Tag Archive: China

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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Sobering PMI Readings Sap Risk Appetites

2023-07-05

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2023-07-05

Overview: As US markets prepare to re-open from yesterday's holiday, the dollar is trading mostly higher, though the euro and yen are steady to slightly firmer. Narrow ranges are prevailing. The Canadian and Australian dollars are exceptions and are off about 0.3%. Emerging market currencies are mostly lower, including Russia, China, South Africa, and Turkey. Final service and composite PMIs were mostly revised lower in Japan, Australia, and 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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PBOC Fixes Dollar Lower, but It Recovers Against the Yuan, Riksbank Hikes and Market Yawns

2023-06-29

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2023-06-29

Overview: The US dollar is narrowly mixed against the G10 currencies. Stronger than expected Australian retail sales helped steady the currency after the soft inflation data took it down. Sterling has also steadied after it suffered its largest loss yesterday (~0.9%) in over a month. Sweden's 25 bp rate hike has not given the krona much of a lift. Central European currencies lead the emerging market currencies higher, while the PBOC set the...

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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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Scandis and Antipodeans Lead the Greenback’s Recovery

2023-06-20

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2023-06-20

Overview: The market continues to resist the Fed's signal that another 50 bp of hikes may be necessary to ensure inflation is headed toward its target. Previously, the market had rate cuts priced in, and it took some time for the Fed's push back to be accepted. The market converged with the Fed, and this helped the dollar recover. We suspect a similar pattern to play out again. The market does not have even one of the two Fed hikes discounted. As...

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ECB’s Turn

2023-06-15

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2023-06-15

Overview: The Fed's hawkish hold and signal that it may raise rates two more time this year sent ripples through the capital markets. Risk appetites have been dealt a blow. However, China's rate cut and likely additional supportive measures after disappointing data, helped lift the CSI 300 by 1.6%, the most this year. The Hang Seng rose by nearly 2.2%, the most in three months. Europe's Stoxx 600 is snapping a three-day advance and US index futures...

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Ahead of the Week’s Central Bank Meetings, Risk Appetites Stoked

2023-06-12

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2023-06-12

Overview: Today may be the calm ahead of a tomorrow's US CPI and rate decisions by the Fed, ECB, BOJ, and PBOC over the next few days. Most large bourses in the Asia Pacific region rose and Europe's Stoxx 600 is snapping a three-day decline. US index futures are trading higher. US 10-year yield is slightly firmer as are core European benchmark yields. The dollar is under broad pressure and is weaker against the G10 currencies. Against emerging...

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Dollar Stabilizes Ahead of the Weekend

2023-06-09

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2023-06-09

Overview:  Long US dollar positions were pared yesterday as rates unwound the gains scored in the wake of the Bank of Canada's surprise hike on Wednesday. It is consolidating today as the market looks toward next week’s central bank meetings (FOMC, ECB, and BOJ) and a flurry of data. It is also possible that China shaves the benchmark one-year medium-term lending facility rate. Broadly speaking the greenback is still tracking rates, and the more...

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Japan’ Q1 GDP was Revised Up, While the Eurozone’s was Revised Down

2023-06-08

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2023-06-08

Overview: The back-to-back surprise rate hikes by the Australia and Canada spurred speculation that the Fed could hike next week, and this lifted US rates and helped the dollar recover. The odds of a hike increased, according to the indicative pricing in the Fed funds futures market from about a 20% chance to a little above 35%. now. At yesterday's high, the two-year yield was up a little more than 25 bp since the low before the US employment data...

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Dollar Steadies After Fed’s Push Back

2023-06-01

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2023-06-01

Overview: The market was gearing up for a June Fed hike and officials and this helped lift the greenback. However, the Fed Governor Jefferson, nominated to be the next vice-chair, pushed back against it. His views are thought to reflect the Fed's leadership. Philadelphia Fed's Harker, who is a voting member of the FOMC also backed a pause. This is not quite what we expected when we suggested the US interest rate adjustment was complete or nearly...

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Debt Ceiling Progress, Weak Chinese and Japanese Data, and Soft EMU CPI, Sends the Dollar Higher

2023-05-31

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2023-05-31

Overview: The US budget agreement passed a House committee vote by 7-6 and the bill is scheduled to be voted on by the entire House today before the Senate take it up with the idea of passing it Monday. The procedural step plus the weakness of China and Japanese data and soft CPI figures from Europe has lifted the greenback against all the major currencies. The euro and Australian dollar have been sold to new lows, while the dollar holds ever so...

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The Dollar Reverses Early Gains

2023-05-30

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2023-05-30

Overview:  The debt ceiling drama is not over. The agreement between the negotiating teams of President Biden and House Speaker McCarthy sets the stage for the next act in the drama: each side must deliver the votes. A preliminary vote today in the House of Representatives is likely today ahead of floor vote tomorrow. Still, the market is optimistic, and risk is favored. Asia Pacific bourses were mixed today. We note that the chip sector helped...

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The Dollar Consolidates after Powell Sapped its Mojo

2023-05-22

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2023-05-22

Overview:  Federal Reserve Chair Powell's offered a stronger case for a pause in the monetary tightening before the weekend and this sapped the dollar's mojo. The greenback is mostly consolidating through the European morning in quiet turnover. The JP Morgan Emerging Market Currency Index is trying to snap a four-day decline. The South African rand is recovering from its recent slide and is up nearly 1%. The South Korea won is benefitting from...

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Key Chart Points Hold and the Dollar’s Rally Stalls Ahead of the Weekend

2023-05-19

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2023-05-19

Overview: Hawkish comments from Fed officials and the first decline in continuing unemployment claims below 1.8 mln in two months boosted US rates and the odds of a June rate hike rose to about 37%. This represents a near tripling of the probability in the past week. It has been a trend with the odds rising in 9 of the past 11 sessions. The two-year note yield has risen for the past five sessions coming into today for a cumulative gain of about 35...

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Biden to Go to G7 Summit with Debt Ceiling Unresolved

2023-05-16

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2023-05-16

Overview:  The US debt ceiling talks resume at the White House today but a deal is unlikely to be announced. President Biden will attend the G7 summit in Hiroshima with the debt ceiling still looming. The dollar is mostly softer as last week's gains are pared. The Swiss franc and Japanese are the strongest in the G10. The Thai baht and South African rand, among the market's favorites yesterday are seeing those gains retraced. The JP Morgan Emerging...

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