Fed Projects 2 Rate Hikes in 2023, Strongly Upgrades Growth and Inflation Outlook
The Fed has turned more hawkish at the June meeting. Besides significant upgrades in the GDP growth and inflation forecasts, the median dot plots now project two rate hikes in 2023, compared with no rate hike until 2024. At the press conference, Fed chair Jerome Powell indicated that the...
Markets Await Fed, Canadian Dollar Shrugs Strong CPI
Dollar softens quite notably in early US session as markets await FOMC rate decision. Though, Swiss Franc and Euro appear to be slightly weaker. On the other hand, Kiwi and Aussie are strengthening mildly but Canadian Dollar shrugs off stronger than expected consumer inflation data. Sterling also firms up...
China’s Recovery Slowed in May amidst Resurgence of Pandemic
China’s major economic data missed expectations in May. Industrial production (IP) expanded +8.8% y/y in May, worse than consensus of +9.2% and April’s +9.8%. Retail sales growth decelerated to +12.4% y/y, from +17.7% in April. The market had anticipated a +14% growth. Fixed asset investment (FAI) gained +15.4% y/y...
Dollar Awaits Fed’s Dots for More Rally
Dollar is maintaining much of this week's gains as focus now turns to FOMC statement and economic projections. There is prospect of further rally for the greenback should some policymakers pull ahead their rate hike expectations. But the overall reactions would more depend on interaction with other markets like...
Dollar Surges on Record PPI, Sterling Tumbles
Dollar jumps in early US session after strong, record making, PPI inflation data. The worse than expected retail sales and manufacturing data were shrugged off. Yen and Euro are following as next strongest for now. Sterling continues to be weighed down by delay in reopening and it's trading and...
Yen Crosses Rebound as NASDAQ and S&P 500 Made New Records
Yen trades broadly overnight on strong risk appetite, with NASDAQ and S&P 500 closing at new record highs. And it remains generally soft in Asian session. Some selling in seen in Australian Dollar after RBA minutes, but loss is very limited. Other commodity currencies are indeed trying to firm...
RBA Minutes Reveal Members Discussed Three Options to Extend QE
The RBA minutes for the June meeting indicated that the member turned more optimistic about economic recovery. Yet, they remained concerned about soft inflation and wage growth. Accommodative monetary policy would stay in place for the years ahead. at the next meeting, we will likely hear more details about...
FOMC Preview – Too Early to for Tapering while Surge in Inflation is More Imminent
We do not expect the Fed talk about tapering at this week's meeting. Policymakers would likely hint more about it at the Jackson Hole symposium in August while a formal announcement would be made at the September FOMC meeting. Rather, we are more interested in its view on the...
Sterling Softens on Possible Reopening Delay, Range Trading Continues
The forex markets continue to be generally quiet today, stuck inside Friday's range. Sterling is mildly lower on talks that UK Prime Minister Boris Johnson is going to delay easing of restrictions due to rise in the Delta variant infections. Yen is also trading lower together with Swiss Franc....
Forex Quiet as FOMC Awaited; Gold, Oil and Bitcoin on Moves
Trading is generally subdued in Asian session today, with little reactions to the G7 summit. Also, China and Hong Kong are on a one-day holiday. Commodity currencies are mildly firmer while Swiss Franc and Yen are softer. But all major pairs and crosses are stuck inside Friday's range. Instead,...
CFTC Commitments of Traders – Bets on Higher Euro Trimmed as ECB Refrained from Hinting “Taper”
As suggested in the CFTC Commitments of Traders report in the week ended June 8, NET LENGTH of USD index futures dropped -1 212 contracts to 2 891. Speculative long positions rose +1 679 contracts while shorts increased +2 891 contracts. Concerning European currencies, NET LENGTH in EUR futures...
CFTC Commitments of Traders – Bets on Higher Crude Oil Prices Increased amid Demand Hopes
According to the CFTC Commitments of Traders report for the week ended June 8, NET LENGTH for crude oil futures jumped +19 202 contracts to 510 499 for the week. Speculative long position rose +18 717 contracts, while shorts dropped -485 contracts. For refined oil products, NET LENGTH for...
Swiss Franc, Dollar, and Yen Jumped on Falling Global Benchmark Yields
The intra-week rebound in global benchmark treasury yields was rather short-lived. Yields in Germany, US and Japan then turned south after ECB's decision on PEPP purchases. That came even though CPI jumped to 13-year high. It remains to be seen of investors are giving a strong node to central...
Dollar Rises ahead of Weekend, Sterling Firm after GDP
Notable buying is seen in Dollar as markets enter into US session. There is no apparent reason for the rally, except that some traders could be adjusting positions ahead of the high profile G7 summit. Resilience in the Swiss Franc is affirm this pre-emptive risk aversion. Meanwhile, Sterling is...
Swiss Franc Firm as Focus Turns to Sterling
Swiss Franc is generally firm as weekend approaches. Even though there was no follow through buying in Euro after ECB overnight, the common currency is somewhat support mildly by the strength in the Franc. Meanwhile, Yen's selloff faded quickly, together with the rebound attempt in treasury yields. Dollar, Canadian...
ECB Upgrades GDP Growth and Inflation Forecasts, Refrains from Talking about Taper
The ECB meeting contains little surprise. On economic developments, despite the notion that recent rise in inflation has been driven by temporary factors, the staff upgraded headline inflation projections sharply for this year and 2022. All monetary policy measures stay unchanged. Obviously, policymakers avoided to mention about “taper”, amidst...
Muted Reactions to ECB and US CPI, Yen Lower Following Yield Rebound
There are heavy weights event for Euro and Dollar today, but reactions are so far mild. ECB said it will continue the PEPP purchases at "significantly higher" pace in Q3. Yet, it also upgraded both growth in and inflation forecast for this year and next. Dollar shrug off very...
Euro Softens ahead of ECB, US CPI also Featured
Euro softens broadly today as markets await ECB policy decision. Traders appear to be position for a dovish, or at least cautious, ECB press conference. Nevertheless, Sterling and Dollar are also soft, indicating that the markets are not one sided yet. Meanwhile, commodity currencies are trading mildly firmer today,...
BOC Drew Attention to Rise in Core Inflation
BOC remained positive about the economic outlook despite recent softer data. The members viewed that weakness in the job market was temporary. Meanwhile, they were more attentive to the rise in core inflation. We believe the plan of QE tapering remains intact while the central bank is still on...
Gasoline and Distillate Inventories Built on Sharp Fall in Demand
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks soared +15.47 mmb to 1293.31 mmb in the week ended May 28. Crude oil inventory plunged -5.24 mmb (consensus: -2.04 mmb) to 474.03 mmb. Stockpile decreased in 2 out...