Tag Archive: Currency Movement

Dollar Retreat Extended, but Turn Around Tuesday may have Already Begun

2023-11-20

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2023-11-20

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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Yen Leads Charge Against the Dollar Amid Falling Rates

2023-11-17

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2023-11-17

Overview: The Japanese yen is leading the charge against the dollar today. Short covering in the Japanese bond market, the decline in US rates, and some reports of real money saw the dollar tumble to around JPY149.25 to approach the low for the month near JPY149.20. All the G10 currencies are firmer today, as are all but a few emerging market currencies. The Dollar Index finished October near 106.55 and it has been finding support near 104.00 in...

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Dollar Consolidates Amid Rate Volatility

2023-11-16

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2023-11-16

Overview: The dollar is consolidating its recent moves as interest rate swings continue. The US two-year yield has traded in a nearly 28 bp range in the first two sessions this week, and near 4.88% now, it is 18 bp lower since last Friday's close. The 10-year yield is slipping below 4.50%. It reached almost 4.70% on Monday and had fallen to almost 4.40% yesterday. Part of this reflects the shift in overnight rate expectations. The implied yield of...

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The Pendulum of Fed Expectations Swings Too Hard

2023-11-15

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2023-11-15

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 CPI Front and Center, but Can Congress Avert a Government Shutdown?

2023-11-14

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2023-11-14

Overview: The dollar is somewhat better offered today ahead of the October CPI report. The US House of Representatives may hold a vote today on a continuing resolution to avoid a partial government shutdown at the end of the week. Narrow ranges have prevailed. Most emerging market currencies are firmer, though paradoxically, the South Korean won is the weakest, despite a strong equity market rally (~1.2%), encouraged by the first in increase in...

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Who Changed: Powell or the Market?

2023-11-10

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2023-11-10

Overview:  A poor reception to the 30-year Treasury sale and Federal Reserve Powell pledged to raise rates again, if necessary, not exactly a new ground, but it spooked the doves--driving rates sharply higher and fueling a strong dollar recovery. There was a large five basis point tail on the bond sale. The eight-day rally in the S&P 500 and nine-day advance in the NASDAQ was snapped like dry kindling. The S&P 500 comes into today down on...

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Food Prices Drive China’s CPI Lower while the Greenback is Mostly Firmer in Narrow Ranges

2023-11-09

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2023-11-09

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

2023-11-08

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2023-11-08

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

2023-11-07

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2023-11-07

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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The Dollar Remains Mostly Softer but Near-Term Consolidation is Likely

2023-11-06

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2023-11-06

Overview: The US dollar, which was sold last week after the FOMC and soft employment report, remains on the defensive today. The Antipodean currencies and yen are struggling, but the other G10 currencies are firm. The dollar is also lower against most emerging market currencies. Still, given the magnitude of the dollar's pullback, we suspect some consolidation is likely.Asia Pacific equities rallied, helped by the sharp gains in the US before the...

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Barring Upside Surprise on US Jobs, the Greenback Looks Vulnerable

2023-11-03

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2023-11-03

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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Dollar Extends Losses Post-FOMC

2023-11-02

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2023-11-02

Overview: We suspect that if Martians read the FOMC statement, which was nearly identical to the September statement and listened to Chair Powell, they would conclude there was nothing new. Yet, the market habitually hears Powell as dovish and this has weighed on rates and the dollar, while lifting risk appetites. Follow-through selling of the greenback has dragged it lower against all the major currencies, with the Antipodean leading the way, and...

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Japanese Fireworks Continue as the Market Turns to the FOMC

2023-11-01

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2023-11-01

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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BOJ and China PMI Disappoint, While EMU Q2 Growth and October Inflation were Softer than Expected

2023-10-31

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2023-10-31

Overview: The Bank of Japan softened its 1.0% cap on the 10-year, while lifting its core CPI forecast this fiscal year and next. This disappointed many who anticipated a bolder move to exit the extraordinary monetary policy. The yen was sold in disappointment and the dollar has returned to the JPY150.75 area. The eurozone contracted by 0.1% in Q3, while October CPI came in below expectations at 2.9%. The greenback is softer against most of the...

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Markets Calm but Trepidation Runs High

2023-10-30

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2023-10-30

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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Is the Market Putting on Risk Ahead of the Weekend?

2023-10-27

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2023-10-27

Overview: The US dollar is trading with a softer bias. Among the G10- currencies, only the euro and Swiss franc are the laggards and are nearly flat. In shifting expectations, the market sees the Reserve Bank of Australia as the most likely to hike rates again, while the swaps market appears to be bringing forward cuts by the European Central Bank and the Bank of Canada. The Australian dollar is the strongest G10 currency today and this week. After...

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Tensions Run High Ahead of ECB Meeting and US Q3 GDP as JPY150 Breached

2023-10-26

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2023-10-26

Overview: The market is on edge. Anxiety is running higher. It is partly geopolitics, and it is partly market stresses. The dollar is holding above JPY150 but so far, no reports or signs of intervention. Bank shares are under pressure. An index of Japanese banks has fallen for five of the past six sessions and are off about 8% from the year's high set last month. An index of European bank shares has fallen in six of the past seven sessions and...

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Divergence Continues to Underpin the Greenback

2023-10-25

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2023-10-25

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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Poor Flash PMI from Japan and Eurozone

2023-10-24

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2023-10-24

Overview: Bonds and stocks are higher today, and the dollar is mixed. A weak PMI reading seemed to weigh on the euro, but the market shrugged the weak Australian PMI off and the Australian dollar is the G10 currencies while the euro is among the weakest. Yesterday, the North American session showed an appetite for foreign currencies and with some of their intraday momentum stretched to the downside, the stage is set for a possible repeat today. The...

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JPY150 Pierced but Market is Not Done

2023-10-23

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2023-10-23

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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