Thu, Feb 21, 2019 @ 13:47 GMT
Dollar suffers selloff against most major currencies except Sterling after slightly weaker than expected CPI data. But it's Euro that really shines in early US session, extending recent rally against Sterling and is trying to rebound against Yen and Swiss Franc. That could be technical driven as both EUR/JPY and EUR/CHF are close to near term fibonacci support. Still, for the week as a whole, Yen and Swiss Franc are still trading as the strongest currencies. Commodity currencies and Sterling will likely end as the weakest on risk aversion.
The responses to FOMC's announcement overnight were very clear. Stocks rebounded with DJIA gained 112.273 pts or 0.54% to close at 20950.10. S&P 500 rose 19.81 pts or 0.84% to close at 2385.26. NASDAQ jumped to as high as 5911.20, just missed record high at 5911.79 before closing at 5900.05, up 43.23 pts or 0.74%. Long term treasury yields, on the other hand, tumbled sharply. 10 year yield was rejected from 2.621 resistance and closed at 2.508, down -0.087 for the day. 30 year yield lost -0.066 to close at 3.106. Dollar index dips to as low as 100.43 and broke 100.66 near term support level, suggesting more downside ahead.
The RBA minutes for the November minutes delivered a dovish tone as policymakers expressed concerns over the wage growth outlook. This is consistent with the central bank's worry over household spending as indicated in the meeting statement (released earlier this month). We believe this has added further pressure to Aussie's recent weakness, sending AUDUSD to the lowest level in 5 months. The central bank kept its powder, leaving the cash rate unchanged at 1.5%, in November. We expect the monetary policy would stay unchanged at least until 1H18 and could extend to 2H18.
In an originally quiet holiday trading day, Sterling surges broadly as UK and EU agreed on the declaration on future relationship. The move, while strong, is relatively limited at this point. There seems to be some hesitation for Sterling...
At the meeting later this week, we expect BOE members to vote unanimously to keep the Bank rate unchanged at 0.75% and the asset purchase program at 435B pound. The macroeconomic indicators released during the inter-meeting period are mixed,...
Sterling trades broadly higher today as boosted by stronger than expected wage growth data. While the gains are impressive, upside is limited against Dollar, Euro and Yen so far. UK Prime Minister Theresa May's fortunate in the EU summit...
Initial reactions show markets are not too happy with US non-farm payroll report. While headline job growth beat expectation, it was partly offset by downward revision in prior month's figure. More importantly, wage growth came in weaker than expected. It's seen as a crucial factor for inflationary pressure, or the lack thereof. While the greenback retreats mildly as knee jerk reaction, there is no sign of a reversal. Instead, the greenback stays very strong against Euro and Swiss Franc. 1.1712 in EUR/USD is now at risk and break will probably trigger broad based acceleration in Dollar. Meanwhile, Sterling reversed earlier gains as Brexit negotiation breakthrough finally becomes a fact today.
Dollar recovers in general today as markets turned into consolidation mode. Euro is treading water while markets await ECB rate decision and press conference. Traders would be eager to hear how ECB President Mario Draghi would clarify his comments in the past few weeks. Or Draghi will just let markets' perceived ECB hawkishness be an assumed base case. Meanwhile, Yen is steady as BoJ delivered what are expected, keeping policies unchanged, raising growth forecast and lowering inflation forecast. Aussie was lifted briefly by solid job data but quickly retreated.
Yen and Swiss Franc ended as the weakest ones last week as global stock markets ended higher. There were some jitters in risk sentiments after US announced to move on with tariffs on additional USD 200B in China imports,...
Sterling is trading generally firm today as the EU and UK finally agreed on the withdrawal agreement. It will now have to go through Prime Minister Theresa May's Cabinet today. That shouldn't be too much a problem despite some...
Yen falls sharply in Asian session on risk appetite flows. Strong earnings from Japanese companies lifted Nikkei back above 20000 handle as the index is trading up 0.6% at the time of writing. That followed another record close in DOW overnight, at 21963.92, up 0.33%. Euro is benefiting most from the developments, in particular, with EUR/JPY finally taking out 130.76 resistance to resume recent rally. Markets will have an eye on German DAX today, which rebound by 1.1% yesterday. That mark the complete of a recent correction and if that's the case, strength in DAX would likely support the Euro further. Meanwhile, Dollar also recovers mildly today, against most except Euro as markets await ADP private employment data from US. Talking about employment, New Zealand Dollar is trading as the weakest one as dragged down by Q2 job data.
Risk aversion was again the main theme in the financial markets last week. But this time, commodity currencies ended as the strongest ones. Sterling was hardest hit as disappointing inflation reading further killed the chance of an early BoE hike. Euro followed on report that ECB President Draghi won't address monetary policy in the upcoming Jackson Hole symposium this week. Also, the common currency was pressured as ECB minutes showed worries on Euro overshooting its strength. Dollar suffered much on the political turmoil in the White House but it ended slightly higher against most except Canadian Dollar and Australian Dollar. Meanwhile Yen and Swiss Franc failed to capitalize on risk aversion and ended the week mixed.
Markets are rather steady in Asian session today. Major forex pairs and crosses are staying in yesterday's range. Dollar is a bit firmer entering into European session. But there is no follow through buying yet. US President Donald Trump's...
There have been both positive and negative data released since the March FOMC meeting. We expect policymakers to view slowdown in GDP growth as driven by temporary factors which should not affect the monetary policy outlook. Meanwhile, the central...
Dollar trades mixed in early US session with notable weakness against Euro and Swiss Franc. The forex markets are relatively steady elsewhere, with Aussie and Loonie trading to recover while yen extends its pull back. US initial jobless claims rose 10k to 244k in the week ended April 15, slightly above expectation of 241k. Continuing claims dropped -49k to 1.98m in the week ended April 8, lowest since April 2000. Philly Fed survey dropped to 22.0 in April, down from 32.8, below expectation of 25.6. In other markets, US futures point to a mildly higher open and stocks could pare back some of yesterday's steep loss. Gold is hovering around 1280 while crude oil is heading to test 50 psychological level. .
The British Pound makes a strong come back today and is trading as the strongest one at the time of writing. UK government released its long term Brexit economic analysis, showing that Prime Minister Theresa May's Brexit deal could...
RBA left the cash rate unchanged at 1.5% in April, continuing to struggle between soaring property prices and subdued inflation. Policymakers appeared more optimistic over the global economic outlook than the domestic one. The central bank remained concerned over the rising property prices and warned of the situation that household borrowing growth was outpacing growth in income. We expect RBA to leave its monetary stance unchanged throughout the year.
The December minutes turned out more hawkish than expected. While the policymakers generally judged that the existing monetary policy remained 'appropriate'. They also agreed that the forward guidance might warrant some adjustments as the pace economic recovery accelerated. The minutes noted that the 'transition would take place without a change in sequencing', suggesting that no rate hike would be implemented before the end of the asset purchase program. The minutes indicate that the forward guidance would be a key policy tool in the year ahead.
US equities ended broadly higher overnight as boosted by tax cuts optimism. DOW gained 0.40% to 24922.68 and 25000 handle is within reach. S&P 500 closed solidly above 2700 handle at 2713.06, up 0.64%. NASDAQ also rose 0.84% to 7065.53. All three indices were at records. Nikkei follows today and surges close to over 2.6% through 23300. Dollar was also lifted by Fed officials's discussion that tax cuts could prompt faster rate hike. But for the moment, the greenback is still traded in red against all but Swiss Franc for the week. More support is needed from economic data, possibly non-farm payroll and wage growth, to give the greenback a turnaround.
Japan Yen and, to a slightly lesser extent, Dollar suffer broad based selloff today as global markets return to risk seeking mode. Major European indices are generally higher with DAX up near 1% at the time of writing. CAC...
- advertisement -