Thu, Apr 18, 2019 @ 12:29 GMT
Dollar ended the week broadly and deeply lower as recent selloff intensified. It should be noted again that the current fall is the continuation of the down trend that started back in January 2017, that is, since US President Donald Trump took office. And that happened despite Fed's three rate hikes last year. DOW gained more than 30% in the period. 10 year yield struggled in most of 2017 but finally surged through a key resistance level at 2.621. Data released during the period showed solid underlying momentum in the economy, except sluggish inflation. Even though Q4 GDP missed expectation, 2.6% annualized growth is still respectable. Fed is more on track for three hikes this year, starting March.
Dollar closed broadly higher last week, and closed as the strongest as boosted by a couple of factors. Firstly, House approved Senate's version of budget blueprint, and cleared an important procedural step for getting the tax cuts done by the end of the year. Secondly, markets responded positively to news that Fed chair Janet Yellen is out of the race for a renewal. Instead, Fed Governor Jerome Powell and Stanford University economist John Taylor are now the front runners. Powell is reported to be slightly more favored by US President Donald Trump and is seen as a less hawkish candidate. But after all, there is still a possibility of Powell/Taylor combination for chair/vice of Fed. And either one seems to be more welcomed by the markets than Yellen. Thirdly, Q3 GDP came in at an impressive 3% annualized growth, despite the impacts of hurricanes.
It's another week's that's full of headlines. Sterling ended as the strongest one on revised hope of a Brexit deal with the EU despite all the rhetorics. UK Prime Minister Theresa May also survived the Conservative Party conference without...
Canadian Dollar surged broadly last week following the rally in oil prices. Weaker than expected employment capped the Loonie's gain, but it ended as the strongest still. Sterling survived BoE super Thursday and ended up against all but Canadian....
Dollar ended as the strongest major currency last week as economic data released affirmed a December Fed hike. The surprised contraction in non-farm payroll was offset by strong wage growth. However, the greenback pared back some of its gain on resurgence on North Korea risk. On the other hand, the British Pound suffered broad based heavy selling as there were increasing calls for Prime Minister Theresa May to step down, in the crucial time of trade negotiations with the world. In spite of political uncertainties in Catalonia, Euro showed much resilience and ended the week mixed only. North Korea, Catalonia, Theresa May, Japan election, are the key things to watch ahead. Politics might overshadow economic data again.
What is a bigger driver of volatility in the markets, politics or monetary policy? Judging only from last week's development, politics got the nod, at least in the US. Investor sentiments initially sank on report that Trump was ready...
Dollar ended last week as the weakest currency as markets took Fed Chair Janet Yellen's testimony as a dovish one. Traders further pared back bet on a rate hike in September. And the development was accompanied by surge in stock indices to record highs. Canadian Dollar ended as the second strongest as lifted by BoC rate hike and rebound in oil prices. But it was outshone by Australian dollar which soared on iron ore prices. Sterling followed as markets continued to adjust their expectations on a near term BoE hike after central banker comments. Euro and Swiss Franc followed Dollar as the weakest ones ahead of ECB meeting this week. Meanwhile, Yen traded mixed as focus is turning to BoJ meeting.
Dollar staged a strong rebound towards the end of the week as boosted by an overall set of solid job data. While the greenback still ended lower against Euro for the week, it's now looking likely that the greenback has found a short term bottom already. It's still early to confirm a trend reversal for Dollar yet. And we believe the key lies in the yet to be confirmed fiscal policy of US President Donald Trump. But for now, Dollar will probably gyrate higher in the early part of this week until CPI release on Friday. On the other hand, while Euro ended the week as the strongest currency, its rallies against Dollar, Yen and even Swiss Franc are starting to look tired. Sterling ended the week generally lower after markets perceived the BoE Super Thursday as a dovish one. But commodity currencies were even weaker with Canadian Dollar starting to pare back the strong gains in the past two months.
Dollar ended last week as the strongest ones, mainly due to weakness elsewhere. Worries of global slowdown, or even recession, sent Germany and Japanese stocks sharply lower. Global treasury yields also tumbled on safe haven demand. Adding to that,...
Japanese Yen ended as the strongest major currency last week as selloff in global stock markets intensified. Dollar followed closely as the second strongest. Sterling, however, ended as the weakest one despite hawkish BoE announcement which hinted at earlier and faster rate hikes. Euro followed as the second weakest while Aussie was the third weakest. DOW recorded two of the largest single day point drops over the week. And two days of more than 1000 pts decline was definitely historic. Judging from the technical pictures of DOW, FTSE and DAX, while the corrections are not finished, they would enter into "buy zone" of traditional medium term corrections on next fall. That is, we could see the selling recedes soon. However, we'd like to point out a big risk ahead, China stocks, that could make these global selloffs long term corrections.
"The market is always right". That's by no means saying that the market is efficient, that's a topic for the academics. But, the market always move with certain underlying forces. We may or may not always understand why stocks, yields, currencies commodities move that way. It doesn't matter. And indeed, the voice of the market is usually the loudest when it does something that doesn't make sense. It's up to us to hear it or ignore it. And, reading news is not about reading the news but the reactions to the news. It's our choice to see the reactions, or just to criticize the reactions.
Risk sentiments continued to recover last week as Fed officials indicated they would be patient before making the next rate move. Positive developments of US-China trade talks also helped. One notable development was the rebound in US treasury yields...
Dollar ended last week broadly higher except versus the Japanese Yen. While economic data from the US were generally disappointing, they were not bad enough to alter Fed's path of three rate hikes this year. Just that, the data...
Dollar ended the week broadly lower, except versus Canadian Dollar. The Loonie was pressured after the "dovish" BoC rate hike which indicates cautiousness of next move. On the background, there was also a lot of uncertainty surrounding NAFTA renegotiation. Euro and Yen followed closely as the third and fourth weakest, ahead of BoJ and ECB meeting. On the other hand, Sterling ended as the strongest one as markets are increasing optimistic on the Brexit deal. Indeed, businessmen and investors could be starting to prepare for a smooth Brexit transition. Australian Dollar followed as the second strongest as solid job data boosts the chance of a rate hike in the second half of the year.
Dollar ended the week broadly lower, except versus Sterling, after US president-elect Donald Trump disappointed the markets by not giving any details on his policies during the first post election press conference. Dollar index reached as low as 100.72 before recovering to close at 101.18. Meanwhile, the greenback also took out key near term support level against Euro, Yen and Canadian Dollar, which carries some bearish implications. However, treasury yields staged a strong rebound on Friday, which could provide some relieves to Dollar bullish. 10 year yield closed at 2.380, after dipping to as low as 2.309, comparing to prior week's close at 2.418. Stocks were also resilient with NASDAQ closing a fresh record of 5574.12. DJIA stayed in tight range of around 200 pts. below 20000 handle. There are still prospects for the greenback to strike back is Trump delivers in his inauguration on January 20.
Yield treasury yield suffered sharp selloff on Friday. 30 year yield closed below 3.000 handle at 2.955, down -0.068. 10 year yield also lost -0.071 to close at 2.317 and carried near term bearish implications. Markets are getting increasing dissatisfied on the lack of progress from US president Donald Trump's administration regarding fiscal stimulus. There was no detail on the so called "phenomenal" tax reform yet. Instead, Trump just continued his attack on media, intelligence agencies and other countries like China. There were talks that Trump could eventually deliver virtually no fiscal stimulus that has an impact of this year's growth. All eyes will turn to his address to Congress on February 28. And reactions could be even more apparent if Trump fails to deliver anything concrete. Dollar also suffered and ended the week mixed.
It was a rather dull week last week as US tax plan was the main market driver. Dollar ended broadly lower as investors were clearly dissatisfied with the Senate's version of the plan, which delay corporate tax cut by a year. But judging from reactions in US stocks, comparing to European markets, sentiments were not that bad. For the moment, DOW's up trend is still intact. Similar picture is seen in Dollar which is holding above key near term support level against all other major currencies. Indeed, US long term yields staged the strongest rally in more than a month on Friday, on worry off additional bond supply next year. And the surge in 10 year yield could provide the greenback with extra support. The economic calendar with come back this week with more important economic data, like CPI fro US and UK. And, with a tight working schedule, US tax plan will stay on top as a key focus in the markets.
Intensifying recession fear was the main theme in the markets in March, alongside never-ending Brexit and trade tensions. With downside risks to growth starting to materialize, major global central banks started their dovish turns. Most notably, Fed now forecasts...
It has been a rather volatile week. We were partly correct in expecting strong impact from politics on the markets. But the reactions to central bank news and economic data surprised us. Dollar was clearly weighed down by FOMC minutes and CPI miss and ended as the weakest one. Meanwhile, Euro reversed early gains and ended mixed on rumors about ECB's tapering plan. There was practical no impacts from US President Donald Trump, North Korea and not even Catalonia. Markets also ignored UK Prime Minister Theresa May. Nonetheless, politics did play a role in the extraordinary volatile in Sterling, which ended as the strongest one. Aussie and Kiwi followed as boosted by China data.
Dollar ended the weak as the weakest major currency as weighed down by a number of factors. Judging from the fact that Yen and Swiss Franc were the strongest ones, risk aversion was a key factor in driving the greenback down. There is so far no resolution to the geopolitical tension between the US and North Korea yet. While US is calling for United Nations Security Council to vote on fresh sanctions against North Korea, it's effectiveness is in heavy doubt. There were also fears that North Korea will launch another missile to celebrate its foundation day on September 9, that is today. Also, not long after hurricane Harvey left, another one Irma is expected to land this weekend too. Some estimated the dame of Irma to be as much as USD 200b, topping Katrina that slammed into New Orleans back in 2005.
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