FOMC Preview – Tapering to Formally Begin
The November FOMC meeting would see the Fed making a formal announcement on QE tapering. We expect the plan would begin immediately and is expected to end by mid-2022. The Fed funds rate will stay unchanged at 0-0.25%. The market has priced in over 60% of a rate hike...
Swiss Franc Rallies Against Euro and Sterling, Dollar Mixed
Swiss Franc is strengthening notably today, but selling focus has somewhat shifted from Euro to Sterling. Still, the franc is outshone by New Zealand Dollar, which is overwhelming the strongest. On the other hand, Yen is the weaker one following extended risk-on sentiments from Japan to Europe. Sterling is...
Nikkei Surges on LDP’s Election Win, Yen Trades Lower
Japan's Nikkei index surges sharply by over 2% in Asian session, in very positive response to the easy win of the Liberal Democratic Party in Sunday's election. Prime Minister Fumio Kishida's LDP retained comfortable majority in the House of Representatives, ensuring continuity of the economic policies. While other Asian...
CFTC Commitments of Traders – GBP Futures Turned to Net Long as BOE Might Hike Rate Next Week
As suggested in the CFTC Commitments of Traders report in the week ended October 26, NET LENGTH of USD index futures dropped -1 477 contracts to 34 457. Bets decreased on both sides. Concerning European currencies, NET SHORT of EUR futures slipped -851 contracts to 11 256. ECB President...
CFTC Commitments of Traders – Bets Reduced on Crude Oil Futures as Price Soared to Highest since 2014
According to the CFTC Commitments of Traders report for the week ended October 26, NET LENGTH of crude oil futures dropped -5 876 contracts to 423 718. Speculative longs slumped -15 549 contracts while shorts fell -9 673 contracts. Bets were trimmed on both sides as price consolidated as...
Euro Selloff to Continue, At Least in Some Crosses
Euro ended as the worst performing one after the post ECB rally faded quickly. It's clear that ECB would lag behind other major central banks in stopping to add stimulus, not to mention raising interest rate. The selloff in Euro also dragged down Sterling, as both were sold off...
Dollar Rebounding after Strong PCE Inflation Data
Dollar is trying to rebound broadly in early US session, partly on strong inflation data, and partly on month end flow. But overall, the greenback is just mixed for the week. For week Aussie and Swiss Franc are the strongest ones, with the latter lifted by strong buying against...
Dollar and Yen Dropped Again on Risk On Markets
Dollar and Yen dropped sharply overnight on strong risk-on market, as NASDAQ finally caught up and made new record high. The greenback is additionally pressured by the delayed buying in Euro after ECB post-meeting press conference. For now, Canadian Dollar is the third weakest, following the retreat in oil...
ECB Downplayed Urgency of Rate Hike to Tame Inflation
ECB’s meeting came in largely as we had anticipated. Policymakers acknowledged the stronger-than-expected inflation but downplayed the need to push forward rate hike. All monetary policy measures remained intact with the main refi rate, the marginal lending rate and the deposit rate staying at 0%, 0.25% and -0.5% respectively....
Euro Mildly Higher after ECB, Dollar Dips Slightly on GDP Miss
Major pairs and crosses are stuck inside yesterday's range so far, as consolidative trading continues. Euro appears to be lifted slightly by ECB's press conference but there is no follow through buying. Dollar also looks just a touch weaker after worse than expected Q3 GDP data. Overall, commodity currencies...
Markets Staying in Consolidation after BoC and BoJ, ECB Next
Consolidative trading continues in the forex markets in general. Canadian Dollar spiked higher after more hawkish than expected BoC overnight, but there was no follow through buying. BoJ's decision to stand pat triggered little reactions. Expectation of an earlier RBA rate hike intensified after the central bank let target...
Hawkish BOC Ends QE. May Hike Interest Rate in 2Q22 the Earliest
The BOC surprised to the hawkish side at the October meeting. Policymakers announced to end the QE program and begin the reinvestment process, compared with consensus of a reduction to the weekly purchase of CAD1B. While leaving the overnight rate unchanged at the effective lower bound of 0.25%, the...
Yen Recovers as Markets Extend Corrective Pattern
The forex markets are extending near term corrective moves today, with Yen turning slightly stronger, followed by Swiss Franc. Canadian Dollar and Sterling are the weaker ones, followed by Dollar. The Loonie will look into BoC policy decision for guidance. Meanwhile, broader markets will look at development in overall...
AUD Mildly Higher after CPI, CAD Consolidates as BoC Awaited
Australian Dollar rises broadly today with support from strong inflation data. But upside is capped by mildly negative investment sentiment in Asia. While DOW and S&P 500 made new records overnight, there is no follow through in risk-on sentiment. Overall currency markets are mixed, with Yen as second strongest...
Dollar and Yen Down again as DOW Sets to Extend Record Run
Risk-on sentiment is pressuring Yen and Dollar today, while Euro and Swiss Franc are not too far away. On the other hand Sterling is the strongest, while Aussie leads other commodity currencies. US futures are trading higher suggesting that DOW and S&P 500 are on track to extend record...
Aussie Higher in Quiet Markets, Euro Staying Weak
DOW and S&P 500 eked out new record highs again overnight. But Asian markets are not following, with the exception of rally in Nikkei. Activities in the currency markets are generally quiet. Nevertheless, Aussie is strengthening with other commodity currencies. Yen and Swiss Franc are weak, followed by Euro....
Euro Drops Broadly Following Weaker Germany Sentiment and Outlook
Euro drops broadly today after slightly weaker than expected German sentiment. Bundesbank also warned of significantly lower growth in Germany in Q4. Swiss France is following as second weakest. Yen is also soft following rally in major global treasury yields. On the other hand, Aussie is currently the strongest...
ECB Preview – ECB to Convince Market Low Interest Rate Still Necessary Despite Rising Inflation
The surge in electricity price has haunted the Eurozone since the last ECB meeting. Meanwhile, heightened inflation expectations have moved forward market pricing of the first post-pandemic rate hike to end-2022, significantly ahead of the central bank’s estimate. We expect policymakers to make use of the October meeting to...
Dollar Softer, Oil Rallies, Silver and Gold Sluggish
Dollar turn softer again in Asian session today and looks set to extend recent decline. But overall markets are quiet so far, with major pairs and crosses staying inside Friday's range. Economic calendar is likely today and focuses will be on whether broad risk markets would take the lead....
BoC Preview – Further QE Tapering
As further QE tapering to CAD 1B/week has been fully priced in, the focus of this week’s BOC meeting is the forward guidance on rate hike. The market has priced in 3 rate hikes in 2022. We expect the central bank to maintain the guidance that a rate hike...