Monday , February 17 2020
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Tag Archives: CAD

Early Update: Full Calendar but Little News

Looking at the diary, today is the most important day of the week. The Bank of England and the Swiss National Bank meet.  The UK reports retail sales.  EMU reports CPI figures.  The US reports retail sales, industrial output, and two September Fed surveys.   Yet the economic updates are unlikely change sentiment ahead of next week FOMC and BOJ meetings.  The euro has been confined to a $1.1200-$1.1285 range since the end of last week.  It is in the middle of that range as...

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Precarious Stabilization

The markets are trying to catch their collective breath after yesterday's dramatic moves.  The sharp slide in US equities may have weighed on Asian markets, but losses are mild. Still, the MSCI Asia-Pacific Index was off 0.8%, the fifth consecutive losing session. European bourses slightly firmer, but appear to be awaiting the US open for stronger directional cues.     Debt markets are stable to slightly higher but are hardly recouping yesterday's slide.  Yields are 1-2...

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Thoughts on the Price Action

The market has not changed its mind.  Following Brainard's comments yesterday the market had downgraded the chances, which were already modest, of a Fed hike next week.  The September Fed funds futures is unchanged on the day.  The implied yield of 41 bp matches the 50-day moving average.   Maybe the suggestion that 25 bp hike in the target range somehow would make the Federal Reserve imprudent, incautious or impatient is a bit much.  Without expectations changing the US...

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Markets Off to a Wobbly Start

Stocks and bonds have begun the new week much like last week ended.  Sharp losses are being recorded.  The US dollar is mixed, with minor losses against the euro, yen, and sterling, but a firmer tone is evident against the dollar-bloc and emerging market currencies.   The MSCI Asia-Pacific Index fell 2.15%, the most since the UK referendum and the third day of losses.  It is finishing on its lows, which are just above the late-August low.    Hong Kong's Hang Seng had been...

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Capital Markets in the Week Ahead

The week ahead will likely be shaped by a combination of what happened last week and what will happen the week after next.  The end of last week saw a sell-off in equities and bonds and a recovery in the US dollar. The week after next the FOMC and BOJ meet in apparently live meetings, meaning that policies may be adjusted.    The S&P 500 suffered its biggest decline in two months, falling 2.5% ahead of the weekend.  It gapped lower and sold-off sharply and closed on...

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Dollar Proves Resilient as Market Rates Rise

It took the market a few days to overcome the shockingly poor non-manufacturing ISM (51.4 vs. 55.5). However, by the end of the week, the US dollar bulls had regained the upper end.   The September Fed funds was implying a yield of 41.75 bp, up a quarter of a basis point from the September 2 close.   Similarly, the 2-year yield was essentially unchanged on the week, while the 10-year yield was up six bp on the week and 15 bp from the ISM-inspired low.  At 1.66%, the...

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Poor Services ISM Sends Greenback Reeling

The US dollar was already trading with a heavier bias before the shockingly poor service ISM.  The August non-manufacturing ISM tumbled to 51.4, a six-year low, from 55.5 in July.  Markit, which does its own survey, showed a smaller decline in its August read to 51.0 from 51.4 in July.  This was up slightly from the preliminary 50.9 estimate.  In any case, the weakness in the manufacturing ISM, the softer than expected employment data, and now the weaker services ISM...

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Dollar Bides Times, Month-End at Hand, Jobs Data Ahead

The US dollar is a little softer against most of the major and emerging market currencies.  The exception is the Japanese yen, where the greenback has moved above JPY103 for the first time in a month.  The tone is consolidative as the market awaits assurances that the jobs growth this month has been sufficiently strong as to keep the prospects of a September meeting still alive.   That said, before the weekend, the September Fed funds futures implied a 42% chance of a...

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Greenback Remains Firm, Awaiting Fresh Cues

The US dollar is trading firmly, largely within yesterday's ranges.  The odds implied by the September Fed fund futures eased to 36% from 42% before the weekend, but ahead of Fischer's Bloomberg TV appearance, and tomorrow's ADP employment estimate, the market seems cautious about fading the dollar's strength.   There are several developments to note today.  First is the batch of Japanese data.   The key takeaway is that the labor market remains tight, with the...

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Narrowly Mixed Greenback in Summer Churn

The US dollar is going nowhere fast.  It is narrowly mixed against the major currencies.  The market awaits for fresh trading incentives, with much hope placed on Yellen's presentation at Jackson Hole at the end of the week.  Is it too early to suggest that the build-up ahead of it is too much?  First, to the extent that she addresses the current economic situation, it is unreasonable to expect it to differ from the general thrust of both Fischer and Dudley.  The...

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