BOE to Keep Stimulus Measures Unchanged in May. Could Announce QE Extension in Coming Two Months
We expect BOE to leave both the policy rate and other liquidity expansion measures unchanged this week. Despite government’s plan to ease lockdown measures amidst stabilization of coronavirus cases, the process will be gradual. Meanwhile, social distancing measures will remain for an extended period of time. These suggest that...
Markets in Defense on US-China Tensions, Dollar and Yen Higher
Yen and Dollar trade generally higher in Asian session today. Trading is relatively subdued with Japan and China on holiday. Yet, the theme of US-China tension drives some risk-off moves. May didn't start well as investors seemed to be rushing to reverse April's risk-on moves. As for today, New...
RBA to Stay on Hold in May. Economic Forecasts to be Downgraded
RBA is widely expected to leave the cash rate unchanged at 0.25% on the May 5 meeting. It will also keep other stimulus measures, including targeting 3-year bond yield, term funding facility operation and QE, announced in March the same. The members will, however, markedly revise lower economic projections.
In...
From Coronavirus Lockdown Exit to New US-China Tariff war
Economic data releases have probably never been that meaningless in history. Traders were not too concerned that the Q1, March or even April data were worse than terrible. Instead, hope of lockdown exit, at least partially, have lifted risk markets for the initial part of the week. Risks of...
CFTC Commitments of Traders – Bets on Higher Safe Haven Currencies Increased
As suggested in the CFTC Commitments of Traders report in the week ended April 30, NET LENGTH in USD Index added +472 contracts to 16 088. Speculative long positions gained +1 425 contracts and short positions added +953 contracts. Concerning European currencies, NET LENGTH in EUR futures declined -7...
CFTC Commitments of Traders – NET LENGTH on Crude Oil Increased on Bargain Hunting
According to the CFTC Commitments of Traders report for the week ended April 30, NET LENGTH for crude oil futures added +2 208 contracts to 589 388 for the week. Speculative long positions gained +1 530 contracts while shorts dropped -678 contracts. While the front-month WTI crude contract rebounded ...
May Starts in Risk Aversion, Yen and Franc Surge
Yen and Swiss Franc surge broadly today as risk aversion seems to be back as May starts. Warnings from Amazon and Apple are cited as the reason for the decline in US futures. On the other hand, Chinese is trading sharply lower on concerns that US President Donald Trump...
Aussie Turns Lower as Markets Reversing April’s Moves
Australian Dollar is leading commodity currencies broadly lower in Asian session today, as markets seem to be rushing to reverse April's moves. Euro has somewhat taken the lead overnight, pulling Swiss Franc higher too, after initial reactions to non-eventful ECB. Yen is also trading generally lower in relatively quiet...
Dollar Recovering as Risk Appetite Recedes, Euro Turns Softer after ECB
Risk appetite recedes mildly today as European indices turn negative after initial gain, dragging US futures lower too. Euro is originally rather unmoved by ECB's policy decision as well as press conference. But some weakness is seen at the time of writing. Traders seem to be betting more on...
Dollar Shrugs FOMC While Euro Awaits ECB and GDP
Commodity currencies remain the strongest one today as supported by risk appetite. Sentiments are lifted by expectations of lockdown exits as well as optimism on coronavirus treatment. Dollar remains generally weak with Fed providing little inspirations. Euro and Swiss Franc are not much better than the greenback. Euro's weakness...
Crude Oil Selloff Could Resume in Weeks as Cushing Approaches Full Capacity
WTI crude oil price consolidated after the collapse in the previous week. Crude oil inventory continued to increase despite slowdown in pace. The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks rose +10.41 mmb to 1377.51 mmb in...
Fed Markedly Downgraded Economic Assessments on Sharp Decline in Activities and Surge in Unemployment
While maintaining all monetary policy measures unchanged in April, FOMC sent a more negative message about the economy. The members noted the sharp deterioration in economic activities and a jump in unemployment, cautioning that the negative impacts could prolong in the medium term. The Fed pledged to maintain the...
Dollar Weakness Continues after GDP Contraction, FOMC Next
Dollar's weakness continues today as largest GDP contraction in more than a decade gives no help. A wave of selling is seen in Sterling in European session. Yet there was no sustainable momentum so far. Yen is follow as the third weakest on mild yet solid risk appetite. Commodity...
Aussie Extends Rally on Strong CPI, Weak Dollar Awaits Fed and GDP
Australian Dollar remains the strongest one for the week as stronger than expected CPI data prompted another round of buying in Asia. Other commodity currencies are also firm, but the Japanese Yen is not too far away. Dollar, on the other hand, is the worst performing one for the...
ECB to Send a Dovish Tone and Pledge to Take Further Actions if Needed. Rate Cut Appears Less Relevant than QE
We expect ECB to keep its powder dry at this week’s meeting, after launching several stimulus measures last month. The central bank should maintain a dovish tone, indicating disappointing economic data and pledging the take further actions if needed. As EU has so far failed to agree on substantial...
Dollar Under Broad Based Pressure on USD/JPY Downside Breakout
Dollar's broad based decline resumes today with the help from downside break out in USD/JPY. Risk sentiments are firm on reopening optimism, with generally rally in European indices. Swiss Franc is pressured as the third weakest, following Dollar and New Zealand Dollar. Yet, Yen is not too bothered and...
Asian Markets Turned Mixed With Falling Oil and Gold, Kiwi Weakest
Despite extended stock rally in the US overnight, Asian markets turned mixed. Renewed weakness in oil price is a factor weighing on sentiments, as WTI crude oil is down at 11 handle, threatening 10 handle again. Gold also dips below 1700 handle, as Dollar is trying to recover. For...
Stocks Lifted by Lockdown Exit Optimism, Dollar and Swiss Weaken
Dollar and Swiss Franc weaken broadly today on optimism that many countries are heading towards lockdown exit. New Zealanders will return to work on Tuesday as alert level is shifted down at midnight. Even Italy is talking about reopening factories and buildings sites from May 4. New York is...
BOJ’s QE Expansion Likely Ineffective Despite Pledge of Unlimited Purchases
BOJ announced to expand QE today. It will increase support on corporate financing and remove the annual purchase limit for JGBs, from 80 trillion yen previously. Meanwhile, the central bank left the overnight rate unchanged at -0.1%, and the yield curve control (YCC) program in order to keep the...
FOMC to Highlight Weakness in Economy and Reinforce Dovish Stance in April Meeting
Following unprecedented measures announced in March, we expect the Fed to leave the policies unchanged at the April meeting. The focus will be on the economic assessment and the forward guidance. We expect the members to acknowledge the rapid deterioration in employment, demand, and confidence since the coronavirus outbreak....