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Selloff in Asia Intensifies, Aussie and Kiwi Accelerate Down

New Zealand and Australian Dollar accelerates lower today as selloff in Asian stocks intensify. The development came on renewed concern over the third wave of coronavirus infections in Europe and return to lockdown. News regarding vaccines were also negative, as Hong Kong temporarily suspended Pfizer/BioNTech vaccination. Technically, Hong Kong...

BoK Lee: Growth trend likely to be stronger than projected

Bank of Korea Governor Lee Ju-yeol said "the trend of growth is likely to be stronger than previously projected." Nevertheless, "because real economic activity hasn't returned to its potential level, and as the economy isn't fully back on its feet from the shocks of COVID-19, our assessment is that...

Weekly Economic & Financial Commentary: The U.S. Economy Continues to Start 2021 on a High Note

U.S. Review The U.S. Economy Continues to Start 2021 on a High Note In January, personal spending increased at a robust 2.4% pace, while personal income soared 10.0%. The core PCE deflator rose 0.3% during the month and 1.5% over the year. Fed Chair Powell testified in front of Congress...

Weekly Economic & Financial Commentary: Q4 GDP Data Top Expectations, but Q1-2021 Looking Shakier

U.S. Review A Consumer and His Stimulus Check Are Soon Parted Stimulus checks from the year-end COVID-relief package arrived in January, and we learned this week that retailers raked in more money during that month than they have since June. Every single store category reported increasing sales during the month....

Weekly Economic & Financial Commentary: Loss of Momentum Sets Up Weak Q1

U.S. Review Loss of Momentum Sets Up Weak Q1, but Recovery Pace Contingent on Vaccine Deployment Economic data came in largely as expected this week and suggest continued economic recovery. Real GDP growth advanced at a strong 4% annualized rate in the fourth quarter. The loss of momentum toward the...

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...

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...

Euro, Sterling and Swiss Interplay Eyed as Volatility in Stocks and Yields Shrugged

The forex markets are very quiet in Asian session today as consolidative trading continues. The sharp decline in US treasury yields overnight, and the pull back in Asian stocks, triggered little reaction in currencies. Dollar and Yen are the slightly firmer ones for today so far, while commodity currencies...

South Korea GDP grew 1.1% qoq in Q4, supported by strong exports

South Korea's GDP grew 1.1% qoq in Q4, above expectation of 0.7% qoq. Momentum of the recovered was dampened, comparing to Q3's 2.1% qoq, by second wave of coronavirus pandemic. Though, strong exports, which grew at 26-month high of 12.6% yoy in December, offset some weakness in private consumption....

The Hoped-For V-Shaped Recovery Risks Turning Into A W, Forcing Markets To Reposition Accordingly

Markets Risky assets cratered and (US) core bond yields slumped yesterday. (Near) record tallies in coronacases reported in many parts of the world including in Europe and the US and new restrictive measures will dampen growth in the fourth quarter. The hoped-for V-shaped recovery risks turning into a W, forcing...

There Is Still Some Room Left For Markets To Adjust To A Double-Dip Scenario

Markets Risky assets cratered and (US) core bond yields slumped yesterday. (Near) record tallies in coronacases reported in many parts of the world including in Europe and the US and new restrictive measures will dampen growth in the fourth quarter. The hoped-for V-shaped recovery risks turning into a W, forcing...

The Waiting Game Continues

Stimulus bill deadline expires House Democrat Leader Pelosi’s Tuesday deadline for a pre-election US stimulus bill came and went overnight, with a deal remaining elusive. However, the fallout was limited to non-existent, as Ms Pelosi said that talks continued with Mr Mnuchin and that progress was being made. Financial markets...

Weekly Economic and Financial Commentary: Q3 PCE Rebound in the Cards, Outlook More Uncertain

U.S. Review Q3 PCE Rebound in the Cards, Outlook More Uncertain After a revised look at GDP this week suggested the second quarter may not have been quite as bad as first estimated, attention shifts to the current quarter. Fresh data this week shed light on the outlook for consumer...

Vaccine Hopes Boost Sentiments, Dollar and Yen Down

Global markets surge broadly today on more optimism on coronavirus treatment. S&P 500 and NASDAQ are both set to extend recent record runs. Yen and Dollar are back under some selling pressure, but New Zealand Dollar is not far away. On the other hand, Australian Dollar is currently the...

Kiwi Lower as Lockdown Extends, Dollar Mixed Awaiting Jackson Hole

Canadian and Australian Dollar trade generally higher today, following mild strength in Asian stocks. But New Zealand Dollar diverges from them as the country extends lockdown of Auckland until Sunday night. Following Kiwi, Swiss Franc and Yen are the next weakest in risk-on markets. Dollar is mixed and could...

BoK Lee: recovery to remain weak as virus cases resurged

Bank of Korea Governor. Lee Ju-yeol told the National Assembly, "after suffering sharp deterioration, the Korean economy showed some signs of an improvement on eased slumps in exports and consumption." But he warned, "as virus cases have recently resurged, the economic recovery is expected to remain weak, and economic uncertainty...

Weekly Economic and Financial Commentary: Jobless Claims Rise, Housing Market Rebounding

U.S. Review Jobless Claims Rise, Housing Market Rebounding Initial jobless claims rose to just over 1.4 million for the week ending July 18. Continuing claims fell to about 16.2 million. Initial claims edging higher suggests that the resurgence of COVID-19 may be taking a toll on the labor market recovery. ...

Dollar and Yen Weak after Steep Selloff, No Bottoming in Sight Yet

Investors in Asia remain generally cautious today as reflected in the mixed markets. US-China tensions look set to escalate further after President Donald Trump said closure of other Chinese missions is "always possible". Yet, the developments give no special support to Dollar and Yen. Both remain the weakest for...

South Korea GDP dropped -3.3% qoq in Q2, worst since 1998

South Korea's GDP contracted -3.3% qoq in Q2, as shown in data released by Bank of Korea. The decline was the worst since Q1 1998, and steeper than analysts' expectations of around -2.3% qoq. Also, with Q1's -1.3% fall, South Korean's economy has formally entered a technical recession this...

Euro and European Stocks Soften as EU Fails to Agree on Coronavirus Rescue

Global markets lack a clear direction today. European stocks are generally lower for the moment after EU failed to agree on coronavirus rescue stimulus. But US futures point to higher open. In the currency markets, Sterling is the strongest one for now as Prime Minister Boris Johnson is said...

Dollar Recovers as Risk Rebound Lost Steam, Aussie Lower after Rating Outlook Downgrade

Dollar recovers mildly today as stock rebound somewhat lost momentum. In particular, DOW closed lower after gaining nearly 1000 pts overnight. Asian markets turned mixed despite rally in Nikkei. Investors could be awaiting the results of OPEC++ decision on production cuts before taking another move. Yen is following Dollar...

South Korea pledges new measures to help exporters and boost domestic demand

South Korean President Moon Jae-in announced additional support to the economy as businesses and domestic demand devastated by the coronavirus pandemic. 36 trillion won of cheap loans will be available to exporters. Measures of 17.7 trillion won will be rolled out to boost consumption and domestic demands. The new...

Sentiments Take a U-Turn as Fed Goes QE Unlimited

Market sentiments take a u-turn today after Fed surprised the markets with another emergency announce. Now, the targets for asset purchases are removed and Fed is going into QE unlimited. US futures turned from limit down to positive while major European indices pared back much of earlier losses. The...

Risk Aversion Continues, RBNZ Cut, NZ & AU Lockdown, US to See Surge in Unemployment

Markets are back in risk averse mode as another week starts, after Spain and Italy suffered the worst days of coronavirus pandemic over the weekend. US Senate failed to advance another aid package on differences between Republican and Democrats. But resolution would be seen soon based on the severity...

South Korea reports lowest new coronavirus cases since peak

A piece of good news regarding the coronavirus pandemic is that South Korea on Monday reported its lowest number of new cases since the peak on February 29. The KCDC said there were only 64 new confirmed cases, taking the tally to 8961. Death toll rose by 1 to...

How Much Will Global Economic Data Deteriorate? Using South Korea as a Leading Indicator

Executive Summary As concerns continue to grow about the economic impact from the spread of COVID-19, analysts have struggled to get their arms around the possible fallout. To a large extent, this reflects the uncertainty about just how much the virus will spread, a near impossible thing to forecast at...

South Korea, Italy and Iran remain most serious coronavirus center outside China

Global coronavirus cases surged to 93158 at the time of writing, with 3202 deaths. 119 new cases were reported in China with 38 new deaths, totaling 80270 cases and 2981 deaths. South Korea (5328 cases, 32 deaths), Italy (2502 cases with 79 deaths) and Iran (2336 cases, 77 deaths)...

Global coronavirus cases surge, China’s slowing, Yuan rebounds

Global spread of China's Wuhan coronavirus continued to intensify over the weekend. Total number of cases outside China reached 9051 with 141 deaths. Situation in South Korea remains the worse, with 4212 cases and 22 deaths. Italy reported 1701 cases with 41 deaths. Iran's cases also jumped to 978...

Weekly Economic and Financial Commentary: A Tough Week

U.S. Review A Tough Week The COVID-19 coronavirus hammered financial markets this week and rapidly raised the perceived likelihood and magnitude of additional Fed accommodation. The bond market now expects almost four Fed rate cuts by the end of the year, but one might rightly wonder how lower shortterm rates...

The Week Ahead – Central Banks, OPEC + and Governments Prepare to Cushion the Coronavirus Impact

Fears of coronavirus pandemic spreading delivered a global equity rout that took all the major indexes into correction territory with some seeming poised to enter a bear market.  Volatility is back in a big way as financial markets have no idea how to price in what will be the...