ECB Not Dovish Enough – Low Rate to Stay until Mid-2020 and TLTRO Pricing Revealed.
We believe ECB’s more dovish tone in June is insufficient to stimulate the economy. As expected, ECB extended the timing that the historically- low interest would remain. It also released the pricing of the TLTRO-III. We were slightly disappointed that the interest rates offered was higher than those in...
Euro in Range after Rough Ride on ECB’s Not Dovish Enough Meeting
It's a roller coaster ride for Euro. It initially dipped after ECB said there will be no rate hike at least through mid 2020. Then it recovered and breaks yesterday's higher against Dollar as the press conference and new economic projections turn out to be not that dovish. Though,...
Dollar Recovered From Overly Bearish Sentiments as Focus Turns to ECB
Dollar tried to stage a reversal overnight after initial selloff, but upside is so far limited and there is no confirmation of bottoming yet. There are a couple of factors behind the move. Post ADP employment decline was largely undone by better than expected ISM services. In particular, the...
Crude Oil Inventory Build Adds to Oversupply Concerns amidst Global Slowdown
Having fallen over -20% from April's peak, oil price has uncomfortably entered a bear market. Intensification of US- China trade war, slowdown in economic growth in major economies, Brexit uncertainty and other geopolitical factors have heightened concerns about the global oil demand. Stock- builds in the US only adds...
Dollar Selloff Extends on Poor ADP Job, Yields Dive Again
Dollar suffers another round off selloff after terribly poor ADP job data, which showed only 27k growth in May. 10-year yield also takes a steep dive breaching Monday's low at 2.081. Gold breaks 1344 and is on track to take on 1346.71 resistance. The poor data adds to speculation...
Dollar in Deep Selloff as Markets Price in 90% Chance of Fed Cut by September
Talks of Fed rate cut intensified overnight after comments from Fed Chair Jerome Powell. Markets are now even pricing in 90% of a cut by September FOMC meeting. US stocks rebounded strongly with DOW closed up 512.40 pts or 2.06%. Positive sentiments carried through to Asia will broad based...
Dollar Turns Mixed as Risk Aversion Recedes Mildly, Overall Markets Mixed
While Dollar has been pressured for most of the day, receding risk aversion seems to be giving in a hand in early US session. The greenback is riding on recovery in both US yield and stocks and trades mildly higher. Adding to that, Chicago Fed President Charles Evans maintains...
Dollar Decline Accelerates on Falling Yield and Stocks, Trade Wars and Fed Cut Talks
Dollar suffered another round of selloff this week and remains broadly weak today. Free fall in treasury yields continued overnight with 10-year yield closing at 2.081, down -0.061. 2% handle is now looking vulnerable with current downside acceleration. Tech stocks were hit hard with NASDAQ lost -1.61%, on news...
RBA Lowers Policy Rate to 1.25%. Two of Big Four Pledge to Pass the Cut to Market in Full
For the first time in 3 years, RBA lowered the cash rate by -25 bps to 1.25%, a fresh record low, in June. The rate cut had been well anticipated as the members sought to support the labor market and boost inflation. Further reduction is possible later this year....
ECB Preview- More on Dovish Side. Focus on Forward Guidance Extension and Pricing of TLTRO-III
We expect the ECB to deliver a more dovish message in June. We expect to see changes in the forward guidance. ECB would also announce the technical details of TLTRO-III. The economic projections would probably similar to the previous ones, despite modest upside surprise in the first quarter GDP...
Dollar Softens ahead of Important Economic Data, EUR/CHF Hits 2-Yr Low
Dollar weakens broadly today as markets are turning their focuses to manufacturing from the US. Final reading of Markit PMI shouldn't deviate much from the first print 50.6. Meanwhile, ISM manufacturing could probably how confidence turned after last round of trade war escalation with China. Even if the greenback...
Threat of Dumping US Treasury Signals China is Running Out of Weapons in Trade War
China’s White Paper, entitled “China's Position on the China-U.S. Economic and Trade Consultations” on recent escalations of trade war has weighed on the fragile market. While the majority of market participants judges that China has opted for a hardliner approach, interpretations of the outcomes are diverse. While some judge...
Dollar Mixed as China’s White Paper Signals No Quick End to Trade War
Dollar opened the week mildly lower but appears to have found some footing in early European session. Trump is fighting trade wars on two fronts, at least. On the one hand, China has cleared stated its position for not backing down on some core issues, with a white paper...
CFTC Commitments of Traders – Bets of USD Diminished Amidst Uncertainty about Fed’s Policy Outlook
The CFTC Commitments of Traders report in the week ended May 28 shows that NET LENGTH in USD Index climbed higher, by +386 contracts, to 27 098. Both speculative long and short positions increased during the week. Traders continued to trim their bets on USD. Recent focus has returned...
CFTC Commitments of Traders – Weaker Oil Prices Anticipated as Traders Accumulated Short Positions
According to the CFTC Commitments of Traders report for the week ended May 28, Bearish sentiment was broadly-based in the energy market. NET LENGTH for crude oil futures slumped -39 460 contracts to 438 938 for the week. Speculative long positions plunged -21 546 contracts while shorts rose -17...
Sentiment Sank on Trump’s Political Weaponization of Tariffs
Free fall in major government yields extended, and accelerated last week. Meanwhile, it seemed that stocks investors finally woke up with sharply deteriorating sentiments. Major indices staged steep decline as risk aversion heightened. The first factor being the "ever-present" US-China trade tensions. Hard-line rhetorics from official media blossomed after...
DOW Opens Down 1% as Bears Cheer Trump’s Mexican Tariffs, Yen Maintains Strong Momentum
Global financial markets are rocked by Trump's decision to use tariffs as a way to force Mexico to solve border security crisis of the US. 5% tariffs will be imposed in all Mexico imports to US starting June 10, then "gradually" as Trump claimed, go up to 25% on...
Yen Jumps as Trump Uses His Only Trick of Tariffs on Mexico
Risk aversion intensifies again today as Trump uses his one old tricky in tariffs again, but turned to Mexico. 5% tariffs will be imposed on all Mexican imports on June 10, and "gradually" move up to 25% in less than 4 months time if Mexico doesn't help on border...
US Crude Oil Inventory Dropped Modestly, While Production Built Further
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks declined -1.57 mmb to 1285.49 mmb in the week ended May 24. Crude oil inventory slipped -0.28 mmb to 476.49 mmb (consensus: -0.86 mmb). Inventories rose in 3 out...
USD/JPY Extends Recovery on Solid US Data, Trade Spats Shrugged
Dollar trades generally higher today as risk markets stabilized, partly helped by recovery in treasury yields too. Economic data from US generally matched expectations. Markets also shrugged off repeated comments from US and China regarding trade war. Though, at the time of writing, Canadian Dollar is the strongest one,...