US June employment report: A rebound on the cards? • NFP is exp. 175k vs 38k prev. ADP and initial jobless claims support a solid number. • Avg. hourly earnings are exp. to rise at same pace as prev. Unemployment rate is exp. to tick up to 4.8% from 4.7% prev. • A rise in […]
June FOMC minutes: Nothing too surprising • June FOMC minutes confirmed that the UK vote could delay the next Fed rate hike. • Weak NFP figures also discussed, though deemed by many as “statistical noise”. NFP on Friday may attract even more attention than usual. • Despite the Fed’s cautiousness, we see risks to USD […]
Cable sinks to a fresh 31-year low • GBP carnage resumed yesterday and rolled into the Asian session as well. • The plunge may have been fuelled by Carney saying that Brexit risks have started to “crystallize”. • This risk-off environment could continue in the near-term. GBP, commodity currencies and stocks down, JPY & gold […]
RBA keeps benchmark interest rate unchanged • RBA remained on hold today and did not signal imminent policy action. • AUD near-term direction may be linked to global risk sentiment, given that it is considered a pro-risk currency. • RBA left the door for further easing open, so the Q2 CPI print (Jul.27) may be […]
UK’s Osborne says he plans to slash corporate tax • UK Chancellor Osborne said that he is planning to cut the corporate tax rate to 15% from 20%. • This can help the economy to attract foreign investments despite the “Brexit” uncertainty. • That could ease some of the downward pressure on sterling. Today: • […]
BoE’s Carney says easing may be required over the summer • BoE Gov. Carney said further stimulus may be needed following the Brexit vote. • Sterling plunged while the FTSE 100 rose well above its pre-Brexit levels. • BoE has meetings in July and August, with the latter seemingly being the most preferable month to […]
ECB not in a hurry, but will it do more? • ECB VP Constancio said that the Bank has to “wait a little bit” following Brexit to assess if further stimulus is needed. • Market has been calm the last few days, with recent rebounds suggesting stabilization. • We believe that the Bank is likely […]
UK leadership vacuum adds to overall uncertainty • Labour MPs voted by 172-40 yesterday for their leader to step down. Party-election may follow. • The Conservatives will go into elections as well to decide who will replace Cameron. Candidates to be announced today & tomorrow. • The lack of clear leadership is adding to political […]
Cable steadies near 31-year low • GBP/USD stretched to a fresh 31-year low but found some buy orders and rose a bit. • Pro-risk currencies such as AUD & NZD gained a bit as well, with no news to drive the moves. • JPY and gold gave back some recent gains but maintained their since-Friday […]
Is another referendum brewing in Scotland? • Scotland’s First Minister Sturgeon said that she and her colleagues will start talking with the EU about Scotland remaining in the EU. • She added that a second Scottish independence referendum is “highly likely”. • If such a step is officially announced in the foreseeable future, we could […]
“Brexit” it is… • The UK has voted to leave the EU. • GBP/USD collapsed to levels last seen in 1985. Euro plunged as well, but to a lesser extent than sterling. • We expect both GBP and EUR to continue lower, as uncertainty over the future of both the UK and the EU heightens. […]
Britain’s decision time: “Brexit” or “Bremain”? • Polls still indicate a tight race, but bookmakers’ probability for “Remain” is 78%. • Negative reactions in “Leave” may be much larger than positive reactions in “Remain”. If Britain remains: If Britain leaves: -GBP gains -GBP likely to plunge -UK equities (Global sentiment) gain -UK equities likely to […]
Yellen: Cautious approach is “still appropriate” • Fed Chair Yellen maintained a cautious yet optimistic tone in her testimony. • “Brexit” could create a risk-off environment, which may strengthen USD. • US economy is doing well, but need to ensure that the recent slowdown in jobs growth is only temporary. • This enhances our view […]
BoJ minutes: concerns about foreign risks • BoJ minutes from the April meeting showed some members concerned regarding increased uncertainty in overseas economies. • Officials said nothing new on the economy. They simply reiterated that the underlying trend in inflation is improving and they stand ready to ease again if needed. RBA minutes offer no […]
“Brexit”: Is “Remain” gathering momentum? • FX markets opened with a tone similar to Friday’s late trading. Higher GBP and a risk-on tone. • GBP/USD (and all major FX pairs) opened with a gap after polls over the weekend indicated a small lead for “Remain”. • Also, a leading “Leave” politician switched sides, something that […]
BoE on hold, “Brexit” campaigning suspended • BoE remained unanimously on hold. Reiterated its willingness to act regardless of the referendum outcome. • Reaction in GBP/USD remained muted on the news, but the pair later slipped on polls showing “Leave” ahead. • Following the murder of a pro-EU British lawmaker, GBP recovered as this may […]
Cautious Fed lowers rate path projections • FOMC remained on hold and lowered its rate path projections for 2017 (dot plot) to signal just 3 rate hikes, from 4 previously. • USD tumbled, but recovered some of its losses during Yellen’s press conference. • Near-term hikes to be data-driven. USD direction likely to depend on […]
FOMC: What signals will they send? • Fed is widely exp. to remain on hold. Focus will be on the updated economic forecasts, the updated “dot plot” and Yellen’s speech. • We exp. upward revisions to the economic forecasts, which may prove USD-positive. • The main reaction will depend on what signals officials send regarding […]
Japan’s Aso resumes intervention talk • Japan’s Fin. Min. Aso reiterated that “rapid and speculative” moves in the FX market may warrant responses. • Closely watching “Brexit” referendum given its potential impact on markets. • Given June’s risk events, we expect JPY to remain resilient and perhaps strengthen further as FX volatility spikes higher. Today: […]
Sterling collapses on new poll • GBP came under renewed selling pressure on Friday, after a fresh poll showed “Leave” ahead by 10 percentage points (55% – 45%). • Bookmakers probabilities for the UK to stay in the EU fell to 70% from 78% previously. • Pound’s near-term direction likely to continue to be driven […]
Euro slides on Draghi’s warnings • ECB’s Draghi voiced concerns about Eurozone’s lack of fiscal and structural reforms. • Euro slid on his comments, as he highlighted that central banks cannot solve all of the bloc’s problems. • His comments reinforce our view that the ECB may remain on hold for now. • EUR/USD is […]
RBNZ holds its fire, Kiwi surges • The RBNZ remained on hold overnight and maintained its easing bias. • NZD/USD surged more than 120 pips on the news and continued higher. • Further cuts could be on the cards as early as August, but this will be determined by incoming data. • NZD/USD could keep […]
RBNZ is likely to remain on hold • The RBNZ is exp. to remain on hold and signal a strong easing bias. • It’s a close call, but we believe that the Bank will wait at least until the August meeting to cut rates further. • As there are some expectations for a rate cut […]
Yellen: No hints on near-term hikes • Fed Chair Yellen maintained a balanced stance, trying not to tip the scale in either way. • Urged investors not to read too much into a single weak jobs report. • Did not mention that a hike “would probably be appropriate” in the coming months. • Probability for […]
Soft US jobs data cast doubts on summer hikes • NFP came at a mere 38k from 123k previously, missing expectations of a 164k rise. • USD collapsed on the news and continued even lower in the following hours. • This erased any expectations for a June hike. A further decline of the July hike […]
US payrolls to shed light on hike expectations • US NFP for May is exp. 164k vs 160k prev. Unempl. rate exp. to decline to 4.9% from 5.0% prev. and avg. hourly earnings to slow down. • Net-net, this is exp. to be a solid report, which may raise bets for a summer rate hike […]
ECB to stand pat…but sound optimistic? • The ECB is widely exp. to remain on hold. Focus will be on the updated forecasts and Draghi’s press conference. • Forecasts for GDP and inflation may be revised up, which could support EUR. • Draghi is likely to suggest that the Bank is in a “wait and […]
Aussie jumps on strong export data • AUD surged after data showed exports were stronger than exp. in Q1. • This increases the likelihood for a positive surprise in Q1 GDP, due out Wed. • A strong GDP reading tomorrow could reduce the likelihood for an RBA rate cut next week, and support AUD. Today: […]
• Yellen keeps the door open a for summer hike • Fed Chair Yellen said that a rate hike would probably be appropriate in coming months. • USD rallied on the comments, and could continue strengthening in comings weeks. • Focus now shifts back to the data, to determine the timing of next rate move […]
• Fed Chair Yellen to set the tone on hikes • Given the “hawkish” comments by FOMC members, Yellen’s speech will set the tone for the likelihood of near-term hikes. • Her last appearance was very dovish, but we expect a more neutral tone today. • Likely to indicate a June hike is still in […]
