Tag Archive: ECB

The Yen Stabilizes in a Broad Range but the Focus is on Today’s US Employment Report

2023-12-08

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2023-12-08

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

2023-11-21

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2023-11-21

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

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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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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Bonds Extend Recovery

2023-10-11

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2023-10-11

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

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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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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After Strong Demand for US Three-Year Notes, Treasury will Sell $38 bln 10-year Notes

2023-08-09

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2023-08-09

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

2023-07-17

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2023-07-17

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

2023-06-28

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2023-06-28

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

2023-06-16

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2023-06-16

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

2023-06-15

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2023-06-15

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

2023-06-14

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2023-06-14

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

2023-06-13

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2023-06-13

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

2023-06-08

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2023-06-08

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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The Greenback Stalls after Yesterday’s Surge as US Negotiators Move Closer to Last-Minute Deal

2023-05-26

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2023-05-26

Overview: Yesterday's dollar surge has stalled. It is consolidating its gains and is softer against all the G10 currencies. After popping above JPY140 yesterday, there were no follow-through greenback buying in Tokyo. Most emerging market currencies are also firmer, including the South African rand, which plummeted by 2.8% yesterday on the back of the central bank's warning of downside currency risks as it delivered a 50 bp hike. The Chinese yuan...

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The Dollar Consolidates after Powell Sapped its Mojo

2023-05-22

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2023-05-22

Overview:  Federal Reserve Chair Powell's offered a stronger case for a pause in the monetary tightening before the weekend and this sapped the dollar's mojo. The greenback is mostly consolidating through the European morning in quiet turnover. The JP Morgan Emerging Market Currency Index is trying to snap a four-day decline. The South African rand is recovering from its recent slide and is up nearly 1%. The South Korea won is benefitting from...

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The Euro Stalled Near Its Best Level since April 2022 Ahead of ECB’s Decision

2023-05-04

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2023-05-04

Overview: Without making a commitment, the Federal Reserve opened the door to a pause in its tightening cycle and the market has concluded it is over. The dollar slumped to new lows for the move against sterling (and the Mexican peso), while euro stalled as it approached last week's high, which was the best level since April 2022. The dollar remains soft against most of the G10 currencies, today. The Norwegian krone is leading after the 25 bp hike...

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Fed Day

2023-05-03

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2023-05-03

Overview: A sharper than expected decline in US job openings and weaker factory orders coupled with intensifying bank stress sent ripples through the capital markets. The large US bank index fell 4.5% yesterday, the most in six weeks, while the regional bank index fell nearly 5.5%, its biggest loss since March 13. Both indices took out the March lows. The US 10-year yield unwound Monday's increase and the two-year note yield fell back below 4.0%...

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