Tag Archive: Japan

The ECB and the $1.10 level in the Euro

2024-09-12

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2024-09-12

Overview:  The US dollar is narrowly mixed against the G10 currencies. The dollar bloc, Japanese yen, and Swiss franc are sporting slightly softer profiles, while the European currencies enjoy a firmer today. There is more than 3 bln euro in options struck at $1.10 that expire today that still seem to be in play. And there is a large option at GBP1.30 that expires Monday. The ECB's rate decision and President Lagarde's press conference are the...

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S&P 500 – A Bullish And Bearish Analysis

2024-09-10

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2024-09-10

The S&P 500 index is a critical benchmark for the U.S. equity market, and its performance often dictates investor sentiment and decision-making. Between November 1, 2022, and September 6, 2024, the S&P 500 experienced a significant rally but not without volatility. Currently, investors have very mixed views about where markets are heading next as concerns of a recession linger or what changes to monetary policy will cause. However, as...

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US Dollar Returns Bid on the Back of Firmer Rates

2024-09-09

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2024-09-09

Overview:  After falling following the US jobs report before the weekend, US interest rates have come back firmer, helping the give the dollar a boost. A downward revision to Japan's Q2 GDP, reflecting weaker consumption, business investment, and a little more inflation, have heled the greenback retrace the pre-weekend losses against the yen. Softer than expected price gauges, the setback of the yen, and the rise in US rates has seen the offshore...

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The Market Discounts around a 40% Chance of not One but Two 50 bp Cuts in last Three FOMC Meetings of the Year Ahead of Jobs Report

2024-09-06

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2024-09-06

Overview: The US jobs report is front and center. The market is going into the report with about a 40% chance of a 50 bp Fed rate cut later this month. The Dollar Index is trading lower for the third consecutive session. Helped by the fifth consecutive decline in US 10-year yields, the yen approached last month's high but without the turmoil seen in July and August. Still, equity markets are under pressure. Most large markets in the Asia Pacific...

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Technological Advances Make Things Better – Or Does It?

2024-09-06

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2024-09-06

It certainly seems that technological advances make our lives better. Instead of writing a letter, stamping it, and mailing it (which was vastly more personal), we now send emails. Rather than driving to a local retailer or manufacturer, we order it online. Of course, we mustn’t dismiss the rise of social media, which connects us to everyone and everything more than ever. Economists and experts have long argued that technological advances drive...

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The Dollar is Bid but Ueda Lends Support to the Yen

2024-09-03

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2024-09-03

The dollar is bid as the upside correction that began last week continues today. The greenback is trading above last week's highs against most of the G10 currencies. The yen is the notable exception.

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Risks Facing Bullish Investors As September Begins

2024-09-03

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2024-09-03

Since the end of the “Yen Carry Trade” correction in August, bullish positioning has returned with a vengeance, yet two key risks face investors as September begins. While bullish positioning and optimism are ingredients for a rising market, there is more to this story.

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Japanese Style Policies And The Future Of America

2024-08-30

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2024-08-30

In a recent discussion with Adam Taggart via Thoughtful Money, we quickly touched on the similarities between the U.S. and Japanese monetary policies around the 11-minute mark. However, that discussion warrants a deeper dive. As we will review, Japan has much to tell us about the future of the U.S. economically. Let’s start with the deficit. Much angst exists over the rise in interest rates. The concern is whether the government can continue to...

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USD is Trading Mostly Firmer, but Yen and Swiss Franc Show Resilience

2024-08-26

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2024-08-26

Overview: The US dollar is mostly firmer, though consolidating against most of the G10 currencies. The Japanese yen and Swiss franc are the strongest, while the Scandis and Antipodean currencies are the heaviest. Among emerging market currencies, a handful of Asian currencies, including the Chinese yuan are higher, but central European currencies, the South African rand, and the Mexican peso are softer.The news stream is light but the threat of the...

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Red Flags In The Latest Retail Sales Report

2024-08-23

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2024-08-23

The latest retail sales report seems to have given Wall Street something to cheer about. Headlines touting resilience in consumer spending increased hopes of a “soft landing” boosting the stock market. However, as is often the case, the devil is in the details. We uncover a more troubling picture when we peel back the layers of this seemingly positive data. Seasonal adjustments, downward revisions, and rising delinquency rates on credit cards and...

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US Benchmark Payroll Revisions Over-Hyped? Dollar may Benefit from Buying on Fact after Being Sold on Rumors

2024-08-21

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2024-08-21

Overview: The preliminary annual revision to US jobs growth is front and center today. It has gotten more play that usual, amid speculation of a historically large revision. Yet, the direct impact on policy may be minimal. Federal Reserve officials, including Chair Powell, acknowledged that the payroll growth may have been overstated. Moreover, the Fed's judgment of the labor market is not based on one element of the multidimensional labor market....

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USD Remains Soft but Consolidation is Threatened

2024-08-20

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2024-08-20

Overview: The US dollar's recent retreat has been marginally extended today but it seems to be moderating. Still, the greenback is on the defensive, arguably ahead of tomorrow's BLS annual revisions of nonfarm payrolls, where there is talk that April 2023-March 2024 job growth could be slashed from 2.9 mln to 1.9 mln. And that is ahead of Friday's Jackson Hole address by Fed Chief Powell that is expected to be the strongest confirmation of a rate...

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Dollar Losses Extended, Led by the Japanese Yen

2024-08-19

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2024-08-19

Overview: The dollar settled last week on a soft note, and follow-through selling today pushed it lower against nearly all the G10 and emerging market currencies today. Just as some observers were talking about a resumption of the yen carry-trades, the yen has popped up. The yen has a little more than 2.2% against the dollar Friday and today. Unlike previous yen surge, the Antipodeans (candidates for the long leg of the carry trades) have traded...

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Data Thursday but Markets Unimpressed

2024-08-15

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2024-08-15

Overview: An eerie calm hangs over the foreign exchange market on this the anniversary of the end of the Bretton Woods agreement 53 years ago today. Narrow ranges are dominating. Strong Australian jobs data and a cautious Norwegian central bank have underpinned their respective currencies today. A firm Q2 UK GDP appears to have given sterling a boost. The euro and the Swiss franc are struggling, while the yen is recording its narrowest range in...

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Is the US CPI Anti-Climactic?

2024-08-14

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2024-08-14

Overview: Today's US CPI is the focus but the bar to a Fed cut next month is low, and it could prove anti-climactic. The more moderate inflation reading creates more space for the central bank to respond to signs of a continued slowing of the US labor market and adopt less restrictive policy. The dollar is mixed as the North American session gets under way. The rate cut by the Reserve Bank of New Zealand, not a total surprise, but has seen fall 1%....

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Are Risk Appetites Recovering?

2024-08-13

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2024-08-13

Overview: The Antipodeans and sterling lead the G10 currencies today. The New Zealand dollar is the strongest, though the central bank is likely to deliver its first rate cut tomorrow. The Australian dollar rose to a three-week near $0.6610. Sterling was lifted by a stronger than expected employment report (though wage growth slowed) ahead of tomorrow's CPI. The yen and Swiss franc nursing modest losses. Emerging market currencies are mostly...

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Yen Slumps, Germany Contracts, and the Week’s Key Events Still Lie Ahead

2024-07-30

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2024-07-30

Overview: An unexpected decline in Japan's unemployment did not prevent a retreat in the yen to a four-day low ahead of tomorrow's data and conclusion of the BOJ meeting. The dollar has probed the JPY155 area where nearly $3.5 bln options expire today. An unexpected contraction Germany's Q2 GDP was offset in the aggregate by better French, and especially Spanish figures, leaving the euro consolidating in a narrow range (~$1.0815-$1.0835). The...

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Is the Dramatic Yen Short Squeeze Over?

2024-07-26

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2024-07-26

Overview:  The powerful yen short squeeze that has roiled the capital market this week has stalled today. It is the first day this week that the dollar has not fallen below the previous day's low and has risen, though slightly, above previous session's high. The Antipodeans and Scandis are trading with a firmer bias. The yen and Swiss franc are the only two G10 currencies that are not stronger today. The stability of the yen appears to have removed...

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Dollar Consolidation is Morphing into Correction

2024-07-19

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2024-07-19

Jury duty assignment prevents a more comprehensive note, but here is a snapshot. Overview: The failure of computer systems has disrupted airlines, banks, media companies, and the London Stock Exchange, ostensibly stemming from an update from a third-party software update, according to Microsoft. The dollar is trading with a firmer bias. The consolidation, we anticipated, appears to be morphing into a correction. Weaker than expected retail sales...

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Euro is Little Changed, while the Yen is Softer to Start the New Week

2024-07-08

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2024-07-08

Overview: The dollar is narrowly mixed against the G10 and emerging market currencies today. The euro is little changed, holding on to last week's gains, after the surprising French election results, where the focus shifts finding a prime minister that can carry a majority of the new and closely divided National Assembly. Despite firm underlying wage data, the Japanese yen has given back its initial gains, and the dollar is pushing back above...

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