Tag Archive: Riksbank

The Greenback Consolidates while Sustaining Break against the Yen

Overview: The dollar is sporting a softer profile today against all the G10 currencies but the Swedish krona. The Riksbank sounded more dovish than previously, signaling the possibility of a cut in each of the last three meetings of the year. The dollar has sustained its push above JPY160 against the Japanese yen. Most emerging market currencies are also firmer, with the notable exception of Türkiye and South Africa. Türkiye is expected to keep its...

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Self-Inflicted Wounds in Europe and Japan Help the Greenback Shrug Off the Drag of Lower Rates

Overview: The dollar is bid. What makes its performance standout is that it is taking place as US rates have fallen. The US 10-year yield is near 4.20%, the lowest in more than two months. The two-year yield is near 4.67%. It has fallen every session this week for a cumulative decline of more than 20 bp. It is not so much that constructive developments took week, but that Europe and Japan are suffering from self-inflicted injury. Macron's call for...

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Riksbank Cuts, Oil Slips, and the Yen Remains Under Pressure

(On business trip over next few days. Commentary to resume Monday.  Thanks for your patience.) Overview: Sweden's Riksbank became the second G10 central bank to cut rates this year. The Swiss National Bank cut its deposit rate in March. A couple other large central banks, including the European Central Bank, and possibly the Bank of Canada, may cut rates next month. The Swedish krona is the weakest of the G10 currencies today, off by about 0.45%,...

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Market Pushes the Yen Lower, Helped by a Broadly Firmer Greenback

Overview: The dollar is firmer against all the G10 currencies today. The market is somewhat less fearful of intervention and the yen is extending yesterday's losses. It is rivaling the Australian dollar for the weakest of the major currencies after the Reserve Bank of Australia left rates on hold and played down speculation of possibility of a rate hike. Both currencies are off around 0.4% in late European morning turnover. Disappointing German...

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Yen Slips, Yuan Jumps, Dollar is Mostly Softer

Overview: The dollar is mostly a little softer today in thin market conditions, with Tokyo, Seoul, and London closed for holidays. The Japanese yen is the weakest G10 currency, losing about 0.5% and slipping through last Friday's lows. At first, after Fed Chair Powell did not endorse rate hike speculation, the market thought he was dovish. But after the softer than expected jobs data and weakness in the ISM services, the market shifted from...

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Corrective Forces Help the Dollar Stabilize

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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Higher for Longer Lifts the Dollar, while SNB Surprises Many by Standing Pat–Over to the BOE

Overview: The Federal Reserve's hawkish hold, which included 50 bp less of cuts next year than it had signaled in June, has lifted the dollar against most currencies today. The notable exception is the Japanese yen. The greenback did extend its advance to new highs for the year before the market turned cautious ahead of the outcome of the Bank of Japan meeting tomorrow. The Swiss franc is the weakest of the G10 currencies after the Swiss National...

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Week Ahead: Thumbnail Sketch of Central Bank Meetings

The week ahead is dominated by central bank meetings. Six of the G10 central banks meets. The post-Covid monetary tightening cycle is ending. The start was not synchronized, and neither will be end. It is tempting to think that those that began the tightening cycle early will among the first to finish. Among emerging markets that is true for Brazil and Chile, both of whom have begun cutting rates. And Brazil is likely to deliver the second cut in...

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PBOC Sends Signal in Lower Dollar Fix, while the Canadian Dollar makes a 9-Month High

Overview: Hawkish comments by ECB President Lagarde at the central bank symposium in Sintra and the PBOC's weaker dollar fix have weighed on the greenback today. It is lower against most of the G10 currencies, but the Japanese yen and Norwegian krone. It also slipped to a new nine-month low against the Canadian dollar. Emerging market currencies are also mostly firmer, with the notable exceptions of the Russian rouble and beleaguered Turkish lira....

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The Greenback Firms to Start the New Week, Stocks Slide

Overview:  The busy week is off to a slow start as Japan is on holiday and the UK and Canadian markets are closed to honor Queen (Australia will commemorate with a holiday on Thursday). Nevertheless, the sell-off in equities continues and the US dollar is firm. Most of the large markets in Asia fell. India is a notable exception. Its benchmark rose for the first time in four sessions, helped by bank shares and Infosys. Europe’s Stoxx 600 is off for...

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Stocks Hit as Central Banks Brandish Anti-Inflation Efforts

Overview: Central banks are committed to combatting inflation even as the economies weaken. This is taking a toll on investor sentiment and is dragging down equities.

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FX Daily, March 17: Investors are Skeptical that the Fed can Achieve a Soft-Landing. Can the BOE do Better?

Overview:  The markets continue to digest the implications of yesterday's Fed move and Beijing's signals of more economic supportive efforts as the Bank of England's move awaited.  The US 5–10-year curve is straddling inversion and the 2-10 curve has flattened as the Fed moves from one horn of the dilemma (behind the inflation curve) to the other horn (recession fears).  Asia Pacific equities extended yesterday's surge.  The Hang Seng led the...

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Flash PMIs Play Second Fiddle to US PCE Deflator and Accelerating Inflation

The flash November PMIs would be the main focus in the week ahead if it were more normal times.  But these are not normal times, and growth prospects are not the key driver of the investment climate.  This quarters' growth is largely baked into the cake.  The world's three largest economies, the US, China, and Japan, are likely to accelerate for different reasons in Q4 from Q3.  Europe is the weak sibling, and growth in the eurozone and UK may slow...

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Ever Grand

Overview: Coming into yesterday's session, the S&P 500 had fallen in eight of the past ten sessions.  It closed on its lows before the weekend and gapped.  Nearly the stories in the press blamed China and the likely failure of one of its largest property developers, Evergrande. 

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FX Daily, April 27: Markets Mark Time Ahead of Fed

Short-covering ahead of the FOMC's outcome tomorrow appears to be lending the US dollar support today. It has extended yesterday's gains against the euro, sterling, and yen.  Among emerging market currencies, the Turkish lira, along with the South Korean won and Taiwanese dollar, lead the few advancers.

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FX Daily, February 10: China’s Expansion Does not Prevent Deflation

Despite a soft close in US indices yesterday, global shares are on the march again today.  Led by China and Hong Kong, most large markets in the Asia Pacific region advanced today.  Officials gave approval for a new game from Tencent, which helped lift the Hang Seng.

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FX Daily, April 28: Oil’s Slides before Steadying, while Easing of Lockdowns Support Risk-Taking

Overview: Equities are building on yesterday's gains.  The MSCI Asia Pacific Index rose 2% yesterday and edged higher today. Shanghai and Austalia stand out as exceptions.   In Europe, the Dow Jones Stoxx 600 is extending yesterday's 1.8% gain to reach its best level since March 11. Today would be the fourth advance in the past five sessions. US shares are firmer.

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FX Daily, February 12: The Greenback Slips in Subdued Activity

Investors appear to be increasingly looking past the latest coronavirus from China as new afflictions slow. Despite the soggy close of US equities yesterday, Asia Pacific bourses are nearly all higher, led by more than 1% gains in Singapore and Thailand. The Dow Jones Stoxx 600 is at new record highs, led by consumer discretionary and materials sectors.

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FX Daily, December 19: Whiff of Inflation in the Air

It is risky to read too much into the price action in holiday-thin markets, but inflation fears are beginning to surface. The price of January WTI is around $61, having tested $50 a barrel in Q3. The CRB Index made new highs for the year yesterday and is up almost 9% for the year. The US yield curve (2-10 year) has been steepening after being inverted for a few days in August, and now at nearly 29 bp, also is new highs for the year.

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