Tag Archive: U.K.

Surging Energy Prices Pushing Europe Closer to Recession

2022-08-23

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2022-08-23

The poor eurozone PMI underscores likely recession and weighs on the single currency, which was sold to a new 20-year low.  Rather than a "Turn Around Tuesday"  a broadly consolidative session is unfolding. Asian and European equities are weaker, while US futures are positive but little changed.  Benchmark 10-year bond yields are mostly firmer and the premium offered by Europe's periphery is edging higher.  The US 10-year is little changed near...

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No Relief for the Euro or Sterling

2022-08-22

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2022-08-22

Overview: The euro traded below parity for the second time this year and sterling extended last week’s 2.5% slide. While the dollar is higher against nearly all the emerging market currencies, it is more mixed against the majors.

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Flash PMI, Jackson Hole, and the Price Action

2022-08-20

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2022-08-20

For many, this will be the last week of the summer. However, in an unusual twist of the calendar, the US August employment report will be released on September 2, the end of the following week, rather than after the US Labor Day holiday (September 5). 

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The Dollar is on Fire

2022-08-19

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2022-08-19

The dollar is on fire. It is rising against all the major currencies and cutting through key technical levels like a hot knife in butter. The Canadian dollar is the strongest of the majors this week, which often outperforms on the crosses in a strong US dollar environment. It is off 1.5% this week.

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Markets Look for Direction

2022-08-17

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2022-08-17

Overview: The biggest development today in the capital markets is the jump in benchmark interest rates.  The US 10-year yield is up five basis points to 2.86%, which is about 10 bp above Monday’s low.  European yields are up 9-10 bp.  The 10-year German Bund yield was near 0.88% on Monday and is now near 1.07%.  Italy’s premium over German is near 2.18%, the most in nearly three weeks.  Although Asia Pacific equities rallied, led by Japan’s 1.2%...

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Greenback Remains Firm

2022-08-16

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2022-08-16

Overview: After retreating most of last week, the US dollar has extended yesterday’s gains today. The Canadian dollar is the most resilient, while the New Zealand dollar is leading the decline with a nearly 0.75% drop ahead of the central bank decision first thing tomorrow. The RBNZ is expected to deliver its fourth consecutive 50 bp hike. Most emerging market currencies are lower as well, led by central Europe. Equities in Asia Pacific and Europe...

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Week Ahead: More Evidence US Consumption and Output are Expanding, and RBNZ and Norges Bank to Hike

2022-08-13

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2022-08-13

After two-quarters of contraction, many still do not accept that the US economy is in a recession. Federal Reserve officials have pushed against it, as has Treasury Secretary Yellen. The nearly 530k rise in July nonfarm rolls, more than twice the median forecast in Bloomberg's survey, and a new cyclical low in unemployment (3.5%) lent credibility to their arguments. If Q3 data point to a growing economy, additional support will likely be...

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Heading into the Weekend, Dollar’s Downside Momentum Stalls

2022-08-12

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2022-08-12

Overview: The markets are putting the finishing touches on this week’s activity. Japan, returning from yesterday’s holiday bought equities, and its major indices jumped more than 2%. China, South Korea, and Australia struggled. Europe’s Stoxx 600 is firmer for the third consecutive session. It is up about 1.3% this week. US futures are also firmer after reversing earlier gains yesterday to close lower on the day. The US 10-year yield is flat near...

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Is it All Really about Today’s US CPI Print?

2022-08-10

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2022-08-10

Overview: The US dollar is trading with a heavier bias ahead of the July CPI report. The intraday momentum indicators are overextended, and this could set the stage for the dollar to recover in North America.

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Downside Risks to the US Employment Report?

2022-08-05

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2022-08-05

Overview: The US dollar enjoys a firmer bias against the major currencies ahead of the July employment data. Emerging market currencies are mixed. Asian currencies are generally firm while central Europe is a bit softer. Some detect a relaxation in tensions around Taiwan, though China’s aerial harassment continues. Taiwanese shares jumped 2.25% to lead the region that saw China’s CSI 300 rally over 1%. Europe’s Stoxx 600 is giving back yesterday’s...

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Over to the BOE

2022-08-04

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2022-08-04

Overview: Strong gains in US equities yesterday and easing fears following Pelosi’s visit to Taiwan helped lift most Asia Pacific equities, with Hong Kong leading the way with a 2% rally. Taiwan, Australia, and India did not participate in the regional rally. The Stoxx 600 is edging higher today. It was flat on the week through yesterday. US futures are a little firmer. The greenback is offered against the major currencies led the Antipodeans. The...

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Dismal EMU Flash PMI on Heels of First ECB Rate Hike since 2011

2022-07-22

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2022-07-22

Overview:  The euro is over a cent lower from yesterday’s peak, pressured by the drop in the flash PMI composite below 50 for the first time since early last year. More generally, the flash PMIs have shown the global economic momentum is waning, and the bond markets have responded accordingly. The US 10-year yield is flirting with 2.80%, its lowest level in more than two weeks. European yields are 15-20 bp lower and the spread between Italian and...

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Italian Politics Complicate the ECB’s Task

2022-07-21

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2022-07-21

The appetite for risk seen earlier this week is fading. Yesterday’s US equity gains helped lift most of the large markets in the Asia Pacific region, but China’s CSI 300 fell 1.1%, giving back most of this week’s gains as credit issues from the property sector haunt sentiment.

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Calm before the Storm?

2022-07-20

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2022-07-20

The biggest rally in the S&P 500 in three weeks helped lift global equities today. The MSCI Asia Pacific index rose for the third consecutive session, the longest streak this month. Europe’s Stoxx 600 is up for a fourth day and is at its best level since mid-June.

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The Dollar is on its Back Foot

2022-07-19

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2022-07-19

The dollar’s downside correction continues today, helped by hawkish signals from the Reserve Bank of Australia and unnamed sources who have played up the chances of a 50 bp hike by the European Central Bank on Thursday.

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Market Prices in More Aggressive Fed AND is more Confident of Rate Cuts by the End 2023

2022-07-14

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2022-07-14

Overview: The higher-than-expected US CPI and the strong expectation of a 100 bp hike by the Fed in two weeks is propelling the dollar higher.

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Euro Parity Holds ahead of US CPI

2022-07-13

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2022-07-13

Overview: The US dollar is consolidating with a slight downside bias ahead of the June CPI report. The euro held above $1.00 but is still pinned in the trough. The rate hike by the Reserve Bank of New Zealand failed to have much impact.

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Euro Tests Parity

2022-07-12

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2022-07-12

Equities remain under pressure as investors contemplate tighter financial conditions and the risks of recession. Most of the large equity markets in the Asia Pacific region sold-off, led by a 2.7% drop in Taiwan.

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Monday Blues

2022-07-11

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2022-07-11

Overview:  The US dollar is bid against most currencies today, encouraged not just by good news in the US and poor news out of China, where Covid is flaring up and new social restrictions are fared, while Macau has been lockdown for a week.

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FX Daily, July 8: Abe’s Assassination Shocks the World

2022-07-08

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2022-07-08

News that former Prime Minister Abe was assassinated while campaigning in Japan ahead of the weekend election shocked the nation and world. The immediate market impact looks minimal. Asia Pacific equities mostly advanced.

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