BOC’s Dovish Shift Widened Yield Spread, Sending CAD Lower
BOC left the policy rate unchanged at 1.75%. What caused the market dramatic market movement was its dovish turn – stripping off the forward guidance that the next move would be a rate hike. The abrupt turn in just two months marks the weaker than expected slowdown in Canada’s...
US Trade Deficit Ballooned to Decade High, Dollar Shrugs and Stays Firm
Yen and Dollar are trading as the strongest ones for today so far. Slightly lower than expected ADP job growth in February was offset by larger upward revision in January's data. US trade deficit surged for 2018 as a whole jumped to highest in a decade. But these data...
Australian Dollar Tumbles on Bet of RBA Rate Cuts after Dismal GDP
Australian Dollar tumbles broadly today as traders add to bet of RBA rate cuts after poor Q4 GDP. RBA Governor Philip Lowe basically maintained upbeat view on the outlook in a speech, but that was largely ignored. Sterling is also among the weakest as UK Attorney General Geoffrey Cox's...
ECB Preview – Downgrades in Forecasts, Changes in Forward Guidance and Hints on New Lending
More dovish messages from ECB seem inevitable at the upcoming meeting. Clouded by Brexit uncertainty, trade conflicts with the US and global economic slowdown, economic developments since the January meeting turned out weaker than expected. We expect ECB to revise lower its GDP and inflation forecasts, extending the duration...
Sterling Suffers Fresh Selling on Irish Backstop Deadlock, Dollar Still Attempting to Rally
Sterling trades broadly lower today and suffers fresh selling in early US session. Some attributes the decline to reports that UK Attorney General Geoffrey Cox and Brexit Minister Stephen Barclay won't get any breakthrough on Irish backstop in Brussels today. But it is actually hardly any news. UK government...
Dollar Supported by Improving Yield Curve, Yet to Take Out Key Resistance
The financial markets are relatively quite in Asia today. Stocks turned mixed following the pull back in US overnight. But losses are limited while the resilient Chinese SSE is having slight gain. Chinese government lowered 2019 growth target to 6.0-6.5%, with the lower bound at lowest pace in more...
Euro Lower Despite Stabilization Signs, Risk Appetite Continues on Trade
Global stock markets are generally higher today, continuing to ride on trade optimism. White House economic adviser Kevin Hassett added to the positive mood and said US Trade Representative Robert Lighthizer has made a lot of progress with China. And the deal may be finished some time soon. Also,...
Stocks in Strong Rally as US-China Trade Deal Close in, Currencies Tread Water
Strong risk appetite dominates Asian markets today on trade optimism after WSJ said a deal could be sealed by the end of the month. In particular Chinese Shanghai SSE surged through 3000 handle for the first time since June 2018. Japan 10-year JGB yield also turned positive again at...
BOC Preview – Risk on Growth is to the Downside
BOC would leave the policy rate unchanged at 1.75% at this week’s meeting. Since the last meeting, economic data released pointed to slowdown in Canada’s growth momentum. Although Governor Stephen Poloz has recently affirmed at the central bank should still increase the policy rate to the neutral level at...
Treasury Yield Surged on Abating Global Risks and Bets on Bottoming in Economic Slowdown
There were so many high profile events last week. In the end, the positive ones were more than enough to offset the negative ones. US-China trade truce was extended indefinitely and it looks closer than ever to have deal. MSCI's increase of weighting of Chinese stocks gave China another...
Markets Cheer Positive News from China, Yen Drops Further
The financial markets are back in full risk on mode today. China Shanghai SSE jumped 1.8% to 2994.01, just missed 3000 handle. Optimism of bottoming in the slowdown is a factor as Caixin PMI manufacturing rebounded to 49.9, just missed 50. More importantly, MSCI said that it will quadruple ...
Yen Decline Accelerates on Widening Yield Spreads
Yen's decline continues today and remains the weakest one for the week. Widening treasury yields is seen as the main driving force behind Yen's selloff. German 10-year yield at 0.186 is now heading back towards 0.2 handle. The rebound on improving outlook is remarkable, considering it closed at 0.096...
China’s February PMI Sent Mixed Message. Update on PBOC’s New Tool to Stimulate Economy
The official manufacturing PMI data, published by the National Bureau of Statistics, slipped -0.3 point to 49.2 in February. The market had anticipated no change from the prior month. This shows that large corporations in the sector, staying in contraction for three months in a row, has been in...
Dollar Surges as US Q4 GDP Grew 2.6%, Eyes on Treasury Yields for More Strength
Dollar regains some ground in early US session after stronger than expected Q4 GDP report. But at the time of writing, it's still trailing behind Euro and Swiss Franc. The common currency is boosted up by strong rally in German 10-year yield, which is up 0.028 at 0.178. Swiss...
Yen and Treasury Yields Await US GDP for Inspirations
The finance markets turned mixed in Asian session today. Yen was sold off overnight, following the strong rebound in US treasury yields. In particular 30-year yield staged the biggest rise in a about a month and looks completed the consolidation from 3.109. But there is no follow through selling...
Crude Oil Inventory Surprisingly Declined in US
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks fell -2.49 mmb to 1263.03 mmb in the week ended February 22. Crude oil inventory plunged -8.65 mmb to 445.87 mmb (consensus: +2.84 mmb). Inventories declined in 4 out...
Sterling Extends Unstoppable Rally, Swiss Rises on Pakistan-India Tensions
After taking a brief Brexit, Sterling's rally extends again today on optimism that risk of no deal Brexit is fading. Also, key figure of Brexiteer also expressed condition support for UK Prime Minister Theresa May's Brexit deal. For now, with some key resistance levels already taken out, the Pound...
Delaying Brexit might prolong UK Economy’s Suffering
Indeed, there is not much update after the parliament voted down the original Brexit deal (Withdrawal Agreement) proposed by PM Theresa May back in January. Yet, things evolving since then appear to have diminished, or delayed, the risk of a no-deal Brexit. There are a number of votes scheduled...
Yen & Dollar Recover as Markets Turned Cautious, Trump-Kim Summit & USTR Testimony Watched
Yen and Dollar trades mildly firmer today as markets turn cautious ahead of Trump-Kim summit. But the biggest risks could lie on US Trade Representative Robert Lighthizer's testimony at the House Ways and Means Committee. After Trump postponed trade truce deadline with China "indefinitely", there is added optimism on...
Sterling Breaks Key Resistance as UK Moves a Big Deal to Avoid No-Deal Brexit
Sterling rises broadly today and takes out key resistance against Dollar and Euro. UK has moved a big step in avoiding no-deal Brexit. Prime Minister Theresa May announced to hold three separate votes on Brexit deal, no-deal Brexit and delay. The key is, no-deal Brexit is no longer the...