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...
Dollar Mixed as China’s White Paper Signals No Quick End to Trade War
Dollar opened the week mildly lower but appears to have found some footing in early European session. Trump is fighting trade wars on two fronts, at least. On the one hand, China has cleared stated its position for not backing down on some core issues, with a white paper...
CFTC Commitments of Traders – Bets of USD Diminished Amidst Uncertainty about Fed’s Policy Outlook
The CFTC Commitments of Traders report in the week ended May 28 shows that NET LENGTH in USD Index climbed higher, by +386 contracts, to 27 098. Both speculative long and short positions increased during the week. Traders continued to trim their bets on USD. Recent focus has returned...
CFTC Commitments of Traders – Weaker Oil Prices Anticipated as Traders Accumulated Short Positions
According to the CFTC Commitments of Traders report for the week ended May 28, Bearish sentiment was broadly-based in the energy market. NET LENGTH for crude oil futures slumped -39 460 contracts to 438 938 for the week. Speculative long positions plunged -21 546 contracts while shorts rose -17...
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...
DOW Opens Down 1% as Bears Cheer Trump’s Mexican Tariffs, Yen Maintains Strong Momentum
Global financial markets are rocked by Trump's decision to use tariffs as a way to force Mexico to solve border security crisis of the US. 5% tariffs will be imposed in all Mexico imports to US starting June 10, then "gradually" as Trump claimed, go up to 25% on...
Yen Jumps as Trump Uses His Only Trick of Tariffs on Mexico
Risk aversion intensifies again today as Trump uses his one old tricky in tariffs again, but turned to Mexico. 5% tariffs will be imposed on all Mexican imports on June 10, and "gradually" move up to 25% in less than 4 months time if Mexico doesn't help on border...
US Crude Oil Inventory Dropped Modestly, While Production Built Further
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks declined -1.57 mmb to 1285.49 mmb in the week ended May 24. Crude oil inventory slipped -0.28 mmb to 476.49 mmb (consensus: -0.86 mmb). Inventories rose in 3 out...
USD/JPY Extends Recovery on Solid US Data, Trade Spats Shrugged
Dollar trades generally higher today as risk markets stabilized, partly helped by recovery in treasury yields too. Economic data from US generally matched expectations. Markets also shrugged off repeated comments from US and China regarding trade war. Though, at the time of writing, Canadian Dollar is the strongest one,...
Sentiments Stabilized Despite More Hard-Line Trade Rhetorics, Stock Markets Not Ready for Crash Yet
Risk sentiments stabilized somewhat in Asian session today. While major Asian indices are down, losses are so far limited. Late buying in the US overnight argues that the markets are not in a crash yet despite all the talks on trade war escalation. DOW has indeed reached as low...
Market Not Convinced by BOC’s Intentionally Neutral Tone
Despite BOC’s effort to temper the need of a rate cut, the market is obviously unconvinced. Market participants continue to price in about 30% chance of rate cut later this year and USDCAD surged to the highest level since January. The key message from the meeting is that the...
Risk Aversion Stays With Persisting Trade Worries, Franc and Yen Strong Again
Risk aversion stays in the global financial markets today but it's not in the most intense state yet. A trigger for selloff in stocks and decline in yield is China's threat to squeeze supply of rare earths to the US as part of a countermeasures in trade war. However,...
EUR/JPY Downside Breakout on Falling Yields and Risk Aversion
Yen and Swiss Franc are finally showing some strength today. There was no special escalation in US-China relationship as the former refrained from naming the latter as currency manipulator. But recovery attempts in stocks were rather short lived. Selloff in stocks is in tandem with free fall in treasury...
How Does Brexit Proceed? After Results of European Parliament Election Showing Divided Britons
The Brexit Party led by Nigel Farage emerges as the biggest party in the European Parliament, with 29 seats and 31.6% (up +31.6% from previously) of the votes across the 12 regions in the UK. Surge in votes was also seen in Liberal Democrats, a pro-EU party, and Greens,...
Yen Attempts to Rally on Falling German Yields, But No Follow Through Buying Yet
The forex markets are rather mixed today. Italy's budget clash with EU is clearly a concern of investors. Markets are anticipating the tension between Rome and Brussels to intensify with a penalty on breach of EU fiscal rules. Italian 10-year yield jumps sharply higher today while German 10-year yield...
Yen and Franc Mildly Lower in Consolidation, More Upside Still in Favor
The forex markets are generally steady in Asian session today. Risk sentiments firmed up mildly in Asia with gains seen in major indices. In particular, China's Shanghai SSE is back above 2900 handle with around 0.9% gain. The moves are reflect in strength in Australian, New Zealand and Canadian...