk-off
sentiment helped the dollar extend its recovery after falling since last...
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US Interest Rate Adjustment Post-Jobs is Over as the 2-Year Yield Backs Away from 4.50%
Overview: The capital markets have shrugged off the
more than 1% loss of the Nasdaq and S&P 500 yesterday and have jumped back
into risk assets. The stocks and bonds have been bought and the dollar sold. Chinese
and Hong Kong shares gained more than 1% today. Japan was mixed and Taiwan and
South Korean equites saw minor losses. Europe's Stoxx 600 is up over 1%. Nasdaq
futures are up nearly 1.2% while the S&P 500 is lagging slightly....
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Sharp Dollar Setback may offer Bulls a Bargain
The dollar is having one of the largest setbacks in recent weeks. We expected the dollar to soften ahead of next week’s CPI, which may fan ideas/hopes of a peak in US price pressures, but the magnitude and speed of the move is
surprising, and likely speaks to the extreme positioning.
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FX Daily, March 16: Equities Firm, but Markets Tread Gingerly
Overview: Yesterday's new record highs in the S&P 500 and Dow Jones Industrial helped set the tone for today's advance in the Asia Pacific region and Europe. The MSCI Asia Pacific Index snapped a two-day decline, with other major markets rising today.
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FX Daily, April 2: Optimism on Oil Deal Steadies Risk Appetites…for the Moment
Overview: After US stocks dropped more than 4% yesterday, investor sentiment has improved, apparently sparked by ideas that the pain will force oil producers to find a way to reduce supply. Oil prices have surged, with the May WTI contract rallying around 7%. Asia Pacific equities were mostly higher, with Japan and Australia the notable exceptions.
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Forex Forensics: The Case of the Yen
Over the past five sessions, the yen is the strongest of the major currencies, appreciating about 1.7% against the US dollar, eclipsing the Swedish krona, which rallied strongly today after the Riksbank's surprise rate hike. Given the sell-off in equities and the decline in markets, the yen's strength is not surprising.
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Capital Flocks to the US
The US policy mix gets a privileged place in our understanding of what is the dollar. Tighter monetary policy and looser fiscal policy could be the closest thing to an elixir for currencies. It is the policy mix that the US is pursuing.
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