Tue, Jan 22, 2019 @ 10:20 GMT
Dollar is under broad based selling pressure on falling treasury yields, globally. In particular, 10 year yield drops below 3% level for the first time since September. Canadian Dollar and Swiss Franc are following as the next weakest. On...
Dollar received no support from better than expected ADP employment data. Instead, it's weighed down by dovish comments from a Fed official. The greenback is trading as the second weakest for today in early US session. It's just slightly...
The strong stock rallies in the US generally carry through to Asian session. At the time of writing, Nikkei is up trading up 0.45%, Hong Kong HSI up 0.58%, Singapore Strait Times up 0.52%. That followed the impressive 1.58%...
Australian Dollar is lifted mildly today by business condition and confidence data and is trading broadly higher. Nonetheless, the forex markets are generally stuck in consolidation mode. Risk markets further stabilized overnight with DOW closed up 410 pts, or 1.7%, at 24601, responded positively to US President Donald Trump's infrastructure plan. Japan Nikkei follow is s trading up 0.8% at the time of writing. The economic calendar remains rather light today. UK inflation data, in particular CPI, will be the focus.
As widely anticipated, the November FOMC meeting contained few changes from the previous one. The members left the target range of the Fed funds rate unchanged at 1-1.25%. One surprise came from the upgrade of the growth assessment to 'solid' for the first time since 2015, despite disruptions by hurricanes. Inflation stayed below the +2% target and the members acknowledged that core inflation 'remained soft'. However, the encouraging growth outlook and further decline in the unemployment rate suggest that a December rate hike remains on track.
Dollar suffers some fresh selling in early US session after weaker than expected inflation data. Headline CPI rose 0.4% mom, 2.2% yoy in November inline with consensus. However, core CPI rose just 0.1% mom, 1.7% yoy , below expectation of 0.2% mom, 1.8% yoy. The greenback will now look into FOMC rate decision and statement for the needed fuel to extend recent rebound. Elsewhere in the currency markets, Sterling is trading as the best performing one today in spite of disappointing job data. Meanwhile Swiss Franc is trading as the weakest one, followed by Euro.
The forex markets are rather quiet today as most countries are still on holiday. Yen is trading generally lower but loss is limited so far. Japan Tankan survey posted some disappointing data but was shrugged off. Australian Dollar is...
According to the CFTC Commitments of Traders report for the week ended July 31, traders were generally bullish towards the energy complex. Net LENGTH for crude oil futures rose +2 929 contracts to 613 400. Net LENGTH for heating...
British pound's post-BOE rally has more than evaporated over the past two weeks. Political uncertainties and the lack of progress in Brexit negotiations are the key reasons driving sterling lower. Despite mounting pressure on PM Theresa May to step down, we believe it would be hard to materialize as there lacks charismatic leaders within the Conservative Party and the move might trigger a snap election and a Labor government. Progress of Brexit talks has remained slow. The next round of talk in Phase I would begin this week, amidst EU Parliament's overwhelming vote that previous talks has not brought sufficient progress. EU member states are due to vote next week to decide whether the talk can progress to the next phase. It is getting likely that BOE would increase the Bank rate by +25 bps in November. However, we do not consider this as the beginning of a tightening cycle as UK's macroeconomic developments remains fragile.
Euro is trying to reverse from initial dip today but buying is so far limited. Traders are getting cautious ahead of ECB President Mario Draghi's speech in the Jackson Hole symposium. There were media reports last week that Draghi won't delivery anything outside of the topic of the symposium, that is, "Fostering a Dynamic Global Economy". And it's also clear that ECB will wait for more economic data, especially on inflation, and discuss policy change in the September meeting. Hence, some analysts argue that Euro could indeed be lifted if Draghi meets this expectation by saying nothing. But of course, what Fed chair Janet Yellen delivers is another big factor for both Dollar and Euro. Markets are generally not convinced that Fed is going to hike again in December. The greenback could be given a lift instead and drag the Euro down if Yellen shows no concern over recent tame inflation reading.
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products stocks gained +2.99 mmb to 1262.98 mmb in the week ended October 12. Crude oil inventory rallied +6.49 mmb (consensus: +2.17 mmb)...
While risk aversion continued in Asian session, volatility cooled mildly. Major pairs and crosses are staying in relatively tight range. Swiss Franc and Sterling are generally higher while commodity currencies are soft. But the picture for the day could...
Canadian Dollar remains the strongest one today as boosted by the new trilateral USMCA trade deal with US and Mexico. Meanwhile, Sterling is shot up by news that UK Prime Minister Theresa May is ready to make a new...
RBA has sounded confident in the domestic growth outlook in both. On the job market, the members acknowledged the decline in unemployment rate and indicated the “notable” fall in youth unemployment. The central bank forecast that employment growth would...
Subdued economic growth and unconventional easing measures resulted in EURUSD's third consecutive yearly decline, although the loss was greatly trimmed to about -3%, last year. EURGBP, however, jumped +16% as sterling slumped on concerns over British economic outlook after Brexit. Risk is to the downside for the single currency in 2017 as pressured by elevated political uncertainties and ECB's dovish tapering stance. Recent upside surprises on inflation data would not make ECB less dovish. Core inflation remained weak and should only improve gradually this year, not sufficient for the central bank to commit to tapering. A break below the 1.0463 low in March 2015 has paved the way for EURUSD to go further lower. We expect EURUSD to reach parity by 2Q17, probably after French election.
Markets open another week rather steadily. Canadian Dollar remains the strongest one as supported by rate hike expectations. Dollar is trying to recover again, in particular as EUR/USD is feeling heavy ahead of 1.2091 key near term resistance. But more evidence is needed to confirm underlying strength in the greenback. Strong global risk appetite is keeping Yen and Swiss Franc soft. But Aussie is so far the weakest one after the government forecasts 20% drop in iron ore price this year.
US equities surged to new records highs overnight as markets await FOMC's announcement on balance sheet normalization. DOW closed up 39.45 pts or 0.18% at 22370.80. S&P 500 gained 2.78 pts, or 0.11%, to 2506.65. 10 year yield also extended recent rebound and rose 0.014 to 2.243. But Dollar is trading generally lower in Asian session today. For the week, Euro, Aussie and Kiwi remain the strongest ones. Meanwhile, Canadian Dollar is under pressure as rate hike speculations cooled. Strong risk appetite in the market is pressuring Yen as the second weakest. Markets have little to response to US President Donald Trump's provocative talk to totally destroy North Korea.
The markets trade in mild risk aversion today and the sentiments sent Yen broadly higher. Meanwhile, Dollar regains some ground from Friday's profit taking pull back. The greenback stays supported by firm expectation of a March Fed hike. Nonetheless, the moves in the forex markets are relatively limited. Politics has been a stronger drive in the forex markets, as well as others since late last year. This view is shared by the BIS too as seen in it's quarterly report. For the moment, US fiscal policies, French elections, Brexit negotiations, as well as some geopolitical development like North Korea's firing of missiles will stay as important market drivers. Dollar will look into Friday's job report for sealing the case for a Fed hike..
Dollar continues to trade generally weak today on worries of a delay in implementing corporate tax cut. EUR/USD edged lower to 1.1553 earlier this week but is now back above 1.16 as the greenback pared gains. Both USD/CHF and USD/JPY are stuck in tight range below recent high at 1.0037 and 114.73 respectively. Yen tried to stage a breakout yesterday but there was no follow through buying. Meanwhile, AUD/USD is also holding on to 0.7624 support as sideway trading continues. New Zealand Dollar trades slightly firmer after a more hawkish than expected RBNZ statement. But recent price actions in Kiwi remains corrective in nature.
Dollar rally lost some momentum as markets are concerned that US President Donald Trump's firing of FBI Director James Comey could delay his tax reform. In a controversial move, Trump abruptly fired Comey who oversaw an FBI investigation into Trump's tie with Russia during last year's election campaign. Trump's tax reform was originally targeted at approval by the Congress by August. It was already delayed after the healthcare act failure. Markets are concerned that there will be more distraction to Trump ahead and further slow down the progress on tax reforms.
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