Tag Archive: Currency Movement

Looming US Government Shutdown Stems the Dollar’s Surge

2023-09-28

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2023-09-28

Overview: The increasingly likely partial US federal government shutdown has spurred a bout of liquidation of long dollar positions. The psychologically important JPY150 level was approached, and the euro was sold through $1.05 yesterday, and the greenback has come back better offered today. It is lower against all the G10 currencies. It is mixed against the emerging market currency complex, with central European currencies and South African rand...

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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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Neither the Threat of Intervention Nor a Possible US Government Shutdown is Derailing the Greenback

2023-09-26

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2023-09-26

Overview: The US dollar is stabilizing a bit but only after extending its gains initially It reached almost JPY149.20, while the euro slipped to $1.0570 before recovering to straddle $1.06 in the European morning. Sterling sank a little through $1.2170 but stabilized to return to almost $1.2200. The Australian dollar tested last week's low slightly below $0.6390 before resurfacing above $0.6400. The US dollar toyed with CAD1.3500, where there is a...

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Yen Drops After BOJ Does Nothing and Says Little

2023-09-22

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2023-09-22

Overview:  The BOJ's failure to do anything or further ideas that an exit of the negative target rate, despite the firm CPI report helped the dollar recover the ground lost yesterday against the yen. The focus has returned to "intervention watch" and the market continues to press for the official pain threshold. Sterling is the weakest of the G10 currencies, off another 0.5% today following the BOE's decision not to hike yesterday. The...

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Higher for Longer Lifts the Dollar, while SNB Surprises Many by Standing Pat–Over to the BOE

2023-09-21

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2023-09-21

Overview: The Federal Reserve's hawkish hold, which included 50 bp less of cuts next year than it had signaled in June, has lifted the dollar against most currencies today. The notable exception is the Japanese yen. The greenback did extend its advance to new highs for the year before the market turned cautious ahead of the outcome of the Bank of Japan meeting tomorrow. The Swiss franc is the weakest of the G10 currencies after the Swiss National...

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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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Greenback Bought on Pullback

2023-09-12

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2023-09-12

Overview: The dollar was bought after yesterday's pullback spurred by Japanese and Chinese comments and the tighter capital controls from Beijing requiring permission to buy more than $50 mln. The economic and monetary policy divergence continues to underpin the greenback. It is firmer against all the G10 currencies and is mostly inside yesterday's ranges. Most emerging market currencies are lower, led by central European currencies. The Chinese...

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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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Battle for $1.07 in the Euro

2023-09-07

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2023-09-07

Overview: Despite disappointing German industrial output, where the 0.8% decline was twice expectations, the euro is holding above $1.07, where large options exist that are expiring over the next few sessions. The greenback is consolidating against the Japanese yen, where the fear of intervention has increased. Sterling remains on its back foot after yesterday's seemingly dovish comments by Bank of England Governor Bailey. Emerging market...

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The Dollar and Oil Steady After Yesterday’s Advance

2023-09-06

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2023-09-06

Overview: Bonds and stocks are mostly heavier today and the dollar has turned mixed. Oil prices are consolidating after soaring to new highs since late last year on the longer than expected extension of Saudi Arabia's extra cut of one million barrels a day. Since July, it has been extending it by one month at a time. Yesterday, it extended it through Q4. Russia, who had previously indicated intentions on reducing its exports by 500k barrels,...

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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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