Tag Archive: capital flows

Quiet End to a Busy Week

2024-02-16

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2024-02-16

Overview:  The US dollar is winding down this week on a quiet note. Most of the G10 currencies are trading within yesterday's ranges. On the week, only the Scandis are set to close with gains, though with a little effort, the Australian dollar could too. The Japanese yen and Swiss franc are the laggards off 0.65%-0.75% this week. Most emerging market currencies outside of central Europe are firmer. The South African rand is the strongest this...

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Food Prices Drive China’s CPI Lower while the Greenback is Mostly Firmer in Narrow Ranges

2023-11-09

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2023-11-09

Overview: The dollar is mostly firmer against the G10 currencies and has been confined to tight ranges through the European morning. Outside of the China's deflation and Japan's monthly portfolio flow data that showed Japanese investors bought the most amount of US Treasuries (~$22 bln) in six months in September, the news stream is light. Most emerging market currencies are trading with a softer bias today. The Philippine peso is the strongest...

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BRICS to Expand a Little, USD Steadies after Yesterday’s Retreat, Attention Turns to Jackson Hole

2023-08-24

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2023-08-24

Overview: Strong Nvidia's earnings after the US markets closed yesterday helped lift Asia Pacific markets today. All the large bourses were higher but India. Hong Kong, South Korea, and Taiwan indices rose more than 1%. Europe's Stoxx 600 is higher for the fourth consecutive session and US index futures are higher, led by the NASDAQ. European benchmark bond yields have extended yesterday's PMI-induced decline and are mostly 1-2 bp lower. The...

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Aussie Recovers from Poor Jobs Data, but Nokkie is Weaker Despite Rate Hike

2023-08-17

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2023-08-17

Overview: Encouraged by the continued stream of US data, which suggests that the world's largest economy is accelerating, the US 10-year yield is approaching last year's 4.33% high, and the dollar's run has lifted it to new highs for the year against the Japanese yen, Chinese yuan, and the Australian and New Zealand dollars. Even a rate hike by Norway did not stop the dollar from rising against the krone. The greenback is firmer against most of the...

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The Greenback is Softer Ahead of CPI but Key Chart Points Remain Intact

2023-08-10

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2023-08-10

Overview: The deluge of Treasury supply is nearly over for this week. On tap today are 4- and 8-week T-bills and $23 bln 30-year bonds to finish the quarterly refunding. The sales will come after the July CPI print that is expected to see the first year-over-year increase since last June. The market is going into the report with about a 15% chance of a Fed hike next month discounted. Meanwhile, September crude oil extended its recover from $80 seen...

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RBNZ Delivers a Dovish Hike and UK Inflation Surprises to the Upside

2023-05-24

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2023-05-24

Overview: Equities in the Asia Pacific region and Europe are being led lower by the sell-off in the US yesterday. All the large Asia Pacific markets fell with Hong Kong and mainland shares setting the pace. Europe's Stoxx 600 is off nearly 1.5%, which would be the largest loss in two months. Consumer discretionary, financials and real estate sectors are off nearly 2%. US equity futures have a softer bias. European 10-year yields are mostly 2-3 bp...

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Equities Retreat while the Dollar is Confined to Narrow Ranges

2023-04-20

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2023-04-20

Overview: Equities are mostly lower, while bonds have risen. The dollar is trading in narrow ranges and mixed against the G10 currencies and emerging markets. Most Asian bourses were lower. The Nikkei (though not the Topix) and Hong Kong were the chief exceptions. Europe's Stoxx 600 is off for the second consecutive day, in what looks like the first back-to-back loss since early this month. US equity futures are lower, with the NASDAQ, which eked...

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Dollar Soft but Stretched

2023-03-30

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2023-03-30

Overview: While bank stress seems to continue to ease, the dollar languishes against most of the major currencies. The Japanese yen is the notable exception. It is off about 1.5% this week. The Dollar Index has given back the gains scored at the end of last week but remains inside the range set last Thursday and Friday (~101.90-102.35). Perhaps the participants are waiting for Friday. In addition to month-, quarter, and fiscal-year ends, it is...

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Firmer Rates and Higher Bank Stocks Give the Greenback Little Help

2023-03-28

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2023-03-28

Overview: Financial strains eased yesterday, and short-term yields jumped. The two-year US yield jumped 25 bp to pierce 4%. Yet, the dollar fell against most of the major currencies yesterday and is mostly softer today. Banking stress is ebbing. The Topix bank index snapped a three-day decline and jumped nearly 2% today to recoup the lion's share of its three-day decline. The Stoxx 600 index of EMU banks is extending yesterday's 1,7% advance. The...

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Higher for Longer Helps the Dollar while Weighs on Equities

2023-03-02

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2023-03-02

Overview: The jump in prices paid in yesterday's US ISM manufacturing coupled with the stronger eurozone inflation, with a new cyclical high reported in the core rate, underscores the market theme of higher-for-longer. This is seen as dollar supportive but also negative for risk-assets, including and especially equities. European benchmark 10-year yields are up another couple of basis points today and the 10-year US Treasury yield is pushing above...

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Ueda Day

2023-02-24

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2023-02-24

Overview:  Rising rates and falling stocks provided the backdrop for the foreign exchange market this week. The dollar appreciated against all the G10 currencies but the Swedish krona, which is still correcting higher after the hawkish pivot by the central bank. The market looks for a later and higher peak in the Fed funds rate. This coupled with the risk-off sentiment helped the dollar extend its recovery after falling since last...

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US Interest Rate Adjustment Post-Jobs is Over as the 2-Year Yield Backs Away from 4.50%

2023-02-09

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2023-02-09

Overview: The capital markets have shrugged off the more than 1% loss of the Nasdaq and S&P 500 yesterday and have jumped back into risk assets. The stocks and bonds have been bought and the dollar sold. Chinese and Hong Kong shares gained more than 1% today. Japan was mixed and Taiwan and South Korean equites saw minor losses. Europe's Stoxx 600 is up over 1%. Nasdaq futures are up nearly 1.2% while the S&P 500 is lagging slightly....

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Sharp Dollar Setback may offer Bulls a Bargain

2022-09-09

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2022-09-09

The dollar is having one of the largest setbacks in recent weeks. We expected the dollar to soften ahead of next week’s CPI, which may fan ideas/hopes of a peak in US price pressures, but the magnitude and speed of the move is surprising, and likely speaks to the extreme positioning.

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FX Daily, March 16: Equities Firm, but Markets Tread Gingerly

2021-03-16

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2021-03-16

Overview: Yesterday's new record highs in the S&P 500 and Dow Jones Industrial helped set the tone for today's advance in the Asia Pacific region and Europe. The MSCI Asia Pacific Index snapped a two-day decline, with other major markets rising today. 

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FX Daily, April 2: Optimism on Oil Deal Steadies Risk Appetites…for the Moment

2020-04-02

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2020-04-02

Overview: After US stocks dropped more than 4% yesterday, investor sentiment has improved, apparently sparked by ideas that the pain will force oil producers to find a way to reduce supply. Oil prices have surged, with the May WTI contract rallying around 7%. Asia Pacific equities were mostly higher, with Japan and Australia the notable exceptions.

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Forex Forensics: The Case of the Yen

2018-12-22

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2018-12-22

Over the past five sessions, the yen is the strongest of the major currencies, appreciating about 1.7% against the US dollar, eclipsing the Swedish krona, which rallied strongly today after the Riksbank's surprise rate hike.  Given the sell-off in equities and the decline in markets, the yen's strength is not surprising. 

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Capital Flocks to the US

2018-08-19

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2018-08-19

The US policy mix gets a privileged place in our understanding of what is the dollar. Tighter monetary policy and looser fiscal policy could be the closest thing to an elixir for currencies.  It is the policy mix that the US is pursuing.  

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Tensions Beyond Trade

2018-08-01

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2018-08-01

Chinese officials do not seem to appreciate the extent of its isolation. The disruption from the US as Trump positions the US as a revisionist power-one that wants to alter the world order, which it was instrumental in constructing, may have obscured the fact that China's practices are a source of frustration and animosity broadly and widely.

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Great Graphic: Treasury Holdings

2018-01-17

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2018-01-17

Treasury Holdings
The combination of a falling dollar and rising US interest rates has sparked a concern never far from the surface about the foreign demand for US Treasuries. Moreover, as the Fed's balance sheet shrinks, investors will have to step up their purchases.

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Impressive Japanese Flows at the end of the Fiscal Year

2017-04-11

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2017-04-11

Japanese investors bought foreign bonds in the last week of March for the first time in nine weeks. Foreigners bought the most Japanese stocks since last April. The pain trade is for a break of JPY110.

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