Mon, Nov 29, 2021 @ 11:02 GMT
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Weekly Report

Global Stock Market Crashed, Dollar Tumbled after Episode 1 of US-China Trade War

Global stock markets suffered steep selloff last week as US President Donald Trump has finally declare the start of trade war with China. Dollar was under broad based pressure with the development, but it was only the second weakest one. Australian Dollar suffered most for it's close trade link...

CAD, AUD, NZD All Suffered as Trump Stepping on Protectionist Acceleration Pedal

Yen maintained solid strength throughout last week as it ended as the strongest one. Meanwhile, the fortunes of commodity currencies suddenly reversed towards the end. Canadian, Australian and New Zealand Dollar ended as the three weakest ones. Some blamed the selloff in commodity currencies to Dollar's strength. But the...

Stocks Survived Trump’s Tariffs, Boosted by Perfect NFP, Commodity Currencies Came Back

The stock markets in the US ended the week up solidly as boosted by the "perfect" job report as seen by investors. Worries over trade wars also receded as US President Donald Trump has backed down on his steel and aluminum tariff even on the day of its arrival....

Trade Wars Overwhelmed the Markets, More Volatility ahead

The theme of trade wars overwhelmed the global financial markets last week and overshadowed any other topics. It started on news that US President Donald Trump is going to impose tariffs of 25% on steel and 10% on aluminum. Trump then doubled down by tweeting "trade wars...

Dollar Rebound Lacks Conviction for Trend Reversal

Dollar ended last week as the strongest major currency Fed communications solidified the case for three hikes this year. Nonetheless, as pointed out a few times, the greenback was held below key near term resistance levels against others and there is no change in its bearish outlook yet....

Dollar Hit Three Year Low as Down Trend Resumed, No Clear Sign of Reversal Yet

Dollar's broad based weakness continued last week and ended as the worst performing major currency. Stronger than expected consumer inflation reading listed treasury yield and raised the chance of a March Fed hike. Fed fund futures are now pricing in 83% chance of a March hike. But that provided just very brief support to the greenback. Dollar index extended the long term down trend to new three year low, suffering the worst weekly decline since September. Some pointed to Friday's rebound as a sign of reverse in fortune in Dollar. But we'll, for now, take a more cautious stance on it first. Elsewhere, Canadian Dollar and Australian Dollar ended as the second and third weakest ones. Yen, Kiwi and Pound were the strongest.

Global Equities Should be Close to Buy Zones after the Crash, If there is No China

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.

Swiss Franc Shone as Global Stocks Markets Entered into Correction Phase

Steep selloff in the global stock markets ended up as the biggest news last week. Some attributed the surge in global yields and stock market declines to the solid non-farm payroll report from US. The headline 200k growth confirmed underlying healthiness in the US job market. And more importantly 0.3% mom rise in average hourly earnings in January, following 0.4% mom rise in December, indicates pickup in momentum in wage growth. The case for Fed to hike three times this year looks more likely than ever. And subject to development, Fed could indeed hike the fourth time in December.

Dollar Bleeds as Trump and Mnuchin Showed Their Hands in Davos

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 Shows No Sign of Bottoming, Canadian Dollar’s Selloff Suggests More Weakness to Come

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.

Global Stocks Started 2018 With Break-Loose Rally, Yen and Swiss Franc Suffered

Risk appetite dominated the markets last week and with global equities having a stellar start to 2018. With that, Japanese Yen and Swiss France ended as the two weakest ones. Dollar attempted to rebound multiple times but failed. Non-farm payrolls data were solid even though the headline number missed expectations. But it nonetheless gives no push for Fed to quicken it's rate path. Euro was also relatively firm throughout the week, until data showed headline and core inflation slowed in December. Sustainable strength was seen in commodity currencies. In particular, Canadian Dollar ended as the star as double boosted by strong job data and surge in oil price.

Dollar Could Be Ready for Rally as Tax Bill Obstacles Cleared

After some roller-coaster rides during the week, Dollar staged a broad based come back before the weekly close. The Republicans' tax plan is now back on track for being signed off by US President Donald Trump, by the end of the year, probably even before Christmas. There were various factors sank the greenback. Tamer than expected core CPI reading was one. An additional dissenter in Fed's rate hike was another. But looking back, the uncertainty on whether Senate could get the bill passed was probably the biggest weight on Dollar. It's still early to tell but focus will now be on whether Dollar could stage a sustainable turnaround before year end.

Dollar Rally Lacks Decisiveness, Looks Forward to FOMC

Dollar ended the week as the strongest major currency on optimism that Republicans are on track to get the tax bill passed by the end of the year. However, there was certain indecisiveness in Dollar's rally. In particular, the greenback lost momentum as wage growth in non-farm payroll report disappointed. That added to concerns of lack on inflationary pressure, and thus could slow down Fed's tightening pace. But there are two sides of every coin as the greenback just lost momentum, but not reversed. Dollar will look into this week's FOMC rate hike and economic projections for guidance.

Dollar to Take the Spotlight Back as Senate Passed Tax Bill

Dollar took a back seat last week as traders were cautious ahead of the Senate's vote on the tax bill. Sterling took lead instead as boosted by positive Brexit news, as UK and EU seemed to have agreed on the divorce bill and Irish border. Canadian Dollar followed as the second strongest as stellar employment data raised the chance of more BoC hike next year. Meanwhile, Yen ended as the weakest one. It's followed by Euro, despite solid Eurozone data. Now, with the tax bill finally passed in Senate on Saturday, the greenback would likely come back to spotlight this week, with non-farm payroll also featured.

Euro Jumped on Improving German Economic and Political Outlook; Dollar Softened ahead of “Make or Break” Week for Tax Plan

Euro surged broadly last week as economic data suggested a "boom" in Germany ahead. Also, political situation in Germany has improved. Ending as the strongest currency, Euro also took Sterling and Swiss Franc high. On the other hand, Dollar ended as the weakest one as traders held their bet during thin holiday trading. The US tax plan is entering into a "make or break" week. Despite sharp rally in oil price, Canadian Dollar ended as the second weakest one as data suggested that BoC would remain on hold. Aussie and Yen were both weak too. We perceive the rout in China stock markets as a factor in pressuring both.

Yen Surged on Risk Aversion and Flattening Yield Curve, Dollar Looks to Tax Bill as Savior

Yen surged broadly last week and ended as the strongest one as partly driven by flattening yield curve, and partly by global risk aversion. Selloff in oil was one of the major factors driving equities down. Euro and Swiss Franc followed Yen with the common currency supported solidly by strong German GDP. On the other hand, commodity currencies ended as the weakest ones. In particular, data from Australia suggested that RBA would stay on hold for longer than originally expected. Meanwhile, inflation data from Canada argued that BoC won't rush into another rate hike. News from US were mixed. On the positive side, a big step was made with passage of the tax bill in House. On the negative side, the real challenges lie in Senate where Republicans only have a slim majority. And, efforts to reconcile the bills of both chambers are huge. Also, there are concerns of political instability as Special Counsel Robert Mueller's Russian probe is getting closer to US President Donald Trump. But so far, US financial markets have displayed much more resilience than others.

Dollar Ended Broadly Lower on Tax Plan Jitters, Rally Resumption Delayed

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.

Dollar Survived Key Event Risks, Set to Resume Rally Soon

It was a week full of high profile events and much volatility was seen. But in the end, most forex pairs and crosses ended inside prior week's range. Canadian Dollar closed as the second strongest, next to Kiwi, thanks to strong October job numbers. In addition, the Loonie was lifted further as WTI crude oil surged through 55.24 key resistance to resume the up trend that started back in February 2016. Sterling was the weakest one as markets responded negatively to the dovish BoE rate cut. But the pound is stubbornly holding on to key near term support against Dollar, Euro and Yen so far. Dollar ended the week mixed after all the events. FOMC delivered a forgettable statement, Jerome Powell was confirmed as President Donald Trump's nomination as next Fed chair, House released the tax bill. Nonetheless, resilience of the greenback after non-farm payroll miss could be seen as hint of underlying strength. And Dollar could be back into driving seat soon.

Dollar to Look to Non-Farn Payroll to Solidify Momentum for Bullish Reversal

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.

Dollar Surged on Tax Plan Hope, Yields to Provide Further Support

Dollar surged broadly last week as Republican's tax plan overcame another hurdle. The news also sent DOW and S&P 500 to new records, with upside acceleration. Accompanying that, treasury yields closed sharply higher, reversing prior week's loss. Technical development in Dollar was not totally convincing yet. NZD/USD led the way lower as markets were unhappy with the new labour-led coalition in New Zealand. USD/CAD followed after disappointing economic data. Solid risk appetite also pushed USD/JPY and USD/CHF near term resistance to resume recent rally. But EUR/USD was kept in range only, showing much resilience in spite of political turmoil in Catalonia. GBP/USD was also held in range with support from some positive news regarding Brexit. AUD/USD also stays in recently established range.