Tag Archive: U.K.
Greenback Surges as Rates Back Up
Overview: The US dollar is bid across the board and posting its best session of the month. It is up between about 0.5% (Canadian dollar) to almost 1.0% (Australian dollar) among the G10 currencies. Among the emerging market currencies, only the Russian ruble is holding its own.
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China Data Dump Keeps Market Looking for a Rate Cut Next Week
Overview: The mostly consolidative week for the US dollar
continues. Most for the G10 currencies are +/- about 0.25% today and only a
slightly wider range for the week. The odds of a Fed rate cut in March is
virtually unchanged on the week at around 75%. The JP Morgan Emerging Market
Currency Index is practically flat on the day and week. The Russian ruble and
Mexican peso lead today's advancers, while eastern and central European
currencies are...
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Consolidative Tone Emerges Ahead of Tomorrow’s US Jobs and EMU CPI
Overview: After gaining for the past couple of
sessions to open the New Year, the dollar is mostly softer today. The yen is
the main exception. The greenback was bid above the JPY144 area where
chunky options expire today. Most emerging market currencies are also firmer
though there are a few exceptions in Asia, like the South Korean won and Thai
baht. Still, the general tone is consolidative ahead of tomorrow US jobs data
and the eurozone's CPI....
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Firm Start for the Greenback
Overview: The US dollar begins the new year on a
firm note. It is recovering against nearly all the G10 and emerging market
currencies today after depreciating in the holiday-thin markets over the past
couple of weeks. Japanese markets are on holiday until Thursday. The yen and
Swiss franc are the poorest performers among the G10 currencies. Among emerging
market currencies, the Mexican peso, Hungarian forint, and South African rand
are bucking the...
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Soft US CPI Today Paves Way for Fed Pivot Tomorrow
Overview: The US dollar is trading softer against all the
G10 currencies ahead of what is expected to be a soft November CPI report,
which paves the way for a pivot by the FOMC tomorrow. It is expected to signal
that policy may be sufficiently restrictive and anticipate being able to cut
rates next year more than it thought in September, even if not as much as is
priced into the market. Among emerging market currencies, central European
currencies...
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Softer Tokyo CPI Buys BOJ Time while Moody’s Cuts the Outlook for China’s Debt following Fiscal Stimulus and the Continued Property Slump
Overview: Outside of the Australian dollar, which
has fallen by around 0.6% following the RBA meeting and the softer final PMI,
which may have dragged the New Zealand dollar a lower by around 0.25%, the
other G10 currencies trading little changed ahead of the start of the North
American session. The eurozone and UK final PMIs were revised higher. Central
European currencies lead the emerging market currencies. China reported better
than expected...
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What Will Powell Say?
Overview: The dollar traded better into month-end but is softer
today. The Scandis and dollar-bloc currencies are leading with around 0.2%-0.5%
gains. In addition to US manufacturing PMI and ISM surveys, and construction
spending, auto sales will trickle in, but key for market participants today
will likely be Fed Chair Powell's comments and the extent that he pushes
against the dramatic rate cuts, with more than a 50% chance of the first cut by...
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Dollar Starts Softer
Overview: The dollar is beginning the week on
a soft note, despite the modest backing up of yields over the last couple of
sessions and better than expected data, including Black Friday sales and the
preliminary November PMI. It is sporting minor losses against all the G10
currencies, but the Canadian dollar, which is the weakest of the major
currencies this quarter and month. The greenback is also lower against most
emerging market currencies, but...
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Yen and Yuan Extend Surge
Overview: The dollar remains offered and our ideas
about it stalling as central banks push against the timing and extent of the
easing the market is anticipating are being challenged. The Governor of the
Reserve Bank of Australia and the Bank of England both warned higher rates may
still be needed. Still, the momentum may be slowing. Meanwhile, the short squeeze continues to lift the Japanese
yen, which is trading at its best level in two months....
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Yen Leads Charge Against the Dollar Amid Falling Rates
Overview: The Japanese yen is leading the
charge against the dollar today. Short covering in the Japanese bond market,
the decline in US rates, and some reports of real money saw the dollar tumble
to around JPY149.25 to approach the low for the month near JPY149.20. All the G10
currencies are firmer today, as are all but a few emerging market currencies. The
Dollar Index finished October near 106.55 and it has been finding support near
104.00 in...
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The Pendulum of Fed Expectations Swings Too Hard
Overview: The capital markets' reaction to softer
than expected CPI was too much. The implied yield of the December 2024 Fed
funds futures fell by 25 bp as if the October's CPI was worth a full
quarter-point rate cut next year. US two- and 1-year yields are around two
basis points higher today and the dollar is mixed, with the euro and sterling
under the most pressure. China's data were uninspiring, and more stimulus is in
the pipeline. Japan's Q3...
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US CPI Front and Center, but Can Congress Avert a Government Shutdown?
Overview: The dollar is somewhat better offered
today ahead of the October CPI report. The US House of Representatives may hold
a vote today on a continuing resolution to avoid a partial government shutdown
at the end of the week. Narrow ranges have prevailed. Most emerging market currencies
are firmer, though paradoxically, the South Korean won is the weakest, despite
a strong equity market rally (~1.2%), encouraged by the first in increase in...
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Who Changed: Powell or the Market?
Overview: A poor reception to the 30-year
Treasury sale and Federal Reserve Powell pledged to raise rates again, if
necessary, not exactly a new ground, but it spooked the doves--driving rates sharply higher and fueling a strong
dollar recovery. There was a large five basis point tail on the bond sale. The
eight-day rally in the S&P 500 and nine-day advance in the NASDAQ was
snapped like dry kindling. The S&P 500 comes into today down on...
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The Dollar’s Recovery has been Extended, but it may Give North American Operators a Better Selling Opportunity
Overview: The dollar's sell-off last week was
extreme and it recovered yesterday and through the European session today. The
Australian dollar has been hit the hardest. It is off more than 1% today after
the RBA lifted the cash rate by 25 bp (to 4.35%). Still, the US dollar's gains
have stretched intraday momentum indicators, suggesting the upside correction
may be nearly over. The greenback's moves appear to have been driven by
interest rate...
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The Dollar Remains Mostly Softer but Near-Term Consolidation is Likely
Overview: The US dollar, which was sold last week
after the FOMC and soft employment report, remains on the defensive today. The
Antipodean currencies and yen are struggling, but the other G10 currencies are
firm. The dollar is also lower against most emerging market currencies. Still,
given the magnitude of the dollar's pullback, we suspect some consolidation is
likely.Asia Pacific equities rallied,
helped by the sharp gains in the US before the...
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Barring Upside Surprise on US Jobs, the Greenback Looks Vulnerable
Overview: The US dollar has been confined to narrow
ranges today as the market awaits the October employment report. Barring a
significant upside surprise, we suspect the dollar is more likely extend this
week's losses. The Dollar Index is off about 0.5% this week. Within the narrow
ranges, it is sporting a slightly softer profile again nearly all the G10
currencies. It is also lower against most emerging market currencies, but tight
ranges...
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Japanese Fireworks Continue as the Market Turns to the FOMC
Overview: The FOMC meeting is today's highlight but
the drama in Japan continues to rivet the market. The Ministry of Finance
warned of the risk of material intervention in the foreign exchange market, and
the BOJ bought bonds in an unscheduled operation a day after its downgraded the
1.0% cap to a reference rate, whatever that means. The yen is trading with a
slightly firmer bias. The Swiss franc is also trading a little firmer, but the
other G10...
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Poor Flash PMI from Japan and Eurozone
Overview: Bonds
and stocks are higher today, and the dollar is mixed. A weak PMI reading seemed
to weigh on the euro, but the market shrugged the weak Australian PMI off and
the Australian dollar is the G10 currencies while the euro is among the weakest.
Yesterday, the North American session showed an appetite for foreign currencies
and with some of their intraday momentum stretched to the downside, the stage
is set for a possible repeat today. The...
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The Dollar Continues to Press Against JPY150; Risk Off Ahead of the Weekend
Overview: True to the market's penchant, it heard a
dovish Fed Chair Powell yesterday. He seemed to suggest that the bar to another
hike was high. This helped cap the 10-year yield just in front of 5.00% and
allowed foreign currencies to recover against the dollar. The US two-year yield
reversed lower after rising above 5.25%. It is now around 5.15%. Still, Powell
appeared to cover similar ground as several other officials, including Fed
governors...
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Greenback Remains Bid and the Market has not Given Up on JPY150
Overview: The greenback did not strengthen yesterday
in Asian and European turnover despite the deteriorating conditions in the
Middle East, but it did rally as North American participants entered the fray. Indeed,
the Dollar Index rose from a marginal new four-day low to a marginally new
four-day high. The safe haven bid seen in gold and oil, was reflected in the
foreign exchange market by the strength of the Swiss franc, the only G10
currency to...
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