Yellen reignites the USD rally • Yellen’s tone was neutral to slightly hawkish yesterday. • She said more gov. spending could have inflationary consequences the Fed would have to take into account (translation = we could hike faster). • But its too early to draw any conclusions before gov. policies become clear. • Her keeping […]
Yellen to be questioned on “Trumpenomics” • Fed Chair Yellen will testify before Congress, followed by a Q & A session. • Investors may look for clues on whether “Trumpenomics” (higher spending, higher inflation) will lead to a faster pace of rate hikes. • We don’t expect her to clearly confirm, nor deny this. • […]
USD bulls “back on the case” • After a brief pause in the dollar rally yesterday, USD surged again following strong US retail sales for Oct. • We expect the dollar to remain supported, but absent any news on Trump’s policies, we could see the USD rally calm down a little. • Investors may wait […]
Is it time for the USD rally to take a breather? • The massacre in the bond market continued yesterday. • Investors kept dumping US bonds, concerned the Fed may hike rates faster than prev. • This fuelled further strength in the dollar. USD index now at highest lvl since Dec. 2015. • But how […]
Bond carnage continues as Trump makes USD ‘great again’ • Market moves from last week continued during the Asian morning Monday. • Investors keep selling US bonds as they are concerned of higher future inflation. • This is fuelling USD strength, as higher inflation could cause the Fed to hike rates quicker than previously anticipated. […]
Will Trump make the US dollar ‘great again’? • Investors keep speculating over the possible effects of ‘Trumpenomics’. • They have been betting on higher US inflation, possibly due to more gov. spending and increased tariffs. • Higher inflation means the Fed may have to raise rates faster than prev. This explains USD strength after […]
What election? Back to square one • The name of the game was countermoves yesterday, in the aftermath of the election. • All of the asset classes that reacted to the initial election outcome began moving in the opposite direction after the result was official. • Most FX pairs corrected significantly, to trade more or […]
Trump wins US presidency and markets panic American citizens elected Donald Trump to be the 45th President of the United States. It has been a carnage around the markets throughout the Asian morning, with massive risk-off moves, possibly due to the uncertainty surrounding many of his policies. In line with our expectations under a Trump-win […]
NFP to steal the thunder from the Elections… for today • NFP is forecast at 175k in Oct., higher than the 156k in Sep. Unemployment rate exp. to decline, average hourly earnings to accelerate. • Overall, a strong report that would keep the Fed on track for a Dec. hike. USD-positive. • However, politics appear […]
Will the BoE send optimistic signals on “Super Thursday”? • “Super Thursday” = Rate decision, meeting minutes & Quarterly Inflation Report. • Expectations are for the Bank to stand pat via a unanimous 9-0 vote. • We share this view, due to the solid UK data, and exp. optimistic rhetoric from officials. • Upbeat comments […]
FOMC policy decision: Waiting for December? • FOMC almost certain to keep borrowing costs unchanged today. • All the market action will come from the language in the meeting statement. • We expect the FOMC to signal that a rate hike is imminent, preparing markets for Dec. • Such “hawkish” language could reverse some of […]
BoJ remains on hold, trims inflation forecasts • BoJ stood pat today, offering little fresh information on policy. • This kept the reaction in JPY muted. BoJ may remain on hold for the rest of the year. RBA takes the sidelines as well and maintains a neutral bias • RBA held its policy steady too. […]
Dollar tumbles as Clinton’s emails come back in focus • USD & US equities tumbled Friday on an FBI announcement about Clinton’s emails. • This was seen as taking momentum away from Clinton and thus, it makes the election outcome even more uncertain. Today: • Eurozone: Prel. CPI for Oct. Following Germany’s CPI acceleration, we […]
US GDP data to take center stage • 1st est. of Q3 GDP is exp. to have risen +2.5% qoq from +1.4% qoq in Q2. • Although we believe the risks are tilted to the downside and a miss in GDP could prove largely USD-negative, exp. for a Dec. rate hike could stay intact. • […]
• Riksbank to keep rates unchanged for now • Although Sweden’s inflation profile has deteriorated since the Bank’s latest meeting, they are likely to remain on hold for now. • Riksbank tends to follow ECB footsteps, as such, they may prefer to wait until Dec. before taking any action. • We expect the Bank to […]
• Draghi defends ECB’s stimulus policies • Draghi defended the Bank’s easy-money policies and signalled to keep them in place to secure its inflation target. • These comments increased the bets that the Bank may extend its QE program in Dec. • BoE Carney: We are not indifferent of the exchange rate level • MPC […]
DXY hit its highest level since early February • Strong US manufacturing data and comments from Fed official added to expectations of a rate hike by year-end. • Fed’s Evans said he sees 3 hikes between now and the end of 2017. USD strong but near important levels against EUR and JPY. BoC Poloz comments […]
Iraq seeks exemption from OPEC deal • Iraq’s oil minister said the nation should be exempted from reducing its production, as it is currently engaged in a war with ISIS. • This may be an obstacle to any future deal, because Iran also appears unwilling to cut its output. • If investors become doubtful that […]
ECB’s Draghi: We will talk in December • The ECB kept its stimulus program unchanged as was widely expected. • Main message from Draghi was the ECB will wait until Dec. before doing anything. • EUR/USD surged when he said they did not discuss an extension of QE (not yet). • But it fell back […]
ECB to take no action, Draghi’s comments in focus • ECB is exp. to stand pat. Any market movement will come from Draghi’s Q&A. • Questions likely to focus around the possibility of “ECB tapering” (Bloomberg story). • We don’t exp. Draghi to confirm that any such discussion has taken place (would be counterproductive to […]
BoC is likely to take the sidelines and maintain its dovish bias • The Bank of Canada is widely expected to remain on hold today. • Focus will be on the language of the statement accompanying the rate decision. • We expect it to remain dovish amid mixed economic data, thereby keeping the door open […]
New Zealand’s CPI beats forecast, but will it hold the RBNZ back? • New Zealand’s CPI rate for Q3 declined, but was slightly above its forecast. • This caused NZD/USD to spike higher. • Despite this, we still believe the RBNZ is on track for a Nov. rate cut, as the positive surprise wasn’t that […]
Yellen strikes a balanced tone but makes no reference to December • Yellen’s speech fell short of being a market mover for USD, as she did not address near-term policy or the likelihood for a Dec. hike. • Focus now turns to a speech by Fed Vice Chair Fischer today at the Economic Club of […]
Scotland announces the first step towards a second referendum • Scotland’s first minister said that an Independence Referendum Bill will be published next week, a first step towards holding another vote. • This could be yet another factor that adds downward pressure to GBP, once made official. • Also, UK High Court decides next week […]
FOMC September minutes: No surprises • The minutes revealed little information not already known. As such, the reaction in USD was limited. • Decision to hike in Sep. was a close call, but FOMC decided to wait for more data. • Still on track for a Dec. hike, especially as data have been decent after […]
British Parliament to vote on May’s “Brexit” plan • UK PM May conceded that Parliament should be allowed to vote on her “Brexit” plan. • This eases some fears of a “hard Brexit”, as Parliament is unlikely to approve of a plan that forfeits access to the single market. • GBP/USD surged, but not enough […]
Oil rallies as Putin offers his support to limit production • Oil prices rallied amid fresh signals that a deal to limit oil production can be achieved. • WTI initially rose on optimistic comments from the Saudi oil minister, and then surged after Putin said Russia supports a deal. • Even though we do not […]
US jobs report misses estimates, but doesn’t seem to alter Fed’s plans • US NFP for Sep. came 156k, missing the forecast of 176k. • USD weakened on the news, mainly due to the below-expectations NFP number. • But the probability for a December rate hike actually rose! Fed is still on track for a […]
Bottom falls out of GBP as Asian markets open • GBP collapsed (biggest crash since Brexit), but quickly recovered most losses. • A news story about French Pres. Hollande demanding “tough Brexit negotiations”, may have been the initial trigger. • Very thin liquidity conditions (China closed) likely amplified the plunge. • Once the move began, […]
Strong US PMI data suggest steady economic growth • US ISM non-manuf. PMI for Sep. surged, fueling the dollar rally even further (particularly against JPY). • Focus now turns to tomorrow’s employment data, that could be critical to investors’ expectations for a hike this year. UK PM Theresa May criticizes BoE policy side-effects • Most […]
