Summary: Risk sentiment staged a resounding comeback yesterday, and yet the US dollar was firm on the day, even breaking higher in places, an odd combination of developments that it tough to build a narrative around. Regardless, the US dollar is tilting to the strong side until proven otherwise. Elsewhere, the RBA did all it could overnight to provide headwinds...
Summary: Markets are trying to stabilize again after a traumatic couple of days, and USD bears are trying to get back on track as the week winds down into the close today. We note a hot inflation reading from the US PCE inflation data series today after the hot reading out of Germany yesterday and from elsewhere earlier this week. US yields are back sharply...
Summary: With the short-squeeze mayhem in Wall Street apparently now helping drive an across the board deleveraging, it is no surprise to see the USD rising sharply, but the JPY sitting out the volatility is another story, especially as long safe haven yields have dropped. Is the USD the only safe haven currency in town? But the key question right now is whether...
Summary: The market is not expecting much from the FOMC meeting later today, nor perhaps should it, given that the Fed needs to have a look at how the economy is shaping up once a significant percentage of the US population has received Covid vaccines, which seem to be in short supply for now. Another issue looms for the Fed in that its purchases are possibly too...
Summary: Summary: FX moves were muted yesterday relative to the histrionics in US equities, but the sense of caution was palpable, with the US dollar and Japanese yen rising as volatility spiked and US treasury yields diving sharply in what looks like a bout of safe haven seeking. A PBOC check of liquidity overnight and concerns that the US stimulus package may...
Summary: Movements in FX are moving sharply against recent trends as the commodity dollars are suddenly on their backfoot, while a less dovish than expected ECB is seeing the euro firming across the board, with the USD likewise firming against risk-correlated FX, especially in EM. The SaxoStrats team is urging near term caution on risk exposure, and this goes for...
Summary: The US dollar was broadly lower as risk appetite surged on Inauguration Day for US President Joe Biden, but the narrative fails to fit with the action seen across markets, even if a single odd day should not . Biden set to work immediately unwinding a raft of Trump move. Elsewhere, Bank of Canada optimism sent USDCAD to a new cycle low.
FX Trading...
Summary: The US dollar continues to consolidate to the strong side as the Biden presidency approaches, one that was meant to weaken the US dollar further, given the slim Democratic control of Congress, but with the market constantly trying to operate on far future expectations, it may simply have gotten ahead of itself. Soon, however, this consolidation will...
Summary: The USD rally was capped and reversed yesterday as US yields retreated sharply from new highs, Fed officials weighed in against any tapering urgency, and risk sentiment stabilized. This sets up the USD high from early Monday as the key line in the sand, or tactical pivot for USD bears as we await more Fed guidance after a confusing couple of weeks, as...
Summary: The consolidation in the US dollar bear trend continues as global markets start the week on wobbly footing on some of the usual suspects returning and grabbing the spotlight, from Covid-19 concerns looking more global again, to longer term concerns on the US-China relationship and maybe even on the implications of Trump finding himself locked out of his...
Summary: Markets largely shrugged off the mob of Trump supporters descending on Capitol Hill, but the prospect of a Democrat-majority Congress voting for new large stimulus checks shortly after the inauguration of Biden saw US yields spiking higher through key levels, and acted as a sudden headwind for USD bears, a development that could continue if the yield...
Summary: The two Senate run-off races in Georgia are set to go to the Democrats, giving the incoming Biden administration control of the US Congress by the slimmest of margins. This has strongly rejuvenated the reflationary trade, driven by a weaker US dollar. Most importantly, US long yields have broken resistance, which eventually could become a hurdle for USD...
Summary: The market tried to set-off the reflationary fireworks as the first session of 2021 got underway, but while big moves up in some commodities and in particular crypto assets opened the year with a bang, the only move that is sticking well as the market rolls into North American hours is the move in the Chinese currency higher after weeks of quiet at the...
Summary: The market narrative is overwhelmingly positive for a reflationary rebound and for a weaker US dollar in 2021, an outlook we are largely sympathetic to, but plenty can still go wrong, and the speculative fervor of the momentum is the most clear and present danger for a correction sooner rather than later. Elsewhere, the Brexit deal was the dampest of...
Summary: The sudden meltdown in risk sentiment yesterday, followed by an impressive reversal that wiped away much of the damage, is not a sign of a healthy market, at least tactically. Markets could remain a bit edgy after this episode and at least into early January, especially around the two run-off elections in the US state of Georgia that could yet grant more...
Summary: The market is starting off this holiday week in a very different place from where it closed last week, as Covid mutation fears and an isolated UK are pounding sterling, while the US dollar has suddenly gone vertical, with no compelling narrative to latch onto other than thin trading and perhaps a sudden hangover from global speculative energy that had...
Summary: The FOMC meeting last night failed to produce any indication of new easing measures from the Fed, an initial disappointment, but one that was quickly wiped away as Powell and company entirely failed to indicate any concern with recent market developments. Elsewhere, GBPUSD is breaking above major resistance on fresh hopes of a last second Brexit deal...
Summary: The FOMC meeting tonight will help reveal both where the Fed is in its thinking as it observes its effect on both the economy and of increasing importance, on the financial markets. There is certainly room for the FOMC to disappoint on the hawkish side by indicating no urgency to act with any new easing, but how much is expected? Elsewhere, sterling is...
