Tag Archive: Canada
The Yen is Sold Despite Better than Expected Q1 GDP and the Greenback Pushes Above CNY7.0
Overview: Better than expected US core retail sales
and manufacturing output sent US rates higher and helped lift the greenback
during the North American session after a heavier tone in Asia and Europe. The
US two-year note rose to almost 4.12% and the 10-year note yield increased to
3.57%. Both are the best levels in two weeks. The dollar traded firmer against
most of the major currencies and the Dollar Index approached the one-month high
set on...
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Biden to Go to G7 Summit with Debt Ceiling Unresolved
Overview: The US debt ceiling talks resume at the
White House today but a deal is unlikely to be announced. President Biden will
attend the G7 summit in Hiroshima with the debt ceiling still looming. The
dollar is mostly softer as last week's gains are pared. The Swiss franc and
Japanese are the strongest in the G10. The Thai baht and South African rand,
among the market's favorites yesterday are seeing those gains retraced. The JP
Morgan Emerging...
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The Greenback Continues to Struggle
Overview: There is a nervousness that hangs over the capital markets.
Although US banks shares recovered at the end of last week, many continue to
see the sector’s challenges as the harbinger of a dramatic reversal in the Fed’s
stance. America’s debt ceiling looms large and could be a few weeks away. China
led Asia Pacific bourses higher, and, ironically, its bank shares extended their
rally. Japan, returning from last week’s holiday was notable...
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The Greenback Remains Heavy Ahead of the Employment Report
Overview: The US dollar is weaker against all the
G10 currencies today but the Swiss franc. The backdrop seems fragile even
though a few regional bank shares have done better in after-hours trading and
Apple's earnings were received well by the markets. Due to seasonal factors and
other considerations, many are warning about a US jobs report, even though
ADP's estimate surprised to the upside earlier this week. Equities were mixed
in the Asia...
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Yen Slumps on Cautious BOJ
Overview: The market took a dovish message away from
the Bank of Japan and sent the dollar above JPY136, its best level since March
10 and spurred a sharp rally in JGBs. Japanese equities led the rally among the
Asia Pacific markets. Europe has not been able to follow suit. It disappointed
with Q1 GDP (0.1% rather than 0.2%). The Stoxx 600 is of about 0.3%, leaving it
off about 1.3% this week, its first weekly loss since the middle of March. US...
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The Dollar Comes Back Bid
Overview: It has taken some time, but the dollar has
found better traction. It traded above JPY135 for the first time since
mid-March and yesterday's setback has been mostly recouped against the other
G10 currencies. Sterling is the most resilient after higher-than-expected
inflation. Equities are lower. Japan's Nikkei snapped an eight-day advance and
most of the other large bourses in the region (except Australia and South
Korea) fell. Europe's...
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Dollar Pares Gains but is Poised to Recover in North America
Overview: A rise in US yields, with the
two-year Treasury closing yesterday at its best level in more than three weeks
help fuel follow-through dollar buying yesterday after an upside reversal at
the end of last week. Key levels were approached, like $1.09 in the euro,
$1.2345 in sterling, and JPY135 held, and the dollar has consolidated in Asia
and Europe. The euro and sterling recouped around half of the losses seen from
the Friday's high to...
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Greenback Pares Yesterday’s Gains
Overview: As the long-holiday ends, risk appetites
have returned. Equities and yields are mostly higher. The dollar is seeing
yesterday's gains pared. Yesterday's setback in the yen helped lift Japanese
stocks, with the Nikkei advancing 1%. Several other markets in the region also
gained more than 1%, including Australia and South Korea. China's CSI was an
exception. It slipped fractionally. Europe's Stoxx 600 is up nearly 0.6%
through the European...
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Fragile Calm Casts a Pall over the Capital Markets
Overview: There is a fragile calm in the capital
markets today ahead of the long holiday weekend for many. The poor US economic
data yesterday and third consecutive decline in the KBW bank index weighed on
risk sentiment. Most of the large bourses in the Asia Pacific region fell, with
Hong Kong and India notable exceptions. In Japan, the Topix bank index fell
1.1% after a 1.9% decline yesterday and is now lower on the week. Europe's
Stoxx 600 is...
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Pressure Returns to Bank Shares and seems to Help Propel Gold Higher
Overview: There are three themes today. First, the
sharp decline in US rates seen yesterday (-14 bp on the two-year yield) on the
back disappointing economic data seemed a bit exaggerated and the two-year
yield has bounced back to almost 3.90% from around 3.81%. This appears to be
helping the dollar consolidate today. Second, bank shares are coming under
renewed pressure. The US KBW bank index fell almost 2% yesterday after a 0.5%
decline on...
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March: Going Out like A Lamb after Wrestling with a Lion
Overview: The banking stress that roiled the markets
this month has eased. However, the emergency lending by the Federal Reserve,
vias the discount window and new Bank Term Funding Program hardly slowed in the
past week ($152.6 bln vs. $163.9 bln). Money markets took in more funds. Almost
$305 bln has flowed to them over the past three weeks. The US KBW bank index is
up 3.75% this week coming into day (after pulling back 1.2% yesterday). Europe's...
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The Dollar Jumps Back
Overview: The pendulum of market expectations has
swung dramatically and now looks for 100 bp cut in the Fed funds target this
year. That seems extreme. At the same time, the dollar's downside momentum has
stalled, suggesting that the dollar may recover some of the ground lost
recently as the interest rate leg was knocked out from beneath it. The euro
twice in the past two days pushed through $1.09 only to be turned away.
Similarly, sterling pushed...
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Banking Stress Eases
Overview: The banking crisis is ebbing. The Bank of
England and European Central Bank assured investors that the AT1 bonds are
senior to equity claims, and Switzerland is a unique case. Bank share indices
in the Europe and the US rose yesterday, even though the shares of First
Republic Bank fell by 47% yesterday. The $123-stock at the end of last month
reached almost $11 yesterday. It is trading around $14.75 pre-market. Global equities are...
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Concerns Over US Banks Rival Today’s Jobs Report
Overview: The unexpectedly large rise in US weekly
jobless claims, the largest since the end of last September and concerns about
the impact of the sharp rise in interest rates on the liquidity and value of
assets (bonds) owned by small and medium-sized banks saw the market unwind the
effect of Fed Chair Powell's comments. The yield on the US two-year note
slumped almost 20 bp to 4.87% yesterday and fell to 4.75% today before
stabilizing (~4.82%)....
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Tumbling Tokyo Prices Gives Ueda Breathing Space
Overview: Talk from two Fed officials yesterday,
which seemed to validate market expectations eased the upward pressure on the
dollar and helped equities launch a dramatic recovery. The market is pricing in a terminal rate near 5.50%, a little higher than the median dot in December. The S&P 500 posted a
dramatic recover and posted a potential bullish key reversal. Its 0.75% closing
gain was the largest advance in nearly three weeks. A large...
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Doubt Chinese Data, but Its Stronger-than-Expected PMI Lifts Risk Assets
Overview: Many investors may be skeptical of the
accuracy of Chinese data, but its stronger than expected February PMI animated
the animal spirits and bolstered risk-taking appetites. Asia Pacific equities
jumped, led by the 4.2% rally in Hong Kong and a 5% surge in the index that
tracks mainland shares. Among the long bourses Australia and Singapore slipped,
and South Korean markets were closed for a national holiday. Europe's Stoxx 600
is posting...
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Potential Brexit Breakthrough Helps Sterling, while France and Spain Report Stronger Price Pressures
Overview: There are two important developments. First,
the stronger than expected February inflation reports from France and Spain
have sparked a jump in European interest rates and the swaps market is
beginning to price in a 4% terminal rate by the European Central Bank. The
deposit rate is now at 2.50% and is widely expected to rise to 3.0% in the
middle of next month. Second, a tentative agreement to resolve the dispute over
the Northern Ireland...
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Markets Catch Collective Breath
Overview: After last week's flurry of activity that saw the US
dollar extend its recovery, it has begun off the new week largely consolidating
in relatively narrow ranges. The Australian and New Zealand dollar's remains
softer, and the Swiss franc is virtually flat, but the other G10 currencies,
led by sterling are posting small gains. A break-through on the Northern
Ireland protocol, which has been rumored for a more than a week may be
announced...
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Investors Shaken by Rising Rates
Overview: The surge in US interest rates and sharp
losses in US stocks sent the dollar broadly higher in North America yesterday. The
$42 bln of two-year notes auctioned by the US Treasury saw the highest yield in
more than a quarter-of-a-century (4.67%) and it still produced a small tail.
Sterling, helped by its own surprisingly strong data, was the only G10 currency
to have gained against the surging dollar. Still, no important technical levels...
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Upside Surprise in UK’s Flash PMI and Better-than-Expected January Public Finances Lift Sterling
Overview: Rising interest rates are weighing on risk
appetites and the dollar is broadly stronger. Sterling is a notable exception
after a stronger than expected flash PMI and better than expected public
finances. The correlation between higher US rates and a weaker yen is
increasing and the greenback looks poised to rechallenge the JPY135 area. A
slightly better than expected preliminary PMI and hawkish minutes from the
recent RBA meeting has done...
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