Tag Archive: China

Firmer Bonds and Stocks, but the Dollar Presses Ahead

2023-09-27

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2023-09-27

Overview: The S&P 500 hit three-month lows yesterday, while the Conference Board's measure of consumer confidence fell to a four-month low. New home sales fell to their lowest level in five years. The US federal government appears headed for a partial shutdown on October 1. Still, the greenback rides high. It is extending its gains against several G10 currencies, including the euro and sterling. The Swiss franc is moving lower for the 12th...

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Softer UK CPI Weighs on Sterling and Lifts Gilts, while Yen Slumps to New Low for the Year, Ahead of the FOMC

2023-09-20

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2023-09-20

Overview: Softer than expected UK CPI has drawn attention ahead of the key event of the day, the FOMC meeting. The UK's CPI has spurred a dramatic rally in Gilts and saw sterling initially extend its recent losses, falling to new four-month lows before stabilizing. The swaps market sees less than a 50% chance of a hike by the Bank of England tomorrow. Meanwhile, even though US Treasury Secretary Yellen suggested conditions in which intervention by...

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The Canadian Dollar Shines in a Mostly Consolidative FX Market Ahead of the Flurry of Central Bank Meetings

2023-09-19

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2023-09-19

Overview: Ahead of the flurry of central bank meetings, starting with the Federal Reserve and Brazil tomorrow, the dollar is largely consolidating in narrow ranges. The euro, sterling, and yen are trading slightly heavier, while the dollar bloc and Scandis enjoy a firmer bias. The Canadian dollar stands out as is trades at its best level since mid-August ahead of its CPI report and despite a diplomatic dispute with India and the failure of...

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Calm Before the Storm: Greenback Confined to Narrow Ranges

2023-09-18

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2023-09-18

Overview:  With many central bank meetings in the days ahead, the dollar has begun the new week on a quietly and mostly in tight ranges, helped by a holiday in Tokyo. G10 currencies, outside of the Scandis are slightly firmer in European turnover. Emerging market currencies are narrowly mixed, but of note the 0.25% decline makes the Chinese yuan the weakest. The Mexican peso is extending its recovery into the seventh consecutive session. While...

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Heightened Speculation of an ECB Hike Tomorrow Fails to Lend the Euro Support

2023-09-13

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2023-09-13

Overview: The US dollar is trading with a firmer bias against all the G10 currencies ahead today's August US CPI report. Even increased speculation that the ECB will hike rates tomorrow has failed to lift the euro, while a larger than expected contraction in the UK's July GDP pushed sterling briefly through last week's lows. The dollar rose to a marginal new high for the week against the Japanese yen, as the market seemed uninspired by the cabinet...

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In Uncoordinated Steps, Japan and China Help Slow Greenback’s Rally

2023-09-11

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2023-09-11

Overview: The Bank of Japan Governor Ueda hinted the world's third-largest economy may exit negative interest rates before the end of the year. This sparked the strongest gain in the yen in a couple of months and lifted the 10-year yield to nearly 0.70%. In an uncoordinated fashion, Chinese officials stepped their rhetoric and indicated that corporate orders to sell $50 mln or more will need authorization. This helped arrest the yuan's slide. The...

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Yuan Sulks in to the Weekend, While Finishing Touches are Put on the Dollar Index’s Eighth Consecutive Weekly Gain

2023-09-08

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2023-09-08

Overview: The greenback is lower against most currencies today as it consolidates ahead of the weekend. The Dollar Index's eight-week advance is the longest since a 12-week rally 2014. The Chinese yuan is an exception. Its losses were extended today. Against the offshore yuan, the dollar traded above the onshore band, which is most often respected. Equities ae extending this week's slump. All the large bourses in the Asia Pacific region but India...

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US Dollar Punches Higher

2023-09-05

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2023-09-05

Overview:  Disappointing data in Asia and Europe has sent the greenback broadly higher. The strong gains posted before the weekend were mostly consolidated yesterday when the US and Canadian markets were on holiday. The rally resumed today. The Antipodeans and Scandis have been hit the hardest (-0.7% to -1.25%) but all the G10 currencies are down. The Swiss franc and yen are off the least (-0.35%-0.45%), and the euro and sterling have taken out...

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China’s Measures Begin to Find Traction, US Employment Report on Tap

2023-09-01

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2023-09-01

Overview: Beijing's seemingly steady stream of measures to support the economy and steady the yuan are beginning to produce the desired effect. The yuan is snapping a four-week decline and the CSI 300 halted a three-week drop. Some economists estimate that the bevy of measures may be worth as much as 1% for GDP. The dollar is narrowly mixed ahead of the US employment data, which is expected to see the pace of job growth slow to around 170k. Of...

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Position Squaring Ahead of US Data Helps the Dollar Recoup Some Recent Losses

2023-08-31

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2023-08-31

Overview: Position-squaring ahead of today's US personal consumption data and perhaps tomorrow's jobs report is giving the dollar a firmer profile against most G10 and emerging market currencies. The Scandis have been the hit hardest and are off 0.75%-0.85%. The euro and sterling about 0.35%-0.45% lower. The yen is the only G10 currency that is slightly firmer. The dollar-bloc is nursing small losses (0.10%-0.15%). Despite the firmer than expected...

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Market Awaits US Data and Leadership

2023-08-30

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2023-08-30

Overview:  The dollar staged a major technical reversal yesterday, in a dramatic reaction to a considerably weaker JOLTs report than expected, spurring a large drop in US interest rates. And this is despite press reports that the participation rate in the survey is half of what was three years ago. We suspect the price action said as much about market positioning as it did about the data. The path to the US jobs data on Friday goes through...

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Still No Follow-Through Dollar Buying After Last Week’s Surge

2023-08-29

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2023-08-29

Overview: The dollar was threatening to break higher at the end of last week, and the euro and sterling closed below key supports. However, so far this week, the greenback is consolidating and has not seen follow-through buying. The key data this week, US consumption and jobs, and the eurozone's CPI still lay ahead. The Antipodeans and Norwegian krone enjoy a firmer today. A 0.8% contraction in Sweden's Q2 GDP was not as deep as had been feared,...

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Dollar Consolidates as Market Considers Breakout and Rebuffs Beijing’s Latest Efforts

2023-08-28

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2023-08-28

Overview: Many market participants sense an inflection point is near. The dollar settled last week beyond key levels against several major currencies, bolstered by higher short-term US rates. The market is aware that the Bank of Japan could intervene in the foreign exchange market with the trading near its best levels of the year, and the 10-year JGB yield grinding higher. Beijing cut the tax on equity transactions, will restrict IPOs, and urged...

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Dollar Bid and Rates Firm Ahead of Powell

2023-08-25

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2023-08-25

Overview: The euro and sterling took out important chart levels near $1.08 and $1.26, respectively. They have steadied in the European morning but remain fragile ahead of Fed Chair Powell's speech at Jackson Hole. A couple of ECB officials sounded a bit hawkish and a less hawkish comment by ECB President Lagarde could renew the pressure on the euro. The market appears to be going into Powell's speech with a hawkish bias and the odds of a hike next...

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Dollar Eases, Stocks and Bonds Advance

2023-08-22

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2023-08-22

Overview: For the first time in more than a week, North American dealers will take to their posts with the dollar softer against all the G10 and most of the emerging market currencies. Despite stepped up efforts by Chinese officials and a firmer yen, the yuan remains on the defensive and is one of the handful of emerging market currencies softer on the day. Stocks and bonds are mostly higher too. The yuan might not be benefitting from a softer...

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China Surprises While the Dollar Begins Week Softer

2023-08-21

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2023-08-21

Overview:  The new week, which features the BRICS meeting and the Jackson Hold symposium is off to a quiet start. The failure of Chinese banks to pass through last week's 15 bp cut fully into the lending prime rates was a major disappointment and it is not yet clear the logic. While the yuan and yen are softer, as are more local Asian currencies, while most of the G10 currencies are posting small gains against the greenback. Gold is trading little...

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Dollar Bulls Still in Control

2023-08-18

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2023-08-18

Overview: What may have been hoped to be a quiet August has turned into a feeding frenzy for dollar bulls as the contrasting economic performance has spurred persistent buying of the greenback. Even shallow dips have been bought. Today, it is mostly trading inside yesterday's ranges against the G10 currencies. The PBOC set the dollar's reference rate at what appears to be a record gap below the Bloomberg average survey, and the dollar was scooped...

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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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Greenback Remains Firm, with Yen and Aussie Falling to New 2023 Lows

2023-08-14

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2023-08-14

Overview: The dollar and US rates remain firm. The greenback rose to new highs for the year against the Japanese yen and Australian dollar before steadying. Outside of the Swedish krona, which is off nearly 0.5%, the G10 currencies are nursing small losses late in the European morning, mostly less than 0.1%. Most emerging market currencies are also lower. The Chinese yuan gapped lower for the second consecutive session and is also approaching this...

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