Dollar Under Broad Based Pressure as Correction Extends, Aussie Hold Gains ahead of RBA
Australian Dollar remains the strongest one today as helped by strong risk appetite. At the time of writing, TSE is trading up 0.55%, DAX up 0.25% and CAC Is up 0.33%. US futures also point to another day of rally. New Zealand Dollar follows as the second strongest. Meanwhile,...
Australian Dollar Higher on Retail Sales, Trade Tensions Shrugged by the Markets
Australian dollar opens the week higher as lifted by stronger than expected retail sales today. That's followed by Euro as the second strongest as European political risks receded. As sentiments improved, Yen stays soft against all others, followed by the Swiss Franc. While trade tensions occupy a lot of...
Bulls Added Bets on USD Appreciation
Traders added more bets for higher USD, as suggested in the CFTC Commitments of Traders report in the week ended May 29. Net LENGTH for USD Index (DXY) futures added +1 338 contracts to 3 924. During the week, the DXY index gained +1.3%, as the greenback strengthened against major currencies...
Traders Reduced Bets for Higher Crude Oil Price
According to the CFTC Commitments of Traders report for the week ended May 29, net LENGTH for crude oil futures fell -25 558 contracts to 607 828. Net LENGTH for heating oil futures added +2 729 contracts to 45 311 while that for gasoline dropped -4 617 contracts to 103 729....
A Look at Why Dollar Failed to Surge on Strong US Job Numbers
It was a roller coaster week with political turmoil in Italy dominated the first half of the week. The formation of the populist Italian government after acceptance by President Sergio Mattarella marked the end of the episode. Trade war then took over as US President Donald Trump decided to...
Dollar Jumps on All Round Better than Expected NFP
Dollar surges in early US session after non-farm payroll report beat market expectation on all front. The job market grew 223k in May, above expectation of 190k. Unemployment rate dropped to 3.8%, beat expectation of 3.9%. That's also the lowest level in 18 years. More importantly, wage growth was...
US-World Trade War Formally Starts as EU, Canada and Mexico Ready Retaliation
Trade war is the dominate theme for the market at the moment after US starts to impose steel and aluminum tariffs on its closest allies in Canada, Mexico and the EU. The move drew strong criticism from these countries and retaliation measures are on the way. Italy took a...
Distillate Inventory Increased For First Time in Two Months
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products stocks increased +1.76 mmb to 1194.01 mmb in the week ended May 25. Crude oil inventory dropped -3.62 mmb (consensus: -0.53 mmb) to 434.51 mmb, as inventories fell in 4 out of...
Trump Escalates Trade Tension by Imposing Steel Tariffs on Allies EU, Canada and Mexico
Euro has been strong most of the day as Italian political risk temporarily receded. Stronger than expected Eurozone CPI reading also provided some support to the common currency. But it's Yen that's taking the spotlight again in early US session on risk aversion. DOW opened losing triple digits and...
Dollar Pressured as Focus Turns from Italy to US Steel Tariffs and Trade War
The forex markets are mixed today so far. Easing concerns over Italy political turmoil calmed markets temporarily. But the situation is not solve yet. Meanwhile, the upcoming decision on US steel tariff temporary exemption could turn sentiments around again. For now, Commodity currencies are generally higher with the help...
BOC Removes “Cautious” Reference, But 2H17 Rate Hikes Experience Suggests Members Can Make Over-Aggressive Judgements
Canadian dollar recorded the biggest one-day rally in two months after BOC’s more hawkish- than- expected statement. Policymakers turned less concerned over the economic outlook. As such, they dropped the words “cautious” and “over time” in the accompanying statement, a sign interpreted by the market as supportive for a...
Euro Recovers on Revived Hope of Italy Government Formation, Robust German Data
Euro recovers broadly today as markets digest the over-stretched decline. Negative sentiments over Italian political turmoil recedes mildly as there is revived hope of a non-anti-euro government. Italy 10 year yield pull back below 3% handle while German bund yields is back above 0.35 at the time of writing....
Re-emergence of Monetary Policy Divergence II – High – Yield Currencies
In our report last week, we pointed out that monetary policy divergence between the Fed and other major central banks has re-emerged since April. While economic developments in the first several months of the year have reinforced FOMC’s commitment to continue gradual rate hike as planned, other major centrals...
Yen Continues to Shine as Sentiments Weighed Down by Italy and Trade Tension
Italy political turmoil and trade tensions are weighing on market sentiments on two fronts. Italy will now likely go into a snap election soon. And the eurosceptic parties will frame that as referendum on Euro membership. US President Donald Trump reignites trade spat with China while NAFTA negotiation is...
Euro Pared Loss after Steep Selloff as 5 Star Di Maio Calmed Markets
While Euro remains the worst performer for today, selling slowed and it recovered much ground as in early US session. Investors seemed to be calmed by Five Star leader Di Maio's facebook comment that he never see leaving the Euro. Also, there are reassessment on how bad the situation...
Prolonged Political Uncertainty in Italy Sparks Fear of Financial Market Contagion to Neighbors
(Updated on 0230 GMT, May 30) 10-year Italy-Germany yield spread jumped further to 2.83%, highest since 2013, on May 29.
Hopes of forming a populist coalition government in Italy hit the rocks as President Sergio Mattarella rejected eurosceptic Paolo Savona’s nomination as the next finance minister. Yet, he has invited...
Yen Extends Rally as 10 Year Yield Breaches 2.9%
Yen is staying strong today and it's extending recent rally. Falling major European and US treasury yields and risk aversion are the main factors. German 10 yield bun yield closed at 0.353% yesterday's concern. That's nearly half of this month's high at 0.651%. US 10 year yield's decline continues...
Euro Decline Resumes as Italy is Facing New Election Risks
Euro is back under broad based selling pressure after an ex-IMF official accepted the mandate to form an interim government. While traders were relieved that the anti-establishment eurosceptic coalition government couldn't be formed, they're now facing uncertainty of a new election. EUR/USD has already broken last week's low at...
BOC Likely Stands on Sideline This Month as More Data and Trade Outlook Awaited
Bank of Canada (BOC) would most likely leave its policy rate unchanged at 1.25% in May. Following two rate hikes in 2017 and one more in January this year, BOC has kept its powder dry since then. In April, the central bank cautiously noted that future monetary policy change...
Euro Rebounds as Markets Cheer Italy Political Turmoil, Yen and Franc Retreat
Euro rebounds strongly and broadly today as the markets cheer political turmoils in Italy. On the other hand, Swiss Franc and Japanese Yen are trading as the weakest as sentiments improved. There appears to be some breakthrough again between US and North Korea as South Korean President Moon Jae-in...