Tag Archive: U.K.

Divergence Highlighted by Back-to-Back Quarterly Contractions in Japan and the UK but Little FX Reaction

2024-02-15

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2024-02-15

Overview: There has been a string of disappointing economic news today. Japan's economy surprisingly contracted in Q4 23 and the Q3 contraction was a little deeper than initially estimates. Australia's jobs growth was weaker than expected and unemployment rose to 4.1%, matching the highest since November 2021.

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Japanese Officials Weigh-In and Help Yen Stabilize, while Euro and Sterling Extend Losses

2024-02-14

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2024-02-14

Overview: The market's reaction to the firmer than expected January CPI seems exaggerated. We do not think it was the game-changer for the Federal Reserve that the market seemed to think. The dollar was driven higher, and it is stabilizing today, though the euro and sterling extended their losses, most of the other G10 currencies did not. After the yen's six-week slide did not elicit a response from Japanese officials, yesterday's drop did, and...

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Sterling Buoyed by Labor Market Report Ahead of US CPI

2024-02-13

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2024-02-13

Overview: The US dollar is enjoying a mostly firmer bias ahead of today's CPI report. Sterling is the strongest among the G10 currencies after a more resilient than expected labor market report. The dollar extended its gains against the Japanese yen to a new high since last November, but the market seems cautious as it approaches JPY150, where large options expire today. On the other hand, emerging market currencies are mostly faring better. The...

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The US Dollar and Rates Rise Further

2024-02-05

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2024-02-05

Overview: The US dollar and interest rates have continued to rise after the strong employment report before the weekend helped drive home the Fed's message at last week's FOMC meeting. The greenback has been bid to new highs for the year against the G10 currencies but the Canadian dollar. The dollar also rose to a marginal new high for the year against the Chinese yuan. Interest rates are jumping, and the market has downgraded the chances of a May...

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The Euro and Australian Dollar Take Out January Lows to Start the New Month

2024-02-01

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2024-02-01

Overview:  Federal Reserve Chair push against speculation of a March rate cut as explicitly as could be imagined at yesterday's press conference lifted the dollar, while weighing on stocks. US regional banks sold off sharply yesterday, and challenges emanating from US real estate adversely impacted a Japan's Aozora Bank and Deutsche Bank quadrupled its loss provisions for such exposure. The greenback remains bid. The euro and Australian dollar have...

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Oil Retraces Initial Surge, Euro Slips to Marginal New Low, while Sterling Hugs $1.27

2024-01-29

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2024-01-29

Overview: Key developments today include the Hong Kong court ordered liquidation of China's Evergrande and the reversal of oil prices after a sharp rally initially in Asia after separate attack in the Middle East that killed US troops in Jordan and struck a Russian oil tank in the Red Sea. March WTI, which settled near $78 ahead of the weekend, its best level since the end of last November, rallied to about $79.30 before returning to almost $77.50...

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PBOC Cuts Reserve Requirements, but USD Pullback may offer New Buying Opportunity in North America

2024-01-24

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2024-01-24

Overview: After a strong showing yesterday, the dollar was sold in Asia and Europe. China announced a cut in reserve requirements and took more informal action to support the stock market, which encouraged risk-taking. Yet, the dollar's decline has stretched intraday momentum indicators, which may provide early operators in North America a new dollar buying opportunity. The ECB and Norway's central banks meet tomorrow, and the US reports its first...

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BOJ Stands Pat, Exit Draws Closer, while HK Liquidity is Squeezed Easing Pressure on the Yuan

2024-01-23

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2024-01-23

Overview:  The dollar remains largely confined to its recent ranges as the consolidative phase extends. The Bank of Japan stood pat and revised its forecasts as it is seen drawing closer another adjustment in policy, with the market still favoring an April timeframe. A squeeze in the Hong Kong money market and talk of a large package to support the equity market helped lift the Chinese yuan for the third consecutive session and lifted Chinese...

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Quiet End to a Busy Week

2024-01-19

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2024-01-19

Overview: The dollar's surge in the first part of the week has given way to consolidation. The US dollar is sporting a softer profile against most of the G10 currencies. The Dollar Index is threatening to snap a three advance. Sterling is a notable exception following the weakest retail sales report since 2021. Most emerging market currencies, including China, Taiwan, and Mexico are slightly firmer. US President Biden is expected to sign a bill...

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Stronger-than-Expected UK CPI Helps Steady Sterling after Dollar Rally Extended

2024-01-17

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2024-01-17

Overview: The sharp dollar advance is stabilizing after follow-through gains earlier today. A larger than expected rise in the UK's December CPI helped sterling recover from the push below $1.26, the lower end of a one-month trading range. It is the only G10 currency that is firmer against the dollar ahead of the North American session. ECB's Lagarde pushed back against the early rate cut speculation and this may have stemmed the euro's losses. The...

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Greenback Surges as Rates Back Up

2024-01-16

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2024-01-16

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

2024-01-12

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2024-01-12

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

2024-01-04

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2024-01-04

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

2024-01-02

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2024-01-02

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

2023-12-12

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2023-12-12

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

2023-12-05

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2023-12-05

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?

2023-12-01

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2023-12-01

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

2023-11-27

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2023-11-27

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

2023-11-21

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2023-11-21

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

2023-11-17

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2023-11-17

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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