BOE Review: Unanimous Rate Hike Decision Fails to Revive Pound
BOE surprisingly voted unanimously to raise the Bank rate, by +25 bps, to 0.75%. This marks the first increase since last November and the second since global financial crisis. The Committee revised higher forecasts for GDP growth and inflation for this year and in 2019. At the press conference,...
Asian Markets in Deep Red on Trade War, Dollar Surfs Up
The FOMC rate decision overnight was largely ignored by the markets. Instead, Asian equities plunged sharply today as US formally announced to raise the tariffs on USD 200B of Chinese imports from 10% to 25%. Chinese stocks lead the decline with Shanghai SSE down -2.45% at the time of...
FOMC Review – Gradual Rate Hike Path Remains Intact and Economic Assessment Upgraded
The August FOMC statement contained few changes, following quite remarkable amendments in the June one. The only change came from the upgrade in the assessment of the economic developments. Interestingly, Chair Powell’s “for now” qualifier on the rate hike path was not included in the statement, let alone any...
Dollar Pares Gain Despite Strong ADP Employment, FOMC Unlikely to Inspire
Dollar pares back some of today's gain in early US session. The better than expected ADP employment data provides no lift to the greenback. Focus will be turning to ISM manufacturing and FOMC rate decision. Nonetheless, as at the time of writing, Dollar is still the second strongest one...
BOE Expected to Deliver Dovish Rate Hike in August
BOE’s rate hike in August is almost fully priced in. The focus is, thus, on the monetary policy outlook. The upcoming increase of +25 bps is the second one in more than a decade. Although the pickup in growth in the second quarter has reinforced most policymakers’ view that...
Dollar Higher as Trade War Heats Up Again, Manufacturing Data and Fed Watched
Dollar trades broadly higher today as talks of trade war heat up again. It's reported that Trump is considering to impose 25% tariffs on USD 200B in Chinese goods, instead of 10%. The greenback is followed by Canadian Dollar and then Yen. Meanwhile, New Zealand Dollar, Australian Dollar and...
Euro Strengthens on CPI Surprise, Yen Extends Post BoJ Selloff
Euro emerges as a strong one today after a number of volatility triggering events. Upside surprise in Eurozone inflation is a key factor lifting the common currency higher. Australian Dollar is also strong, competing with Euro for the biggest gainer today. Meanwhile, stronger than expected GDP data lifted Canadian...
BOJ Introduced Forward Guidance and Made Subtle Changes in YCC
BOJ made some changes in its unconventional monetary policy in July. We believe these changes sent a dovish message that it takes longer time than previous anticipated for inflation to reach the +2% target. At this meeting, BOJ introduced forward guidance reinforcing the commitment to keep for policy rate...
Yen Spikes Lower after BoJ, But No Follow Through Selling Yet
Yen spikes lower broadly after BoJ announced to strengthen the framework for continuous powerful easing. But at this point, there is no follow through selling seen yet. Instead, of raising the target on 10 year JGB yields, BoJ simply allow flexibility to move it in move directions of up...
Fed Prepares for Rate Hike in September
The upcoming FOMC meeting later this week aims at preparing the market for another +25 bps rate hike in September. As no press conference and economic projections would follow the August meeting, the post-meeting statement, and the minutes in three weeks, would be used for communication and setting expectations....
Unclear Direction in Forex Markets, Yen Softer ahead of BoJ
Euro and Swiss Franc are lifted in earlier today but was then out-performed by New Zealand Dollar. On the hand, Yen and Australian Dollar are trading as the weakest ones, followed by Dollar. Direction in the forex markets is relatively unclear as traders turned a bit cautious ahead of...
Renminbi/Chinese Yuan Depreciates as a Result of Economic Weakness and Loosening Policies
Renminbi’s depreciation since April this year has accelerated over the past two months. While USDCNY has in aggregate rallied over +6% in June and July, renminbi’s weakness was less pronounced against a basket of currencies. The CEFTS index, the official reminbi index, fell -4.4% over the past two months....
Forex Markets Steady, But Volatility Guaranteed in an Unusually Busy Week ahead
Dollar opens the week broadly firmly, followed by Sterling as the second strongest. On the other hand, Australian Dollar is trading with and broad-based soft tone, followed by Canadian Dollar. Nonetheless, all major pairs and crosses are bound in Friday's range only, suggesting that they're in consolidative mode. In...
Only USD and EUR Maintained Net Length Positions amidst Monetary Policy Divergence
As suggested in the CFTC Commitments of Traders report in the week ended July 24, bets on a higher US dollar increased modestly by +1 818 contracts. However, thanks to a -4 529 reduction in short positions, NET LENGTH for USD Index (DXY) futures added +6 347 contracts to 25...
Traders Bet for Higher Fuel Prices as Crude Oil In Correction
According to the CFTC Commitments of Traders report for the week ended July 24, net LENGTH for crude oil futures declined -20 823 contracts to 610 471. Net LENGTH for heating oil futures increased +1 689 contracts to 41 712 while that for gasoline rose 2 860 contracts to 99...
CAD, JPY and USD Ended as the Strongest in a Week of Trade Talk and Surging Yields
EU-US trade talk and surge in yields in Japan and the US were the two major themes last week. But it was Canadian Dollar which quietly ended as the strongest one last week. US holding off car tariffs is definitely a positive for Canada and could clear the way...
Dollar Firm But Lacks Upside Momentum after Solid Yet Unspectacular GDP
Dollar stays firm in early US session after US delivered a solid yet unspectacular GDP report. While the greenback attempts strengthen today, so far, it's held in range against all other major currencies. There is no committed buying in Dollar up to this point. Yen is trading as the...
Yen Firm as JGB Yield Rally Persists, Dollar Looks into Q2 GDP
Yen remains generally firm today with help from strength in JGB yields. 10 year JGB yields hit as high as 0.113 and is now hovering at around 0.10. Nonetheless, Yen is outperformed by Canadian Dollar, which is lifted by NAFTA optimism. While the greenback is softer today, downside is...
Euro Mildly Lower after Balanced Yet Uninspiring Draghi, Dollar Picking Up Strength Slightly
Euro weakens slightly against Dollar after ECB left monetary policy unchanged as widely expected. President Mario Draghi delivered a balanced yet Uninspiring press conference. Fresh buying is seen in Dollar in early US session and the greenback has overtaken Yen as the strongest major currency for today. But it's...
Euro & Dollar Softer after Trade Talk Breakthrough, Canada Emerges as Clear Winner
While it appeared that there was a breakthrough in EU-US trade negotiation, the news provide no lift to Dollar nor Euro. Both are trading mixed in Asian session. Indeed, Dollar is the weakest one for the week so far, followed by Euro as the second weakest. On the other...