Tag Archive: RBA

RBA Holds Fire, Sterling Reaches Best Level since last June, and the Dollar Struggles to Find Much Traction

2023-04-04

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2023-04-04

Overview: The jump in oil prices is the newest shock and the May WTI contract is holding above $80 a barrel as it consolidates yesterday's surge. A week ago, it settled near $73.20. Australian and New Zealand bond yields moved lower, partly in catch-up and partly after the RBA stood pat. South Korean bonds also rallied on the back of softer inflation (4.2% vs. 4.8%). But European and US benchmark yields is 2-4 bp higher. The large equity markets...

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OPEC+ Surprises while Manufacturing Remains Challenged

2023-04-03

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2023-04-03

Overview: News of OPEC+ unexpected output cuts saw May WTI gap sharply higher and helped lift bond yields. May WTI settled near three-week highs before the weekend near $75.65 and opened today near $80. It reached almost $81.70 before stabilizing and is straddling the $80 area before the North American session. The high for the year was set in the second half of January around $83. Benchmark 10-year yields are up 2-5 bp points. The 10-year US...

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Powell Sends the Two-Year Yield above 5% and Ignites Powerful Dollar Rally

2023-03-08

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2023-03-08

Overview:  Federal Reserve Chair Powell's comments to the Senate Banking Committee were seen as hawkish by the market, even though it has been clear to most observers that the 5.10% median terminal rate that the Fed projected in December would be increased. Also, it seemed well appreciated a few Fed officials support a 50 bp hike at the February 1 FOMC meeting, two days before a "hot" jobs report that showed over 500k jobs were filled. It...

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US Dollar is Better Bid Ahead of Powell, while Aussie Sells Off on Dovish Hike by the RBA

2023-03-07

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2023-03-07

Overview: The US dollar is trading with a firmer bias against nearly all the G10 currencies ahead of Federal Reserve Chairman Powell's semi-annual testimony before Congress. Speaking for the Federal Reserve, the Chair is likely to stay on message which is higher rates are necessary to cool the overheating economy. This comes on the heels of the Reserve Bank of Australia's 25 bp hike and indication that it is not pre-committing to an April hike. The...

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Yields Pull Back to Start the New Week

2023-03-06

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2023-03-06

Overview: The modest economic goals announced as China's National People's Congress starts was seen as a cautionary sign after growth disappointed last year. It seemed to weigh on Chinese stocks, though others large bourses in the region advanced, led by Japan's Nikkei and South Korea with gains of more than 1%. Europe's Stoxx 600 is little changed after rising for the past two sessions. US index futures are slightly softer. Strong gains were seen...

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No Turn Around, but Consolidation Featured

2023-02-07

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2023-02-07

Overview:  After large moves yesterday, the capital markets ae quieter today. Stocks are mostly firmer, and the 10-year US yield is a little softer near 3.62%. Strong nominal wage increases in Japan and a hawkish hike by the Reserve Bank of Australia helped their respectively currencies recover, though remain within yesterday's ranges. The euro briefly traded below $1.07, and sterling has been sold through $1.20. That said, a consolidative tone is...

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Week Ahead: RBA and BOC Meetings Featured and China’s Inflation and Trade

2022-12-03

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2022-12-03

The week ahead is more than an interlude before five G10 central banks meet on December 14-15. The data highlights include the US ISM services and producer prices, Chinese trade and inflation measures, Japanese wages, household consumption, and the current account. Also, the Reserve Bank of Australia and the Bank of Canada hold policy meetings. Central banks from India, Poland, Brazil, Peru, and Chile also meet.The dollar appreciated in Q1 and Q2...

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US Dollar Offered Ahead of the Employment Report

2022-11-04

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2022-11-04

Overview: Risk appetites have returned but may be tested by the US jobs report. News of progress with US auditors in China helped lift Hong Kong and Chinese equities. Most of the large bourses in the region also rose. Europe’s Stoxx 600 is up a little more than 1% near midday after shedding 1.3% over the past two sessions. US futures also are trading with an upside bias. Benchmark 10-year yields are mostly a little softer today. The 10-year US...

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RBA Hikes by 25 bp, Chinese Stocks Surge, and the Greenback Trades Heavier

2022-11-01

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2022-11-01

Overview: Risk appetites have returned today. Bonds and stocks are advancing, while the dollar is better offered. Unsourced claims that Beijing has formed a committee to assess how to exit the zero-Covid policy sent Chinese shares sharply higher. An index of mainland companies list in Hong Kong jumped nearly 7% and closed up almost 5.5%. The Hang Seng surged 5.2%, while all the large markets in the region advanced. Europe’s Stoxx 600 recovered...

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RBA, FOMC, BOE Meetings Featured while the Greenback’s Recovery can be Extended

2022-10-29

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2022-10-29

The week ahead is important from a macro perspective. The data highlights include China's PMI, eurozone preliminary October CPI and Q3 GDP, and the US (and Canadian) employment reports. In addition, the Federal Reserve meeting on November 2 is sandwiched between the Reserve Bank of Australia meeting and the Bank of England meeting.

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Dollar Slump Stalls Ahead of ECB Meeting

2022-10-27

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2022-10-27

The dollar’s recent losses have left it stretched on a near-term basis after today’s ECB meeting, the focus will shift to the Federal Reserve, next week’s meeting, and the employment report. The greenback is trading with a firmer bias against the G10 currencies, while the emerging market currencies are more mixed.

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Stocks and Bonds Extend Rally

2022-10-04

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2022-10-04

The big bond and stock market seen yesterday has continued today. The Reserve Bank of Australia’s reversion to a quarter-point hike stokes hope that the aggressive tightening cycle more broadly is set to slow.

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Week Ahead: Macro and Prices

2022-10-01

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2022-10-01

The market has much to digest. The Bank of England's new purchases of Gilts coincided with a reassessment of the trajectory of Fed policy. After the hawkish FOMC decision and forecasts, the market briefly thought the terminal rate could be 5.25-5.50% in the middle of next year. However, by the end of last week, it had returned to around 4.5% at the end of Q1 23.

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Aussie Sells Off After RBA Hikes 50 bp while Sterling Bounces on UK New Initiative

2022-09-06

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2022-09-06

Overview: A GBP130 bln initiative by the new UK government to protect households from the surge in power costs helped lift sterling from 2.5-year lows. The Reserve Bank of Australia delivered the expected 50 bp rate hike, but the prospect of smaller moves going forward saw the Australian dollar sold through yesterday’s lows.

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What Happened Monday

2022-09-05

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2022-09-05

The US and Canada may have been on holiday on September 5, but the world waits for no one and there were several significant developments. First, Gazprom's decision to indefinitely suspend gas shipments through the Nord Stream 1 pipeline announced before the weekend saw the European natgas benchmark soar 23.7.

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RBA, BOC, and ECB Meetings and more in the Week Ahead

2022-09-03

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2022-09-03

All three major central banks that meet in the coming days will hike rates. The question is by how much. The Reserve Bank of Australia makes its announcement early Tuesday, September 6. One of the challenges for policymakers and investors is that Australia reports inflation quarterly. The Q2 estimate was released on July 27. It showed prices accelerating to 6.1% year-over-year from 5.1% in Q1. The trimmed mean rose to 4.9% from 3.7%, and the...

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Greenback Remains Firm

2022-08-16

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2022-08-16

Overview: After retreating most of last week, the US dollar has extended yesterday’s gains today. The Canadian dollar is the most resilient, while the New Zealand dollar is leading the decline with a nearly 0.75% drop ahead of the central bank decision first thing tomorrow. The RBNZ is expected to deliver its fourth consecutive 50 bp hike. Most emerging market currencies are lower as well, led by central Europe. Equities in Asia Pacific and Europe...

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Aussie Hit with Profit-Taking after RBA Hikes 50 bp

2022-08-02

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2022-08-02

Speaker Pelosi's visit to Taiwan has added to the risk-off mood of the capital markets today. Most of the large Asia Pacific equities sold off, with Australia and India being notable exceptions. Europe's Stoxx 600 is off for the second consecutive session, and by the most (~0.60%) since mid-July. US futures are also weaker. Benchmark 10-year rates are lower.

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Yen Squeeze Continues

2022-08-01

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2022-08-01

The US dollar begins the new month better offered. It is softer against all the major currencies. Short yen positions continue to get unwound, which is leading the move, followed  by the Antipodeans, where the Reserve Bank of Australia is expected to hike rates tomorrow.

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Macro and Prices

2022-07-31

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2022-07-31

Next week, there are three big events:  the US jobs report, the Reserve Bank of Australia meeting, and the Bank of England's meeting. That said, the final PMI readings may be more helpful this time than we often see because of how quickly it appears activity has stalled.

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