Tag Archive: ECB
Attention turns to Lagarde’s Press Conference and US Q4 GDP
Overview: The US dollar is trading mostly quietly in narrow ranges
against the G10 currencies ahead of the ECB's President Lagarde's press
conference at the conclusion of the policy meeting and the first estimate of Q4
US GDP. With elevated price pressures, Norway's central bank left rates steady
and reiterated its signal that rates will remain high for some time, and this
has lifted the krone by about 0.5% to leader the major currencies. Most of...
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Dollar Rally Pauses, but Fuel from Interest Rate Adjustment may not be Complete
Overview: This week's dollar surge is consolidating
today. Interest rates have steadied, but the adjustment, which involves pushing
the first rate from March toward June does not appear complete. This suggests
the dollar's recovery from last November-December's sell-off may not be
complete either. Today, though, it is a little firmer against all the G10
currencies but the Swiss franc. Most emerging market currencies are also
trading with a slightly...
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Fed to Express More Confidence that Policy is Sufficiently Restrictive Despite the Easing of Financial Conditions
Commentary will resume with a 2024 outlook on December 29. Overview: The dollar is trading with a firmer bias today ahead of the outcome of the FOMC meeting. Standing pat for two
meetings was framed as a pause, but given the decline in price pressures, being
unchanged for a third meeting is understood as the end of the historically
aggressive tightening cycle. Fed Chair Powell is expected to express greater confidence
that policy is sufficiently...
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BOJ Speculation Unwound, Taking the Yen Lower
Overview: The busy week of central bank meetings is
off to a mostly slow start. The dollar is narrowly mixed in quiet turnover,
except against the Japanese yen. Many participants seemed to exaggerate the
risks of a BOJ move next week and dollar continued its recovery that began
ahead of the weekend. Among emerging market currencies, central European
currencies appear to be aided by the firmer euro. They are resisting the
dollar's advance seen...
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The Yen Stabilizes in a Broad Range but the Focus is on Today’s US Employment Report
Overview: The US dollar is a little firmer ahead of
the November employment data. It is trading mostly inside yesterday's range. It
is in a wide range against the Japanese yen (~JPY142.50-JPY144.50) even if not
as wide as yesterday (~JPY141.70-JPY147.30). The Canadian and Australian
dollars are the strongest among the G10 currencies, while the South Korean won,
and Taiwanese dollar are the best performers among the emerging market complex.
Gold,...
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Yen and Yuan Extend Surge
Overview: The dollar remains offered and our ideas
about it stalling as central banks push against the timing and extent of the
easing the market is anticipating are being challenged. The Governor of the
Reserve Bank of Australia and the Bank of England both warned higher rates may
still be needed. Still, the momentum may be slowing. Meanwhile, the short squeeze continues to lift the Japanese
yen, which is trading at its best level in two months....
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Dollar Retreat Extended, but Turn Around Tuesday may have Already Begun
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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Is the Market Putting on Risk Ahead of the Weekend?
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
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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Bonds Extend Recovery
Overview: Broadly speaking, the dollar's
recent pullback was extended today but the momentum appears to be slowing,
perhaps ahead of tomorrow's US CPI report. The Dollar Index slipped to its
lowest level since September 25 before steadying. The greenback is mixed as the
North American market is set to open. The dollar bloc and Swedish krona are the
underperformers. The Swiss franc is the best, up about 0.2%, while the yen and euro are little...
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Heightened Speculation of an ECB Hike Tomorrow Fails to Lend the Euro Support
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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Dollar Consolidates as Market Considers Breakout and Rebuffs Beijing’s Latest Efforts
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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After Strong Demand for US Three-Year Notes, Treasury will Sell $38 bln 10-year Notes
Overview: The first leg of the US refunding was well
received, with the three-year note being scooped up by investors, driving the
yield below it was trading in the when-issued market. Today, the Treasury sells
$38 bln 10-year notes, whose auctions have been less than stellar recently. The
US 10-year yield reached 4.20% last week and is now straddling 4%. Italian
bonds are also firm as the Italian government clarifies the
new tax on banks' windfall...
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Euro Edges Higher
Overview: The US dollar has mostly steadied at
the start of the week after last week's sharp losses. The yen, euro, and Swiss
franc are enjoying a firmer tone, but only the euro has thus far extended
last week's gains, and then, only marginally. Uninspiring data from China
pressed the yuan lower, while the firm euro is helping the central European
currencies. A typhoon shut Hong Kong markets and Japan's markets were closed
for a national holiday....
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The Dollar Regains Composure
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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BOJ Stands Pat while the Dollar is Consolidating Ahead of the Weekend
Overview: The market has not yet become convinced
that the Fed will in fact deliver the two hikes the median dot anticipates this
year, and the dollar was sold off sharply yesterday, the day after the FOMC
meeting. In fact, the swaps market is more convinced that the ECB hikes in July
than the Fed. Outside of the yen, which was sold after the BOJ stood pat, the
G10 currencies are mostly little changed, consolidating the recent moves. Emerging...
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ECB’s Turn
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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Euro: Thumbnail Sketch Ahead of the ECB Meeting
The euro has traded between roughly $1.0485 and $1.1100 so
far this year. The average is about $1.08, where it traded above yesterday for
the first time in 2 ½ weeks.
Recall that the euro rallied from around $1.05 in mid-March
(amid speculation that the banking stress was going to force the Fed to cut) to
around $1.1100, where it stalled in late April and early May.
We argued that the rate cut expectations had swung too far
and that as they...
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PBOC Surprise Rate Cut and a Strong UK Labor Market Report Ahead of US CPI
Overview: A surprise cut in China's seven-day repo
and a stronger than expected UK employment report are session's highlights
ahead of the US CPI. The base effect alone suggests a sharp fall in the
year-over-year rate, while the median forecast in Bloomberg's survey has been
shaved to a 0.1% month-over-month gain. The dollar is under pressure and is
weaker against nearly all the G10 currencies. It is mixed against the emerging
market currencies....
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Japan’ Q1 GDP was Revised Up, While the Eurozone’s was Revised Down
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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