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...
USD Bulls Remained Intact
Traders were increasingly bullish over US dollar, as suggested in the CFTC Commitments of Traders report in the week ended May 22. USD Index (DXY) futures stayed in NET LENGTH for a second consecutive week. Rising speculative long positions and dropping shorts resulted in NET LENGTH of 2 586 contracts,...
Bulls on Crude Oil and Gold Getting Less Excited
According to the CFTC Commitments of Traders report for the week ended May 22, traders apparently turned less bullish on crude oil with the reduction of speculative long positions nearly doubling that of shorts. This resulted in a decrease in Net LENGTH, by -11 058 contracts, to 633 386...
Yen Surged Again as Italy, Protectionism, Geopolitics and Central Bank Expectations Weighed on Yields
Yen ended as the strongest one last week followed by Swiss Franc. Meanwhile Sterling was the weakest one, followed by Euro, Canadian and then US Dollar. A number of factors were behind such development and they're all inter-related. The most direct one is decline in major European and US...
Italy Concerns Hammer German Yield and Euro, Canadian Dollar Falls With Oil Price
Canadian Dollar, Euro, to a lesser extend Sterling, are the clear losers today. The Loonie is dragged down by oil price as WTI drops through 70 handle. It reaches as low as 68.96 so far on news that OPEC and Russia are considering to raise production. On the other...
Markets Calm as North Korea Responded Diplomatically to Trump’s Unilateral Cancellation of Summit
Markets are rather steady in Asian session today. Major forex pairs and crosses are staying in yesterday's range. Dollar is a bit firmer entering into European session. But there is no follow through buying yet. US President Donald Trump's cancellation of the summit with North Korean leader Kim Jong...
Trade Wars and Auto Tariffs Dominate the Markets, 10 Year Yield Losing 3% Handle
Sterling recovers mildly today as there was finally a piece of better than expected key data from the UK. Nonetheless, Swiss Franc outshines Sterling as the strongest one for today. And the Pound is still the weakest one for the week, followed by Euro. Canadian Dollar, on the other...