Tag Archive: ECB

FX Daily, September 13: Bonds and the Dollar Remain Heavy Ahead of the Weekend

2019-09-13

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2019-09-13

Overview: The markets are digesting ECB's actions and an easing in US-Chinese rhetoric. Next week features the FOMC meeting and three other major central banks (Japan, Switzerland, and Norway). The US equity rally that saw the S&P 500 edge closer to the record high set in late July spilled over to lift Asian markets. Chinese and Korean markets were closed for a mid-autumn holiday.

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The Obligatory Europe QE Review

2019-09-13

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2019-09-13

Germany 10-year Bund Yield, 2008-2019
If Mario Draghi wanted to wow them, this wasn’t it. Maybe he couldn’t, handcuffed already by what seems to have been significant dissent in the ranks. And not just the Germans this time. Widespread dissatisfaction with what is now an idea whose time may have finally arrived.

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A Bigger Boat

2019-09-11

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2019-09-11

Europe Industrial Production, 2013-2019
For every action there is a reaction. Not only is that Sir Isaac Newton’s third law, it’s also a statement about human nature. Unlike physics where causes and effects are near simultaneous, there is a time component to how we interact. In official capacities, even more so.

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Is The Negativity Overdone?

2019-09-10

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2019-09-10

China Exports, 2006-2019
Give stimulus a chance, that’s the theme being set up for this week. After relentless buying across global bond markets distorting curves, upsetting politicians and the public alike, central bankers have responded en masse. There were more rate cuts around the world in August than there had been at any point since 2009.

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FX Weekly Preview: Gaming the ECB and Putting the Cart Before Horse in the Brexit Drama

2019-09-09

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2019-09-09

The step away from the edge of the abyss may have stirred the animal spirits, but it remains precarious at best. The formal withdrawal of the extradition bill in Hong Kong is too late and too little at this juncture. The ambitions of the protests have evolved well beyond that.

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FX Weekly Preview: Talking and Fighting in the Week Ahead

2019-09-02

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2019-09-02

Equity markets and the US dollar closed last week and August on a firm note. Ahead of the weekend, the dollar rose to new highs for the year against the euro, Swedish krona, Norwegian krone, and the New Zealand dollar. While the next set of US and Chinese tariffs start September 1, the market is making the most of the lull.

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“More of the same” at the ECB increases gold’s appeal

2019-08-22

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2019-08-22

“The intellectual leaders of the peoples have produced and propagated the fallacies which are on the point of destroying liberty and Western civilization.” Ludwig von Mises, Planned Chaos. It took multiple meetings and over 50 hours of official negotiations for EU leaders to reach an agreement on the appointments for the top jobs of the EU and the ECB, but in mid-July the results finally came in.

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FX Weekly Preview: The Dog Days of August are Upon Us

2019-08-05

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2019-08-05

The die is cast. To defend the uneven expansion and ward off disinflationary forces, monetary authorities will provide more accommodation. The Federal Reserve delivered its first rate cut in more than a decade and stopped unwinding its balance sheet two months earlier than it previously indicated (worth $100 bln of additional buying of Treasuries and Agencies).

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DATA ADDS TO THE CASE FOR ECB ACTION IN SEPTEMBER

2019-08-01

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2019-08-01

Euro Area Real GDP Growth, 2013-2019
Slowing economic momentum in the euro area means that we are lowering our GDP forecasts for this year. The euro area economy grew by 0.2% q-o-q in Q2, down from 0.4% in Q1.While 0.2% is still a decent pace of growth, concerns about the economy in the second half of the year have increased. Recent data have shown that the industrial slump has started to leave some marks on the domestic economy.

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Seven Points on the ECB and the Price Action

2019-07-27

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2019-07-27

Confusion
As soon as it was clear that the ECB was not easing today, the euro began to recover, after making a marginal new low for the year (just above $1.11). Draghi made it clear that easing was going to be delivered in September and on several fronts including rates (with mitigating measures like tiering) and new asset purchases (not decided on instruments, which plays into speculation of equity purchases—though I strongly doubt this will materialize).

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

2019-07-26

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2019-07-26

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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FX Daily, July 25: ECB Takes Center Stage

2019-07-25

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2019-07-25

The euro remains stuck in its trough below $1.1150 ahead of the ECB meeting. The US dollar is firmer against most of the major currencies. The yen continues to resist the draw of the greenback. Most emerging market currencies are lower. The Turkish lira is weaker ahead of its central bank meeting, which is expected to deliver a large cut (~250 bp).

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FX Daily, July 24: Poor PMI Weighs on Euro Ahead of ECB

2019-07-24

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2019-07-24

EUR/CHF and USD/CHF, July 24
Overview:  Disappointing flash PMI pushed an already offered euro lower ahead of tomorrow's ECB meeting. European bonds rallied and equities, amid a rash of earnings, is trying to extend the advance for a fourth consecutive session.  Italian and Spanish 10-year benchmark yields are off four-six basis points, while core bond yields are off two-three basis points.

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FX Daily, July 23: Debt Deal Help Lifts the Dollar

2019-07-23

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2019-07-23

The gains in US equities and the apparent US budget agreement has underpinned equities today and the US dollar. Asia Pacific equities recouped yesterday's losses, and Europe's Dow Jones Stoxx is posting gains for the third consecutive session, helped by some earning beats, to probe two-week highs. US shares are firmer. Benchmark 10-year yields are mixed with the Asia Pacific softer and European firmer.

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FX Daily, July 22: Greenback is Mostly Firmer to Start New Week, while the Euro is Pinned near $1.12

2019-07-22

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2019-07-22

What promises to be an eventful two weeks has begun quietly. The ECB, Fed, BOJ, and BOE will meet over the next fortnight. The central banks of Turkey and Russia meet this week and are expected to cut rates. The UK will have a new Prime Minister.

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FX Weekly Preview: Highlights in the Week Ahead

2019-07-22

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2019-07-22

Three events that will capture the market's attention next week: The consequences of the Japanese election, the first look at US Q1 GDP, and the ECB meeting. The central banks of Turkey and Russia also meet. Both are expected to cut interest rates, following rate cuts in the middle of last week by South Korea, Indonesia, and South Africa.

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FX Weekly Preview: What to Watch if Fed and ECB are Committed to Easing

2019-07-15

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2019-07-15

There is little doubt after the Federal Reserve Chairman Powell's testimony last week and the FOMC minutes that a rate cut will be delivered at the end of the month. Similarly, after comments by several ECB officials and the record of their recent meetin.g confirms it too is prepared to adjust policy. The timing of the ECB's move is more debatable, an adjustment at the July 25 meeting appears to have increased.

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FX Daily, July 11: Powell Spurs Equity and Bond Market Rally, While the Greenback Falls Out of Favor

2019-07-11

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2019-07-11

Overview:  Fed's Powell confirmed a Fed rate cut at the end of this month by warning that uncertainties since the June FOMC had "dimmed the outlook" and that muted price pressures may be more persistent.  It ignited an equity and bond market rally (bullish steepening) while the dollar was sold.

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The ECB moves to keep euro bond yields down

2019-07-10

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2019-07-10

10-Year Euro Area Sovereign Bond Yields, 2017-2019
Prospects of more ECB easing has contributed to an across-the-board rally in euro sovereign bonds yields and could help limit volatility in peripheral bonds.Since Mario Draghi in June signalled the European Central Bank’s (ECB) readiness to embark on more easing should the euro area economy fail to regain speed, euro sovereign bonds yields have fallen across the board, with the 10-year Bund yield briefly moving below -0.4% (the same level as the...

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FX Weekly Preview: In Bizzaro Beauty Contest, the US is Still the Least Ugly

2019-07-08

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2019-07-08

Our hypothesis that the market had reached peak dovishness toward the Fed remains intact after the employment data.  Job growth was the strongest since January.  The participation rate and the unemployment rate ticked up. Average hourly earnings edged 0.2%  higher, and, with revisions, maintained a 3.1% year-over-year pace, which is a bit disappointing.  

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