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Tag Archives: AUD

Trump Walks Away from North Korea. Should Beijing Worry?

Overview:  News that the US-North Korean summit ended abruptly without an agreement spurred losses in equities and gains in the Swiss franc and Japanese yen.  US President Trump willingness to walk away from the talks is important in and of itself, but it also sends a warning not to go all in on a US-China trade agreement that could also sour at the last minute. North Korea may express its displeasure by renewing missile tests.   In addition, the tension between India and...

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Dollar Trades Heavily, While Prospects of a Softer and Later Brexit Send Sterling Higher

Overview:  As the North American session is about to begin, the markets await developments in the UK House of Commons where a vote is expected today on Prime Minister May's proposal to hold votes on around March 12 on the Withdrawal Bill and no deal.  However, perceptions of a reduced likelihood of a no-deal exit continued to fuel sterling gains.  Pakistan has reportedly shot down two Indian aircraft as the tension between these two nuclear powers intensify.  The anxiety...

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Brexit Dilution Lifts Sterling, while Yesterday’s Equity Rally Fades, Powell Awaited

Overview:  The increased likelihood that Brexit is delayed and the possibility of a second referendum is helping lift sterling.  As has been the case for most of the time since the June 2016 referendum, the prospects of a softer and/or later Brexit is understood as sterling positive.  The other key focus is US-Chinese trade.  The delay of the tariff escalation and the prospects for a deal helped lift equity markets yesterday, but profit-taking is cutting those gains today. ...

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Breakout Continues to be Elusive for the Greenback

The US dollar has failed to break higher, and this seems to boost the chances that it experiences a near-term setback.  Elsewhere we suggest that two dominant themes--US-China trade talks and Brexit--will likely be delayed.   The combination of the technical condition and the macro backdrop may deter players from looking for a break out in the week ahead.  A delay in Brexit is understood to be good for sterling because it ostensibly reduces the risk of a no-deal exit. An...

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Markets Ending Week with A Whimper

Overview:  The global capital markets are winding down what appears to be an inconclusive week quietly and on a mixed note.  The MSCI Asia Pacific Index is poised to snap a four-day advance but held on to a nearly 2% gain for the week.  European bourses are mostly higher, and although the weekly advance of around 0.5% may not be that impressive, Dow Jones Stoxx 600 has only fallen in one of the first eight weeks of the year for a 9.5% year-to-date gain.  Benchmark yields...

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Aussie Slammed by Dalian Coal Embargo, While Firmer Flash PMI does Euro Little Good

Overview:  The US dollar is firm against most major and emerging market currencies.  There is more optimism on US-Chinese trade as a series of understandings are drafted, and an extension past March 1 of the tariff freeze is reportedly in the works.  Mixed economic data and a call from a local bank for two rate cuts this year did not have as much impact on the Australian dollar as reports suggesting that Dalian, where 2% of Australia coal goes, has blocked imports to which...

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US-China Trade and Brexit Dominate Ahead of FOMC Minutes

Overview:  The US dollar is narrowly mixed against the major currencies, but the strongest currency today is the Chinese yuan, following reports that US wants China to keep the yuan stable and not offset US tariffs with currency depreciation.  The second monthly decline in Japanese exports weighted on the yen.  In the UK, another Labour MP left, while there is speculation that a few Conservatives may defect today.  The focus in the US turns to the FOMC minutes from last...

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Investors Need Fresh Incentives

Overview: Activity in the global capital markets is subdued as investors await fresh developments. New wording for the Irish backstop apparently is being drafted.  US-China trade talks resume.  No decision has been made on US auto tariffs, but European and Japanese officials seem to be playing down the threat.  Separately, BOJ' Kuroda said there was more room to lower rates or buy more assets if needed, while the minutes from the Reserve Bank of Australia confirmed the...

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Dollar Drifts Lower

Overview:  In quiet turnover, the US dollar slipped lower against most of the major currencies to start the new week.  The news stream is light and the US markets are closed today.  The MSCI Asia Pacific Index was up five of the past six weeks and extended its gains today.  Nearly all the equity markets in the region rose but India.  European markets are narrowly mixed in the morning trade.  Bond yields firmed in the Asia Pacific region, while benchmark yields in Europe...

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Dollar Bulls may Turn Cautious

While we expect that the broad economic and monetary divergence will allow the dollar's uptrend to resume, more immediately we have been expecting the recent ranges to remain intact.  The ranges may have frayed, but the pre-weekend price action may reinforce them. With a slow start to the week ahead (US holiday and light economic calendar), it may be difficult to rebuild the greenback's upside momentum.  It had tested the lower end of its ranges in late January and...

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