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Tag Archives: USD

What Can the Fed tell the Market it Does Not Already Know?

Overview: The softer than expected US CPI drove the dollar and interest rates lower, while igniting strong advances in equities, risk assets, commodities, and gold. Calmer market conditions are prevailing today, and we suspect that in the run-up to the FOMC meeting, a broadly consolidative tone will emerge. The dollar is mostly softer, but within yesterday’s ranges. Only the New Zealand and Canadian dollars among the G10 currencies are softer. Emerging market...

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US CPI ahead of FOMC Outcome Tomorrow

Overview: The dollar softer against the G10 currencies ahead of today’s CPI report and the FOMC meeting the concludes tomorrow. Emerging market currencies are most mixed. The Hungarian forint leads the complex with around a 1% gain on news of a preliminary deal struck with the EU. The South African rand is the worst performer, off around 0.8%, as impeachment proceedings against Ramaphosa proceed. Global equities are mostly higher today after the strong advance seen...

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Markets Await Central Banks and Data

Overview: There are two themes today. First, there has been a modest bout of profit-taking on Chinese stocks (and yuan) after last week’s surge. Second, the ahead of the five G10 central bank meeting this week a series of market-sensitive economic reports, a consolidative tone is seen in most of the capital markets. Most of the large bourses in the Asia Pacific region fell, led by a 2.2% loss in Hong Kong and 3% loss in its index of mainland shares. Europe’s Stoxx...

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The Yuan Puts Together its Strongest Two Week Rally in Decades and it has Nothing to do with its Trade Surplus (which Shrank more than expected)

The G10 currencies traded with a heavier bias against the dollar last week. The Swiss franc was the sole exception, and it edged up about 0.25%. The thwarted putsch in Germany and the relaxation of vaccine and quarantine protocols in China were notable developments. The weakness in European and American equities and oil helped account for the underperformance of the Norwegian krone and Canadian dollar. At the same time, the recovery in US 10-year yields after a more...

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Chinese Stocks Extend Rally Even Though Covid Infections Appear to be Spreading

Overview: The easing of vaccination, quarantine, and some travel protocols related to Covid in China (and Hong Kong) continues to draw funds back into Chinese stocks, wherever they trade. The Hang Seng rose 2.3% today to close the week with a nearly 6.6% advance. The index of mainland companies that trade there rose 2.5% on the day for a7.3% weekly gain. The CSI 300 of mainland shares rose 1% today and almost 3.3% for the week. Japan’s 1% gain today ensured a gain...

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Political Developments Overshadow Economics

Overview: There is nervous calm in the capital markets today.  The weakness of US shares yesterday is taking a toll today. An exception in the Asia Pacific region is the Hang Seng and the index of mainland shares that trade there, which up around 3.5% today on thUe easing of some Covid protocols.  Europe’s Stoxx 600 is off for a fifth day, its longest losing streak in nearly two months. US futures are posting minor gains. Benchmark 10-year yields are mostly little...

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Risk Appetites Challenged after US Equities Tumble

Overview: The sharp sell-off of US stocks yesterday as sapped the risk appetite today. Equities are being sold. Hong Kong and the index of mainland shares that are listed there led the regional decline with 3.2%-3.3% losses. Europe’s Stoxx 600 is off about 0.65% in late morning turnover, the fourth day of losses. US futures are trading with a lower bias as well. European 10-year bonds are mostly 1-2 bp firmer. The US 10-year Treasury is practically flat at 3.53%....

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Yesterday’s Dollar Recovery Questioned Today

Overview: The 11 bp jump in the 10-year US yield yesterday after dropping nearly 26 bp in the previous three sessions, helped the greenback recover and took a toll on stocks. Still, the S&P 500 is above the low set on November 30 (~3939) before Fed Chair Powell’s talk that day. Global equities were dragged lower today. Most large bourses in the Asia Pacific region fell, including Hong Kong’s Hang Seng and the index of mainland companies that trade in Hong Kong....

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Chinese Yuan Jumps While the Dollar recovers After Losses were Extended Against the Euro and Sterling

Overview: The markets remain hopeful about a re-opening in China and continue to pour into Chinese stocks on the mainland and in Hong Kong. The index of Chinese companies that trade in the US rose nearly 22.4% last week. Large bourses in the Asia Pacific region were mixed, but China and Hong Kong stand out. Europe’s Stoxx 600 is nursing a small loss for the second consecutive session. US equity futures have a slightly heavier bias. European 10-year yields are 2-5...

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Dollar Bears have the Upper Hand

Once again, the dollar was sold into a shallow bounce as the bears maintained the upper hand. There is a growing conviction that the peak in the Fed's tightening cycle is within view, despite more robust than expected jobs growth and an unexpectedly strong rise in average weekly earnings. After rallying through September, the US dollar's pullback was extended last week. Despite the oversold momentum indicators, dollar bounces have proved short and shallow. Falling...

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