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Tag Archives: AUD

Dollar’s Downside Correction Set to Continue

The US dollar's downside correction, which we anticipated, has more room to run.  On the margins, the fundamental drivers have softened.  The tame US wage data, the flattening of the yield curve, and the angst over the trade tensions all argue against an acceleration of Fed tightening.   At the same time, the improved June EMU composite PMI and surge in German factory orders, and industrial output suggests the winter/spring soft patch is over. Following the guidance by...

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While the US was on Holiday–Wednesday Summary

The inability of the S&P 500 to hold on gains on Tuesday and the poor finish weighed on Asian equities on Wednesday.  The MSCI Asia Pacific Index slipped 0.2% and posted its lowest close in nine months.  The Chinese yuan, which is under close international scrutiny with many suspecting it is being used to send the US a message as the trade tensions are set to escalate before the weekend, rose slightly for the second consecutive session.   The stability of the yuan...

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Markets Trying to Stabilize

The global capital markets are trying to stabilize.  US equities recovered from early losses yesterday but this was not enough to stop Asian equities from extending recent losses.  The MSCI Asia Pacific Index slipped 0.2% for the sixth decline in the past seven sessions, However, several local markets, including China, Australia, and Korea advanced.  European bourses are mostly higher, and the Dow Jones Stoxx 600 is up 0.5% near midday in Europe.   All of the industrial...

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More Backing and Filling for the Greenback to Start July

The powerful combination of the US policy mix and the divergence with most other central banks drives our constructive medium-term outlook for the dollar.  However, the technical indicators warn that there is still scope for some more backing and filling before the rally can resume on more sure foot.    The greenback had a strong quarter, appreciating against all the major currencies.  The Canadian dollar's 2.25% decline made in the strongest of the other majors and is...

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Renminbi Slide Continues and Oil Extends Surge

The US dollar is mostly firmer today, though has slipped back below the JPY110 level, as lower yields and equities support the Japanese yen.  The main story in the foreign exchange market today is the continued slide in the Chinese renminbi.  The decline is the sharpest since the 2015 devaluation.   The onshore yuan fell for its eighth session of the past ten, while the offshore yuan has declined in all ten sessions.  Over this run, the onshore yuan is off 3.1%, while...

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Trade Tensions and Approaching Quarter-End Cast Pall Over Markets

The global capital markets have stabilized today after yesterday's rout in equities, softer yields, and US dollar.  The implementation of US tariffs on China and China's retaliatory tariffs on the US is still ten days off.  The immediate focus is on actions expected to curb the technology transfer.   However, there have been conflicting signals over the intent.  Treasury Secretary Mnuchin, who is seen as one of the remaining voices that try to minimize or soften, the...

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Trade Tensions Weigh on Equities, Lift Yen

Reports confirm that later this week, the US Treasury will announce new curbs on Chinese investment and trade.  The US considering preventing Chinese companies with a 25% (though could be lowered) government stake from buying US companies with industry significant technology."  Also, the US will block technology exports to China aimed at frustrating China's "Made in China 2025" initiative. This is separate from the 25% tariff that the US is levying on $34 bln of Chinese...

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Technical Correction Spurred by Fundamental Trigger

The Bank of England seems to purposefully like to surprise investors and managed to do so again last week, as three of the nine MPC members, including the chief economist, dissented in favor of an immediate hike.  The move caught the market leaning the wrong way. A few hours before the announcement, both sterling, and the euro were sold to new lows for the year.  The short-covering rally that ensued appears to have signaled the start of a broad corrective phase in the...

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Dollar Driven Higher

The half-hearted and shallow attempts by the currencies to recover appear to be emboldening the dollar bulls today,  The greenback is higher against all major and emerging market currencies today.  Demand for dollars is strong enough to offset the broader risk-off environment that is pulling stocks and core yields lower that is usually supportive of the yen.  The greenback stretched to a week high near JPY110.75 today.   Asian shares were lower, and the MSCI Asia Pacific...

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Fragile Stability

The day began out with equity losses in Asia before a sharp recovery, perhaps initiated in China.  The MSCI Asia Pacific Index was up a little more than 0.5%.  The Shanghai Composite fell more than 1% before closing 0.25% better.  Market talk suggests retail accounts followed the so-called national team of the large state-owned banks, following comments by PBOC Governor Yi Gang that some took as a hint that another cut in reserves requirement could be forthcoming shortly. ...

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