Tag Archive: EMU

Dollar is Softer Ahead of the Employment Report

2024-05-03

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2024-05-03

Overview: The greenback is trading with a softer bias ahead of the US jobs report. Solid, even if not spectacular job growth, is expected. However, recent survey data warns of the downside risks. Moreover, counter-intuitively, the dollar has not often rallied this year into the employment data, but frequently has in response. The dollar is softer against the G10 currencies. The Norwegian krone is the strongest, up about 0.6% after the central bank...

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Japan Drives Home Message

2024-05-02

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2024-05-02

Overview: The US dollar is mixed, but the spotlight is on the Japanese yen. It appears that with the market challenging Monday's intervention, Japanese officials entered the market shortly after the US equity market closed yesterday, as the Asia Pacific session got underway and sold dollars again. Initial estimates suggest the intervention amount was two-thirds of Monday's. The timing caught the markets wrongfooted. Tokyo markets are closed Friday...

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May Day Fed Day

2024-05-01

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2024-05-01

Overview: Much of Asia and Europe are off for the May Day labor holiday. The dollar is mostly softer in the thin activity. However, the dollar has edged higher against the yen and approached JPY158. The euro initially fell to $1.0650, a six-day low and where a billion euros in options expire later today. It has recovered to almost $1.0675. Emerging market currencies are subdued. Central European currencies, the South African rand, and Mexican peso...

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Yen Retreats, while Stronger EMU GDP Underscores Nascent Recovery and Lifts the Euro

2024-04-30

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2024-04-30

Overview:  Stronger than expected eurozone GDP strengthened the sense that a nascent recovery may be taking hold and has given the euro a bid in the European morning. The dollar, though, is enjoying a firmer tone against the other G10 currencies today. Australia's unexpected weakness in retail sales has weighed on the Antipodean currencies. The Aussie and Kiwi are off slightly more than 0.5% today. Japanese data were mixed (a recovery in industrial...

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Yen Dumps before It Jumps

2024-04-29

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2024-04-29

Overview:  The FOMC meeting, the US employment report, and eurozone CPI were to be the highlights of the week, but the Japanese yen stole the march to start the week. The dollar soared to almost JPY160.20 before falling sharply to JPY154.55 and then rebounding to almost JPY156.00. Intervention has not been confirmed and BOJ data will not cover it until next month. On balance, it appears that most think it was algo-trading in thin markets given the...

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US Employment Data to Set Dollar’s Course

2024-04-05

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2024-04-05

Overview: The focus is squarely on the US employment report. At the risk of oversimplifying, given the position adjustment in the past 48 hours, a solid report can see the greenback recover, while a disappointing report will likely see it deepen the correction of the rally that began with the February jobs report. The dollar recovered in the North American afternoon yesterday and many observers attributed it to the bevy of Fed comments. Yet, the...

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Greenback Losses Extended, but Look for Consolidation in North America

2024-04-04

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2024-04-04

Overview: The softer-than-expected ISM services report caught the market leaning the wrong way. Although interest rates had a muted reaction, the dollar was sold. In fact, the Dollar Index saw its second-biggest loss of the year, falling by about 0.50%. ISM services prices paid increases moderated to their slowest since March 2020. Supplier deliveries improved to their best since 2009, suggesting a supply chain improvement. Still, the Fed funds...

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Rate Adjustment Underpins Greenback

2024-04-03

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2024-04-03

Overview: The adjustment to US interest rates continues and this helps underpin the US dollar. The 10-year yield rose to 4.40% yesterday, the highest it has been since last November. It is trading 4.34%-4.38% today. The two-year yield is firm though holding below the Q1 high set last month near 4.75%. This week, for the first time since last October, the Fed funds futures do not have at least a quarter point cut discounted for July. As recently as...

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Gold, Oil, and Interest Rates Rise

2024-04-02

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2024-04-02

Overview:  The market put more weight on the rise in the US ISM manufacturing survey than the downward revision to the manufacturing PMI and the unexpected back-to-back decline in construction spending. US rates shot up and lifted the greenback. The Dollar Index made a new high for the year, a little above 105, which had been anticipated by the new lows recorded by the Bannockburn World Currency Index (a GDP-weighted basket of the currencies of...

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Heightened Threat of Japanese Intervention Pushes Greenback Away from JPY152

2024-03-27

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2024-03-27

Overview: The dollar neared JPY152, setting a new 34-year high. This appeared to spur a senior official meeting in Tokyo, ostensibly to talk about the response. Previously, we suggested that Friday, when most markets outside of Asia will be closed, could provide an interesting opportunity for intervention. The implicit threat was enough to take the dollar to JPY151.10 in the European morning. Most of the G10 currencies are softer against the dollar...

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Market Hears a Dovish Fed and Sells the Greenback

2024-03-21

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2024-03-21

Overview:  The Federal Reserve triggered a dollar sell-off yesterday and follow-through selling was seen in Asia before profit-taking emerged. That created a new dollar selling opportunity in early European turnover. The FOMC revised up this year's growth forecast, shaved the unemployment projection, and while maintaining the PCE deflator forecast, and the median dot remained for three cuts this year. The soft-landing scenario was underscored and...

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Ueda’s Comments Weigh on Yen as the Market Awaits US CPI

2024-03-12

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2024-03-12

Overview: The US CPI has become one of the most important high-frequency economic reports for the capital markets. The dollar is going into the report narrowly mixed against the G10 currencies. Comments by BOJ Governor Ueda about the weakness in consumption of non-durable goods was seen by some as reducing the likelihood of a change in policy next week.

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Forex Becalmed with the Greenback Mostly Firmer in Narrow Ranges

2024-03-05

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2024-03-05

(Business trip will interrupt the commentary over the next few days.  Check out the March monthly here.  Back with the Week Ahead on March 9. May have some comments on X @marcmakingsense.) Overview: Outside of the Australian and New Zealand dollars, which are off by 0.20%-0.25%, the other G10 currencies are little changed and mostly softer in narrow ranges. A firm Tokyo CPI, mostly on base effects and softer rates helped keep the US dollar below...

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Narrowly Mixed Dollar to Start the Big Week for Europe and North America

2024-03-04

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2024-03-04

Overview: The dollar is narrowly mixed against the G10 currencies to begin the week that features a Bank of Canada and ECB meetings, US jobs data, Federal Reserve Chair Powell's two-day testimony before Congress, and US President Biden's State of the Union address.

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Ueda’s Comments Knock the Yen Back, while the Euro Flirts with $1.08

2024-03-01

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2024-03-01

Overview: The US dollar is mixed today. The dollar-bloc currencies and the Scandis are enjoying a slightly firmer tone, while the euro and sterling are edging higher in European turnover.

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Yen Pops on BOJ Comments on Inflation, but the Dollar holds Most of Yesterday’s Gains against the other G10 Currencies

2024-02-29

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2024-02-29

The dollar is mixed as the market awaits the US personal consumption expenditure deflator, which is the measure of inflation the Fed targets. While there is headline risk, we argue that the signal has already been generated by the CPI and PPI releases.

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Weak US Durable Goods may Herald Pullback in Capex

2024-02-27

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2024-02-27

Most of the G10 currencies are trading quietly in narrow ranges today. After a slightly firmer than expected national CPI reading, which still moderated, and a pullback in US yields, the Japanese yen is the strongest of the major currencies.

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Euro Bid in Europe but Unlikely to Sustain Gains Through North America

2024-02-26

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2024-02-26

Overview: The dollar is beginning the new week mixed. The dollar-bloc currencies and Japanese yen are softer while the European currencies enjoy a firmer today. Among emerging market currencies, central European currencies are trading with higher. The Turkish lira is the notable exception. It is the weakest currency today, off about 0.65%. The Chinese yuan is a little softer, but the dollar continues to be capped near CNY7.20. Last week, more often...

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While the Greenback has Tended to be Sold in Asia this Week, it has Recovered in North America

2024-02-23

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2024-02-23

Overview: Amid a light news stream, the dollar is mostly in narrow ranges against the G10 currencies. Leaving aside the Norwegian krone, the others in a +/- 0.15% against the dollar today. We note that the technical tone of the euro and sterling have improved withe the five-day moving averages crossing above the 20-day moving averages. On the other hand, the dollar is approaching the year's low set last week near JPY150.90. Emerging market...

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Risk On, Dollar Sold

2024-02-22

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2024-02-22

Overview: The post-close rally in US tech stocks after Nvidia's earnings has fueled risk-on activity today. The Nikkei closed at record highs with a 2.2% rally. China's CSI rose for the eighth consecutive session as official discourage sales at the open and close, and short sales in general. Europe's Stoxx 600 is up more than 0.5% to recoup the small losses seen in the last two sessions. US indices are poised to gap higher at the open. Benchmark...

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