Yen Rally Continues as Nikkei Suffers Worst Selloff in Asia, Euro Decline Halts ahead of ECB
Risk aversion is back as the main theme in the global financial markets. The crash in the US overnight has spreaded to Asia. At the time of writing, Japanese Nikkei is down -756 pts or -3.42%, being the worst performer in Asia. 10 year JGB yield also suffers another...
BOC Review – Hiking Policy Rate to 1.75% with Hawkish Bias
The market was thrilled by BOC’s hawkish comments accompanying the widely-anticipated +25 bps rate hike. With the uncertainty of future trade relationship with the US reduced and economic growth on track, the members judged that it is prudent to move to “neutral” interest rate. Removal of the “gradual” rate...
US Crude Oil Inventory Jumped Significantly, Fuel Stockpiles Declined
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products stocks declined -7.99 mmb to 1254.99 mmb in the week ended October 19. Crude oil inventory rallied +6.35 mmb (consensus: +3.69 mmb) to 422.79 mmb. Inventories increased in 4 out of of...
Euro Tumbles as PMI Readings Suggest ECB Easing Bias, Dollar Firm With Canadian and Australian
The theme of the markets have switched from risk aversion to selloff in European majors today. In particular, Euro leads other down after weak PMIs point to further slow down in the economy. Even worse, Markit expects that the PMI readings are now consistent with ECB easing bias. And...
Yen Lower as Risk Aversion Recedes, Canadian Dollar Awaits BoC Hike
Despite initial steep selloff, US equities staged a strong rebound before close and closed just slightly lower. The turnaround in sentiments carried on in Asian session with major indices all trading in black. With receding risk aversion, Australian and New Zealand Dollar are trading as the strongest one for...
Yen Surges as Global Stock Rout Extends, Sterling Lifted by Brexit Rumor
Risk aversion is the main theme in the financial markets today and all major global stock indices are in deep red. DOW futures are also down more than -400 pts at the time of writing. However, Sterling defies gravity and is trading as the strongest together with Japanese Yen...
Yen Rises & Aussie Falls as Nikkei Leads Asian Stocks Lower
Australian and New Zealand Dollar are trading as the weakest ones today. Nikkei's sharp, over -2% decline led Asian markets lower. Risk aversion is popping up the Japanese Yen. For today, Canadian Dollar is the second strongest, followed by Dollar. For the week, though, Sterling is the worst performing...
ECB Likely More Cautious amid Soft Core Inflation and Italy. Reinvestment Details to be Revealed in December
We expect ECB to emphasize downside risk to growth in this week's meeting on October 25. That would be a slight shift from the more hawkish stance at the last meeting six weeks ago. With the path of QE announced in June, the focus is on the reinvestment arrangement....
Euro Rally Falters on Italy, Sterling Extending Selloff on Brexit
Italy is the center of focus in a rather quiet day. The highly anticipated response to EU on its budget is delivered. And there is little surprise that Italy insists on sticking with it's budget deficit target of 2019. Euro's rally attempt falters after that and turned mixed. Nonetheless,...
BOC Preview – Rate Hike Fully Priced but Future Decision Still Data- Dependent
The market has fully priced in that BOC would raise its policy rate by +25 bps to 1.75% this week. With Canada-US trade uncertainty eased and the employment market staying strong, the focus is on whether policymakers would consider accelerating the pace of normalization. Notwithstanding a rosier picture, the...
Chinese Stocks Lead Asia Higher, But Australian Dollar Soft
Asian stocks are in full risk-on mode as the week starts. China's Shanghai SSE leads the way by rising 4.56% at the time of writing, back above 2600 handle at 2666. Some attribute the rebound to words of top Chinese official, including President Xi Jinping who vowed to "unwavering"...
CFTC Commitments of Traders – Traders Trimmed Speculations on Currencies amid Looming Uncertainty
The CFTC Commitments of Traders report in the week ended October 16 indicates that positioning on major currencies lowered as a whole. Speculative long positions for USD index futures dropped -2 635 contracts while shorts fell -2 802, sending the NET LENGTH higher, by +167 contracts, to 37 876...
CFTC Commitments of Traders – Oil Bulls Shied as Price Rally Might be Over
According to the CFTC Commitments of Traders report for the week ended October 16, NET LENGTH for crude oil, heating oil and gasoline futures all dropped. This happened in line with the ongoing correction oil prices. Speculative long positions of crude oil futures declined -18 694 contracts, while shorts...
Multiple Themes in Markets, More Upside in Euro after Surviving Italy Rating Downgrade
The markets were driven by multiple themes last week. Dollar ended up broadly higher as supported by hawkish FOMC minutes and rebound in treasury yields. However, it's outshone by New Zealand and then Australian Dollar. Kiwi was boosted by stronger than expected CPI. Meanwhile, the Aussie was pulled up...
Canadian Dollar Dives after Weak CPI and Retail Sales, Euro Steady Despite Widening German-Italian Spread
Canadian Dollar suffers heavy selling in early US session as the large deceleration in CPI to 2.2% raising doubts on whether BoC would still hike next week. Meanwhile Yen and Swiss Franc are among the weakest ones. Widening of German-Italian spread is not translated into selloff in European stocks...
China’s Economic Growth Slowed More than Expected. Worst of Trade War Yet to Come
China’s economic growth decelerated further in 3Q18, as the impacts of restraining infrastructure investment and trade war surfaced. GDP growth moderated to +6.5% y/y in the third quarter, the slowest since the first quarter of 2009. Growth came in lower than market expectations and second quarter’s +6.7%. On an...
Euro Weak as Italy-EU Budget Clash Starts, China GDP Miss Shrugged
Euro and Sterling recover mildly in Asian session but they remain the weakest two for the week. Brexit impasse and Italian budget continued to weigh down both currencies, which also drags down Swiss Franc. Dollar's rally extended lower night as helped by hawkish comments from a top Fed official....
Dollar Struggles to Find Momentum Despite Solid Job Data
Dollar is struggling to find more upside momentum in early US session except versus Swiss Franc. Solid job data is not giving the greenback the needed fuel for rally. Nonetheless, Dollar is still firm as supported by the hawkish FOMC minutes released yesterday. For now, Australian Dollar is the...
Dollar Slightly Firmer on Hawkish FOMC Minutes, Sterling Softens on Brexit Impasse
Dollar strengthened overnight after FOMC minutes showed that majority of Fed officials expected interest to enter into restrictive region down the road. Treasury yields also ended up mildly higher. And more importantly, stock markets showed no particular negative reaction to the minutes. USD/CHF's break of 0.9954 high and USD/JPY's...
Fed’s September Minutes Explained the Rationale of Removing Forward Guidance, Showed More Concerns about USD Strength
The FOMC minutes for the September meeting contained little news regarding the rationale of the 25 bps rate hike last month, as well as the future path of monetary policy normalization. Yet, there are some points worth nothing. First, the minutes explain why the “accommodative” guidance was removed. Second,...