Tag Archive: US
US CPI, New Security Initiatives with Tokyo and Manila, Bank of Canada Meeting
Overview: The dollar has been confined to narrow ranges ahead of the US CPI report. Given the backup of US rates and the stronger-than-expected jobs growth, the greenback's performance has been unimpressive.
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Dollar Consolidates Softer Ahead of Tomorrow’s CPI
Overview: The dollar is trading with
a softer bias in mostly narrow ranges against the G10 currencies. It did not
rally much ahead of the US jobs data, and it was not able to sustain the upside
momentum afterwards, despite the jump in US yields. Former St. Louis Fed President
Bullard, who still has a strong reputation in the market, told Bloomberg TV
yesterday that three cuts were his base case this year. The Scandis and
Antipodeans are the...
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Will the Market Push the Dollar Above JPY152 as Japanese Prime Minister Heads to the US?
Overview: The jump in US rates after the employment
report failed to ignite a sustained rally in the dollar and this shaken the
market's near-term confidence. The dollar has been mostly confined to narrow
ranges and the low yielding Swiss franc and Japanese yen are softest with the
G10 complex today. The dollar is knocking on JPY152. The Scandis and Antipodeans lead the advancers. The euro has
made little headway despite a much stronger than...
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US Employment Data to Set Dollar’s Course
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
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
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
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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China PMI is Better than Expected but the Greenback Still Rises above CNY7.23
Overview: The dollar is trading quietly against the G10
currencies as European markets remain on holiday. Narrow ranges have prevailed.
The dollar-bloc currencies are leading with minor gains, perhaps helped on the
margins by better-than-expected Chinese PMI, but the Scandis, which also
typically do well amid a better global growth profile are the laggards. This
may speak to the light liquidity conditions. Japan may have missed a tactical...
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Waller Pushes on Open Door: Push for Patience Lifts the Dollar, Complicating Japanese Efforts
Overview: Comments by Fed Governor Waller, urging
patience on rates and wanting more evidence that price pressures are moderating
has helped the greenback extend its recent gains. The yen is the notable
exception as the fear of intervention has restrained the dollar bulls. Poor
German data, including a sharp 1.9% drop in February retail sales, the fourth
consecutive monthly decline, underscored the euro's negative divergence, and the
single...
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Heightened Threat of Japanese Intervention Pushes Greenback Away from JPY152
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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Dollar’s Recent Gains Pared but Firm Undertone Remains Intact
Overview: After surging at the last week, the dollar
consolidated yesterday and is continuing to do so today as slightly lower
levels. The Swiss franc is the only G10 currency unable to gain traction
against the greenback today. Still, the dollar's pullback has barely met the
minimum retracement targets of the jump last Thursday and Friday. The PBOC
lower the dollar's fix slightly, but the proverbial toothpaste is out of the
tube and officials are...
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CNY7.20 Gives Way as Strong Greenback Proves Too Much
Overview: The dollar's post-FOMC sell-off has
been completely reversed and the greenback has reached new highs for the week
against most of the G10 currencies. Heightened intervention fears and softer US
yields has helped steady the yen, which near unchanged now, and is the best
performer. The Scandis and Antipodeans are the heaviest, off 0.65%-0.90%. For
the first time since last November, the US dollar has risen above CNY7.20 and
continued to...
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Heightened Speculation of a BOJ Move Tomorrow did not Stop the Nikkei from Rallying or Yen from Slipping
Overview: The US dollar is trading with a mostly
softer bias against the G10 currencies. The notable exceptions are the Japanese
yen and Swiss franc. Ironically, speculation of a Bank of Japan rate hike
appears to have increased, while there is a risk that the Swiss National Bank
cuts rates this week. The Norwegian krone is the strongest of the major
currencies. The central bank meets later this week but is widely expected to
stand pat. The...
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Euro’s Recovery to $1.09 Looks Vulnerable while Yen Falls to New Lows for the Week After Strong Pay Raises Confirmed
At the end of last week, the derivatives market was again pricing in nearly four Fed cuts this year, but this week's data have seen expectations re-converge with the Fed's three rate cuts signaled in December, while cutting the odds of June hike to the lowest in the more than four months.
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Ueda’s Comments Weigh on Yen as the Market Awaits US CPI
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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Japan’s Q4 23 Contraction Revised Away, Helping Keep Yen Bid
Overview: News that the Japanese economy expanded rather than contracted in Q4 23 has fanned expectations that rates could be as early as next week. This is helping keep the yen supported, though it remains in the pre-weekend range, albeit barely.
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Forex Becalmed with the Greenback Mostly Firmer in Narrow Ranges
(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
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
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
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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