Summary: The ECB meeting yesterday failed to provide new developments for EUR bulls, although the euro has bounced back again today. In the US, a Biden proposal to nearly double the capital gains tax would represent the most significant shift in US tax policy in forty years if it sees the light of day. And after the consolidation in US treasury yields, USDJPY is...
Summary: Price action is choppy after a risk-off wave yielded to a risk-on counterpunch yesterday, keeping the tactical outlook difficult. The Bank of Canada caught the market off guard yesterday with more hawkish than expected guidance on the economy, although Canadian yields suggest that the CAD reaction may have been a bit over-baked. ECB on tap today, where...
Summary: An ugly reversal in global risk sentiment, together with a solid rally in treasuries, had the USD and JPY on the bid across the board in what used to be the typical pattern for risk-off developments across markets, in stark contrast to the patterns brought about in the recent past by rising yields. The G10 smalls were hit the hardest on this development,...
Summary: The best scenario for USD bears would be one in which the positive growth outlook elsewhere picks up relative to the already white hot US economy, especially now that the biggest US fiscal impulse is a done deal. But there are a few factors here that should make USD bears uncomfortable, and only one of those is the implications of not yet having seen...
Summary: The US dollar is breaking down through important levels to start the week after recent very strong US data failed to take the currency higher as US treasuries looked through the data. Perhaps helping the greenback lower at the margin has been a revival of risk sentiment in Asia. Medium term uncertainties abound, but USD bears may have a spell of clear...
Summary: Commodities have generally beat a path back higher this week, and most commodity-linked currencies have responded with a break higher. Even the ruble is back on the recover path despite US sanctions. If commodities and pro-cyclical currencies post a solid close today to end the week on a strong note for the reflationary theme, we could be set for a...
Summary: The EURUSD has retraced nearly all the way back to 1.2000 and neutralized the downside risk and more powerful momentum has now arrived in commodity-linked FX since yesterday against the big dollar, whether in G10 or in EM, the Russian ruble loudly excepted on new US sanctions incoming. More strong US data expected today, but the reaction to the CPI data...
Summary: The US dollar is not making any broader statement here as treasuries jump back and forth and EURUSD dances on the edge of critical resistance, mostly driven by recent Euro strength rather than anything USD-related. Fresh developments are adding to the risks for a reduced fiscal impulse from the US in coming months, with possibly negative implications for...
Summary: The headlines touted a dovish set of FOMC minutes, further reducing the recent spike in expectations for Fed rate hikes and supporting US treasuries, but the US dollar was not particularly reactive. EURUSD has risen to a critical tactical level that must hold if the USD bulls are to maintain a key pillar of support. Meanwhile, low volatility suggests a...
Summary: The sharp rally in US treasuries and fall in yields in recent sessions has brought some profound relief to the lowest yielding currencies, from the euro to the most negative yielding of them all, the Swiss franc. The move could yet deepen further, but far too early to call a change of trend. Elsewhere, India and Russia are worth mention in the EM space....
Summary: The malaise in Asian markets is weighing on sentiment, but it is hard to get too down in the European session when the flash March German manufacturing PMI rolled in at a blistering 66.6 this morning. The EURUSD is mulling whether it should follow through lower after breaking below an important support this morning just before the strong EU flash PMI...
Summary: The New Zealand government moved aggressively against housing speculation with a raft of new measures overnight, a loud policy signal that the whole world should pay attention to, as policies aimed at inverting the K-shape are going to spread aggressively around the world. Also, commodity dollar pain and easing US yields driving a steep yen recovery...
Summary: The Turkish lira suffered an enormous gap lower on the opening of trade this week after Turkish president Erdogan fired the hawkish former central bank chief and replaced him with someone more sympathetic with his own views on interest rate policy and inflation. Lira longs are suffering a brutal case of whiplash after the bigger than expected rate hike...
Summary: A further rise in US yields yesterday, even at the shorter end of the US yield curve, spooked risk sentiment once again, and a mini-crash in crude oil prices has pressured commodity currencies and spoiled the NOK bulls parade in the wake of the Norges Bank meeting. The most interesting development overnight, however, was the potent rally in the Japanese...
Summary: The Fed has made it more than clear that it is not about to touch the policy rate or its pace of QE purchases until US inflation rises and stays high for a sustained period. That dovish message was initially celebrated by the equity market and by USD bears, but a follow-on move higher in US long yields is providing some pushback, especially for risk...
Summary: Equity markets are showing signs of another tantrum as US yields rise steeply again, with the US dollar following the lead from treasury yields. It looks like a potential explosive week ahead, as the FOMC meets on Wednesday and the Bank of Japan is set to announce the results of its policy review on Friday in the wake of a recent remarkable tailspin in...
Summary: US yields stopped rising and the US dollar has largely stopped rising as well. US treasury auctions today and tomorrow are crucial for the next moves in the greenback. Elsewhere, the ECB meeting tomorrow is receiving plenty of attention, which it only should receive if yields elsewhere continue higher, because the ECB is operating without the fiscal...
Summary: As global yields have risen recently, the chief victims among currencies have been the lowest yielders and traditional safe-haven currencies like CHF and JPY, but we are curious to see if continued US dollar strength and weak risk sentiment begin to weigh more heavily on traditional pro-cyclical currencies this week, where the calendar highlights of the...
