Tag Archive: Mexico

BOJ Moves to Slow JGB Sell-Off, while Month-End is Making for Subdued Price Action in FX outside the Yen

2023-07-31

by

2023-07-31

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...

Read More »

Yen Extends Recovery on Wage Data, Yuan Ticks Up Too

2023-07-07

by

2023-07-07

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...

Read More »

What Happened Today

2023-07-04

by

2023-07-04

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...

Read More »

The Greenback Starts H2 on a Firm Note

2023-07-03

by

2023-07-03

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,...

Read More »

The Dollar Regains Composure

2023-06-28

by

2023-06-28

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...

Read More »

Higher for Longer

2023-06-22

by

2023-06-22

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...

Read More »

UK Inflation Surprises to the Upside and Weighs on Sterling

2023-06-21

by

2023-06-21

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...

Read More »

Japan’ Q1 GDP was Revised Up, While the Eurozone’s was Revised Down

2023-06-08

by

2023-06-08

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...

Read More »

Dollar Steadies After Fed’s Push Back

2023-06-01

by

2023-06-01

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...

Read More »

Debt Ceiling Progress, Weak Chinese and Japanese Data, and Soft EMU CPI, Sends the Dollar Higher

2023-05-31

by

2023-05-31

Overview: The US budget agreement passed a House committee vote by 7-6 and the bill is scheduled to be voted on by the entire House today before the Senate take it up with the idea of passing it Monday. The procedural step plus the weakness of China and Japanese data and soft CPI figures from Europe has lifted the greenback against all the major currencies. The euro and Australian dollar have been sold to new lows, while the dollar holds ever so...

Read More »

Fitch Puts US on Negative Credit Watch and the Dollar Extends its Gains

2023-05-25

by

2023-05-25

Overview: Concerned about the political wrangling over servicing US debt, Fitch put the US on negative credit watch. Besides chin wagging and finger pointing, it has had little perceptible impact. The dollar is mostly higher, reaching new highs for the year against the Japanese yen, Chinese yuan, and the Antipodean currencies. The euro and sterling met retracement objective we have targeted (~$1.0735 and $1.2435, respectively). The greenback is...

Read More »

RBNZ Delivers a Dovish Hike and UK Inflation Surprises to the Upside

2023-05-24

by

2023-05-24

Overview: Equities in the Asia Pacific region and Europe are being led lower by the sell-off in the US yesterday. All the large Asia Pacific markets fell with Hong Kong and mainland shares setting the pace. Europe's Stoxx 600 is off nearly 1.5%, which would be the largest loss in two months. Consumer discretionary, financials and real estate sectors are off nearly 2%. US equity futures have a softer bias. European 10-year yields are mostly 2-3 bp...

Read More »

Yen and Yuan Fall to New Lows for the Year

2023-05-18

by

2023-05-18

Overview: Some creeping optimism about the US debt ceiling, easing of pressure on bank shares, and a continued rise in US rates helped the dollar extend its recent recovery. Over the past two weeks or so, the US 2-year premium has risen 25-30 bp against Germany and nearly 25 bp against the UK. The 10-year US Treasury has risen from the lower end of its seven-month range (~3.30%) earlier this month to approach the upper end of the range that has...

Read More »

Biden to Go to G7 Summit with Debt Ceiling Unresolved

2023-05-16

by

2023-05-16

Overview:  The US debt ceiling talks resume at the White House today but a deal is unlikely to be announced. President Biden will attend the G7 summit in Hiroshima with the debt ceiling still looming. The dollar is mostly softer as last week's gains are pared. The Swiss franc and Japanese are the strongest in the G10. The Thai baht and South African rand, among the market's favorites yesterday are seeing those gains retraced. The JP Morgan Emerging...

Read More »

Consolidative Session Marked by Weak Chinese Imports and White House Debt Ceiling Talks

2023-05-09

by

2023-05-09

Overview: The market sentiment remains fragile. Equities are mostly lower. Japan was a notable exception, and concerns about China's economy after a sharp decline in imports took mainland and Hong Kong listed companies sharply lower. Europe's Stoxx 600 is giving back yesterday's 0.35% gain plus more. Bank shares are off 0.65% after rallying 4.20% over the past two sessions. US equity futures are heavier. Benchmark 10-year yields are mostly a couple...

Read More »

The Greenback Continues to Struggle

2023-05-08

by

2023-05-08

Overview: There is a nervousness that hangs over the capital markets. Although US banks shares recovered at the end of last week, many continue to see the sector’s challenges as the harbinger of a dramatic reversal in the Fed’s stance. America’s debt ceiling looms large and could be a few weeks away. China led Asia Pacific bourses higher, and, ironically, its bank shares extended their rally. Japan, returning from last week’s holiday was notable...

Read More »

RBA Surprises with a Quarter-Point Hike

2023-05-02

by

2023-05-02

Overview: A combination of a surprisingly strong prices paid component to the US manufacturing PMI, corporate supply, and US debt woes spurred an almost 15 bp spike in the US 10-year yield and 13 bp jump in the two-year yield. The rise in US rates appeared to lend the dollar support. The greenback's gains have been extended today, but a surprise hike by the Reserve Bank of Australia is seeing the Australian dollar (and New Zealand dollar) traded...

Read More »

Yen Slumps on Cautious BOJ

2023-04-28

by

2023-04-28

Overview:  The market took a dovish message away from the Bank of Japan and sent the dollar above JPY136, its best level since March 10 and spurred a sharp rally in JGBs. Japanese equities led the rally among the Asia Pacific markets. Europe has not been able to follow suit. It disappointed with Q1 GDP (0.1% rather than 0.2%). The Stoxx 600 is of about 0.3%, leaving it off about 1.3% this week, its first weekly loss since the middle of March. US...

Read More »

Risk-Off Mood Dominates

2023-04-25

by

2023-04-25

Overview:  Perhaps it was the extent of First Republic Bank's loss of deposits that were reported with earnings yesterday, but risk appetites dried up today. Asia Pacific equities were trounced outside Japan today. Hong Kong and mainland shares that trade there set the tone today falling 1.7%-1.9%. China's CSI 300 fell for the fifth consecutive session. Taiwan and South Korean markets fell more 1.4%-1.6%. Europe's Stoxx 600 is off almost 0.5%,...

Read More »

Equities Retreat while the Dollar is Confined to Narrow Ranges

2023-04-20

by

2023-04-20

Overview: Equities are mostly lower, while bonds have risen. The dollar is trading in narrow ranges and mixed against the G10 currencies and emerging markets. Most Asian bourses were lower. The Nikkei (though not the Topix) and Hong Kong were the chief exceptions. Europe's Stoxx 600 is off for the second consecutive day, in what looks like the first back-to-back loss since early this month. US equity futures are lower, with the NASDAQ, which eked...

Read More »