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Tag Archive: #USD

BOJ Steps-Up its Efforts, US 2-10 Curve steepens, and the Dollar Softens

2022-03-30

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2022-03-30

Overview:  A pullback in US yields yesterday and the Bank of Japan's stepped-up efforts to defend the Yield Curve Control policy helped extend the yen's recovery.  This spurred profit-taking on Japanese stocks, where the Nikkei had rallied around 11% over the past two weeks. 

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Calmer Markets: Hope Springs Eternal

2022-03-29

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2022-03-29

Overview:  Interest rates continue to rise, but equities are looking through it today and the dollar is drawing less succor.  Asia Pacific equities were mostly higher.  With half of Shanghai in lockdown, Chinese equities were unable to join the regional advance.  Europe's Stoxx 600, led by energy and consumer discretionary sectors, is rising for the third consecutive sessions. US futures have a small upward bias. 

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Yields Jump, Greenback Bid

2022-03-28

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2022-03-28

Overview: Yields are surging.  Canada and Australia's two-year yields have jumped 20 bp, with the US yield up 10 bp to 2.37% ahead of the $50 bln sale later today.  The US 10-year yield has risen a more modest three basis points to 2.50%, flattening the 2-10-year yields curve.  The 5–30-year curve has inverted for the first time since 2016. 

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Caution: Trends in the Foreign Exchange Market

2022-03-28

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2022-03-28

The recent themes in the foreign exchange market continued last week. On the one hand, the dollar-bloc currencies and Norwegian krona trended higher, while the euro, and especially the yen, traded heavier.

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Cautious Markets after China Disappoints

2022-03-21

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2022-03-21

Overview: Ukraine's Mariupol refuses to surrender as the war is turning more brutal according to reports.  Iran-backed rebels in Yemen struck half of a dozen sites in Saudi Arabia, driving oil prices higher.  China’s prime lending rates were unchanged.  The MSCI Asia Pacific Index, which rallied more than 4% last week, traded heavily today though China and Taiwan's markets managed to post small gains.  Tokyo was closed for the spring equinox.

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

2022-03-17

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2022-03-17

EUR/CHF and USD/CHF, March 17
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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China and Hong Kong Stocks Plummet, Yields Soar

2022-03-14

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2022-03-14

Overview: While the World Health Organization debates about downgrading Covid from a pandemic, the rise China and Hong Kong cases is striking.  A lockdown in Shenzhen and restrictions in Shanghai, coupled with a record fine by PBOC officials on Tencent drove local stocks sharply lower.  China's CSI 300 fell 3% and a measure of Chinese stocks that trade in HK plunged more than 7%. 

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Risk Assets Given a Reprieve

2022-03-09

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2022-03-09

Overview: US equities failed to sustain early gains yesterday, but risk appetites have returned today.  Asia Pacific equities had a poor start, with Chinese and Japanese indices losing ground, but the equity benchmarks in Taiwan, Australia, India, and most of the smaller markets traded higher.  Taiwan's 1.1% gain is notable as foreign investors continued to be heavy sellers. 

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Vladimir Nogoodnik Roils Markets

2022-03-07

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2022-03-07

Overview:  The economic disruption seen since the US warning of an imminent Russian attack on February 11 continue to ripple through the capital and commodity markets.  Equities are being slammed.  Most Asia Pacific bourses were off 2-3% today. Europe's Stoxx 600 gapped lower ad has approached February 2021 levels, orr about 2.6% today.  US futures are around 1.5% lower.

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Capital and Commodity Markets Strain

2022-03-04

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2022-03-04

Overview:  The capital and commodity markets are becoming less orderly.  The scramble for dollars is pressuring the cross-currency basis swaps.  Volatility is racing higher in bond and stock markets.  The industrial metals and other supplies, and foodstuffs that Russia and Ukraine are important providers have skyrocketed.  Large Asia Pacific equity markets, including Japan, Hong Kong, China, and Taiwan fell by 1%-2%, while South Korea, Australia,...

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European Currencies Continue to Bear the Brunt

2022-03-03

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2022-03-03

Overview: Russia's invasion of Ukraine and the global response is a game-changer, as Fed Chair Powell told Congress yesterday.  The UK-based research group NISER estimated that world output will be cut by 1% next year or $1 trillion, and global inflation will be boosted by three percentage points this year and two next. 

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The Dollar and Yen’s Safe Haven Appeal Slackens

2022-02-27

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2022-02-27

Russia's invasion of Ukraine overwhelmed other drivers of the foreign exchange market.  When everything was said and done last week, the odds of a 50 bp hike by the Federal Reserve in the middle of March was little changed slightly above 25%. The odds of a 50 bp hike by the Bank of England have been reduced from a little over 60% before the US government's warning that a Russian attack could happen at any time on February 10 to 36% on February 18. 

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Russia’s Military Action Shakes Markets

2022-02-24

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2022-02-24

Overview: News that the separatists were calling on Moscow for military assistance began the risk-off move, and Russia hitting targets across Ukraine has rippled across the capital markets.  Equites have been upended.  Most bourses in the Asia Pacific region were off 2%-3%, while the Stoxx 600 in Europe gapped lower and is off around 3.5% in late morning dealings. 

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FX Daily, January 26: Federal Reserve and Bank of Canada Meet as Risk Appetites Stabilize

2022-01-26

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2022-01-26

After a slow and mixed start in Asia, where Australia and India are on holiday, equity markets have turned higher.  Europe's Stoxx 600 is up around 1.9% near midday in Europe, which if sustained would be the biggest gain of the year.  US futures are snapping backing too, with the S&P 500 popping more than  1% and NASDAQ by 2%. 

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FX Daily, January 17: PBOC Eases, but the Yuan Firms

2022-01-17

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2022-01-17

EUR/CHF and USD/CHF, January 17
Overview: Russia is thought to be behind the cyber-attack on Ukraine at the end of last week, but a military attack over the weekend may be underpinning risk appetites today.  The dollar's pre-weekend gains are being pared slightly.  Led by the Canadian dollar and Norwegian krone, the greenback is lower against most major currencies, with the yen being the notable exception, which is off about 0.2%.

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Is the Dollar Due for a Bounce?

2022-01-16

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2022-01-16

The US dollar had one of its worst weeks in a few months.  Although there has been some talk about the historical pattern of weakness after the first Fed hike in a cycle, many participants were surprised.  The dollar struggled in the last couple of weeks of 2021, but this seemed to be explained by year-end position squaring amid light interest.

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How the Market Responds to US CPI may set the Near-Term Course

2022-01-12

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2022-01-12

Overview:  US stocks built on the recovery started on Monday and Powell's suggestion of letting the balance sheet shrink later this year eased some speculation of a fourth hike this year, which seemed to allow the Treasury market to stabilize. 

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The Chagrin of Beijing and the Problem of Time

2021-12-19

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2021-12-19

The central bank meeting cycle is over. Most of the important high-frequency data has been released until early January. The US debt ceiling has been lifted, avoiding an improbable default. A year ago, there was a sense of optimism, with a couple of vaccines being announced and monetary and fiscal stimulus boosting risk-appetites. Populism, which had been in the ascendancy after the Great Financial Crisis, seemed to be retreating in Europe and the...

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Bulls Shrug Off Bout of Profit-Taking, Leaving the Greenback Poised to Rally into Year-End

2021-12-19

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2021-12-19

(The regular analysis will resume after the New Year.  In the meantime, look for several occasional thematic posts over the next couple of weeks.  Here is to a healthy and happy New Year!).  The dollar recovered from the bout of profit-taking seen after the FOMC largely confirmed market expectations to post a weekly advance against all the major and most emerging market currencies.  The omicron variant continues to sweep across the world, and...

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The Week Winds Down with Equities under Pressure and the Dollar Mostly Firmer

2021-12-17

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2021-12-17

Overview: The combination of the volatility and a large number of central bank meetings have exhausted market participants, and the holiday phase appears to have begun. Equities are under pressure following the sell-off yesterday in the US. Japan, China, and Hong Kong suffered more than 1.2% losses, while Australia, South Korea, and Taiwan posted minor gains. It was the fifth loss in the past six sessions for the MSCI Asia Pacific Index. Europe's...

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