Tag Archive: Mexico
Looming US Government Shutdown Stems the Dollar’s Surge
Overview: The increasingly likely partial US federal
government shutdown has spurred a bout of liquidation of long dollar positions.
The psychologically important JPY150 level was approached, and the euro was
sold through $1.05 yesterday, and the greenback has come back better offered
today. It is lower against all the G10 currencies. It is mixed against the
emerging market currency complex, with central European currencies and South
African rand...
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Firmer Bonds and Stocks, but the Dollar Presses Ahead
Overview: The S&P 500 hit three-month lows
yesterday, while the Conference Board's measure of consumer confidence fell to
a four-month low. New home sales fell to their lowest level in five years. The
US federal government appears headed for a partial shutdown on October 1. Still,
the greenback rides high. It is extending its gains against several G10
currencies, including the euro and sterling. The Swiss franc is moving lower
for the 12th...
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Yen Drops After BOJ Does Nothing and Says Little
Overview: The BOJ's failure to do anything or
further ideas that an exit of the negative target rate, despite the firm CPI
report helped the dollar recover the ground lost yesterday against the yen. The
focus has returned to "intervention watch" and the market continues
to press for the official pain threshold. Sterling is the weakest of the G10
currencies, off another 0.5% today following the BOE's decision not to hike
yesterday. The...
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Battle for $1.07 in the Euro
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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The Dollar and Oil Steady After Yesterday’s Advance
Overview: Bonds and stocks are mostly heavier today
and the dollar has turned mixed. Oil prices are consolidating after soaring to
new highs since late last year on the longer than expected extension of Saudi
Arabia's extra cut of one million barrels a day. Since July, it has been
extending it by one month at a time. Yesterday, it extended it through Q4. Russia,
who had previously indicated intentions on reducing its exports by 500k
barrels,...
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US Dollar Punches Higher
Overview: Disappointing
data in Asia and Europe has sent the greenback broadly higher. The strong gains
posted before the weekend were mostly consolidated yesterday when the US and
Canadian markets were on holiday. The rally resumed today. The Antipodeans and
Scandis have been hit the hardest (-0.7% to -1.25%) but all the G10 currencies
are down. The Swiss franc and yen are off the least (-0.35%-0.45%), and the
euro and sterling have taken out...
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China’s Measures Begin to Find Traction, US Employment Report on Tap
Overview: Beijing's seemingly steady stream of
measures to support the economy and steady the yuan are beginning to produce
the desired effect. The yuan is snapping a four-week decline and the CSI 300
halted a three-week drop. Some economists estimate that the bevy of measures
may be worth as much as 1% for GDP. The dollar is narrowly mixed ahead of the
US employment data, which is expected to see the pace of job growth slow to
around 170k. Of...
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Position Squaring Ahead of US Data Helps the Dollar Recoup Some Recent Losses
Overview: Position-squaring ahead of today's US
personal consumption data and perhaps tomorrow's jobs report is giving the
dollar a firmer profile against most G10 and emerging market currencies. The
Scandis have been the hit hardest and are off 0.75%-0.85%. The euro and
sterling about 0.35%-0.45% lower. The yen is the only G10 currency that is
slightly firmer. The dollar-bloc is nursing small losses (0.10%-0.15%). Despite
the firmer than expected...
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Still No Follow-Through Dollar Buying After Last Week’s Surge
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 Proves Resilient and Even Strong UK GDP Figures Hardly Dents It
Overview: The dollar's resilience after initially
selling off in response to the as-expected CPI was impressive. A quieter tone
is dominating today and most of the G10 currencies are +/- 0.15%. While the
dollar is consolidating, the underlying tone is still firm. For the week, it
has risen against all the major currencies and the Dollar Index is up nearly
0.6% this week, its fourth consecutive weekly gain. The greenback is rising
today against most...
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RBA Holds Fire, Greenback Rebounds
Overview: The dollar has
come back bid. It is rising against all the major currencies today. The Reserve
Bank of Australia left rates steady and the poor Chinese Caixin PMI is weighing
on the Australian dollar, which is off about 1.25% today. Sterling is the best
G10 performer, off about 0.1%. Perhaps, the BOE's meeting on Thursday is
helping to deflect some of the selling pressure. Emerging market currencies are
also nearly all lower, led by the...
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BOJ Moves to Slow JGB Sell-Off, while Month-End is Making for Subdued Price Action in FX outside the Yen
Overview: The Bank of Japan took the market by
surprise with its adjustment of the cap on the 10-year yield before the
weekend, and then stepped in to buy the government bond as yields rose in
reaction today. The move helped lift the dollar to JPY142.50. from where it had
settled on Friday (~JPY141.15). The dollar is mostly softer, however, with only
the yen and Swiss franc weaker. The Australian dollar is leading the other
currencies higher ahead...
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Yen Extends Recovery on Wage Data, Yuan Ticks Up Too
Overview: A powerful short squeeze has lifted the
yen by the most in two months this week. The dollar's push today below JPY143
was encouraged by the stronger than expected wage growth. The US jobs report
will test its strength. The PBOC fixed the yuan sharply higher today and it is
the only emerging market currency that is higher on the day, ahead of the Latam
open. The dollar has not drawn much support for the surge in US yields. The
10-year...
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What Happened Today
The US dollar was mostly softer. The
New Zealand dollar was the strongest (~0.85%) helped by cross rate gains
against the Australian dollar, following the RBA’s decision to stand pat. The
Australian dollar fell to one-month lows below NZD1.08. There is scope for
another 0.5%, or so to the next target near NZD1.0750. The RBA’s decision to
leave its cash target at 4.10% was not surprising, and despite the hawkish
rhetoric, the market downgraded the...
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The Greenback Starts H2 on a Firm Note
Overview: The dollar is recovering from the
month-end losses seen at the end of last week. Only the New Zealand dollar
among the G10 currencies is holding its own. Japanese reports indicate that Tokyo
is in contact with the US Treasury about intervention, which is injecting a
note of caution as the greenback holds below JPY145.00. Chinese officials also
appear to be stepping up their efforts to stabilize the yuan. Among emerging
market currencies,...
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The Dollar Regains Composure
Overview: The dollar is better bid today. It is rising against
nearly all the G10 currencies, with the Antipodeans bearing the brunt, after a
softer than expected Australian inflation report. The yen has steadied after
extending its losses to new lows for the year. Emerging market currencies are
also mostly lower, though the Mexican peso is edging higher for the fourth
consecutive session. The large Asia
Pacific bourses rallied with the exception...
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Higher for Longer
Overview: The central
banks of Norway and Switzerland have hiked rates by 50 bp and 25 bp,
respectively. Attention is on the Bank of England. A 25 bp hike is widely
expected but after strong inflation report, the risk is clearly for a 50 bp
hike. In fact, we suspect a quarter-point move could see sterling sold. With a
new orthodox economics team in Turkey, a large rate hike is expected today. Late
in the North American session, Mexico's central...
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UK Inflation Surprises to the Upside and Weighs on Sterling
Overview: The UK surprised with higher-than-expected consumer
inflation and budget deficit, and the odds of a 50 bp hike tomorrow edged
higher. Sterling has been sold on the news and is the weakest of the G10
currencies, off about 0.5%. The dollar is mixed with the euro, Swedish krona,
Canadian dollar, and Swiss franc posting small gains. Emerging market
currencies are lower, including the Chinese yuan, which is at new lows since
last November. The...
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Japan’ Q1 GDP was Revised Up, While the Eurozone’s was Revised Down
Overview: The back-to-back surprise rate hikes by
the Australia and Canada spurred speculation that the Fed could hike next week,
and this lifted US rates and helped the dollar recover. The odds of a hike
increased, according to the indicative pricing in the Fed funds futures market
from about a 20% chance to a little above 35%. now. At yesterday's high, the
two-year yield was up a little more than 25 bp since the low before the US
employment data...
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Dollar Steadies After Fed’s Push Back
Overview: The market was gearing up for a June Fed
hike and officials and this helped lift the greenback. However, the Fed
Governor Jefferson, nominated to be the next vice-chair, pushed back against it.
His views are thought to reflect the Fed's leadership. Philadelphia Fed's
Harker, who is a voting member of the FOMC also backed a pause. This is not
quite what we expected when we suggested the US interest rate adjustment was
complete or nearly...
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