FOMC Review – Fed Not As Dovish As Expected
The December FOMC meeting outcome is expected, yet unexpected. As widely anticipated, it raised the policy rate, by +25 bps, to 2.25-2.5%. The IOER rate was raised by +20bps. The members trimmed the rate hike forecasts to two, form three, for September. They remained upbeat about economic outlook, but...
Oil Fundamentals Remain Fragile Despite OPEC+ Cut. Saudi’s Over-Optimistic Budget Reinforces Oversupply Worries
The deal made by OPEC+ to cut output had only limited boost the oil prices. The renewed selloff in crude oil prices, indicating another leg of downturn, is driven by concerns over global growth slowdown, decline in stock markets and Saudi Arabia's budget plan. US' weekly report showed less-than-expected...
Euro Surges as EU Finally Approved Italian Budget, Dollar Mixed Awaiting FOMC Guidance
Euro rises broadly today as Italy finally got its 2019 budget plan approved by the European Commission. Disciplinary actions are now avoided. Italian 10-yield yields tumbles sharply and is pressing September's low. For now, Yen follows as the second strongest. Canadian Dollar is recovering today as oil prices turned...
Dollar in Range ahead of FOMC, Preparing for Breakout
Dollar is mildly softer in Asian session as traders turn cautious ahead of FOMC rate decision. But it should be noted that, except versus less, and to a lesser extent Swiss Franc, Dollar isn't that weak. EUR/USD, GBP/USD and AUD/USD are bounded in consolidation in familiar range. USD/CAD has...
Dollar Declines as Trump Urged Fed to Feel the Markets, But Loss Limited as Traders Await Projection Numbers
Dollar selloff takes center stage today as Trump continues with his verbal intervention on Fed policy. But Canadian Dollar is even weakest as down trend in WTI crude oil extends. Swiss Franc is for now the third worst performing one. On the other hand, New Zealand Dollar recovers as...
BOJ: Loss in Communication Hinders Policy Effectiveness
The government of Japan downgrades its forecasts on GDP growth and inflation for the coming years. This evidences the failure of the transmission mechanism of the monetary policy adopted by the Bank of Japan. We believe the central bank has already run out of solutions to rescue sluggish economic...
Yen Trading Higher as Risk Aversion Spreads from US
Yen is trading as the second strongest one for today, next to New Zealand Dollar, as risk aversions spread from the US to Asia. There were continuous rhetorics from Trump's administration against Fed's rate hikes. But the fact that Dollar and yields are weak argues that the free fall...
BOE Probably Turns More Cautious amid Brexit Uncertainty
At the meeting later in the week, BOE would most likely leave the Bank rate unchanged at 0.75%. It would also keep the purchases of gilts and corporate bonds remain at 435B pound and 10B pound, respectively. BOE sounded hawkish in November. Yet, given the changes in economic and...
Swiss Franc Leads Europeans Higher, Dollar Softer after Poor Data
European majors are trading generally higher today, as led by Swiss Franc. Euro is also strong but to a lesser extend while Sterling just follows. On the other hand, Dollar is under some selling pressure, in particular after much weaker than expected manufacturing. It's yet another piece of data...
Fed Likely Hikes Rate in December, Future Path More Dovish
While the majority of market participants (including us) expects the Fed to raise the policy rate, by +25 bps, to 2.25-2.5% at the December meeting, this is far from fully priced in. CME’s Fed funds futures suggest that the market has priced in less than 80% of a rate...
Markets Cautiously in Tight Range, Awaiting FOMC Rate Hike and Economic Projections
The financial markets are rather steady in Asia today. Nikkei and and Singapore Strait Times are having notably rebounds. But China and Hong Kong stock markets are mixed. In the currency markets, Yen is the generally weaker one, followed by Sterling. Canadian Dollar and Swiss Franc are the stronger...
CFTC Commitments of Traders – NET Bets for Higher USD Trimmed ahead of December Rate Hike
As suggested in the CFTC Commitments of Traders report in the week ended December 11, NET LENGTH in USD Index dropped modestly while bets increased on both sides. All other major currencies stayed in NET SHORT positions. During the week, the greenback strengthened against major currencies, except for against...
CFTC Commitments of Traders – NET LENGTH for Crude Oil Futures Dropped to 2-Year Low
According to the CFTC Commitments of Traders report for the week ended December 11, NET LENGTH for crude oil futures continued to fall. Speculative long positions of crude oil futures slipped -708 contracts, while shorts jumped +19 932 contracts, resulting in a fall in NET LENGTH, by -20 640...
Fed’s Economic Projections to Provide Guidance as Concerns on Global Slowdown Intensify
Sterling and Brexit was the center of focus during the early part of last week. The parliament vote on Brexit was postponed to at least January. UK Prime Minister Theresa May survived leadership challenge but her position is shaky with more than one-third of her MPS voted against her....
Yen and Dollar Soar on Risk Aversion, EUR/USD Downside Breakout Imminent
Yen and Dollar are the strongest ones today as global stock markets are back in selloff mode. Sentiments turned sour after weaker than expected Chinese sales and production data. Adding to that, Eurozone came showed further decline in growth momentum, verifying ECB's concerns. China's concessions on retaliation tariffs on...
Weak Chinese Data Sent Asian Stocks and Aussie Lower
Asian stocks are under pressure today as weaker than expected data from China prompted growth worries. New Zealand and Australian Dollar are trading as the weakest ones for today. Sterling follows as the third weakest as UK Prime Minister Theresa May got nothing but vague assurances from the EU...
ECB’s Reinvestment of QE Proceeds Would Well- Pass First Rate Hike. Growth Outlook Downgraded
At the December meeting, ECB formally announced that the asset purchase program (QE) would end by this month. In order to maintain the size of the balance sheet at the current 2.6 trillion euro, the central bank would reinvest the proceeds for “an extended period of time” which should...
Euro Turns Slightly Softer as ECB Lowers 2019 Growth and Inflation Forecasts, Increasingly Cautious
It's a relatively calm day today despite all the high profile events. At the time of writing, Euro is trading as the weakest one after ECB delivered a dovish shift as expected. In short, 2019 growth and inflation forecasts are lowered, and Draghi said balance of risks are moving...
UK PM May Survived Leadership Challenge, Focus Turns to SNB and ECB
Risk sentiments are rather firm in Asian markets as major indices opened up and are extending gains. UK Prime Minister Theresa May's survival of the leadership challenge is a positive factor. Also, progress and US-China trade talk is another factor. It's reported that China has already purchased more than...
Sterling Soars as Traders Believe UK PM May Will Survive Leadership Challenge
The UK is in the center of focus again today. Now the time has come for a leadership challenge on UK Prime Minister Theresa May. Sterling gains a lot of round as it looks like May could survive this big test for her Brexit deal. The Pound is so...