ECB Preview – Focus on Reinvestment Plan, New Round of TLTRO
The market is closely watching ECB’s policy after QE. At the upcoming meeting next week, ECB would announce its plan to reinvest the maturing bonds. Meanwhile, market speculations are rising that the central bank would soon announce a new round of its targeted long-term refinancing operations (TLTRO). Given recent...
Dollar Regains Ground as Investors Rush from Stocks to Bonds, Aussie Additionally Pressured by GDP Miss
The US stock markets closed sharply lower overnight while treasury yields also dived. Such patterns continue in Asia, seeing major indices pressured while JGB year yields also drop. There are clear flows out of stocks into bonds. Fed has already turned less hawkish with Chair Jerome Powell's turn last...
Dollar Broadly Lower as 10 Year Yield Breaks Below 3%
Dollar is under broad based selling pressure on falling treasury yields, globally. In particular, 10 year yield drops below 3% level for the first time since September. Canadian Dollar and Swiss Franc are following as the next weakest. On the other hand, return to risk aversion and falling global...
BOC Preview: Will Poloz Maintain Hawkish Stance?
Bank of Canada is expected to keep its policy rate unchanged at 1.75%, after a rate hike of +25 bps in October. Despite bets of another move this month, we believe policymakers would take a wait- and- see mode to assess the impact of the sharp fall of oil...
Yen Surges as Nikkei Tumbles and JGB Yield Falls
Yen jumps broadly today as Asian stocks weaken, moving past the positive catalyst of US-China trade truce quickly. Nikkei closed down -2.39%, more than enough to reverse Monday's 1.00% gain. Additionally, 10 year JGB yield is down is down -0.010 at 0.073, comparing to October's high at 0.162. There...
RBA More Concerned about Housing Markets, Disinflation Likely Keeps Policy Rate Unchanged for 2019
As widely expected, RBA left the cash rate unchanged at 1.5% for the 26th consecutive meeting. The accompanying statement contained little new information. Yet, it revealed that the members were dovish about the housing market. Meanwhile, disinflation in Australian economy should likely lead the central bank to keep its...
US-China Trade Ceasefire: Too Early to be Relieved
We remain cautious over the 90-day ceasefire on US- China trade dispute. Over the weekend, the US agrees to postpone raising tariff on US$200B worth of Chinese goods from 10% to 25%. In return, China would buy significant amount of US goods within agriculture, energy and industry products. Meanwhile,...
Sentiments Supported by Trade Truce, But Sterling Down on Renewed Brexit Worries
The global financial markets are blessed by strong risk appetite today, as US and China agreed on 90 days ceasefire on trade war. US stock futures point to sharply higher open, following strengthen and European and Asian markets. Australian Dollar, being a close trade partner of both the US...
US-China Trade War Ceasefire, Stocks and Aussie Surge, Dollar and Yen Weaken
US and China agreed not to escalate trade war after meeting between Trump and Xi. A cease-fire agreement was reached. Even though it's just for 90 days, Asian markets responded positively to the development with all major indices recording solid gains. DOW futures are also pointing to a day...
CFTC Commitments of Traders – Bets for Higher Euro Fell Sharply as Confidence Data Soured
As suggested in the CFTC Commitments of Traders report in the week ended November 27, NET LENGTH in USD Index slipped slightly whilst bets increased on both sides. All other major currencies stayed in NET SHORT positions. During the week, the greenback strengthened against major currencies. Note that the...
CFTC Commitments of Traders – Bets Trimmed on Oil and Petroleum, Traders Turned Cautious ahead of OPEC
According to the CFTC Commitments of Traders report for the week ended November 27 NET LENGTH for crude oil and gasoline futures continued to fall. Speculative long positions of crude oil futures declined -17 170 contracts, while shorts gained +1 896 contracts, resulting in a fall in NET LENGTH,...
A Look at Market Pricing on Fed Rate Path after Powell’s U-Turn
Fed Chair Jerome Powell's speech last week was sort of a turning point. Stocks staged a strong rally and helped lifted Kiwi and Aussie as the strongest ones. Nevertheless, despite being sold off steeply, Dollar has indeed reversed much the the losses and ended as the third strongest one....
Euro Lower after Inflation Data, Dollar Pare Losses ahead of Trump-Xi Meeting
The forex markets are generally staying in familiar range as traders turn cautious ahead of G20 summit and, of course, the highly anticipated Trump-Xi summit. There are rumors flying around on whether there will be a deal of no deal. But it's no to productive to guess at this...
Dollar Recovers after FOMC Minutes, But Overall Markets in Consolidative Mode
Dollar is trying to recover again today, with rather weak momentum so far. FOMC minutes released overnight didn't prompt renewed selling in the greenback. Instead, traders are turning cautious ahead of the highly anticipated meeting between Trump and China Xi in Argentina. For now, Yen is the second strongest...
FOMC Minutes Signals Rate Hike “Fairly Soon”, Policy Outlook Masked by Tariff and Debts
The FOMC minutes for the November revealed that the members still considered a rate hike in December is appropriate. Yet, they debated on the change in forward guidance regarding the pledge on “further gradual increases” in the policy rate. Some judged that the policy rate is near to the...
Dollar Rebound Attempt Capped by Weaker Core Inflation, Yen Gains ahead of G20
After yesterday selloff triggered by Fed Chair Jerome Powell, Dollar turns mixed today. It did try to regain some grounds in early European session. But the attempt falters after weaker than expected inflation reading from the US. Focus will now turn to minutes of the November FOMC meeting. It's...
Dollar Tumbled on Fed Powell’s Awkward Dovish Turn, FOMC Minutes Now Awaited
Dollar tumbled steeply overnight on Fed chair Jerome Powell's awkward dovish turn. Within a matter of weeks, interests rate went from being "long way from" to "just below" neutral. Markets took that as a sign Fed is nearing a pause in the current hike cycle. DOW staged a decisive...
Fed Chair Powell’s U-Turn on Interest Rates?
Stock markets rallied after Fed Chair Jerome Powell’s speech at the Economic Club, New York. Market players were thrilled amid their interpretation that Powell has turned dovish, probably succumbed to Trump’s endless criticism. We do not see an abrupt turn on Powell’s stance.
What the market focused on was Powell’s...
Sterling Makes a Come Back, Dollar Awaits Fed Powell
The British Pound makes a strong come back today and is trading as the strongest one at the time of writing. UK government released its long term Brexit economic analysis, showing that Prime Minister Theresa May's Brexit deal could bring as little as -0.1% drag in GDP in 15...
OPEC+: To Cut or Not to Cut?
Crude oil prices have steadied after the sharp correction over the past 7 weeks. Supporting the recovery are hopes of OPEC or OPEC+ production cut next month. OPEC and non-OPEC producer would meet in Vienna on December 6, discussing ways to defend oil prices. While the market generally expects...