Summary: The USD rise accelerated steeply yesterday as Fed Chair Powell largely shrugged off the move higher in US treasury yields. And USDJPY went nearly vertical overnight on intervention against rising yields at the long end of the yield curve. The US dollar is now strong across the board and the countdown to the next Fed intervention is underway, but the USD...
Summary: The market is trying to put a brave face on after the treasury market trauma of late last week send shockwaves across asset classes. The hopeful narrative is one that yield-curve control to backstop asset markets is imminent. Already, the ECB is practicing rhetorical pushback against rising yields, and the Australian RBA stepped up long bonds purchases...
Summary: The pressure from rising yields came to at least a near-term climax yesterday with a new spectacular spike in US Treasury yields that spooked global markets and drove a general leveraging across asset classes. In FX, this meant that the strongest trends of late reversed brutally, with JPY and USD soaring and traditional risk-correlated FX and sterling...
Summary: Risk sentiment is broadly under pressure, with muted reactions across FX, although yesterday did produce new developments worth noting, and the event risk of the week is up today in the form of semi-annual testimony from Fed Chair Powell. Any hint from Powell on the Fed stance on rising yields will be closely watched, with even the absence of concern...
Summary: Yields closed at new cycle high on Friday and followed through to a degree in trading to start the week today, likely a key driver in spooking risk sentiment in equities. Commodity related FX has been happy to shrug off the usual sensitive to risk sentiment as some commodity prices are white hot, even if EM currencies seem a bit less than thrilled with...
Summary: The rise in global bond yields this week has buffeted risk sentiment, but a strong buy-the-dip mentality in risky assets seems to prevail, especially this morning in Europe, helping the USD back lower and sending GBPUSD to 1.4000 and AUDUSD to new cycle highs. Can sentiment continue to look through higher yields? That is a knotty question, which I...
Summary: US treasury yields spiked a bit more impressively yesterday as the entire curve from five years on out rose aggressively to new cycle highs. Markets finally responded a bit more broadly to the development even if the USD move higher on the back of this development was rather modest in broad terms. From here, we will watch out for a whiplash-inducing...
Summary: Risky assets remain on fire as the US gets back to work today, with US long yields, easily the most important risk benchmark for global financial markets, having broken to new cycle highs ahead of a three-day weekend in the US and with China out on holiday until later this week. USDJPY has poked higher in sympathy with US yields, likely a coincident...
Summary: Most USD charts have posted a significant bearish reversal pointing to the risk of further USD weakness, driven by poor quality US stimulus and a reflationary narrative in which the Fed and the US government are seen as pursuing an irresponsible level of accommodation. But lurking in the background, long US rates should be making everyone uncomfortable....
Summary: The US dollar peaked out on Friday just ahead of a weak official January jobs report and weakened sharply again yesterday and overnight as US treasury yields rolled over after etching new highs ahead of important treasury auctions tomorrow and Thursday. The JPY responded enthusiastically to lower yields and USDJPY dropped well below 105.00 overnight,...
Summary: The US dollar has supposedly become a pro-cyclical currency, enjoying the strength from strong economic performance and a surge in longer yields, but can we really continue to see a rising US dollar, rising US yields and rising risk sentiment for much longer? The US labour market report later today the next test on that front. Elsewhere, sterling has...
Summary: The Bank of England decision was to the marginally hawkish side of the spectrum of likely outcomes in that no haste for a negative rate policy was mentioned, but neither was the idea entirely eliminated. Sterling relief rally shows strong bid for the currency. Elsewhere, the USD surge continues as the longest US yields rose to new highs for the cycle and...
Summary: Risk sentiment staged a resounding comeback yesterday, and yet the US dollar was firm on the day, even breaking higher in places, an odd combination of developments that it tough to build a narrative around. Regardless, the US dollar is tilting to the strong side until proven otherwise. Elsewhere, the RBA did all it could overnight to provide headwinds...
Summary: Markets are trying to stabilize again after a traumatic couple of days, and USD bears are trying to get back on track as the week winds down into the close today. We note a hot inflation reading from the US PCE inflation data series today after the hot reading out of Germany yesterday and from elsewhere earlier this week. US yields are back sharply...
Summary: With the short-squeeze mayhem in Wall Street apparently now helping drive an across the board deleveraging, it is no surprise to see the USD rising sharply, but the JPY sitting out the volatility is another story, especially as long safe haven yields have dropped. Is the USD the only safe haven currency in town? But the key question right now is whether...
Summary: The market is not expecting much from the FOMC meeting later today, nor perhaps should it, given that the Fed needs to have a look at how the economy is shaping up once a significant percentage of the US population has received Covid vaccines, which seem to be in short supply for now. Another issue looms for the Fed in that its purchases are possibly too...
Summary: Summary: FX moves were muted yesterday relative to the histrionics in US equities, but the sense of caution was palpable, with the US dollar and Japanese yen rising as volatility spiked and US treasury yields diving sharply in what looks like a bout of safe haven seeking. A PBOC check of liquidity overnight and concerns that the US stimulus package may...
Summary: Movements in FX are moving sharply against recent trends as the commodity dollars are suddenly on their backfoot, while a less dovish than expected ECB is seeing the euro firming across the board, with the USD likewise firming against risk-correlated FX, especially in EM. The SaxoStrats team is urging near term caution on risk exposure, and this goes for...
