Global Risks Materializing, Stocks and Yields Tumbled, Yen and Franc Surged
US-China trade/currency war, no-deal Brexit, global slowdown and central bank easing were the main themes last week. The perceived risks to global economy were moving closer to materializing. Free fall in Chinese Yuan at the start of the week triggered US in designating China as currency manipulator. New 10%...
Sterling Tumbles as GDP Contraction Raises Recession Fears
Sterling weakens broadly today as surprised contraction in Q2 UK GDP raised concerns of recession. In the background, risk of no-deal Brexit continues to weigh on sentiments. Canadian Dollar is suffering some renewed selling in early US session after worse than expected job data. Dollar is not much better...
China PPI Returns to Deflation, PBOC Probably Cuts Rate in September
Headline CPI in China accelerated to +2.8% y/y in July, from +2.7% a month ago. Same as previous months, the key driver of inflation was food prices, which jumped +9.1% y/y in July. In June, food prices also rose +8.3% y/y. Of which, pork prices soared +27% y/y and...
Sterling Soft as Markets Await UK GDP and Productions
Sterling stays soft in Asian session and remain the second worst performing one for the week. Risk of no-deal Brexit continues to weigh on the Pound. UK GDP and production data could add more selling pressure. For the week, New Zealand Dollar remains the weakest one after the surprised...
Sterling Under Pressure as Johnson Might Delay General Election after Brexit Date
Sterling is back under pressure again in early US session and is trading as the weakest for today. Prime Minister Boris Johnson urged MPs to keep the promise to people an deliver Brexit on October 31. At the same time Financial Times reported that Johnson, if loses a confidence...
Markets in Consolidations as China Trade Data Support Sentiments
The forex markets are rather quiet today as major pairs and crosses are stuck in consolidations. Better than expected trade data from China gives sentiments a mild boost. But momentum of recovery is very weak so far. Treasury yields are also trying to recover after yesterday's steep decline. For...
US Crude Oil Inventory Gained for First Time since Mid- June
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks jumped +10.41 mmb to 1308.82 mmb in the week ended August 2. Crude oil inventory gained +2.39 mmb to 438.93 mmb (consensus: -2.85 mmb). Inventories increased in 3 out...
Yen Strengthens Again on Falling Treasury Yields, Swiss Follows
Yen strengthens broadly today, mainly follows decline in major benchmark yields. German 10-year yield hit another record low at -0.597. US 10-year yield also breaks 1.7 handle. Yields are pressured after deeper the surprised -50bps cut by RBNZ and expectation of more global central bank easing. Asian stocks ended...
New Zealand and Australian Dollars in Steep Decline after Surprised RBNZ 50bps Rate Cut
New Zealand Dollar is clearly the worst performing one today as selloff intensifies after RBNZ's surprised -50bps rate cut. Australian Dollar is also dragged down deeply while Canadian Dollar follows as third weakest so far. Asian markets ignore rebound in US stocks overnight and weaken generally. Yen and Swiss...
RBNZ Cut Policy Rate by -50 bps, Hinting Negative Interest Rate
RBNZ surprised the market by reducing the OCR, by -50 bps, to 1%. The market had only anticipated a -25 bps cut. The aggressive rate cut is "necessary" to help support employment and inflation in the country as downside risks are growing. Governor Orr also signaled that negative interests...
Dollar Recovering While Yen Softens as Currency War Fear Recedes Mildly
Market sentiments stabilized with recoveries seen in European stock markets, while US futures also point to a solid rebound. The China's Yuan also pares back some of yesterday's steep losses on rumors that a PBoC official reassured foreign companies that the currency won't continue to weaken significantly. Though, the...
Sentiments Stabilize While US-China Trade War Turns into Currency War
Asian markets tumbled sharply earlier today in response to US designation of China as currency manipulator. USD/CNH also jumped to new high at 7.1399. But China's PBoC appeared to be trying to "smooth" Yuan's decline despite hard line rhetorics elsewhere. Asian stocks quickly pared back much of today's losses....
US’ Designation of China as Currency Manipulator Makes it Harder to Reach Trade Deal
US Treasury Department on Monday labeled as currency manipulator, first time since 1994. Before the announcement, Trump has threatened to label as currency manipulator while the Treasury Department has long placed China in its monitoring list. According to the criteria, set by the Treasury Department in 2015, for a...
RBNZ Preview – Another Rate Cut is Needed to Boost Inflation and Support Employment
We expect RBNZ to cut the OCR, by -25 bps, to 1.25% in August. Given the disappointment in the inter-meeting data flow, the central bank would likely signal further easing later in the year. Meanwhile, the policy statement might focus on the downside risks on domestic economic growth outlook,...
Risk Aversion Dominates Globally as Yuan Fall Drags Sentiments
Global markets are dragged down by the steep decline in the Chinese Yuan today. Major European indices are all in deep red today, following the selloffs in Asia. DOW future is currently down over -1.4% or -370 pts. Treasury yields also suffer with German 10-year yield breaking -0.5 handle...
Free Fall in Chinese Yuan Spills Over to Asian Markets, Yen and Franc Strong
Yen and Swiss Franc extends last week's strong rally as risk aversion dominates Asian markets. A key trigger is the free fall in the Chinese Yuan, which dives through psychologically important 7 level against Dollar, in response to trade war escalations. Major Asian indices are all in deep red...
RBA Preview – Pausing (Not Ending) after Two Consecutive Rate Cuts
Following two consecutive rate cuts, RBA is widely expected to leave the cash rate unchanged at 1% in August. Incoming economic data since the last meeting have also supported the pause. Yet, given the aggressive target in the longer-term unemployment rate, downside risks to growth and ongoing uncertainty in...
Abrupt Trade War Escalation Overshadowed Fed’s Cut, Yen and Franc Jumped
The abrupt escalation of US-China trade war overshadowed Fed's rate cut last week. As the trade talks in Shanghai yielded no constructive result, Trump announced to impose 10% on USD 300B in Chinese imports, effective September 1. The list include practically all untaxed Chinese goods, which should have much...
CFTC Commitments of Traders – All Major Currencies in NET SHORT Positions, Except USD and CAD
As suggested in the CFTC Commitments of Traders report in the week ended August 1, NET LENGTH in USD Index added +1 155 contracts to 30 283. Speculative long positions rose +7 087 contracts while short positions gained +5 932 contracts during the week.Concerning European currencies, NET SHORT for...
CFTC Commitments of Traders – Traders Bet on Lower Crude Oil Prices
According to the CFTC Commitments of Traders report for the week ended August 1, NET LENGTH for crude oil futures declined -10 560 contracts to 387 291 for the week. Speculative long positions gained +2 298 contracts and shorts jumped +12 858 contracts. For refined oil products, NET LENGTH...