Tag Archive: Mexico

China’s Politburo Validates and Extends Pivot while the US Dollar Sees Yesterday’s Gains Pared

2024-09-26

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2024-09-26

Overview: After its recent losses were extended, the dollar reversed higher in North America yesterday. Technically, this looks to have ended the sharp drop over the last couple of weeks, but there has been no follow-through gains today and a consolidative tone emerged. G10 currencies are firmer today, led by the recovery in the Antipodeans. The Swiss National Bank delivered the expected 25 bp rate cut, but the Swiss franc is up about 0.25%....

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Run on the Dollar Stalls after the Market Boosted Odds of another 50 bp Fed Cut

2024-09-25

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2024-09-25

Overview: Weak US consumer confidence, especially regarding the labor market boosted speculation of another half-point Fed cut in November when the central bank meets again. This weighed on the dollar. Sterling and the Australian dollar rose to new 2 1/2-year highs. The PBOC followed up yesterday's package with a 30 bp cut in the one-year Medium-Term Lending rate. After extending its losses earlier today, the dollar has steadied and turned higher...

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China Goes Big, and Market (Initially) Gives it the Benefit of the Doubt

2024-09-24

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2024-09-24

Overview: News of China's multifaceted support measures have bolstered risk appetites today. The dollar is mostly softer and only the yen and Swiss franc among the G10 currencies have been unable to find traction against the greenback. Most emerging market currencies are also trading with a firmer bias. China's measures include measures to support the stock and housing markets. The seven-day repo rate was cut by 20 bp (to 1.50%) and reserve...

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Little Discussion about the US Budget Deficit in the Debate, But Falling Yields Drag the Greenback Lower

2024-09-11

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2024-09-11

Overview: The US 10-year yield is lower for the eighth consecutive session. The yield was near 3.90% at the end of August. It is now flirting with 3.60%. The two-year yield has fallen 35 bp since the end last month to about 3.55%. Although Vice-President Harris was seen winning last night's debate, it is not clear if it was a more important driver than the continued decline in US rates, despite the budget deficit not the discussed much in the...

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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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Disappointing US Data Followed by Better Japanese Wages and Stronger German Factory Orders Weigh on the Greenback

2024-09-05

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2024-09-05

Overview: The one-two punch of the disappointing US job opening report and the downbeat Beige Book weighs on the US dollar, which is softer against all the G10 currencies. The Canadian dollar is a notable exception. Prime Minister Trudeau's minority Liberal Party lost key support and the Bank of Canada affirmed expectations for more rate cuts. Japan's wage growth was stronger than expected, underscoring the divergence of policy and the dollar was...

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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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Corrective Forces Weigh on G10 Currencies, with the Euro Threatening its Largest Loss in Two Months

2024-08-28

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2024-08-28

Business travel prevents the commentary for the next two days.  It will return with the September monthly on August 31.  Overview: Corrective forces are helping lift the dollar against all the G10 currencies. The euro's 0.5% pullback is the largest in nearly two months. Sterling's 0.3% loss is the most in nearly three weeks. The dollar-bloc currencies are the most resilient and are off less than 0.2% today. Emerging market currencies are more...

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Sterling Shines

2024-08-27

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2024-08-27

Overview: The US dollar is softer against all the G10 currencies but the Japanese yen. Sterling is leading the advance and is at new two-year highs, knocking on $1.3250. More generally, the dollar's consolidative tone remains intact, but it looks like a pause rather than a reversal, especially against the dollar-bloc currencies. The weaker yen is a headwind for most of the regional currencies, including the yuan. Most central European currencies...

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What Can Powell Say that the Markets Do Not Already Know?

2024-08-23

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2024-08-23

Overview: The US is consolidating with a softer profile against most G10 and emerging market currencies today, ahead of Fed Chair Powell's speech at Jackson Hole (10 AM ET). He is unlikely to go much beyond confirming what the market already thinks it knows: namely, that the first rate cut will be delivered next month. By acknowledging that the economy has evolved broadly along the lines the central bank expected, it would be a gently push against...

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The Dollar and Rates Come Back Firmer

2024-08-22

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2024-08-22

The US dollar's decline continued yesterday after the steep jobs’ revision and an unusual solid auction of the Treasury's 20-year bond. The minutes from the recent meeting confirmed that the FOMC will begin its easing cycle next month.

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Consolidation Featured

2024-08-08

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2024-08-08

Overview:  Yesterday's poor 10-year note US Treasury auction helped turn the equity market lower and this carried over into Asia Pacific and European activity today. Today, Treasury completes its quarterly refunding with the sale of $25 bln 30-year bonds. The general tone in the foreign exchange market is one of consolidation. Japanese investors were buyers of foreign stocks on bonds last week, according to the latest portfolio flow report, which...

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BOJ Offers Verbal Support, Extends the Yen’s Pullback

2024-08-07

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2024-08-07

Overview:  The calls earlier this week for an emergency rate cut seemed to be a call for the Fed put, which, we argue is misunderstood. It is not about the stock market per se but financial stability, which did not seem threatened in the US. Japan is a different story, and the Bank of Japan offered a verbal put today, with an indication that it wants to maintain low (accommodative) rates. The markets reacted accordingly. The yen was sold (and...

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Equity Meltdown Continues as Attention turns to the US Employment Report

2024-08-02

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2024-08-02

Overview: Federal Reserve Chair Powell said that although confidence has risen that inflation is on course back to 2%, the Fed is not quite confident enough to cut rates. The market effectively eased for it. Since the FOMC meeting began on Tuesday, the two-year US yield tumbled from 4.40% to 4.10%. The US 10-year yield settled below 4% for the first time in six months. The risk-off spurred by the weaker than expected US manufacturing ISM helped...

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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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Yen’s Surge Continues, while PBOC Surprises with Another Rate Cut, and US 2-30 Year Yield Curve Ends Inversion

2024-07-25

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2024-07-25

Overview: The capital markets are in flux. The powerful short-covering rally of the yen and unwinding of carry trades continues. For the second time this week, the PBOC has surprised by cutting interest rates. The dramatic sell-off of equities continues. The unexpected contraction of South Korea's Q2 GSP (-0.2%) is seen as confirmation of broader economic weakness Speculation of a more aggressive Federal Reserve is gaining ground. It is not that...

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Narrow Ranges for the Dollar Prevail Ahead of Tomorrow’s US CPI

2024-07-10

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2024-07-10

Overview: The dollar is mostly softer today, but largely within the recent ranges, as the market appears to be waiting for tomorrow's US CPI. There are a few exceptions to note. The yen is trading near its recent lows. A less hawkish Reserve Bank of New Zealand has triggered a sell-off of the local dollar. Softer than expected Norwegian inflation has knocked the krone lower. Most emerging market currencies are firmer, with several Asia Pacific...

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Quiet Summer Tuesday with Powell’s Testimony and a Deluge of US Supply on Tap

2024-07-09

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2024-07-09

Overview: In the absence of fresh developments, the dollar is consolidating in narrow ranges today against the G10 currencies and enjoys as slight upward bias against most emerging market currencies but for a few currencies from the Asia Pacific region. With practically an empty US data calendar, Fed Chair Powell's testimony with be the highlight, and a soft headline CPI on Thursday anticipated. The US two-year premium over Germany has fallen from...

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Sigh of Relief Lifts French Markets, But…

2024-07-01

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2024-07-01

Overview: The market feels a bit more at ease after the first round of the French elections that extreme policies will be avoided by an effort to deny the National Rally a legislative majority. French stocks have recouped some of their recent losses and the euro reached $1.0775, its best level since June 13. The yen remains soft after the Tankan survey showed little change but an uptick in capex plans. Outside of the yen and Swiss franc, the dollar...

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