Tag Archive: US

The Yen Stabilizes in a Broad Range but the Focus is on Today’s US Employment Report

2023-12-08

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2023-12-08

Overview: The US dollar is a little firmer ahead of the November employment data. It is trading mostly inside yesterday's range. It is in a wide range against the Japanese yen (~JPY142.50-JPY144.50) even if not as wide as yesterday (~JPY141.70-JPY147.30). The Canadian and Australian dollars are the strongest among the G10 currencies, while the South Korean won, and Taiwanese dollar are the best performers among the emerging market complex. Gold,...

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Markets Catch Collective Breath

2023-12-06

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2023-12-06

Overview: The US dollar is mixed today. The dollar-bloc currencies are firmer, while the euro and yen are softer. We had anticipated a recovery of the dollar on ideas that the market has too aggressively pushed down US rates, and pricing in more Fed easing with higher confidence than seems to be warranted by the recent data.  However, US rates have not recovered, but the dollar has.  Partly, this reflects that rates have fallen as faster if not...

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Softer Tokyo CPI Buys BOJ Time while Moody’s Cuts the Outlook for China’s Debt following Fiscal Stimulus and the Continued Property Slump

2023-12-05

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2023-12-05

Overview: Outside of the Australian dollar, which has fallen by around 0.6% following the RBA meeting and the softer final PMI, which may have dragged the New Zealand dollar a lower by around 0.25%, the other G10 currencies trading little changed ahead of the start of the North American session. The eurozone and UK final PMIs were revised higher. Central European currencies lead the emerging market currencies. China reported better than expected...

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Rates and the Dollar Come Back Firmer

2023-12-04

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2023-12-04

Overview: Weekend accounts seemed to try to understand what Fed Chair Powell said by beginning with the large drop in US rates. Yet, most accounts miss the fact that no matter what Powell has said, the market has more often than not reacted as if he were a dove. Rates have come back firmer today, perhaps as some recognized the overshoot. The US two-year yield is up nearly seven basis points after falling 14 before the weekend. The 10-year yield is...

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What Will Powell Say?

2023-12-01

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2023-12-01

Overview: The dollar traded better into month-end but is softer today. The Scandis and dollar-bloc currencies are leading with around 0.2%-0.5% gains. In addition to US manufacturing PMI and ISM surveys, and construction spending, auto sales will trickle in, but key for market participants today will likely be Fed Chair Powell's comments and the extent that he pushes against the dramatic rate cuts, with more than a 50% chance of the first cut by...

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The Dollar is Having One of Its Best Days This Month

2023-11-30

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2023-11-30

Overview: After being bludgeoned, the dollar is having one of its best days of the month. It is rising against all the major currencies. The Dollar Index is up about 0.5%, which is the most since the end of October. The greenback is also firmer against all the emerging market currencies but the Turkish lira and Russian ruble. Some of the demand for the dollar may be a function of month end, but also the disappointing Chinese PMI, revisions that...

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Dollar Recovers After Losses Extended in Asia

2023-11-29

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2023-11-29

Overview: On the back of lower interest rates, the greenback's slide was extended in early Asia Pacific turnover, but it has recovered. As North American trading begins, the dollar is firmer against all the G10 currencies but the New Zealand dollar, which has been aided by the hawkish hold of the central bank, and an immaterial gain in the Swiss franc. Emerging market currencies are mixed. Central European currencies and the Mexican peso are...

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Canadian Dollar Plays A Little Catch-Up, Rises to best Level in Nearly Seven Weeks

2023-11-28

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2023-11-28

Overview: The US dollar is narrowly mixed against the G10 currencies. The Canadian and Australian dollars lead the advancers, while the Scandis are pacing the losers off 0.1%-0.2% in quiet turnover. Most the freely accessible emerging market currencies are sporting softer profiles today, the Chinese yuan is among them. However, most Asia Pacific currencies, are firmer. Benchmark 10-year yields were softer in the Asia Pacific region in mostly a...

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Corrective Forces Help the Dollar Stabilize

2023-11-22

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2023-11-22

Overview: Corrective forces helped the dollar stabilize yesterday and it enjoys a firmer today. The euro has slipped below $1.09, and the dollar has resurfaced above JPY149.00. The FOMC minutes seem dated by the more than 30 bp decline in the US 10-year yield, the 7% rally in the S&P 500 and roughly 3% drop in the Dollar Index. The implied year-end 2024 Fed funds rate has fallen by 10 bp to 4.51% (5.33% currently). The Japanese government...

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Dollar Retreat Extended, but Turn Around Tuesday may have Already Begun

2023-11-20

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2023-11-20

Overview:  Last week's dollar losses have been extended today. The yen is leading the move, encouraged by talk of a buying by a large US real money fund. The Dollar Index is off about 0.35% after sliding 1.8% last week. It is below the 200-day moving average for the first time since late August. As was the case last week, the Canadian dollar is the laggard. Emerging market currencies are also mostly higher. The Chinese yuan's 0.67% rise is the most...

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Yen Leads Charge Against the Dollar Amid Falling Rates

2023-11-17

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2023-11-17

Overview: The Japanese yen is leading the charge against the dollar today. Short covering in the Japanese bond market, the decline in US rates, and some reports of real money saw the dollar tumble to around JPY149.25 to approach the low for the month near JPY149.20. All the G10 currencies are firmer today, as are all but a few emerging market currencies. The Dollar Index finished October near 106.55 and it has been finding support near 104.00 in...

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Dollar Consolidates Amid Rate Volatility

2023-11-16

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2023-11-16

Overview: The dollar is consolidating its recent moves as interest rate swings continue. The US two-year yield has traded in a nearly 28 bp range in the first two sessions this week, and near 4.88% now, it is 18 bp lower since last Friday's close. The 10-year yield is slipping below 4.50%. It reached almost 4.70% on Monday and had fallen to almost 4.40% yesterday. Part of this reflects the shift in overnight rate expectations. The implied yield of...

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US CPI Front and Center, but Can Congress Avert a Government Shutdown?

2023-11-14

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2023-11-14

Overview: The dollar is somewhat better offered today ahead of the October CPI report. The US House of Representatives may hold a vote today on a continuing resolution to avoid a partial government shutdown at the end of the week. Narrow ranges have prevailed. Most emerging market currencies are firmer, though paradoxically, the South Korean won is the weakest, despite a strong equity market rally (~1.2%), encouraged by the first in increase in...

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US Treasury Yields Come Back Softer After Moody’s Cut Outlook, and the Dollar Rises to New Highs Against the Yen

2023-11-13

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2023-11-13

Overview: The dollar is beginning the new week narrowly mixed against the G10 currencies. Sterling seems largely unaffected by the cabinet reshuffle that has seen former Prime Minister Camron return as the foreign minister, replacing Cleverly who replaces Home Secretary Braverman. The dollar rose to new highs for the year against the Japanese yen (~JPY151.85). The market has shown little reaction to the pre-weekend news that Moody's cut the outlook...

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Food Prices Drive China’s CPI Lower while the Greenback is Mostly Firmer in Narrow Ranges

2023-11-09

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2023-11-09

Overview: The dollar is mostly firmer against the G10 currencies and has been confined to tight ranges through the European morning. Outside of the China's deflation and Japan's monthly portfolio flow data that showed Japanese investors bought the most amount of US Treasuries (~$22 bln) in six months in September, the news stream is light. Most emerging market currencies are trading with a softer bias today. The Philippine peso is the strongest...

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The Dollar’s Recovery has been Extended, but it may Give North American Operators a Better Selling Opportunity

2023-11-07

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2023-11-07

Overview: The dollar's sell-off last week was extreme and it recovered yesterday and through the European session today. The Australian dollar has been hit the hardest. It is off more than 1% today after the RBA lifted the cash rate by 25 bp (to 4.35%). Still, the US dollar's gains have stretched intraday momentum indicators, suggesting the upside correction may be nearly over. The greenback's moves appear to have been driven by interest rate...

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The Dollar Remains Mostly Softer but Near-Term Consolidation is Likely

2023-11-06

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2023-11-06

Overview: The US dollar, which was sold last week after the FOMC and soft employment report, remains on the defensive today. The Antipodean currencies and yen are struggling, but the other G10 currencies are firm. The dollar is also lower against most emerging market currencies. Still, given the magnitude of the dollar's pullback, we suspect some consolidation is likely.Asia Pacific equities rallied, helped by the sharp gains in the US before the...

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Barring Upside Surprise on US Jobs, the Greenback Looks Vulnerable

2023-11-03

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2023-11-03

Overview: The US dollar has been confined to narrow ranges today as the market awaits the October employment report. Barring a significant upside surprise, we suspect the dollar is more likely extend this week's losses. The Dollar Index is off about 0.5% this week. Within the narrow ranges, it is sporting a slightly softer profile again nearly all the G10 currencies. It is also lower against most emerging market currencies, but tight ranges...

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Dollar Extends Losses Post-FOMC

2023-11-02

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2023-11-02

Overview: We suspect that if Martians read the FOMC statement, which was nearly identical to the September statement and listened to Chair Powell, they would conclude there was nothing new. Yet, the market habitually hears Powell as dovish and this has weighed on rates and the dollar, while lifting risk appetites. Follow-through selling of the greenback has dragged it lower against all the major currencies, with the Antipodean leading the way, and...

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BOJ and China PMI Disappoint, While EMU Q2 Growth and October Inflation were Softer than Expected

2023-10-31

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2023-10-31

Overview: The Bank of Japan softened its 1.0% cap on the 10-year, while lifting its core CPI forecast this fiscal year and next. This disappointed many who anticipated a bolder move to exit the extraordinary monetary policy. The yen was sold in disappointment and the dollar has returned to the JPY150.75 area. The eurozone contracted by 0.1% in Q3, while October CPI came in below expectations at 2.9%. The greenback is softer against most of the...

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