Tag Archives: intervention

Overview: The capital markets are in flux. The powerful short-covering rally of the yen and unwinding of carry trades continues. For the second time this week, the PBOC has surprised by cutting interest rates. The dramatic sell-off of equities continues. The unexpected contraction of South Korea's Q2 GSP (-0.2%) is seen as confirmation of broader economic weakness Speculation of a more aggressive Federal Reserve is gaining ground. It is not that the odds of a cut...

Jury duty assignment prevents a more comprehensive note, but here is a snapshot. Overview: The US dollar is consolidating in narrow ranges against most of the G10 currencies. The Australian and New Zealand dollars, along with the Japanese yen are off by about 0.25%, but the others are +/- 0.10. The latest BOJ data appears to imply that officials intervened not only last Thursday, but Friday as well. Emerging market currencies are mixed but mostly quiet. The Turkish...

Overview: The dollar is mostly consolidating yesterday's CPI-inspired decline. The main features include the market bidding the US dollar back above JPY159 despite more speculation that the BOJ did in fact intervene yesterday and checked on the euro-yen cross in the local session today, and unexpectedly soft Swedish inflation, which the swaps market says could spur three rate cuts here in second half. A record trade surplus and strong aggregate lending figures did...

Overview: Much of Asia and Europe are off for the May Day labor holiday. The dollar is mostly softer in the thin activity. However, the dollar has edged higher against the yen and approached JPY158. The euro initially fell to $1.0650, a six-day low and where a billion euros in options expire later today. It has recovered to almost $1.0675. Emerging market currencies are subdued. Central European currencies, the South African rand, and Mexican peso are sporting...

Overview:  Stronger than expected eurozone GDP strengthened the sense that a nascent recovery may be taking hold and has given the euro a bid in the European morning. The dollar, though, is enjoying a firmer tone against the other G10 currencies today. Australia's unexpected weakness in retail sales has weighed on the Antipodean currencies. The Aussie and Kiwi are off slightly more than 0.5% today. Japanese data were mixed (a recovery in industrial production but...

Overview: The dollar is trading quietly against the G10 currencies as European markets remain on holiday. Narrow ranges have prevailed. The dollar-bloc currencies are leading with minor gains, perhaps helped on the margins by better-than-expected Chinese PMI, but the Scandis, which also typically do well amid a better global growth profile are the laggards. This may speak to the light liquidity conditions. Japan may have missed a tactical opportunity to intervene to...

Overview: Comments by Fed Governor Waller, urging patience on rates and wanting more evidence that price pressures are moderating has helped the greenback extend its recent gains. The yen is the notable exception as the fear of intervention has restrained the dollar bulls. Poor German data, including a sharp 1.9% drop in February retail sales, the fourth consecutive monthly decline, underscored the euro's negative divergence, and the single currency was sold to new...

Overview: A consolidative tone has emerged ahead of the outcome of the FOMC meeting later today. The focus is not so much on the 75 bp rate hike, but on its forward guidance. Many expect the Fed to signal it will return to a 50 bp move next month, but we are not convinced that it will go beyond indicating that 50 bp or 75 bp will be debated in December, depending on the data. The market has a 5% terminal rate discounted. The Fed does not need to validate it now....

Overview: The markets have returned from the weekend with a greater appetite for risk. Equities and bonds are rallying, and the dollar is better offered. China, Hong Kong, South Korea, and Indian bourses advanced. Mainland shares edged higher even though Zhengzhou, a city of one million people, near an iPhone manufacturing hub was locked down due to Covid. Europe’s Stoxx 600 is up nearly 0.5% to extend its recovery into a third session. US futures are trading a...

The latest US employment and inflation figures are passed. The market is confident of a 75 bp rate hike next month. While a 50 bp in December is still the odds-on favorite, the market has a slight chance (~15%) of a 100 bp move instead after the robust jobs report and stronger-than-expected September CPI. The implied yield of the December Fed funds futures has ground higher for 12 consecutive sessions to about 4.23%. After two straight quarters of contraction, the...