US Companies Doomed to Suffer from Trump’s Protectionist Policy
US-China trade tensions intensified shortly after Trump-Kim Summit. Last Friday (Jun 15), the White House announced that it would impose 25% tariffs on a list of Chinese exports worth of US$34B, effective on 6 July, with another list of goods, covering US$ 16B under further review. In response, China...
Risk Aversion Dominates as Trade War Could Mean More than Tariffs
The financial markets are rocked by Trump's over-the-top escalation in trade spat with China. At the time of writing, FTSE is down -0.4%, DAX down -1.2% and CAC down -1.1%. Dow opens by dropping more than -300%. In the currency markets, Yen and Swiss Franc are the strongest ones...
Yen Continues to Shine as Trade Tension Escalates. AUD, NZD, CAD Suffer
Yen and Swiss Franc continue to dominate the market on risk aversion as trade tensions escalate. The US markets didn't perform too badly indeed. DOW closed just down -103.01 pts or -0.41% overnight at 24987.47. S&P was down -5.91 pts or -0.21%. NASDAQ even managed to gain 0.65 pts...
Swiss Franc and Yen Firmer on Mild Risk Aversion
Swiss Franc and Yen are trading as the strongest ones for today on mild risk aversion. A wave of buying is seen in Euro entering into US session. But for now, Euro is trading up against Dollar, Sterling and Aussie for the day only. Some attributes today's weakness in...
BOE Preview – Focus on June Meeting Minutes
Last month, BOE left the policy rate at 0.5% and the asset purchase program at 435B pound. It acknowledged the growth slowdown in the first quarter but noted that more information is needed to confirm whether it was driven by temporary factors. Although deputy governor Dave Ramsden suggested earlier...
Yen Higher as Sentiments Weighed Down by Trade Tensions and Osaka Earthquake
Yen trades generally higher in Asian session today on mild risk aversion. Escalation of trade tension between US and China is a factor weighing on sentiments. The 6.1 earthquake in Osaka also pressures Japanese stocks. Nikkei is trading down -0.8% at the time of writing. Euro is broadly lower...
China Growth Weakened Significantly in May. Crackdown on Credit is Biting
We expect the slowdown in China’s economic growth would be increasingly evident in coming months, reflecting the rapid moderation in credit growth in the first half of the year. PBOC left its policy rate unchanged, although FOMC lifted the Fed funds rate by +25 bps, in June. This was...
Traders Bet for Further Strength Despite USD’s Pullback
Both bulls and bears added bets on US dollar ahead of the June FOMC meeting, as suggested in the CFTC Commitments of Traders report in the week ended June 12. Both speculative long and short positions were increased in USD Index (DXY) futures, resulting in Net LENGTH of 4 663...
Bets for Higher Precious Metal Prices Increased Despite Fed’s Rate Hike
According to the CFTC Commitments of Traders report for the week ended Jun 12, net LENGTH for crude oil futures soared +11 717 contracts to 595 293. Net LENGTH for heating oil futures dropped -4 208 contracts to 34 597 while that for gasoline declined -7 965 contracts to 85 868....
Dollar Surged on Hawkish Fed, Trade War Threat Ignored
Dollar surged broadly last week as Fed policymakers finally made up their mind on hiking a total of four times this year, as reflected in the new projections. The greenback was also helped by ECB monetary policy decision, with traders disappointed on the rate path. The headlines were then...
Stocks to Suffer, But Forex Steady as Trump Ignores Americans and Fires Another Shot in Trade War
US stocks futures are rocked by the announcement on formalizing the Section 301 tariffs against China. DOW futures point to triple digit loss at open and could threaten 25000 handle. The forex markets are relatively calm though. Euro is paring back some of yesterday's post ECB losses and takes...
Dollar Extending Post ECB Gains, Section 301 Tariffs Against China to be Formalized
Dollar is trading as the strongest one as partly helped by the post ECB selloff in Euro. In part, there were delayed reactions to the hawkish Fed announcement too, which indicates it will hike two more times this year. The greenback in extending it's strong, broad based gains in...
ECB to End QE in December, No Rate Hike At Least Until Summer 2019
ECB's decisions in June came in largely in line with our expectations, although it might have contained surprises for other market participants. The central bank decides to reduce the size of its QE program to 15B euro/ month, from the current 30B euro/ month, from October. The entire purchase...
Euro Dives after ECB Announces to End QE this Year, But Interest Rates Will Stay Unchanged At least Through 2019 Summer
Euro drops sharply today as markets are not quite happy with ECB announcement. In particular, while deciding to end the asset purchase program this year, ECB said interest rate will remain at current level at least through 2019 summer. President Mario Draghi also sounds cautious as usual in the...
Trade War Offsets Hawkish Fed as Dollar Struggles, ECB to Take the Spotlight
Dollar got a very brief lift overnight as Fed delivered a hawkish rate hike. But it quickly lost steam as weighed down by concern over trade war between US and China. For today, the greenback is only trading slightly better than Australian Dollar, which is weighed down by its...
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...