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Weekly Report

Risk Markets Surged on Receding Political and Trade Uncertainties

Risk aversion eased notably further last week as some of the imminent risks receded. New Italian government was sworn in as 5-Star Movement and bitter rival Democratic Party agreement to form a coalition. UK lawmakers passed a bill to force Prime Minister Boris Johnson to delay Brexit if no...

EUR/USD Resumed Down Trend as Dollar Surged after China Backed Down on Tariff Escalations

Dollar ended as the strongest major currency last week, largely thanks to late buying before weekly close. It remains to be proved whether that was due to month end flows. But somewhat receding risk of US-China decoupling and expectations of aggressive Fed cut could have provided some help too....

Sentiments Sank as Abrupt US-China Trade War Escalation Raises Risk of Cold War

Last week started with anticipation of Fed Chair Jerome Powell's Jackson Hole speech, but ended with shocked escalation of US-China trade war. Risk aversion should continue to dominate the markets this week, as hard-line rhetorics are expected from both sides. Indeed, they look moving away from a September trade...

An Important Week for EUR/USD as Fed and ECB Easing Expectations Built

Euro ended last week as the weakest one as comments from a top ECB official suggested a forceful easing package to be announced in September. Additionally recession fear in Germany sent 10-year bund yield to new record low. New Zealand Dollar followed as the second weakest on dovish RBNZ...

Global Risks Materializing, Stocks and Yields Tumbled, Yen and Franc Surged

US-China trade/currency war, no-deal Brexit, global slowdown and central bank easing were the main themes last week. The perceived risks to global economy were moving closer to materializing. Free fall in Chinese Yuan at the start of the week triggered US in designating China as currency manipulator. New 10%...

Abrupt Trade War Escalation Overshadowed Fed’s Cut, Yen and Franc Jumped

The abrupt escalation of US-China trade war overshadowed Fed's rate cut last week. As the trade talks in Shanghai yielded no constructive result, Trump announced to impose 10% on USD 300B in Chinese imports, effective September 1. The list include practically all untaxed Chinese goods, which should have much...

Sterling Might Bottom While Euro Would Stay Pressured, Dollar Indecisive

Sterling, Dollar and Euro were the major focuses last week as they took turn in suffering selloffs. The Pound was pressured by increasing worries over no-deal Brexit. While it ended the week as the weakest one, late recovery argues that the worst could be past for Sterling for the...

Dollar Reversed, Stocks Made New Records on as Fed Cut Expectations Solidified

Dollar's fortune reversed again last week as expectations of Fed July rate cut re-intensified. Such expectations also pushed US equities to new record highs. However, global equities lagged behind, with major FTSE, CAC and Nikkei closed inside prior week's range. DAX even dropped sharply. Also, 10-year and 30-year US...

Focus Turn to US Data after Trump & Xi Delivered at G20

Expectations setting were rather well set for the highly anticipated Trump-Xi meeting at G20. Both sides agreed to stop raising tariffs further. But it's unsure whether they've closed the huge gap that led to collapse in trade negotiations. If the causes remain, the results would be the same no...

Fed & ECB Turned Dovish, But It’s Too Early to Confirm July Policy Actions

Major global central bankers sang a chorus of dovishness last week. Most importantly, both ECB and Fed signaled the possibility of rate cuts ahead. Comparatively, RBA's indication of more rate cut was not much a surprise. In the background, it appeared US and China were back on track to...

Dollar Rebounded Strongly as Focus Turns to FOMC Meeting

Dollar ended as the strongest one last week as economic data from the US affirmed that Fed is in no rush to deliver the "insurance" rate cut this month, that is, on June 19. Yen was the second strongest as US and German treasury yields stays pressured. Canadian Dollar...

Dollar in Steep Decline… Before Trump Drops Mexico Tariffs

Dollar weakness was the main theme over the whole week. It started with worries over Trump's tariff threats to Mexico. Then Fed officials came out acknowledging the risks from Trump's tariff policies and signaled their openness to rate cuts should trade tensions worsen. Selling reached its peak after poor...

Sentiment Sank on Trump’s Political Weaponization of Tariffs

Free fall in major government yields extended, and accelerated last week. Meanwhile, it seemed that stocks investors finally woke up with sharply deteriorating sentiments. Major indices staged steep decline as risk aversion heightened. The first factor being the "ever-present" US-China trade tensions. Hard-line rhetorics from official media blossomed after...

Treasury Yield in Free Fall, But the Worst in the Markets are Yet to Come

Sterling was the weakest one last week as it suffered persistent selloff ahead of UK Prime Minister Theresa May's announcement on resignation. The Pound has indeed stabilized since then after the speculation was realized. Without May, the Brexit path ahead becomes even more uncertain. The key lies on who...

CHF, USD & JPY Surged on Deals, Sterling Plummeted

Deal, deal, deals. They're the main themes in the markets last week. The cross-party Brexit talks in UK collapsed and a high profile Brexiteer is tipped to lead the Brexit process after current Prime Minister steps down. Tensions between US and China escalated further. A trade deal is now...

US-China Trade War Escalated, No End in Sight as Principle Differences Remain

US-China trade war was the center of global focus last week. Markets were expecting a deal with Chinese Vice Premier Liu He visited Washington Instead Trump announced to escalate to full-blown level after China reneged on its commitments during the negotiations. Trump's decision was understandable even though it may...

Sterling Surged as UK Politicians Could Finally Drop Differences to Deliver Brexit

Sterling was the star winner last week as boosted by renewed hope of a Brexit deal between the government and opposition. Poor results for both Conservatives and Labours are piling pressure on both parties to end the Brexit standoff and drama as soon as possible. In short, Conservatives lost...

Worsening Inflation, Dovish Central Banks and Falling Treasury Yields

Yen and Dollar were the biggest winners last week on worsening inflation outlook, dovish central banks and falling treasury yields. Australian Dollar was the weakest one as CPI just rose 1.3% yoy in Q1 versus expectation of 1.5% yoy. The added heavy weight to the case of RBA rate...

Yields Surged, Yen Tumbled on Receding Global Risks

The financial markets were generally dominated by positive sentiments last week. Major global economic risks seemed to be receding generally, even though some uncertainties remain. The development was best seen in the strong rally in treasury yields. US 10-year yield closed the week up 0.059 at 2.56, above 2.554...

Fundamentals Improved But Uncertainties Remain, Forex Markets Isolated From Optimism Elsewhere

After a strong Q1, risk appetite extended into the first week of Q2. The most notable improvements were seen in the bond markets, as German 10-year yield turned positive again. US 10-year yield also reclaimed 2.5 handle. However, stocks and 10-year yield are both near to key resistance zone....