Tag Archive: EMU

The US Dollar and Rates Rise Further

2024-02-05

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2024-02-05

Overview: The US dollar and interest rates have continued to rise after the strong employment report before the weekend helped drive home the Fed's message at last week's FOMC meeting. The greenback has been bid to new highs for the year against the G10 currencies but the Canadian dollar. The dollar also rose to a marginal new high for the year against the Chinese yuan. Interest rates are jumping, and the market has downgraded the chances of a May...

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The Euro and Australian Dollar Take Out January Lows to Start the New Month

2024-02-01

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2024-02-01

Overview:  Federal Reserve Chair push against speculation of a March rate cut as explicitly as could be imagined at yesterday's press conference lifted the dollar, while weighing on stocks. US regional banks sold off sharply yesterday, and challenges emanating from US real estate adversely impacted a Japan's Aozora Bank and Deutsche Bank quadrupled its loss provisions for such exposure. The greenback remains bid. The euro and Australian dollar have...

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EMU Q4 23 GDP Stagnates, Underscoring Divergence with the US

2024-01-30

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2024-01-30

Overview: The US dollar is mixed ahead of the start of the FOMC meeting and is mostly in its recent ranges. The euro, which was sold below $1.08 yesterday for the first time since mid-December is holding above it today. The less-than-expected projection of US Treasury borrowing requirements for Q1 and Q2 weighed on US rates, which, in turn, dragged the greenback lower against the yen. It is trading near a four-day low, a little above JPY147.00. The...

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Oil Retraces Initial Surge, Euro Slips to Marginal New Low, while Sterling Hugs $1.27

2024-01-29

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2024-01-29

Overview: Key developments today include the Hong Kong court ordered liquidation of China's Evergrande and the reversal of oil prices after a sharp rally initially in Asia after separate attack in the Middle East that killed US troops in Jordan and struck a Russian oil tank in the Red Sea. March WTI, which settled near $78 ahead of the weekend, its best level since the end of last November, rallied to about $79.30 before returning to almost $77.50...

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PBOC Cuts Reserve Requirements, but USD Pullback may offer New Buying Opportunity in North America

2024-01-24

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2024-01-24

Overview: After a strong showing yesterday, the dollar was sold in Asia and Europe. China announced a cut in reserve requirements and took more informal action to support the stock market, which encouraged risk-taking. Yet, the dollar's decline has stretched intraday momentum indicators, which may provide early operators in North America a new dollar buying opportunity. The ECB and Norway's central banks meet tomorrow, and the US reports its first...

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BOJ Stands Pat, Exit Draws Closer, while HK Liquidity is Squeezed Easing Pressure on the Yuan

2024-01-23

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2024-01-23

Overview:  The dollar remains largely confined to its recent ranges as the consolidative phase extends. The Bank of Japan stood pat and revised its forecasts as it is seen drawing closer another adjustment in policy, with the market still favoring an April timeframe. A squeeze in the Hong Kong money market and talk of a large package to support the equity market helped lift the Chinese yuan for the third consecutive session and lifted Chinese...

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Greenback is Bid ahead of the Jobs Report

2024-01-05

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2024-01-05

Overview: The dollar is bid going into the December jobs report. After selling off into the end of last year, it has recovered this week. The five-day moving average is crossing the 20-day moving average against several of the currency pairs, capturing the shift in momentum. The greenback's gains have as interest rates have jumped. The 10-year Treasury yield finished last year near 3.88% and is now near 4.04%. European benchmark rates have mostly...

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Consolidative Tone Emerges Ahead of Tomorrow’s US Jobs and EMU CPI

2024-01-04

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2024-01-04

Overview: After gaining for the past couple of sessions to open the New Year, the dollar is mostly softer today. The yen is the main exception. The greenback was bid above the JPY144 area where chunky options expire today. Most emerging market currencies are also firmer though there are a few exceptions in Asia, like the South Korean won and Thai baht. Still, the general tone is consolidative ahead of tomorrow US jobs data and the eurozone's CPI....

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Firm Start for the Greenback

2024-01-02

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2024-01-02

Overview: The US dollar begins the new year on a firm note. It is recovering against nearly all the G10 and emerging market currencies today after depreciating in the holiday-thin markets over the past couple of weeks. Japanese markets are on holiday until Thursday. The yen and Swiss franc are the poorest performers among the G10 currencies. Among emerging market currencies, the Mexican peso, Hungarian forint, and South African rand are bucking the...

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Soft US CPI Today Paves Way for Fed Pivot Tomorrow

2023-12-12

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2023-12-12

Overview: The US dollar is trading softer against all the G10 currencies ahead of what is expected to be a soft November CPI report, which paves the way for a pivot by the FOMC tomorrow. It is expected to signal that policy may be sufficiently restrictive and anticipate being able to cut rates next year more than it thought in September, even if not as much as is priced into the market. Among emerging market currencies, central European currencies...

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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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Markets Catch Collective Breath

2023-12-06

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2023-12-06

Overview: The US dollar is mixed today. The dollar-bloc currencies are firmer, while the euro and yen are softer. We had anticipated a recovery of the dollar on ideas that the market has too aggressively pushed down US rates, and pricing in more Fed easing with higher confidence than seems to be warranted by the recent data.  However, US rates have not recovered, but the dollar has.  Partly, this reflects that rates have fallen as faster if not...

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The Dollar is Having One of Its Best Days This Month

2023-11-30

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2023-11-30

Overview: After being bludgeoned, the dollar is having one of its best days of the month. It is rising against all the major currencies. The Dollar Index is up about 0.5%, which is the most since the end of October. The greenback is also firmer against all the emerging market currencies but the Turkish lira and Russian ruble. Some of the demand for the dollar may be a function of month end, but also the disappointing Chinese PMI, revisions that...

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Dollar Recovers After Losses Extended in Asia

2023-11-29

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2023-11-29

Overview: On the back of lower interest rates, the greenback's slide was extended in early Asia Pacific turnover, but it has recovered. As North American trading begins, the dollar is firmer against all the G10 currencies but the New Zealand dollar, which has been aided by the hawkish hold of the central bank, and an immaterial gain in the Swiss franc. Emerging market currencies are mixed. Central European currencies and the Mexican peso are...

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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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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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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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