Tag Archive: federal-reserve

China Returns, the US is on Holiday, and the Dollar Consolidates

Overview: US markets are closed for President's Day, while China's markets re-opened from the long Lunar New Year holiday. Mainland stocks advanced, while the yuan slipped slightly. The US dollar is mostly softer but in narrow ranges. The Antipodeans and yen lead, while the Swiss franc the only G10 currency that is slightly softer. Most emerging market currencies are lower, led by about a 0.5% loss of the South African rand. The Mexican peso's and...

Read More »

A perfect storm in the making 

The New Year is usually associated with a new beginning, a fresh start, or a “clean slate”. Unfortunately, for millions of Americans, these are wishes that are bound to remain unfulfilled – for them, the New Year has nothing “new” to offer at all: it will only perpetuate all the same burdens, obligations and worries of the past year and of the ones that came before.

Read More »

Sterling Buoyed by Labor Market Report Ahead of US CPI

Overview: The US dollar is enjoying a mostly firmer bias ahead of today's CPI report. Sterling is the strongest among the G10 currencies after a more resilient than expected labor market report. The dollar extended its gains against the Japanese yen to a new high since last November, but the market seems cautious as it approaches JPY150, where large options expire today. On the other hand, emerging market currencies are mostly faring better. The...

Read More »

Greenback Consolidates Two-Day Surge

Overview: The US dollar is consolidating its the two-day surge since the jobs data at the end of last week. The Reserve Bank of Australia did not rule out additional rate hikes, and although the derivatives markets do not think it is likely, the Australian dollar is the best performer in the G10 today with a small gain. An unexpectedly strong German factory orders report failed to help the euro much and it languished near yesterday's low. Sterling...

Read More »

US Dollar Offered Ahead of Employment Data after US 10-year Yield Set New Low for the Year

Overview: The dollar is offered ahead of today's US jobs report, even though expectations are for solid if not spectacular jobs growth of around 185k. The Australian and New Zealand dollars are leading today's move, while the euro approached $1.09, which it has not traded above this week. Sterling neared the lower end of its $1.26-$1.28 trading range yesterday and set a new high for the week today, slightly above $1.2770. Emerging market currencies...

Read More »

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

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...

Read More »

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

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...

Read More »

China Equity Slump Continues, while Dollar Extends Consolidation

Overview: The foreign exchange market is quiet to start the new week. As the North American session is about to begin, the dollar is mostly +/- 0.10% against most of the G10 currencies. The Swedish krona is the notable exception, rising about 0.25% against the US dollar amid good demand for its bonds today. Emerging market currencies are mostly lower. The Taiwanese dollar is the strongest in the complex so far today, rising about 0.30% against the...

Read More »

War is the health of the State

Part II of II by Claudio Grass, Hünenberg See, Switzerland This is precisely what the State is doing. The idea of war, mayhem and destruction being economic boosters is exactly what has supported the thin facade that politicians like to place over their greed and their personal gain that they derive from the military industrial complex. “It’s good for the country”, is certainly easier to sell than “it’s good for me and my reelection...

Read More »

US CPI Front and Center, but Can Congress Avert a Government Shutdown?

Overview: The dollar is somewhat better offered today ahead of the October CPI report. The US House of Representatives may hold a vote today on a continuing resolution to avoid a partial government shutdown at the end of the week. Narrow ranges have prevailed. Most emerging market currencies are firmer, though paradoxically, the South Korean won is the weakest, despite a strong equity market rally (~1.2%), encouraged by the first in increase in...

Read More »

US Treasury Yields Come Back Softer After Moody’s Cut Outlook, and the Dollar Rises to New Highs Against the Yen

Overview: The dollar is beginning the new week narrowly mixed against the G10 currencies. Sterling seems largely unaffected by the cabinet reshuffle that has seen former Prime Minister Camron return as the foreign minister, replacing Cleverly who replaces Home Secretary Braverman. The dollar rose to new highs for the year against the Japanese yen (~JPY151.85). The market has shown little reaction to the pre-weekend news that Moody's cut the outlook...

Read More »

Who Changed: Powell or the Market?

Overview:  A poor reception to the 30-year Treasury sale and Federal Reserve Powell pledged to raise rates again, if necessary, not exactly a new ground, but it spooked the doves--driving rates sharply higher and fueling a strong dollar recovery. There was a large five basis point tail on the bond sale. The eight-day rally in the S&P 500 and nine-day advance in the NASDAQ was snapped like dry kindling. The S&P 500 comes into today down on...

Read More »

The Dollar Remains Mostly Softer but Near-Term Consolidation is Likely

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...

Read More »

Weekly Market Pulse: Monetary Policy Is Hard

So, is that it? Have rates peaked? Is the long bear market finally over?  The market decided last week that interest rates have peaked for this cycle. And if rates have peaked then all the assets that have been pressured over the last two years can finally come up for air. Since October 18, 2021, over two years ago, investors have had few places to hide. Of the major asset classes we follow closely, only two – gold and commodities – were higher by...

Read More »

Dollar Extends Losses Post-FOMC

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...

Read More »

Japanese Fireworks Continue as the Market Turns to the FOMC

Overview: The FOMC meeting is today's highlight but the drama in Japan continues to rivet the market. The Ministry of Finance warned of the risk of material intervention in the foreign exchange market, and the BOJ bought bonds in an unscheduled operation a day after its downgraded the 1.0% cap to a reference rate, whatever that means. The yen is trading with a slightly firmer bias. The Swiss franc is also trading a little firmer, but the other G10...

Read More »

The Dollar Continues to Press Against JPY150; Risk Off Ahead of the Weekend

Overview: True to the market's penchant, it heard a dovish Fed Chair Powell yesterday. He seemed to suggest that the bar to another hike was high. This helped cap the 10-year yield just in front of 5.00% and allowed foreign currencies to recover against the dollar. The US two-year yield reversed lower after rising above 5.25%. It is now around 5.15%. Still, Powell appeared to cover similar ground as several other officials, including Fed governors...

Read More »

Greenback Consolidates Ahead of September CPI

Overview: The dollar is mixed against the G10 currencies. It is confined to narrow ranges ahead of today's CPI report. The Russian ruble is the strongest of the emerging market currencies following the imposition of new capital controls, forcing many exporters to repatriate their foreign earnings. After posting a key upside reversal at the end of last week, gold continues to recover. It nearly $1883 so far today, the best level in more than two...

Read More »

Dollar Edges to New High for the Year against the Japanese Yen, While Developer Woes Hit Chinese Stocks and Yuan

Overview: The US dollar begins the new week on a firm note. It is trading at new highs for the year against the Japanese yen and is bid against nearly all the G10 currencies, though the Swedish krona and Canadian dollar are resisting the greenback's push. Most emerging market currencies are heavier, with the Polish zloty and a few East Asian currencies holding their own. Gold is trading with a heavier bias near $1922, but within the ranges seen at...

Read More »

Higher for Longer Lifts the Dollar, while SNB Surprises Many by Standing Pat–Over to the BOE

Overview: The Federal Reserve's hawkish hold, which included 50 bp less of cuts next year than it had signaled in June, has lifted the dollar against most currencies today. The notable exception is the Japanese yen. The greenback did extend its advance to new highs for the year before the market turned cautious ahead of the outcome of the Bank of Japan meeting tomorrow. The Swiss franc is the weakest of the G10 currencies after the Swiss National...

Read More »