Tag Archive: U.K.
Greenback Remains Bid and the Market has not Given Up on JPY150
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
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
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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Greenback Consolidates Ahead of September CPI
Overview: The dollar is mixed against the G10
currencies. It is confined to narrow ranges ahead of today's CPI report. The
Russian ruble is the strongest of the emerging market currencies following the
imposition of new capital controls, forcing many exporters to repatriate their
foreign earnings. After posting a key upside reversal at the end of last week,
gold continues to recover. It nearly $1883 so far today, the best level in more
than two...
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US Employment Data to Determine Whether the Greenback’s Rally since mid-July is Over…Maybe
Overview: One key issue for market participants is
if the dollar's pullback is the beginning of something important or is largely
position adjusting ahead of today's US jobs report. We suspect that the
dollar's rally that began in mid-July is over, though a strong employment
report that boosts the chances of a Fed hike before year-end could quickly
demonstrate the folly of making claims ahead of what is still one of the most
important reports in...
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Strategic Ambiguity Leaves Intervention Question Unanswered, but US Dollar has Steadied
Overview: Dramatic yen price action around the JOLTS
report yesterday after the dollar pierced the JPY150 level spurred speculation
of BOJ intervention. Although there has been no confirmation, the strategic
ambiguity is helping steady the yen and the dollar more broadly today, even
though US yields remain firm. Final PMI readings were a better than the flash
estimates and this may also be facilitating the consolidative tone. Most
promising, from a...
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US Yields and Dollar Rise After US Government Closure Averted
Overview: The US avoided a government shutdown,
barely, and this eased one of the headwinds that were anticipated. In turn,
this is spurring new gains in US interest rates and helping underpin the dollar
at the start of the new quarter. The 10-year Treasury is holding above 4.60%
and nearing last week's high (4.68%). The two-year yield gapped higher and is
near 5.10%. The high from September 21 was almost 5.20%. The Swiss franc is the
only G10...
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Dollar Sets Back into Month- and Quarter-End Ahead of likely US Government Shutdown
Overview: The dollar's surge stalled yesterday, and
follow-through selling has pressed it lower against all the G10 currencies
today. The dollar-bloc and Scandis are leading the move. Month-end, quarter-end
pressures, coupled with a likely partial shutdown of the government beginning
Monday, and after key chart levels were approached or violated earlier this week,
serving as a bit a cathartic event. The Swiss franc snapped a 12-day losing
streak...
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Yen Drops After BOJ Does Nothing and Says Little
Overview: The BOJ's failure to do anything or
further ideas that an exit of the negative target rate, despite the firm CPI
report helped the dollar recover the ground lost yesterday against the yen. The
focus has returned to "intervention watch" and the market continues
to press for the official pain threshold. Sterling is the weakest of the G10
currencies, off another 0.5% today following the BOE's decision not to hike
yesterday. The...
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Softer UK CPI Weighs on Sterling and Lifts Gilts, while Yen Slumps to New Low for the Year, Ahead of the FOMC
Overview: Softer than expected UK CPI has drawn
attention ahead of the key event of the day, the FOMC meeting. The UK's CPI has
spurred a dramatic rally in Gilts and saw sterling initially extend its recent
losses, falling to new four-month lows before stabilizing. The swaps market
sees less than a 50% chance of a hike by the Bank of England tomorrow. Meanwhile,
even though US Treasury Secretary Yellen suggested conditions in which
intervention by...
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The Canadian Dollar Shines in a Mostly Consolidative FX Market Ahead of the Flurry of Central Bank Meetings
Overview: Ahead of the flurry of central bank
meetings, starting with the Federal Reserve and Brazil tomorrow, the dollar is
largely consolidating in narrow ranges. The euro, sterling, and yen are trading
slightly heavier, while the dollar bloc and Scandis enjoy a firmer bias. The
Canadian dollar stands out as is trades at its best level since mid-August
ahead of its CPI report and despite a diplomatic dispute with India and the
failure of...
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Calm Before the Storm: Greenback Confined to Narrow Ranges
Overview: With
many central bank meetings in the days ahead, the dollar has begun the new week
on a quietly and mostly in tight ranges, helped by a holiday in Tokyo. G10
currencies, outside of the Scandis are slightly firmer in European turnover.
Emerging market currencies are narrowly mixed, but of note the 0.25% decline
makes the Chinese yuan the weakest. The Mexican peso is extending its recovery
into the seventh consecutive session.
While...
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Heightened Speculation of an ECB Hike Tomorrow Fails to Lend the Euro Support
Overview: The US dollar is trading with a
firmer bias against all the G10 currencies ahead today's August US CPI report. Even
increased speculation that the ECB will hike rates tomorrow has failed to lift
the euro, while a larger than expected contraction in the UK's July GDP pushed
sterling briefly through last week's lows. The dollar rose to a marginal new
high for the week against the Japanese yen, as the market seemed uninspired by
the cabinet...
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Greenback Bought on Pullback
Overview: The dollar was bought after yesterday's
pullback spurred by Japanese and Chinese comments and the tighter capital
controls from Beijing requiring permission to buy more than $50 mln. The
economic and monetary policy divergence continues to underpin the greenback. It
is firmer against all the G10 currencies and is mostly inside yesterday's
ranges. Most emerging market currencies are lower, led by central European
currencies. The Chinese...
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The Dollar and Oil Steady After Yesterday’s Advance
Overview: Bonds and stocks are mostly heavier today
and the dollar has turned mixed. Oil prices are consolidating after soaring to
new highs since late last year on the longer than expected extension of Saudi
Arabia's extra cut of one million barrels a day. Since July, it has been
extending it by one month at a time. Yesterday, it extended it through Q4. Russia,
who had previously indicated intentions on reducing its exports by 500k
barrels,...
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US Dollar Punches Higher
Overview: Disappointing
data in Asia and Europe has sent the greenback broadly higher. The strong gains
posted before the weekend were mostly consolidated yesterday when the US and
Canadian markets were on holiday. The rally resumed today. The Antipodeans and
Scandis have been hit the hardest (-0.7% to -1.25%) but all the G10 currencies
are down. The Swiss franc and yen are off the least (-0.35%-0.45%), and the
euro and sterling have taken out...
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China’s Measures Begin to Find Traction, US Employment Report on Tap
Overview: Beijing's seemingly steady stream of
measures to support the economy and steady the yuan are beginning to produce
the desired effect. The yuan is snapping a four-week decline and the CSI 300
halted a three-week drop. Some economists estimate that the bevy of measures
may be worth as much as 1% for GDP. The dollar is narrowly mixed ahead of the
US employment data, which is expected to see the pace of job growth slow to
around 170k. Of...
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Dollar Eases, Stocks and Bonds Advance
Overview: For the first time in more than a week,
North American dealers will take to their posts with the dollar softer against
all the G10 and most of the emerging market currencies. Despite stepped up
efforts by Chinese officials and a firmer yen, the yuan remains on the
defensive and is one of the handful of emerging market currencies softer on the
day. Stocks and bonds are mostly higher too. The yuan might not be benefitting
from a softer...
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Dollar Bulls Still in Control
Overview: What may have been hoped to be a quiet
August has turned into a feeding frenzy for dollar bulls as the contrasting
economic performance has spurred persistent buying of the greenback. Even
shallow dips have been bought. Today, it is mostly trading inside yesterday's ranges
against the G10 currencies. The PBOC set the dollar's reference rate at what
appears to be a record gap below the Bloomberg average survey, and the dollar
was scooped...
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Aussie Recovers from Poor Jobs Data, but Nokkie is Weaker Despite Rate Hike
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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