Tag Archive: China

Japan’s Tankan was Uninspiring and UK Disappoints with Contracting Economy in October

2024-12-13

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2024-12-13

Overview: The US dollar is mixed against the G10 and emerging market currencies to finish out the week. Among the G10, sterling and the yen are the heaviest. Japan's Tankan survey was unimpressive and does nothing to reanimate speculation of a BOJ rate hike next week. Sterling has been dragged down by unexpected news that the economy contracted in October for the second straight month. The euro is being aided by the unwinding of cross positions...

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Greenback Bid Ahead of CPI

2024-12-11

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2024-12-11

Overview: The dollar is on fire. Ahead of today's US November CPI and tomorrow's anticipated rate cuts by the European Central Bank and the Swiss National Bank, the greenback is rising against all G10 currencies and nearly all emerging market currencies (but the Hong Kong dollar and the Indian rupee, which slipped to a record-low earlier today). There is a press report claiming that Beijing is considering allowing the yuan to fall further but it is...

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Dovish Hold Sends the Aussie Lower

2024-12-10

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2024-12-10

Overview: The US dollar is little changed against most of the G10 currencies today. The antipodean currencies are the main exception. A modest change in tone from the Reserve Bank of Australia, boosting the chances of a rate cut early next year sent the Australian dollar back toward yesterday's lows, and the New Zealand dollar fell in sympathy. Most of the G10 currencies sporting softer profiles within the consolidative price action. The greenback...

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US Dollar is Offered and China’s Politburo Promises more Monetary and Fiscal Support

2024-12-09

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2024-12-09

The dollar is offered. Neither the 227k rise in nonfarm payrolls, nor the above 3% Q4 growth that the Atlanta Fed sees the economy tracking, or the uptick in November CPI expected to be reported on Wednesday has been sufficient to dampen speculation of a rate cut next week.

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French Government on Precipice, Presses Euro Lower

2024-12-02

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2024-12-02

Overview: The US dollar is beginning the new week and month on a firm note. It is rising against all the G10 currencies and nearly all the emerging market currencies. US-President-elect Trump's threat to BRICS if they abandon the dollar is symbolic than substantive, as we have argued, despite the occasional claim to the contrary, a BRICS currency is not realistic, and the China has little interest in fostering another competitor to the yuan. Still,...

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Ueda Lifts Yen, Leaving Euro and Sterling Pinned Near Lows

2024-11-21

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2024-11-21

Escalating tensions in Europe and comments from Bank of Japan Ueda that spurred speculation of a December hike are the main drivers of the foreign exchange market today. The yen is the strongest of the G10 currencies, up about 0.65%, while the euro is the weakest, off a little more than 0.25%, and sterling is down almost as much.

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FX and Rates Unwind Yesterday’s Powell Effect, US Index Futures Slide

2024-11-15

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2024-11-15

Overview:  The dollar bounced, and US rates rose yesterday afternoon in response to comments by Fed Chair Powell. But he did little more that reiterate what he had said at the recent press conference. Powell expressed a lack of urgency to move after having led the central bank in delivering a 50 bp cut to start the easing in September while indicating that direction of travel will be to a less restrictive rate. The dollar has come back lower today...

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Dollar Bulls Catch Breath

2024-11-13

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2024-11-13

Overview: Surging US yields helped send the dollar higher but wobbled the stock market yesterday. A fragile consolidative tone has emerged today for the foreign currencies. The greenback remains mostly within yesterday's ranges. All but a few emerging market currencies are trading with a firmer bias. Beijing's weaker dollar fix may have been the first protest of the yuan's weakness since the election. The highlight of the North American session is...

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The Dollar Remains Bid, While the Euro and Swiss Franc are Sold Through Last Week’s Lows

2024-11-11

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2024-11-11

Overview: The dollar is bid to start the new week. It has taken out last week's high against the Swiss franc, and the euro has been sold through last week's lows. The divided opposition allowed Ishiba to continue as Japan's prime minister, heading up a minority government. The German government collapsed last week. Chancellor Scholz wanted to hold off holding (and losing) a vote of confidence until January, setting the stage for elections, but it...

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Searching for Direction

2024-11-08

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2024-11-08

Overview: The capital markets have been choppy as pre-existing positioning meets new thoughts on the implications of a second Trump administration. The dollar has found better footing today after giving back a chunk of Wednesday's gains yesterday. The yen is an exception, but it is not exception that the dollar trades heavier against the yen as the US 10-year yield drifts lower. On the week, the most G10 currencies are holding on to gains against...

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Nervous Calm Hangs over the Markets

2024-11-05

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2024-11-05

Overview: A nervous calm hangs over the markets as the US goes to the polls. The proximity of the presidential contest warns that the results may not been known as soon as people hope. Indeed, many fear the voting simply begins the next phase of the contest, with premature declarations of victory and disputes over votes. The dollar is in mostly narrow ranges today, but the Antipodeans and Scandis are the strongest, and the Reserve Bank of Australia...

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US Polls Spur Position Adjusting Ahead of Tomorrow’s Election

2024-11-04

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2024-11-04

Overview: Weekend polls in the US made it seem that the Trump victory, which many large pools of capital, had discounted, was not so inevitable after all. The most dramatic market response was taking US yields and the dollar lower. The US 10-year yield is off about nine basis points to straddle 4.30% and the two-year yield down four basis points to around 4.16%. The greenback is also against all the G10 currencies. Most emerging market currencies...

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US Job Report may Offer Little Relief ahead of Next Week’s US Election and Meetings by Half of the G10 Central Banks

2024-11-01

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2024-11-01

Overview: The first of what promises to be two tumultuous weeks is winding down. The US jobs data is the last big event. It is widely recognized that it will be skewed to the downside because of hurricanes and some mostly temporary factors. Anticipating the market’s reaction is also complicated by the weekend, and reports that Iran may strike back at Israel (through bases in Iraq?), and next Tuesday's US election, and five G10 central bank meetings...

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

2024-10-31

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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...

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Continued Backing Up of US Rates Extend the Greenback’s Gains

2024-10-23

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2024-10-23

Overview: The persistent rise in US rates continues to help fuel dollar gains. The euro has been sold through $1.08 and the greenback has jumped over 1% against the yen to JPY152.75. It finished last week closer to JPY149.55. So far, Japanese officials have been fairly quiet, but this seems likely to change. The US two-year premium over Germany has widened by around 65 bp since late September to return to levels that prevailed in June. The...

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The Dollar and Gold Firm

2024-10-21

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2024-10-21

Overview: The US dollar is firm to start the new week. The Japanese yen and Australian dollar are the heaviest with in the G10 (~0.30%). The euro and sterling are trading heavier but inside the pre-weekend range. The market anticipates the Bank of Canada to deliver a 50 bp rate cut in the middle of the week, and the Canadian dollar is threatening to extend its losses for the fourth consecutive week. China's prime lending rates were cut by 25 bp,...

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Dollar Firm, China Briefing Light on Details, and Its Data Remain Poor

2024-10-14

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2024-10-14

Business travel will prevent the updating of the blog in the coming days. It resumes October 19 with the Week Ahead. The lack of details from China's fiscal briefing, the soft CPI (and deeper PPI deflation), and a smaller than expected trade surplus did not prevent Chinese equities from advancing (CSI 300 +1.9%).

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Weekly Market Pulse: Questions

2024-10-14

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2024-10-14

As we enter the final quarter of 2024, there are a lot of questions facing investors. There are, of course, always a lot of questions because investors are always dealing with the future, but today’s environment does seems to have more than usual.

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Tomorrow’s China Briefing Did Not Prevent the Continued Slide in Chinese Stocks Today

2024-10-11

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2024-10-11

Overview: The combination of the firmer than expected US CPI and larger than expected rise in initial and continuing jobless claims saw short-term US rates fall, and the odds of a quarter-point cut by the Fed rose from about 83% to about 93%. The Fed funds futures market boosted the odds of another quarter-point cut in December (~90% vs.78%). The dollar initially weakened but recovered, though the key levels held, such as $1.09 in the euro, $1.30...

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Soft US Headline CPI is Unlikely to Be Sufficient to Reanimate Expectations of another Large Fed Cut

2024-10-10

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2024-10-10

Overview: The US dollar is mostly softer ahead of the September CPI. The euro and Canadian dollar have recorded new lows for the move. The greenback extended its gains against the yen to JPY149.55 but has fallen to new session lows in the European morning near JPY148.85. Given the pushback against Fed Chair Powell's 50 bp cut last month revealed in the FOMC minutes, it will take more than a soft headline CPI today to renew speculation of another...

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