Summary: EU sovereign yields got a big boost yesterday from a higher than expected EU inflation print, but also on a couple of known hawks arguing for a reduction of stimulus. But the fact that EU yields have moved at all, especially relative to the moribund activity in US yields, has helped bring the euro some fundamental support. Still, some further wood to...
Summary: Fed Chair Powell delivered as dovish a speech as anyone could have expected at the Jackson Hole symposium on Friday, taking the US dollar lower with the outlining of his thorough conviction that the recent bout of high inflation will prove transitory. The reaction to the speech was sharp, if still quite modest as we now watch for any follow-on reaction...
Summary: Risk sentiment tried to stage a recovery yesterday, but the US dollar never really blinked, and the Japanese yen and Swiss franc are gunning for broad gains again as well, as FX appears to have become a driver of weak sentiment elsewhere now, and less of an observer. The latest currencies to join the risk-off pattern across FX include the Scandies and...
Summary: While the USD coils around near the top of the range, we have seen a significant acceleration in the JPY rally on the recent drop in global bond yields, while the New Zealand dollar has suffered a sudden retreat after its recent rally on a single Covid case triggering a nationwide lockdown and casting sudden doubt on the RBNZ decision at the meeting in...
Summary: The US dollar is on its back foot after a weaker than expected GDP number yesterday, while currencies have largely ignored a new stumble in risk sentiment since late yesterday. Later today we get the PCE inflation data, the preferred inflation measure of the US Fed and Fed speaker Bullard, with the US data calendar a busy one next week, together with an...
Summary: The market may be too complacent on the FOMC meeting tonight as Powell and company may be set to signal a desire to bring forward the tapering of QE purchases. This could very well catch a complacent market by surprise and boost the US dollar on a renewed bout of volatility. Elsewhere, the Chinese renminbi weakened past a key technical level versus the...
Summary: The US dollar has bobbed back higher from a slight weakening yesterday ahead of the event risk of the week for the US, the FOMC meeting tomorrow, however little anticipation the market has drummed up for the latest thoughts from Powell and company. Elsewhere, turbulent Chinese markets are the development most worth studying for knock-on effects, whether...
Summary: Yesterday saw a sharp recovery in risk sentiment in the US, with equities rebounding and treasuries retreating. But the backdrop elsewhere shows many other pieces do not fit with the notion that we are seeing a comprehensive improvement in sentiment. Establishing a more consistent picture in either direction will be critical tactically to determine the...
Summary: USDJPY swooned to a pivotal level yesterday without yes breaking as the JPY thrived on weak risk sentiment and tumbling commodities prices, together with a fresh plunge in safe-haven bond yields. Elsewhere EURUSD continues to tease in the 1.1765-1.1800 area with no resolution. The wave of risk-off yesterday has sent the usual suspects lower, with...
Summary: The RBNZ is the latest central bank to remove policy accommodation among G10 currencies, with the Bank of Canada having led the charge in April and likely set to taper purchases again at its meeting later today. Today we look at some hopefully uncorrelated trades for the coming months as the normalization theme potentially deepens, and even in one case...
Summary: The US June CPI report came in far hotter than expected at both the core and headline, setting a new high bar for the cycle. While some will point to the especially large contribution from the used cars and trucks category to the higher than expected reading, a number of other categories have shown strong rises in recent months and the Fed is at risk of...
Summary: The USD has firmed to new local highs against several currencies without much help from coincident indicators and despite an indifferent ADP payrolls report yesterday. One reason for fresh USD strength could be the latest burst of USD liquidity suggesting that the Fed will have no choice but to signal a tapering sooner rather than later. US ISM...
Summary: We are finally getting a follow up dose of USD strength after the currency spent all of last week consolidating back to the weak side in the wake of the sharp surge from the FOMC meeting of the prior week. The ability of the US dollar to even hold up reasonably well is interesting, given that the market continues to express solid conviction in the...
Summary: The market has made a significant adjustment in the wake of the FOMC meeting last week, but the action at the start of this week suggests that any follow-on move from here could be fitful, as we have a long few months to watch data develop and as the Fed could push back against over-interpretation of what happened last week. Elsewhere, the Swedish krona...
Summary: The move in Fed rate expectations in the wake of the FOMC meeting has largely stuck and continues to support the US dollar, while the interesting new twist is a sudden surge in the Japanese yen, one that has little to do with Bank of Japan meeting overnight and probably far more to do with long US yields coming down sharply despite the focus on the...
Summary: Friday brought a sharp reversal of the US dollar strength from Thursday as the US May payrolls data was seen as likely to lower the odds that the Fed will deviate from its current patient stance on trying to see through strong labour market and inflation data in the near term. The last biggest test on that front will the US May CPI release on Thursday....
Summary: Yesterday, the US dollar perked up far more sharply than did Fed rate expectations on the release of strong US data, perhaps as the market wanted a look at the official May jobs report today before reacting. With Nonfarm payrolls growing a bit more slowly than expected, the USD is reversing back lower on reduced odds that the Fed will need to shift its...
Summary: The US dollar is firming again, but moves have been so hesitant and lacking in staying power in both directions recently. Making it clear that USD traders are plagued with uncertainty here and want to wait as long as possible, perhaps for a firmer message from the Fed on its next steps, before committing risk to any traders. Elsewhere, TRY plumbed new...
