Tag Archives: 4) FX Trends

Overview:  The capital markets are calmer today.  The market is digesting the FOMC minutes, where officials tipped an aggressive path to shrink the balance sheet and confirmed an “expeditious” campaign to lift the Fed funds rate to neutrality.  Benchmark 10-year yields are softer, with the US off a couple basis points to 2.58%.  European yields are 1-3 bp lower.  After the equity losses in the US yesterday, including a 2.2% drop in the NASDAQ, Asia Pacific equities...

Overview: The Reserve Bank of Australia hinted that it was getting closer to a rate hike.  The Australian dollar was bid to its best level since the middle of last year.  Australian stocks advanced in a mixed regional session while China and Hong Kong markets were closed for the local holiday.  BOJ Kuroda called the yen’s recent moves “rapid.”  The yen is sidelined today as the dollar weakens against other major currencies, led by the Antipodeans.  In addition to the...

The effectiveness of the Federal Reserve's communication seems clear. The market has nearly 90 bp of tightening discounted here in Q2. This means that after a 25 bp hike to initiate the tightening cycle, the labor market's strength will allow the central bank to accelerate the pace. By the end of the week, the market will also have a better idea of the timing and pace of the balance sheet unwind. The March nonfarm payroll growth may have missed median estimates,...

Vulnerabilities have increased and Swiss real estate market Swiss apartments overvalued by 10% to 35% SNB continues to monitor developments in real estate market It is not roll of monetary policy to curb risk to financial system The  USDCHF  is trading back below its 100 hour moving average at 0.93129 and its 200 hour moving average at 0.93304. However at the low today, the pair did find support against what has been a swing area between 0.9293 and 0.92964. The...

Overview: Interest rates continue to rise, but equities are looking through it today and the dollar is drawing less succor. Asia Pacific equities were mostly higher. With half of Shanghai in lockdown, Chinese equities were unable to join the regional advance. Europe’s Stoxx 600, led by energy and consumer discretionary sectors, is rising for the third consecutive sessions. US futures have a small upward bias. The US 10-year yield is up a few basis points to 2.50%,...

The recent themes in the foreign exchange market continued last week. On the one hand, the dollar-bloc currencies and Norwegian krona trended higher, while the euro, and especially the yen, traded heavier. On the other hand, although some critics argued that the Fed's 25 bp rate hike earlier this month was too timid, the Fed is signaling it could accelerate the pace. The interest rate adjustment continued in dramatic fashion. The Fed funds futures imply almost a...

This year was supposed to be about the easing of the pandemic and the normalization of policy. Instead, Russia's invasion of Ukraine threw a wrench in the macroeconomic forecasts as St. Peter’s victories broke the brackets of the NCAA basketball championship pools. The war has pushed up the price of energy, metals, and foodstuffs, which seemed to be advancing prior to the conflict.  High-frequency economic data are important because of the insight generated about...

Overview: Ukraine’s Mariupol refuses to surrender as the war is turning more brutal according to reports. Iran-backed rebels in Yemen struck half of a dozen sites in Saudi Arabia, driving oil prices higher. China’s prime lending rates were unchanged. The MSCI Asia Pacific Index, which rallied more than 4% last week, traded heavily today though China and Taiwan’s markets managed to post small gains. Tokyo was closed for the spring equinox. Europe’s Stoxx 600 is steady...

Swiss Franc The Euro has risen by 0.14% to 1.0387 EUR/CHF and USD/CHF, March 17(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com - Click to enlarge FX Rates Overview: The markets continue to digest the implications of yesterday’s Fed move and Beijing’s signals of more economic supportive efforts as the Bank of England’s move awaited. The US 5–10-year curve is straddling inversion and the 2-10 curve has flattened as the Fed moves from one horn of the...

The Federal Reserve hiked the Fed funds target rate by 25 bp as widely anticipated. It clearly signaled it was beginning an ongoing hiking cycle. The FOMC statement also indicated the balance sheet roll-off would begin at a coming meeting. The uncertainty posed by Russia’s invasion of Ukraine was acknowledged, but the FOMC recognized that in the first instance it boosts price pressures while also weakening growth. There was one dissent. The noted hawk, St. Louis Fed...