Tag Archive: federal-reserve

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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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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China Equity Slump Continues, while Dollar Extends Consolidation

2024-01-22

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2024-01-22

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...

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War is the health of the State

2023-11-24

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2023-11-24

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...

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

2023-11-14

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2023-11-14

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...

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

2023-11-13

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2023-11-13

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...

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Who Changed: Powell or the Market?

2023-11-10

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2023-11-10

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...

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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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Weekly Market Pulse: Monetary Policy Is Hard

2023-11-06

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2023-11-06

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...

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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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Japanese Fireworks Continue as the Market Turns to the FOMC

2023-11-01

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2023-11-01

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...

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

2023-10-20

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2023-10-20

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...

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Greenback Consolidates Ahead of September CPI

2023-10-12

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2023-10-12

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...

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

2023-09-25

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2023-09-25

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...

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

2023-09-21

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2023-09-21

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...

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Softer UK CPI Weighs on Sterling and Lifts Gilts, while Yen Slumps to New Low for the Year, Ahead of the FOMC

2023-09-20

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2023-09-20

Overview: Softer than expected UK CPI has drawn attention ahead of the key event of the day, the FOMC meeting. The UK's CPI has spurred a dramatic rally in Gilts and saw sterling initially extend its recent losses, falling to new four-month lows before stabilizing. The swaps market sees less than a 50% chance of a hike by the Bank of England tomorrow. Meanwhile, even though US Treasury Secretary Yellen suggested conditions in which intervention by...

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Week Ahead: Thumbnail Sketch of Central Bank Meetings

2023-09-16

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2023-09-16

The week ahead is dominated by central bank meetings. Six of the G10 central banks meets. The post-Covid monetary tightening cycle is ending. The start was not synchronized, and neither will be end. It is tempting to think that those that began the tightening cycle early will among the first to finish. Among emerging markets that is true for Brazil and Chile, both of whom have begun cutting rates. And Brazil is likely to deliver the second cut in...

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Battle for $1.07 in the Euro

2023-09-07

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2023-09-07

Overview: Despite disappointing German industrial output, where the 0.8% decline was twice expectations, the euro is holding above $1.07, where large options exist that are expiring over the next few sessions. The greenback is consolidating against the Japanese yen, where the fear of intervention has increased. Sterling remains on its back foot after yesterday's seemingly dovish comments by Bank of England Governor Bailey. Emerging market...

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Still No Follow-Through Dollar Buying After Last Week’s Surge

2023-08-29

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2023-08-29

Overview: The dollar was threatening to break higher at the end of last week, and the euro and sterling closed below key supports. However, so far this week, the greenback is consolidating and has not seen follow-through buying. The key data this week, US consumption and jobs, and the eurozone's CPI still lay ahead. The Antipodeans and Norwegian krone enjoy a firmer today. A 0.8% contraction in Sweden's Q2 GDP was not as deep as had been feared,...

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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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