Tag Archive: Currency Movements

FX Daily, August 27: Realism Fights Back After Hope Dominated Yesterday

Hope triumphed over realism yesterday, and realism is fighting back toward. Asia Pacific markets, however, traded on the echo from the recovery in North America on Monday. The MSCI Asia Pacific recouped part of yesterday's drop, led by Chinese markets. Hong Kong was the main exception.

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FX Daily, August 26: Trump’s “Call from China” helps Markets Recover

Overview:  The anticipated growth implications of the heightened tensions between the world's two largest economies is dominating activity at the start of the new week. These considerations that drove the 2.6% drop in the S&P 500 before the weekend is carrying over into today's activity.

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FX Daily, August 23: Market has Second Thoughts on Magnitude of Fed Cuts Ahead of Powell

Powell speech at Jackson Hole stands before the weekend.  Equities in Asia and Europe are finishing the week on a firm tone.  Most markets in the Asia Pacific region closed higher today, and the MSCI Asia Pacific Index snapped a four-week slide.  European bourses are edging higher, and the Dow Jones Stoxx 600 is poised to end its three-week air pocket.

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FX Daily, August 22: Tick Up in EMU PMI Does Little, Waiting for Powell

Overview:  Soft data in Asia and the continued decline in the yuan (six days and counting) prevented Asian equities from following the US lead from yesterday when the S&P 500 advanced by 0.8%.  European shares are paring yesterday's 1.2% advance despite an unexpected gain in the EMU flash PMI.  US shares are little changed in the European morning.

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FX Daily, August 20: Marking Time Ahead of PMI and Powell

Overview:  Global equities and bonds are firmer in quiet turnover, and the dollar is narrowing mixed in narrow ranges.  The big events of the week, the eurozone flash PMI and Powell's speech at Jackson Hole still lie ahead.  The MSCI Asia Pacific Index rose for the third consecutive session, led by Korea and Australia's 1%+ gains. 

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FX Daily, August 19: China’s Rate Reform Helps Markets Extend End of Last Week Recovery

Overview: China announced some changes in its interest rate framework that is expected to lead to lower rates.  This helped lift equity markets, which were already recovering at the end of last week from the earlier drubbing.  Chinese and Hong Kong shares led the regional rally with 2-3% gains.  The Nikkei gapped higher for the third time in six sessions, and the first two were followed by lower gaps. 

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FX Daily, August 16: Markets Take Collective Breath Ahead of the Weekend

Overview:  The global capital markets are ending the tumultuous week calmly, but it is far from clear that is will hold long.  Next week's flash PMIs have potential to disappoint, and there is risk of new escalation in the US-China trade conflict as the PRC threatens to take action to countermeasures to the new US tariffs.

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FX Daily, August 15: Animal Spirits Lick Wounds

Overview:  It took some time for investors to recognize that the scaling back of US tariff plans was not part of a de-escalation agreement. There was an explicit acknowledgment by US Commerce Secretary Ross that there was no quid pro quo. The US tariff split was more about the US than an overture to China. 

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FX Daily, August 14: Markets Paring Exaggerated Response to US Blink

The US cut its list of Chinese goods that will be hit with a 10% tariff at the start of next month by a little roe than half, delaying the others until the mid-December. This spurred a near-euphoric response by market participants throughout the capital markets. However, as the news was digested, it did not seem as much of a game-changer as it may have initially.

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FX Daily, August 13: Investors Remain on Edge

Overview:  The confrontation in Hong Kong and the fallout from the Argentine primary over the weekend join concerns the conflict between the two largest economies and slower growth to force the animal spirits into hibernation.  Global equities remain under pressure.  Japan's Topix joined several other markets in the region to have given up its year-to-date gain. 

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FX Daily, August 12: Yen Remains Bid, While Macri’s Loss in Argentina Weighs on Struggling Mexican Peso

Overview: China again tried to temper the downside pressure on the yuan, and this appears to be helping the risk-taking attitude. Many centers in Asia were closed today, including Japan and India, though most of the other equity markets advanced modestly, including China, Korea, and Australia. Europe's Dow Jones Stoxx 600 opened firmer but is staddling little changed levels unable to stain any upside momentum.

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FX Daily, August 7: Three Asian Central Banks Surprise Investors

While investors keep a watchful eye on the dollar fix in China (a little firmer than projected) and tensions with the US, two other developments compete for attention. The Reserve Bank of New Zealand and the central banks of India and Thailand surprised the market with lower rates. The RBNZ cut by 50 bp, India by 35 bp, and the fact that Thailand cut at all was unexpected.

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FX Daily, August 6: Markets Stabilize with Help of CNY Fix in Muted Turnaround Tuesday

Overview: The escalation of the economic conflict between the world's two largest economies is dominating the capital markets.  The US cited China as a currency manipulator after the North American markets closed, ensuring the troubled start to Asian trading after the US equities and yields plummeted on Monday.  The VIX surged to 25%, doubling in the past week.

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FX Daily, August 5: China Strikes Back

Overview:  Chinese officials took the US tariff hike quietly last week but struck back today.  The PBOC fixed the dollar higher (CNY6.90), which it has not done, and will halt imports of US agriculture. The dollar shot through CNY7.0 to finish the mainland session a little above CNY7.03 and CNH7.07 for the offshore yuan. 

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August Monthly

After falling against all the major currencies in June, the US dollar rebounded in July. The Dollar Index finished the month at new two-year highs with the Fed’s suggestion it was engaged in a mid-course correction rather than a sustained easing cycle. The dollar also appeared buoyed by the extent of the dovishness by the ECB and the heightened risks that the UK leaves the EU at the end of October without an agreement.

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FX Daily, August 1: Mid-Course Correction Sends Greenback Higher

Overview:  The Federal Reserve delivered the first rate cut since the Great Financial Crisis but couched it in terms of a mid-course correction rather than the start of a larger easing cycle.  By doing so, Fed chief Powell cast the cut in less dovish terms than the market expected and the reaction function of the market has been clear. 

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FX Daily, July 31: Sterling Steadies, Attention Shifts to FOMC

Overview: After a shellacking in recent days, sterling has stabilized though there is not much of a bounce to speak of, suggesting the adjustment to the risk of a no-deal Brexit may not be complete. After the S&P 500 posted back-to-back declines, Asia Pacific equities struggled. Hong Kong shares led the regional decline.

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FX Daily, July 30: Sterling Pounded

Overview:  The prospect of a no-deal Brexit continues to pound sterling lower.  A little more than two months ago, it was testing $1.32.  Two weeks ago it was around $1.25.  Today it traded near $1.2120 before stabilizing.  On the other hand, the 10-year Gilt yield is below 65 bp, a new multiyear low, while the international-laden FTSE 100 is holding its own in the face of heavier equity prices in Europe.

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FX Daily, July 26: Markets Consolidate as the Dollar Index Extends its Advance for the Sixth Consecutive Session

Investors are happy for the weekend. Between the ECB, Brexit, and next week's FOMC, BOJ, and BOE meetings, the markets are mostly in a consolidative mode ahead of the weekend. The first look at Q2 US GDP is the last important data point of the week, though it is unlikely to impact next week's Fed decision.

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