Tag Archive: China
Corrective Forces Help the Dollar Stabilize
Overview: Corrective
forces helped the dollar stabilize yesterday and it enjoys a firmer today. The
euro has slipped below $1.09, and the dollar has resurfaced above JPY149.00. The
FOMC minutes seem dated by the more than 30 bp decline in the US 10-year yield,
the 7% rally in the S&P 500 and roughly 3% drop in the Dollar Index. The
implied year-end 2024 Fed funds rate has fallen by 10 bp to 4.51% (5.33%
currently). The Japanese government...
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Dollar Retreat Extended, but Turn Around Tuesday may have Already Begun
Overview: Last week's dollar losses have been
extended today. The yen is leading the move, encouraged by talk of a buying by
a large US real money fund. The Dollar Index is off about 0.35% after sliding
1.8% last week. It is below the 200-day moving average for the first time since
late August. As was the case last week, the Canadian dollar is the laggard. Emerging
market currencies are also mostly higher. The Chinese yuan's 0.67% rise is the
most...
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The Pendulum of Fed Expectations Swings Too Hard
Overview: The capital markets' reaction to softer
than expected CPI was too much. The implied yield of the December 2024 Fed
funds futures fell by 25 bp as if the October's CPI was worth a full
quarter-point rate cut next year. US two- and 1-year yields are around two
basis points higher today and the dollar is mixed, with the euro and sterling
under the most pressure. China's data were uninspiring, and more stimulus is in
the pipeline. Japan's Q3...
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US Treasury Yields Come Back Softer After Moody’s Cut Outlook, and the Dollar Rises to New Highs Against the Yen
Overview: The dollar is beginning the new week
narrowly mixed against the G10 currencies. Sterling seems largely unaffected by
the cabinet reshuffle that has seen former Prime Minister Camron return as the
foreign minister, replacing Cleverly who replaces Home Secretary Braverman. The
dollar rose to new highs for the year against the Japanese yen (~JPY151.85). The
market has shown little reaction to the pre-weekend news that Moody's cut the
outlook...
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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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Greenback Returns Better Bid
Overview: After the making marginal new highs in
early North America yesterday, the dollar pulled back, arguable dragged lower
by the softness of US rates, helped by the sharp drop in oil prices and healthy
reception to the US three-year note auction. However, the greenback has
returned better bid today as the market continues to search for direction
post-FOMC and US jobs report. The euro and sterling are the weakest of the G10 currencies
through...
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The Dollar’s Recovery has been Extended, but it may Give North American Operators a Better Selling Opportunity
Overview: The dollar's sell-off last week was
extreme and it recovered yesterday and through the European session today. The
Australian dollar has been hit the hardest. It is off more than 1% today after
the RBA lifted the cash rate by 25 bp (to 4.35%). Still, the US dollar's gains
have stretched intraday momentum indicators, suggesting the upside correction
may be nearly over. The greenback's moves appear to have been driven by
interest rate...
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Barring Upside Surprise on US Jobs, the Greenback Looks Vulnerable
Overview: The US dollar has been confined to narrow
ranges today as the market awaits the October employment report. Barring a
significant upside surprise, we suspect the dollar is more likely extend this
week's losses. The Dollar Index is off about 0.5% this week. Within the narrow
ranges, it is sporting a slightly softer profile again nearly all the G10
currencies. It is also lower against most emerging market currencies, but tight
ranges...
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Japanese Fireworks Continue as the Market Turns to the FOMC
Overview: The FOMC meeting is today's highlight but
the drama in Japan continues to rivet the market. The Ministry of Finance
warned of the risk of material intervention in the foreign exchange market, and
the BOJ bought bonds in an unscheduled operation a day after its downgraded the
1.0% cap to a reference rate, whatever that means. The yen is trading with a
slightly firmer bias. The Swiss franc is also trading a little firmer, but the
other G10...
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Markets Calm but Trepidation Runs High
Overview: Fears that the Israel-Hamas war was going
to widen this past weekend sent gold and oil sharply higher at the end of last
week. A reportedly more restrained Israeli entrance into Gaza has seen gold
pullback back below $2000 (~-0.6%) and December WTI soften (~-1.7%). The US
dollar is mostly softer. Stronger-than-expected Australian retail sales fan the
risk of a hike next week and this appears to be helping the Australian dollar
lead the...
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Divergence Continues to Underpin the Greenback
Overview: The divergence reflected in the flash PMI
readings seen yesterday underpinned the dollar, which is firmer in mostly quiet
turnover. The initial Australian dollar gains scored in response to the
slightly less decline in Q3 CPI have been unwound. The greenback also remains
within striking distance of JPY150 where there are still some large options and
some apprehension over possible BOJ intervention. Hungary's larger than expected
rate cut...
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JPY150 Pierced but Market is Not Done
Overview: News that Israel's ground assault
on Gaza is being delayed while hostage negotiations continue saw gold and oil ease,
but tensions continue to run high. Gold peaked near $1997 before the weekend
and pulled back to about $1964 today before steadying. December WTI peaked in
front of $90 a barrel at the end of last week, and fell to about $86.85 today,
but has also steadied. The dollar is firmer against the G10 currencies, with
the Scandis...
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The Dollar Continues to Press Against JPY150; Risk Off Ahead of the Weekend
Overview: True to the market's penchant, it heard a
dovish Fed Chair Powell yesterday. He seemed to suggest that the bar to another
hike was high. This helped cap the 10-year yield just in front of 5.00% and
allowed foreign currencies to recover against the dollar. The US two-year yield
reversed lower after rising above 5.25%. It is now around 5.15%. Still, Powell
appeared to cover similar ground as several other officials, including Fed
governors...
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Greenback Remains Bid and the Market has not Given Up on JPY150
Overview: The greenback did not strengthen yesterday
in Asian and European turnover despite the deteriorating conditions in the
Middle East, but it did rally as North American participants entered the fray. Indeed,
the Dollar Index rose from a marginal new four-day low to a marginally new
four-day high. The safe haven bid seen in gold and oil, was reflected in the
foreign exchange market by the strength of the Swiss franc, the only G10
currency to...
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Geopolitical Tensions Lift Oil and Gold, but little Sign of Haven Buying in FX
Overview: US economic data surprised to the upside yesterday,
and although interest rates rose as one would expect, the dollar's initial
gains were pared, and the Dollar Index finished slightly lower on the day. This
seemed, in some respects, to echo how the greenback reacted to the recent jobs
report. However, then, interest rates softened, but the inability to rally on
seemingly good news is notable. The heightened tensions in the Middle East...
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Markets Remain on Edge
Overview: The markets remain on edge. The press
reports US President Biden is planning an imminent trip to Israel while Iran
warns of "multiple fronts" against Israel if the attacks on Gaza
continued. The dollar, which was offered yesterday, is better bid today. Still,
the capital markets are relatively quiet. Even the Swiss franc, which was the
strongest G10 currency last week (~0.9%) is slightly heavier today. Among
emerging market...
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Capital Markets are Calm though Anxiety Continues to Run High
Overview: The risk that the war in Israel spreads
remains palatable, and several observers have warned of the greatest risks of a
world war in a generation. Still, the capital markets remain relatively calm. The
US dollar is softer after closing last week firmly. The only G10 currency
unable to post corrective upticks today is the Swiss franc. Among emerging
market currencies, the Polish zloty has been boosted by the pro-EU election
results, and...
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Dollar Steadies after Yesterday’s Surge, Oil Jumps Ahead of the Weekend while Yields Soften
Overview: The capital markets seemed to have an
exaggerated response to the US CPI, where the headline rate, flattered by the
rise in energy, rose by 0.1% in September than forecast. Rather than decline,
the headline year-over-year rate was unchanged at 3.7%. The core rate was as
expected slowing to 4.1% from 4.3%. Next week's US data, including retail
sales, industrial production, existing home sales, and the index of leading
economic indicators...
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Greenback Consolidates Ahead of September CPI
Overview: The dollar is mixed against the G10
currencies. It is confined to narrow ranges ahead of today's CPI report. The
Russian ruble is the strongest of the emerging market currencies following the
imposition of new capital controls, forcing many exporters to repatriate their
foreign earnings. After posting a key upside reversal at the end of last week,
gold continues to recover. It nearly $1883 so far today, the best level in more
than two...
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Bonds Extend Recovery
Overview: Broadly speaking, the dollar's
recent pullback was extended today but the momentum appears to be slowing,
perhaps ahead of tomorrow's US CPI report. The Dollar Index slipped to its
lowest level since September 25 before steadying. The greenback is mixed as the
North American market is set to open. The dollar bloc and Swedish krona are the
underperformers. The Swiss franc is the best, up about 0.2%, while the yen and euro are little...
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