Tag Archive: Canada

Stronger-than-Expected UK CPI Helps Steady Sterling after Dollar Rally Extended

2024-01-17

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2024-01-17

Overview: The sharp dollar advance is stabilizing after follow-through gains earlier today. A larger than expected rise in the UK's December CPI helped sterling recover from the push below $1.26, the lower end of a one-month trading range. It is the only G10 currency that is firmer against the dollar ahead of the North American session. ECB's Lagarde pushed back against the early rate cut speculation and this may have stemmed the euro's losses. The...

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The Dollar Goes Nowhere Quickly

2024-01-09

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2024-01-09

Overview: The dollar continues to consolidate broadly after the dramatic price swings at the end of last week. For the most part, the greenback remains inside yesterday's ranges, which were inside last Friday's. The G10 currencies are a little heavier today, except the Japanese yen and Norwegian krone, which are posting small gains. Indeed, the greenback is near session highs against most of the major currencies as we go to print. Emerging market...

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Greenback is Bid ahead of the Jobs Report

2024-01-05

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2024-01-05

Overview: The dollar is bid going into the December jobs report. After selling off into the end of last year, it has recovered this week. The five-day moving average is crossing the 20-day moving average against several of the currency pairs, capturing the shift in momentum. The greenback's gains have as interest rates have jumped. The 10-year Treasury yield finished last year near 3.88% and is now near 4.04%. European benchmark rates have mostly...

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Consolidative Tone Emerges Ahead of Tomorrow’s US Jobs and EMU CPI

2024-01-04

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2024-01-04

Overview: After gaining for the past couple of sessions to open the New Year, the dollar is mostly softer today. The yen is the main exception. The greenback was bid above the JPY144 area where chunky options expire today. Most emerging market currencies are also firmer though there are a few exceptions in Asia, like the South Korean won and Thai baht. Still, the general tone is consolidative ahead of tomorrow US jobs data and the eurozone's CPI....

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Markets Catch Collective Breath

2023-12-06

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2023-12-06

Overview: The US dollar is mixed today. The dollar-bloc currencies are firmer, while the euro and yen are softer. We had anticipated a recovery of the dollar on ideas that the market has too aggressively pushed down US rates, and pricing in more Fed easing with higher confidence than seems to be warranted by the recent data.  However, US rates have not recovered, but the dollar has.  Partly, this reflects that rates have fallen as faster if not...

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Softer Tokyo CPI Buys BOJ Time while Moody’s Cuts the Outlook for China’s Debt following Fiscal Stimulus and the Continued Property Slump

2023-12-05

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2023-12-05

Overview: Outside of the Australian dollar, which has fallen by around 0.6% following the RBA meeting and the softer final PMI, which may have dragged the New Zealand dollar a lower by around 0.25%, the other G10 currencies trading little changed ahead of the start of the North American session. The eurozone and UK final PMIs were revised higher. Central European currencies lead the emerging market currencies. China reported better than expected...

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Rates and the Dollar Come Back Firmer

2023-12-04

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2023-12-04

Overview: Weekend accounts seemed to try to understand what Fed Chair Powell said by beginning with the large drop in US rates. Yet, most accounts miss the fact that no matter what Powell has said, the market has more often than not reacted as if he were a dove. Rates have come back firmer today, perhaps as some recognized the overshoot. The US two-year yield is up nearly seven basis points after falling 14 before the weekend. The 10-year yield is...

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What Will Powell Say?

2023-12-01

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2023-12-01

Overview: The dollar traded better into month-end but is softer today. The Scandis and dollar-bloc currencies are leading with around 0.2%-0.5% gains. In addition to US manufacturing PMI and ISM surveys, and construction spending, auto sales will trickle in, but key for market participants today will likely be Fed Chair Powell's comments and the extent that he pushes against the dramatic rate cuts, with more than a 50% chance of the first cut by...

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The Dollar is Having One of Its Best Days This Month

2023-11-30

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2023-11-30

Overview: After being bludgeoned, the dollar is having one of its best days of the month. It is rising against all the major currencies. The Dollar Index is up about 0.5%, which is the most since the end of October. The greenback is also firmer against all the emerging market currencies but the Turkish lira and Russian ruble. Some of the demand for the dollar may be a function of month end, but also the disappointing Chinese PMI, revisions that...

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Dollar Recovers After Losses Extended in Asia

2023-11-29

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2023-11-29

Overview: On the back of lower interest rates, the greenback's slide was extended in early Asia Pacific turnover, but it has recovered. As North American trading begins, the dollar is firmer against all the G10 currencies but the New Zealand dollar, which has been aided by the hawkish hold of the central bank, and an immaterial gain in the Swiss franc. Emerging market currencies are mixed. Central European currencies and the Mexican peso are...

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Dollar Retreat Extended, but Turn Around Tuesday may have Already Begun

2023-11-20

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2023-11-20

Overview:  Last week's dollar losses have been extended today. The yen is leading the move, encouraged by talk of a buying by a large US real money fund. The Dollar Index is off about 0.35% after sliding 1.8% last week. It is below the 200-day moving average for the first time since late August. As was the case last week, the Canadian dollar is the laggard. Emerging market currencies are also mostly higher. The Chinese yuan's 0.67% rise is the most...

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The Dollar’s Recovery has been Extended, but it may Give North American Operators a Better Selling Opportunity

2023-11-07

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2023-11-07

Overview: The dollar's sell-off last week was extreme and it recovered yesterday and through the European session today. The Australian dollar has been hit the hardest. It is off more than 1% today after the RBA lifted the cash rate by 25 bp (to 4.35%). Still, the US dollar's gains have stretched intraday momentum indicators, suggesting the upside correction may be nearly over. The greenback's moves appear to have been driven by interest rate...

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Barring Upside Surprise on US Jobs, the Greenback Looks Vulnerable

2023-11-03

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2023-11-03

Overview: The US dollar has been confined to narrow ranges today as the market awaits the October employment report. Barring a significant upside surprise, we suspect the dollar is more likely extend this week's losses. The Dollar Index is off about 0.5% this week. Within the narrow ranges, it is sporting a slightly softer profile again nearly all the G10 currencies. It is also lower against most emerging market currencies, but tight ranges...

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Japanese Fireworks Continue as the Market Turns to the FOMC

2023-11-01

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2023-11-01

Overview: The FOMC meeting is today's highlight but the drama in Japan continues to rivet the market. The Ministry of Finance warned of the risk of material intervention in the foreign exchange market, and the BOJ bought bonds in an unscheduled operation a day after its downgraded the 1.0% cap to a reference rate, whatever that means. The yen is trading with a slightly firmer bias. The Swiss franc is also trading a little firmer, but the other G10...

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BOJ and China PMI Disappoint, While EMU Q2 Growth and October Inflation were Softer than Expected

2023-10-31

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2023-10-31

Overview: The Bank of Japan softened its 1.0% cap on the 10-year, while lifting its core CPI forecast this fiscal year and next. This disappointed many who anticipated a bolder move to exit the extraordinary monetary policy. The yen was sold in disappointment and the dollar has returned to the JPY150.75 area. The eurozone contracted by 0.1% in Q3, while October CPI came in below expectations at 2.9%. The greenback is softer against most of the...

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Is the Market Putting on Risk Ahead of the Weekend?

2023-10-27

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2023-10-27

Overview: The US dollar is trading with a softer bias. Among the G10- currencies, only the euro and Swiss franc are the laggards and are nearly flat. In shifting expectations, the market sees the Reserve Bank of Australia as the most likely to hike rates again, while the swaps market appears to be bringing forward cuts by the European Central Bank and the Bank of Canada. The Australian dollar is the strongest G10 currency today and this week. After...

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The Dollar Continues to Press Against JPY150; Risk Off Ahead of the Weekend

2023-10-20

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2023-10-20

Overview: True to the market's penchant, it heard a dovish Fed Chair Powell yesterday. He seemed to suggest that the bar to another hike was high. This helped cap the 10-year yield just in front of 5.00% and allowed foreign currencies to recover against the dollar. The US two-year yield reversed lower after rising above 5.25%. It is now around 5.15%. Still, Powell appeared to cover similar ground as several other officials, including Fed governors...

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Greenback Remains Bid and the Market has not Given Up on JPY150

2023-10-19

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2023-10-19

Overview:  The greenback did not strengthen yesterday in Asian and European turnover despite the deteriorating conditions in the Middle East, but it did rally as North American participants entered the fray. Indeed, the Dollar Index rose from a marginal new four-day low to a marginally new four-day high. The safe haven bid seen in gold and oil, was reflected in the foreign exchange market by the strength of the Swiss franc, the only G10 currency to...

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Geopolitical Tensions Lift Oil and Gold, but little Sign of Haven Buying in FX

2023-10-18

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2023-10-18

Overview: US economic data surprised to the upside yesterday, and although interest rates rose as one would expect, the dollar's initial gains were pared, and the Dollar Index finished slightly lower on the day. This seemed, in some respects, to echo how the greenback reacted to the recent jobs report. However, then, interest rates softened, but the inability to rally on seemingly good news is notable. The heightened tensions in the Middle East...

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Markets Remain on Edge

2023-10-17

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2023-10-17

Overview:  The markets remain on edge. The press reports US President Biden is planning an imminent trip to Israel while Iran warns of "multiple fronts" against Israel if the attacks on Gaza continued. The dollar, which was offered yesterday, is better bid today. Still, the capital markets are relatively quiet. Even the Swiss franc, which was the strongest G10 currency last week (~0.9%) is slightly heavier today. Among emerging market...

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