Tag Archive: Japan

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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Softer Tokyo CPI Buys BOJ Time while Moody’s Cuts the Outlook for China’s Debt following Fiscal Stimulus and the Continued Property Slump

2023-12-05

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2023-12-05

Overview: Outside of the Australian dollar, which has fallen by around 0.6% following the RBA meeting and the softer final PMI, which may have dragged the New Zealand dollar a lower by around 0.25%, the other G10 currencies trading little changed ahead of the start of the North American session. The eurozone and UK final PMIs were revised higher. Central European currencies lead the emerging market currencies. China reported better than expected...

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Rates and the Dollar Come Back Firmer

2023-12-04

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2023-12-04

Overview: Weekend accounts seemed to try to understand what Fed Chair Powell said by beginning with the large drop in US rates. Yet, most accounts miss the fact that no matter what Powell has said, the market has more often than not reacted as if he were a dove. Rates have come back firmer today, perhaps as some recognized the overshoot. The US two-year yield is up nearly seven basis points after falling 14 before the weekend. The 10-year yield is...

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What Will Powell Say?

2023-12-01

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2023-12-01

Overview: The dollar traded better into month-end but is softer today. The Scandis and dollar-bloc currencies are leading with around 0.2%-0.5% gains. In addition to US manufacturing PMI and ISM surveys, and construction spending, auto sales will trickle in, but key for market participants today will likely be Fed Chair Powell's comments and the extent that he pushes against the dramatic rate cuts, with more than a 50% chance of the first cut by...

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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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Dollar Starts Softer

2023-11-27

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2023-11-27

Overview: The dollar is beginning the week on a soft note, despite the modest backing up of yields over the last couple of sessions and better than expected data, including Black Friday sales and the preliminary November PMI. It is sporting minor losses against all the G10 currencies, but the Canadian dollar, which is the weakest of the major currencies this quarter and month. The greenback is also lower against most emerging market currencies, but...

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Corrective Forces Help the Dollar Stabilize

2023-11-22

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2023-11-22

Overview: Corrective forces helped the dollar stabilize yesterday and it enjoys a firmer today. The euro has slipped below $1.09, and the dollar has resurfaced above JPY149.00. The FOMC minutes seem dated by the more than 30 bp decline in the US 10-year yield, the 7% rally in the S&P 500 and roughly 3% drop in the Dollar Index. The implied year-end 2024 Fed funds rate has fallen by 10 bp to 4.51% (5.33% currently). The Japanese government...

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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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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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Dollar Consolidates Amid Rate Volatility

2023-11-16

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2023-11-16

Overview: The dollar is consolidating its recent moves as interest rate swings continue. The US two-year yield has traded in a nearly 28 bp range in the first two sessions this week, and near 4.88% now, it is 18 bp lower since last Friday's close. The 10-year yield is slipping below 4.50%. It reached almost 4.70% on Monday and had fallen to almost 4.40% yesterday. Part of this reflects the shift in overnight rate expectations. The implied yield of...

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The Pendulum of Fed Expectations Swings Too Hard

2023-11-15

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2023-11-15

Overview: The capital markets' reaction to softer than expected CPI was too much. The implied yield of the December 2024 Fed funds futures fell by 25 bp as if the October's CPI was worth a full quarter-point rate cut next year. US two- and 1-year yields are around two basis points higher today and the dollar is mixed, with the euro and sterling under the most pressure. China's data were uninspiring, and more stimulus is in the pipeline. Japan's Q3...

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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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Food Prices Drive China’s CPI Lower while the Greenback is Mostly Firmer in Narrow Ranges

2023-11-09

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2023-11-09

Overview: The dollar is mostly firmer against the G10 currencies and has been confined to tight ranges through the European morning. Outside of the China's deflation and Japan's monthly portfolio flow data that showed Japanese investors bought the most amount of US Treasuries (~$22 bln) in six months in September, the news stream is light. Most emerging market currencies are trading with a softer bias today. The Philippine peso is the strongest...

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The Dollar’s Recovery has been Extended, but it may Give North American Operators a Better Selling Opportunity

2023-11-07

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2023-11-07

Overview: The dollar's sell-off last week was extreme and it recovered yesterday and through the European session today. The Australian dollar has been hit the hardest. It is off more than 1% today after the RBA lifted the cash rate by 25 bp (to 4.35%). Still, the US dollar's gains have stretched intraday momentum indicators, suggesting the upside correction may be nearly over. The greenback's moves appear to have been driven by interest rate...

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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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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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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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