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Tag Archives: AUD

Yen Soars Amid Stimulus Confusion and Doubts

The strength of the Japanese yen is the main development in the foreign exchange market today. It has gained nearly 1.5% as short-term participants grow skeptical of the kind of stimulus that had driven the yen around7.5% lower between July 8 and July 21's six-week high.  The pendulum of market sentiment has swung wildly.   One set of estimates had risen from JPY10 trillion to JPY30 trillion over that period.  There was also the fascination with a version of...

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Will the FOMC Halt the Dollar’s Advance?

The US dollar gained against all the major currencies over the past week.  It also rose against many emerging market currencies.  A notable exception was the Chinese yuan.  The yuan rose before the weekend, extended its advancing streak to four consecutive sessions, and in so doing, it snapped a six-week slide. Last week's advance was only the second week since the start of May that the yuan moved higher.  The optimists claim the firmer yuan, and official comments...

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Bears Jump on the Euro, but Aussie Bulls may be Caught Leaning the Wrong Way

Speculators made several significant position adjustments in the CFTC reporting period ending 19 July.  The euro bears added to their gross short position for the fourth consecutive week and for the ninth week in the past ten.  The 16.2k contract increase lifted the gross short position to 211.5k contracts, the largest since the first week of the year. Even before the poor flash UK PMI readings, speculators in the futures market slashed gross long sterling positions....

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Flash PMIs Show Brexit Impact Localilzed

As the week draws to a close, there are three main developments in the capital markets. First, the profit-taking seen in US equities yesterday has continued in Asia and Europe today. The MSCI Asia Pacific Index and the Dow Jones Stoxx 600 in Europe are both off around 0.5%. The second development is continued heaviness of the dollar-bloc currencies. They have underperformed this week. Expectations that both New Zealand and Australia may cut interest rates next...

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Monetary Policy Expectations are Driving Foreign Exchange

Monetary policy is said to have lost its impact on the foreign exchange market, as investors scratch their heads at the resilience of currencies with negative interest rates.  Yet the price action in the action cannot be understood without recognizing the ongoing importance of monetary policy expectations.   Two members of the UK MPC seemed to distance themselves from the dovishness of recent comments from Governor Carney and the minutes from the BOE meeting this week. ...

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Great Graphic: Aussie Approaches Two-Month Uptrend

The Australian dollar recorded a key downside reversal last Friday (July 15) and had seen follow through selling this week.  It is off 1.25% over the past three sessions, which makes it the worst performing major currency behind the Japanese yen.   As this Great Graphic, composed on Bloomberg shows,  the recent losses have pushed to Australian dollar close to the uptrend line drawn off the late-May low near $0.7150 and the spike low from Brexit (~$0.7300).  The...

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Dollar-Bloc Tumbles, but Euro and Yen Little Changed

The US dollar is sporting a firmer profile today, but it is not the driver.  Heightened speculation that Australia and New Zealand may cut interest rates next month is pushing those respective currencies more than 1% lower today.  The Canadian dollar is being dragged lower (~).5%0 in what looks to be primarily sympathy, but it had seemed vulnerable to us in any event.  Sterling is trading heavily as well, and it was even before the inflation gauges were reported, which...

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Will BOE Ease on May Day?

After a nearly three weeks of turmoil following the UK referendum, there is now a sense of order returning to UK politics.  Two elements of the new government are particularly relevant.  First, May demonstrates strategic prowess by putting those like Johnson and Davis, who campaigned for Brexit, to lead the negotiations with the EU, while putting Tories who favored remaining in the EU in the internal ministries.   The second element that is important is that May...

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Dollar Extends Gains

The combination of the rebounding US job growth and gains in the S&P 500 to near record levels before the weekend is helping boost the US dollar against the major currencies, while the emerging market currencies are mixed.  In addition, indications that Japan will put together another fiscal stimulus package and the Bank of England may cut rates late this week are helping global equities.   The MSCI Asia-Pacific Index gained nearly 2%, the largest gain in nearly...

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Dollar Rallies with Stocks and Bonds

The US dollar had a good week.  It was helped by the strongest service ISM this year, with strong gains in forward-looking new orders component and an increase in export orders. Non-farm payrolls snapped back from a downwardly revised 11k jobs (-6k private sector) to 287k (265k private sector).  It was the strongest employment gain in eight months.  Also, as more bonds denominated in euro, yen, and Swiss francs offer negative nominal yields, an increasing part of the...

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