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US Dollar Pummelled

Surge in risk sentiment sends US dollar reeling The US dollar wilted overnight before the onslaught of bullish risk sentiment that swept Wall Street after Friday’s Non-Farm Payrolls and the overnight ISM Non-Manufacturing PMI data. The dollar index fell 0.47% to 92.57, although it has recovered slightly in Asia to...

The US Dollar Grinds Higher Overnight

US dollar slightly higher on risk aversion After some significant moves on Tuesday, currency markets had a more consolidative look about them overnight, although the US dollar continued grinding higher. The dollar index rose 0.21% to 92.52 and is now testing its 200-DMA, signalling further potential gains to 93.00 initially. Amongst...

The Dollar Thrives In Nervous Covid Markets

Dollar rises despite lower yields Some degree of safe-haven flows appears to be emerging in the US dollar as it rallied impressively overnight. The strong bid-to-cover ratios in the short US-note auctions overnight hinting at where much of those haven flows are being parked. That had the effect of pushing...

Currency Markets Remain In Hibernatio

Currency markets in wait-and-see mode In contrast to the action in equity, bond and energy markets, currency markets remain in a state of suspended animation. The US dollar continues to range, the dollar index edging lower to 90.80 overnight, although the equity sell-off in Asia has pushed it higher by...

Pro-Cyclical Currencies Rise In Asia

Pro-cyclical currencies, Asian currencies climb Rebounding commodity prices and vaccine optimism have lifted pro-cyclical and Asian currencies this morning. The dollar index rose 0.83% to 90.83 on Friday, but a quiet day on the majors has seen it edge lower to 90.80 in Asia. Far more activity is being seen on...

US Dollar On Defensive After Powell

Currency markets get back to recovery rotation Evidence continues to pile up that the US dollar short squeeze in the latter part of January has reached an endgame, with the dollar index closing at 90.17 overnight, just above support at 90.00 for the third day in a row. With Mr...

The US Dollar Continues To Fade

Cyclical rotation pushes dollar down The US dollar found no solace in higher longer-end bond yields overnight, likely because the move was mirrored to some extent among other developed market currencies. The greenback suffered as the cyclical rotation into global recovery positioning continued gaining momentum. The dollar index fell 0.40%...

Mixed Start For Asian Equities

China equities markets slide after PBOC withdraws liquidity US equities markets had another sideways day on Friday, with all three major indexes closing near to unchanged. Except for China, most of Asia has opened cautiously higher with global recovery sentiment, notably reflected in base metals prices, fuelling the bullish tone. Mainland...

European Open: US Vaccinations To Rally From Here?

Biden think's he'll beat his own vaccine rollout target, copper and Asian indices are higher and forex awaits a catalyst. President Joe Biden remains confident that the US can exceed his target of achieving 100 million vaccinations within the first 100 days of his presidency. And so he should be...

Asian Equities And US Dollar Dip Lower

Asian equities ease with Wall Street Wall Street fell again overnight, as bullish momentum temporarily ebbs, spurring investors to lighten risk. The S&P 500 lost 0.44%, the Nasdaq slipped 0.72%, and the Dow Jones eased by 0.44%. US index futures have continued a downward trajectory this morning, with all three...

Awaiting Overdue Rebound in USDCNY

Strengthening against US dollar for 8 consecutive months, Renminbi (Chinese yuan) has accumulated gains of about 10% since June 2020. We believe the rally is overextended as China's economic recovery has shown signs of losing steam while yield differential between US and China has narrowed over the past few...

Sentiment And Technical Considerations Driving Markets At The Start Of The New Trading Week

Markets In the absence of relevant economic data, sentiment and technical considerations drove yesterday's markets at the start of the new trading week. A positive Asian risk mood gently spilled over into an otherwise uneventful European dealings. EMU stocks rose about half of a percent with Italy the regional outperformer....

Currency Markets Directionless

Currency markets drift A gentle rise in US bond yields was enough to sustain early US dollar gains, with robust US data raising economic expansion expectations. The dollar index finished almost unchanged at 91.17, having tested 91.30 earlier in the session. However, it remains above previous resistance at 91.00 for...

China Monetary Tightening? Not so Fast

Summary For the past week or so, the People's Bank of China (PBoC) seems to have engaged in sporadic operations that effectively tighten monetary policy in China. Pulling liquidity out of China's financial system has pushed short-term borrowing rates higher, and supported the renminbi as well as other emerging Asian...

Volatility On Stock Markets Remains Elevated

Markets Volatility on stock markets remains elevated with main European and US stock markets closing with gains yesterday. The EuroStoxx 50 bounced back from a bad start to even close around 1% higher. US benchmarks did even better (>2% intraday), but had to return some of those gains in the...

Currency Markets On Hold Ahead Of FOMC

Currency markets becalmed ahead of FOMC Currency markets remained becalmed in Asia this morning, in a continuation of the range-trading pattern seen overnight. Currency markets are clearly on hold until the FOMC, and it will take a big headline surprise to awaken them from their slumber beforehand. The dollar index edged...

Dollar Turns Soft as European Stocks Surge, Sterling and Commodity Currencies Jump

European stocks are trading generally higher today but no equivalent strength is see in the US pre-markets. Investors seemed to be lifted by news that EU, with backing from Germany, is going to introduce restrictions on COVID-19 vaccines over sudden supply cuts by AstraZeneca and Pfizer. There is little...

PBoC Yi: Increasing macro leverage ratio and non-performing loans are two risks

China's PBOC Governor Yi Gang said in the virtual meeting of the World Economic Forum, "monetary policy will continue to prop up the economy, but at the same time we will watch for the risks. We will keep a delicate balance between supporting economic recovery, at the same time...

Dollar Gains Ground On Risk Concerns

The US dollar moves higher on risk reassessment The mild dose of political reality being administered in Washington DC saw bullish stimulus bets reduced overnight. If financial markets needed any further confirmation that the US fiscal stimulus was the only game in town, the buy-everything herd received it overnight. Senate...

Risk Sentiment Will Continue To Set The Tone For Trading

Markets A bad day at the office for European stock markets. Main indices shed 1% to 1.7%, breaking momentum. The fragile balance between stimulus-driven recovery hope and a dire near term outlook tilted in favour of the dark side.Slower-than-expected vaccine roll-outs in a world of Covid-mutants can trigger bouts of...

Yellen Is Expected To Advocate Further Stimulus Measures To Support The Restart Of The Economy

Markets With US markets closed in observance of the Martin Luther King Jr Holiday, trading took a slow start of the week. Asian equity indices finished mixed with China outperforming in the wake of better-than-expected Q4 GDP data. After opening in the red, a protracted and gradual bottoming out process...

Dollar Shrugs At Biden Stimulus Plan

Currency markets are unmoved by Biden wish-list Currency markets entered a holding pattern overnight, ahead of the Biden stimulus release, and have remained to circling in Asia this morning. Part of the reason is that the fiscal package contents were well telegraphed beforehand and contained no reactionary surprises. The stimulus...

US Stimulus Bill Lifts Asian Equities

Trump signs stimulus/spending bill into law With liquidity lower than usual and a dearth of meaningful news over the weekend, the presidential signing of the omnibus bill today has lifted sentiment in Asia. Most of the region is green, although the gains scale is modest, perhaps reflecting the holiday-thinned participation....

Sterling Dives Again on Brexit Deadlock and Coronavirus Spread

Sterling opened the week broadly lower after Brexit trade negotiations missed yet another deadline. Additionally, European countries rushed to ban travel from UK as coronavirus infections worsened. Aussie and Kiwi are trailing as the next weakest on mild risk aversion. On the other hand, Dollar, Yen and Swiss Franc...

PBoC left 1-yr LPR unchanged at 3.85%, USD/CNH recovers in consolidation

China's PBoC left the one-year loan prime rate (LPR) unchanged at 3.85% today. The five-year LPR was held at 4.65%. These benchmark lending rates for corporate and household loans were kept unchanged for the eight straight months. Some economists saw that with the economic recovery on the right track,...

The Dollar Stays Vulnerable To The Downside

Markets Europe took a cautiously optimistic start to the week. Sentiment was boosted by comments from EU chief negotiator Barnier who said that a Brexit trade deal could be reached this week if a compromise on fisheries is found. European stocks eked out modest gains ranging from 0.5% to 1%....

China’s November Data Signals Recovery Continues. PBOC to Keep Powder Dry

The latest set of economic data indicates economic recovery in China continued. Growth in industrial production improved slightly, while manufacturing investment accelerated, thanks to strong exports growth. Retail sales growth accelerated, suggesting internal circulation has taken effect. Industrial production expanded +7% y/y in November, inline with expectations and up +0.1...

China Fell into Deflation First Time in More than a Decade

The country recorded deflation for the first time since October 2009. Headline CPI contracted -0.5% y/y in November, compared with consensus of a flat reading and a +0.5% gain in October. Food inflation dropped -2% y/y in November following a +2.2% gain in October. Of which egg and pork...

The US Dollar Edges Lower

Hopes of fiscal stimulus weighs on US dollar The US dollar quickly reversed its gains overnight as the US fiscal stimulus news hits the wires. In the end, the dollar index finished barely changed at 92.29. It will be eyeing support at 92.12 and 91.75 into the end of the...

China Leaves Rates Unchanged

PBOC holds rates as economy remains strong China left its one and five-year Loan prime Rate benchmarks unchanged this morning at 3.85% and 4.65% respectively. The decision should be of no surprise with China’s economy firing on all cylinders. Even a Covid-19 slowdown from the US and Europe impacting exports...