Australian Dollar Pressured Despite Improvement in Risk Appetite
US stocks closed generally higher overnight even though the rally looks a bit stretched. Positive sentiments continue in Asian session today. Yen is naturally one of the weakest on risk appetite. But Australian and New Zealand Dollar are also among the weakest, continuing recent decoupling with risk markets. We'll...
Sterling Tumbles on GDP Contraction and Weak Manufacturing Outlook
Sterling trades broadly lower today after data showed unexpected GDP contraction in April. More importantly, the deterioration in manufacturing after Brexit stockpiling appeared to be much worse than expected. Other survey data indicated little recovery momentum in Q2 so far, which could be heading for a contraction. Meanwhile, Australian...
Dollar Recovers on US-Mexico Deal, Aussie Weighed Down by China Imports
Dollar recovers broadly today while stocks markets rebound. Threat of US-Mexico trade war vanished after Trump announced to suspend indefinitely the plan to impose tariffs on all Mexican imports. An agreement was made between the US and Mexico on migration issue. At this point, there is no confirmation of...
CFTC Commitments of Traders – USD to Weaken Further as Rate Cut Hopes Loom
The CFTC Commitments of Traders report in the week ended June 4 shows bets for US dollar dropped on bog long and short sides. NET LENGTH in USD Index dropped -864 contracts to 26 234. Both speculative long and short positions decreased during the week. Traders continued to trim...
CFTC Commitments of Traders – Energy Prices Weakened Further on Gloomy Global Outlook
Energy prices remained weak. We expect the bearish trend to carry on although OPEC+ would likely announce to extend output cut at the June 25 meeting. According to the CFTC Commitments of Traders report for the week ended June 4, NET LENGTH for crude oil futures slumped -38 770...
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...
Dollar and Yield Tumble as Poor NFP Affirms Fed’s Rate Cut
Dollar tumbles sharply in early as poor non-farm payroll report affirms the case for Fed rate cut this year. The headline number of 75k is a big miss. Equally importantly, weaker than expected wage growth argues that inflation pressure could remain subdued ahead. The question now is on whether...
Dollar Recovers ahead of Job Data, But More Downside Still in Favor
Dollar recovers mildly today, continuing to stabilize from this week's selloff. The greenback is staying in range established earlier except versus Canadian. There is some optimism on the outcome of US-Mexico negotiations. Or at least, tariffs won't go up to the worst case of 25% down the road. Together...
ECB Not Dovish Enough – Low Rate to Stay until Mid-2020 and TLTRO Pricing Revealed.
We believe ECB’s more dovish tone in June is insufficient to stimulate the economy. As expected, ECB extended the timing that the historically- low interest would remain. It also released the pricing of the TLTRO-III. We were slightly disappointed that the interest rates offered was higher than those in...
Euro in Range after Rough Ride on ECB’s Not Dovish Enough Meeting
It's a roller coaster ride for Euro. It initially dipped after ECB said there will be no rate hike at least through mid 2020. Then it recovered and breaks yesterday's higher against Dollar as the press conference and new economic projections turn out to be not that dovish. Though,...
Dollar Recovered From Overly Bearish Sentiments as Focus Turns to ECB
Dollar tried to stage a reversal overnight after initial selloff, but upside is so far limited and there is no confirmation of bottoming yet. There are a couple of factors behind the move. Post ADP employment decline was largely undone by better than expected ISM services. In particular, the...
Crude Oil Inventory Build Adds to Oversupply Concerns amidst Global Slowdown
Having fallen over -20% from April's peak, oil price has uncomfortably entered a bear market. Intensification of US- China trade war, slowdown in economic growth in major economies, Brexit uncertainty and other geopolitical factors have heightened concerns about the global oil demand. Stock- builds in the US only adds...
Dollar Selloff Extends on Poor ADP Job, Yields Dive Again
Dollar suffers another round off selloff after terribly poor ADP job data, which showed only 27k growth in May. 10-year yield also takes a steep dive breaching Monday's low at 2.081. Gold breaks 1344 and is on track to take on 1346.71 resistance. The poor data adds to speculation...
Dollar in Deep Selloff as Markets Price in 90% Chance of Fed Cut by September
Talks of Fed rate cut intensified overnight after comments from Fed Chair Jerome Powell. Markets are now even pricing in 90% of a cut by September FOMC meeting. US stocks rebounded strongly with DOW closed up 512.40 pts or 2.06%. Positive sentiments carried through to Asia will broad based...
Dollar Turns Mixed as Risk Aversion Recedes Mildly, Overall Markets Mixed
While Dollar has been pressured for most of the day, receding risk aversion seems to be giving in a hand in early US session. The greenback is riding on recovery in both US yield and stocks and trades mildly higher. Adding to that, Chicago Fed President Charles Evans maintains...
Dollar Decline Accelerates on Falling Yield and Stocks, Trade Wars and Fed Cut Talks
Dollar suffered another round of selloff this week and remains broadly weak today. Free fall in treasury yields continued overnight with 10-year yield closing at 2.081, down -0.061. 2% handle is now looking vulnerable with current downside acceleration. Tech stocks were hit hard with NASDAQ lost -1.61%, on news...
RBA Lowers Policy Rate to 1.25%. Two of Big Four Pledge to Pass the Cut to Market in Full
For the first time in 3 years, RBA lowered the cash rate by -25 bps to 1.25%, a fresh record low, in June. The rate cut had been well anticipated as the members sought to support the labor market and boost inflation. Further reduction is possible later this year....
ECB Preview- More on Dovish Side. Focus on Forward Guidance Extension and Pricing of TLTRO-III
We expect the ECB to deliver a more dovish message in June. We expect to see changes in the forward guidance. ECB would also announce the technical details of TLTRO-III. The economic projections would probably similar to the previous ones, despite modest upside surprise in the first quarter GDP...
Dollar Softens ahead of Important Economic Data, EUR/CHF Hits 2-Yr Low
Dollar weakens broadly today as markets are turning their focuses to manufacturing from the US. Final reading of Markit PMI shouldn't deviate much from the first print 50.6. Meanwhile, ISM manufacturing could probably how confidence turned after last round of trade war escalation with China. Even if the greenback...
Threat of Dumping US Treasury Signals China is Running Out of Weapons in Trade War
China’s White Paper, entitled “China's Position on the China-U.S. Economic and Trade Consultations” on recent escalations of trade war has weighed on the fragile market. While the majority of market participants judges that China has opted for a hardliner approach, interpretations of the outcomes are diverse. While some judge...