Fed Raised Policy Rate in June. Two More to Come amidst Upbeat Economic Developments
Decided unanimously, FOMC raised the Fed funds rate by +25 bps to a range of 1.75-2.00%. In a technical adjustment, it also lifted the interest rate paid on required and excess reserve balances, by +20 bps, to 1.95% so as to maintain the trading in the fed funds market...
Dollar Soft as Markets Look Through Strong PPI to FOMC, Pound Lower on CPI Miss
Dollar is trading in soft tone in range against most major currencies except versus Yen and Sterling. The greenback shrugs off stronger than expected PPI as markets are awaiting FOMC rate hike, economic projections and press conference. Sterling is trading as the weakest one today as headline UK CPI...
Dollar Staying Range Bound as Fed Rate Hike Awaited
Dollar is generally staying in familiar range, except versus Japanese Yen as markets await FOMC rate decision today. The federal funds rate is expected to be lifted by 25bps to 1.75-2.00%. There is practically no chance for Fed to disappoint the markets. Yet, there are a number of questions...
PM May Avoided Defeat in Brexit Vote as a Key Amendment Got Rejected
On June 12 and 13 the House of Commons, the lower house of the parliament, is due to vote on the 15 amendments proposed by the House of Lords, the upper house of the parliament. The key amendment – “meaningful vote”, has been rejected by the Commons, avoiding humiliation...
Markets Struggle for Direction Despite Strong US CPI, Weak UK Wage Growth
The forex markets are struggling to find a clear direction today despite all the high profile events. US headline CPI jumped to 6 year high in May while core CPI also accelerated. But Dollar is getting no lift from it. UK wage growth missed expectation even though the overall...
Markets Steady as Kim Meets Trump, UK Job and US CPI to Guide
The financial markets are steadily optimistic so far this week and that can be reflected in the rebound in German bund yield and US 10 year yield. Yen is trading broadly lower today, followed by the Swiss Franc. Australian, New Zealand and US Dollar are trading mildly higher. Eyes...
Sterling Weakens after Poor Economic Data, More to Care than Kim-Trump Summit for Traders
While the spats between US and G6 countries made a lot of headlines, they're not much bothered by the market-smart investors who know what are important. The summit between North Korean Leader Kim Jong-un and US president Donald Trump is currently in the spotlight. But it will likely fade...
ECB Preview – Members to Discuss QE Tapering This Week, Attention Moves to Rate Hike Path and Forward Guidance
The recovery in euro since late-May gathered momentum last week after ECB Chief Economist and executive board member Peter Praet signaled the central bank would discuss QE tapering at this week’s meeting. We are not surprised by this as it is appropriate for the members to communicate with the...
Markets Shrug G7 Chaos and Trade War, Euro Higher on Italy
Asian markets open the week rather firmly, shrugging of the Trump triggered chaos in G7 leaders meeting over the weekend. At the time of writing, Nikkei is trading up nearly 0.6% while HK HSI is up 0.28%. Focus has quickly turned to Kim-Trump summit in Singapore but that's unlikely...
FOMC Preview – Fed’s Rate Hike A Done Deal, Focus Turned to Forward Guidance
A rate hike of +25 bps at the upcoming FOMC meeting is a done deal as the market has for months priced in over 90% chance of its occurrence. Recent macroeconomic developments indicate such rate hike is totally justified. The focuses are on the forward guidance on the future...
Bets for USD Trimmed as Traders Lacked Clues after Recent Rally
Both bulls and bears trimmed bets on US dollar after its rally to the highest level in over 6 months, as suggested in the CFTC Commitments of Traders report in the week ended June 5. Both speculative long and short positions were reduced but the latter overwhelmed, resulting in...
Traders Shrank Bets for Further Oil Rally
According to the CFTC Commitments of Traders report for the week ended Jun 5, net LENGTH for crude oil futures fell -24 252 contracts to 583 576. Net LENGTH for heating oil futures dropped -6 506 contracts to 38 805 while that for gasoline declined -9 896 contracts to 93 833....
Markets to Look Through G7 to Fed Hike and ECB Judgement Day
While trade tension between the US and its allies dominated the headlines last week, Euro emerged as the strongest major currency. Receding Eurozone internal political risks was a key factor. German 10 year bund yield hit as high as 0.52, comparing to 0.186 low just two weeks ago, before...
Canadian Dollar Shrugs Off Weak Employment Data, Yen Higher head of G7 Showdown
Safe haven flow is the main theme today as markets await G6+1 showdown in Canada. Yen is the biggest winner today, followed by Dollar. But these two remain the weakest ones for the week next to Canadian Dollar. Despite weaker than expected job data, CAD is indeed rather steady...
USDJPY Rebound at Risk as US Yields Reversed, G6+1 in Focus
Yen is picking up some strength in Asian session today while commodity currencies are generally lower. Pull back in US treasury yield is a factor that's support the Yen. 10 year yield hit as high as 2.992 over night but reversed to close at 2.933, down -0.042. That development...
EURGBP Jumps as Fortunes of Euro and Sterling Diverge
Swiss Franc and Euro remain the strongest ones together. They're riding on the expectation that ECB will finally announce to quit the asset purchase program next week. Meanwhile, Sterling starts to lag behind and suffers some heavy selling today. Brexit uncertainty is back in spotlight, in particular the stick...
Concerns over Rising OPEC Supply Serve as Excuse for Profit- Taking
Crude oil prices remain under pressure after reaching 3.5-year highs in mid-May. While both benchmarks are declining, the selloff of WTI crude oil has been more severe than its Brent counterpart, resulting in a widening of WTI- Brent spread to a level not seen since March 2015 last Friday. We...
Yen Staying Weak on Solid Risk Appetite, Dollar Follows
Japanese Yen is trying to recover in Asian session today but remains the weakest one for the week. Risk appetites have been be strong as risk of trade war is shrugged off by investors. DOW rose 346.41 pts or 1.40% to 25146.39. S&P 500 rose 023.55 pts or 0.86%...
Euro Surges as ECB Praet Hints at Judgement Call on QE Next Week
Canadian Dollar, Australian Dollar and Euro are the strongest major currencies today. Meanwhile, Swiss Franc, Yen and Dollar are the weakest one. The reason for the strength in Loonie is not exactly clear. But Canadian could be benefiting from report that US Treasury Secretary Steve Mnuchin urged President Donald...
China’s PMIs in May Suggest Government’s Pro-Growth Policy Shift At Work
China’s official PMI report (focusing on big companies) signals improvement in both manufacturing and services sector. The Caixin/ Markit data (focusing on SMEs) suggest both sectors remained resilient in May. We believe the government’s policy shift, to prioritize over domestic growth from deleveraging, has proved effective so far. The...