ECB Reduces PEPP Purchases, Upgrades Inflation forecasts
The ECB meeting came largely in line with expectations. While leaving the policy rates unchanged, the members confirmed that the PEPP program would end in March 2022. Meanwhile, they have extended the reinvestment process and topped up the APP program, as means to continuously provide liquidity to the market....
Sterling Surges after BoE Rate Hike, Euro Catching Up after ECB
Sterling rises broadly after BoE surprised the markets by raising interest rates and maintains a hawkish tone. Solid risk-on sentiment as well as strong job data boosts Aussie as the second strongest. Euro is not performing badly after ECB announces to end PEPP net purchases in March. Indeed, the...
BOE Hikes Bank Rate, Surprising the Market Two Months in a Row
The BOE surprised the market in two consecutive months. After failing to deliver rate hike in November, the members surprisingly increased the Bank rate by +15 bps to 0.25% in December. Concerns over elevated trumped Omicron variant uncertainty. British pound rallied against US dollar and the euro.
The members voted...
Dollar’s Post FOMC Rally Choked Off by Risk-On Sentiment; ECB, BoE and SNB Next
Dollar initially surged after Fed decided to double tapering pace and indicated there could be as many as three rate hikes next year. Nevertheless, the rally attempted was choked off by strong risk-on rally in stocks. Investors seemed to be relieved that firstly, Fed is still cautious on the...
Hawkish Fed Anticipates Three or More Rate Hikes Next Year
FOMC delivered a hawkish outlook at the December meeting. Besides doubling the size of tapering as we had anticipated, more than two-third of the members have projected at least 3 rate hikes next year. The latest economic projections suggest that inflation could rise to +5.3% this year before easing....
US Crude Oil and Petroleum Inventory Unexpectedly Dropped
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks slumped -15.87 mmb to 1210.49 mmb in the week ended December 10. Crude oil inventory dropped -4.58 mmb to 428.29 mmb, compared with consensus of a +0.82 mmb increase....
Dollar Mixed after Weak Retail Sales, Fed Next
Dollar is trading mixed in early US session after weaker than expected retail sales data. The greenback is extending recent rally against Canadian, but pulls back against Australian. European majors are mixed while Yen is also trading a touch weaker. Other markets are quite too with Gold's selloff taking...
Dollar Firmer in Range as Focus Turns to FOMC
While Dollar is so far the strongest one for the week, there is clearly no follow through buying. The greenback is stuck in range against most others with traders on the sideline ahead of FOMC. Canadian and New Zealand Dollars are the two exceptions, which are already breaking through...
Dollar Shrugs Record PPI, Gold on the Move?
Commodity currencies remain generally weak today on mixed market sentiment. But buying is turned to European majors, with Swiss Franc having an upper hand. Dollar and Yen, on the other hand, soften mildly. The greenback has little reaction to record PPI reading. Meanwhile, it should be noted that major...
ECB Preview – Phase-Out of PEPP by March as Scheduled
The focus of this week’s ECB meeting is whether the PEPP would extend beyond March 2020 in light of the new Omicron variant and rapid increase the number of coronavirus cases across Europe since the November meeting. Recent comments from ECB officials signal that things would go as planned....
BOE Preview – Delaying Rate Hike to February 2022
We expect the BOE to stand pat at this week’s meeting. October’s GDP came in weaker than expected, and the renewed restrictive measures to curb spread of the new Omicron variant could affect household consumption and put a brake on the job market improvement. We expect policymakers to wait...
Dollar and Yen Rise on Slightly Negative Sentiment, Aussie Tumbles
Dollar and Yen rise following slightly negative risk sentiment. Major Asian indexes are generally lower, following the mild pull back in US overnight. Australian Dollar is leading commodity currencies lower. European majors are mixed with Euro trading a bit firmer than the others. Focuses will firstly turn to UK...
Dollar Mildly Higher as Traders Turn Cautious, CAD Dips
Dollar and Sterling firm up mildly in overall quiet markets today. Commodity currencies are, on the other hand, trading lower. Investors are turning cautious ahead of the wave of central bank meetings later this week, in particular on Fed's decision to faster the tapering pace. Oil prices also dip...
Markets Quiet Ahead of Fed, ECB, BoE, SNB, BoJ, and Lots of Data
The markets are rather quiet in Asian session. Stock indexes are trading higher but no follow through buying is seen. In the forex markets, major pairs and crosses are stuck inside Friday's range, with commodity currencies a touch firmer. Activity could remain subdued with an empty calendar for today....
FOMC Preview – Fed to Double Size of QE Tapering
The Fed this week will announce acceleration of QE tapering. With inflation approaching 7%, policymakers would likely revise its view on inflation outlook and "retire" the word "transitory". The updated economic projections and median dot plots showing members' interest rate projections would also be released. The Fed funds rate...
Markets Back in Risk-on Mode, But Forex Mixed Awaiting Central Bank Meetings
Investors seemed to have already put Omicron risks behind last week, with markets turned back into risk-on mode. But the forex markets were indeed quite mixed. Commodity currencies were the strongest ones, but the rebounds are looking more like corrective. Yen was the worst performer, but the pull-backs were...
CFTC Commitments of Traders – Risky Currencies Recovered Weeks of Selloff
As suggested in the CFTC Commitments of Traders report in the week ended December 3, NET LENGTH of USD index futures fell -1 014 contracts to 34 865. Bets on long and short increased +1 048 contracts and 2 062 contracts, respectively . Concerning European currencies, NET SHORT of...
CFTC Commitments of Traders – Traders Trimmed Long Position in Crude Oil. Rebound Triggered Profit-taking
According to the CFTC Commitments of Traders report for the week ended December 7, NET LENGTH of crude oil futures slumped -20 002 contracts to 367 232. Speculative longs declined -19 277 contracts while shorts added +725 contracts. For refined oil products, NET LENGTH for heating oil dropped -2...
Dollar Shrugs Strong CPI Reading, Extending Sideway Trading
The multi-decade high in US CPI reading appears to be failing trigger any move in Dollar. The greenback is staying in very tight range in general. Commodity currencies are indeed trying to regain upside momentum. Yen is set to end as the worst performing, followed by Swiss Franc and...
Markets Turn Quiet ahead of US CPI, Dollar Awaits Range Breakout
The markets generally turn quiet in Asian session as markets are look forward to consumer inflation data from US. Before that UK GDP will also be a major focus. Commodity currencies, in particular Canadian Dollar, are losing much upside momentum even though they're still the strongest ones. Yen's earlier...