Action Insight

The financial markets continued to trade with risk appetite this week. DOW managed to make another record high despite a mere 9.23 pts rise. S&P 500 and NASDAQ performed slightly better and gained 0.13% and 0.33% respectively, both at new records. FTSE was also firm yesterday and gained 0.03% to new record close at 7562.28. While that was below intraday record at 7598.99, that was enough to help lift Sterling for a rebound. GBP/USD is temporary safe after failing to break through 1.3026 key support following post BoE selloff. Meanwhile, Aussie trades steadily after RBA left cash rate unchanged at 1.50% as widely expected, with a carbon copy statement.

The direction in the Forex markets is no too clearly today. Yen was initially sold off earlier but there was no follow through selling so far. Instead, Euro is back under some selling pressure despite solid economic data. On the other hand, Dollar is mixed as US President Donald Trump's trip to Asia is no providing any inspiration to the markets. Instead, eyes will stay on the progress of the tax plan in Congress. But for now, in a rather light week, attention will be on RBA rate decision in the upcoming Asian session.

Yen opens the weak generally lower. USD/JPY's break of 114.49 key resistance could now open up further rally to 118.65 key resistance. But more is needed to confirm underlying bullish momentum. BoJ Governor Haruhiko Kuroda sounds quite upbeat in his latest assessment in the Japanese economy. US President Donald Trump started his Asian tour by crying that the US has suffered at hands of Japan for many many years, but markets paid little attention. The forex markets are mixed elsewhere with mild strength in Euro. But the initial focus of the week will on whether Dollar can ride on Friday's strength to resume recent uptrend

It was a week full of high profile events and much volatility was seen. But in the end, most forex pairs and crosses ended inside prior week's range. Canadian Dollar closed as the second strongest, next to Kiwi, thanks to strong October job numbers. In addition, the Loonie was lifted further as WTI crude oil surged through 55.24 key resistance to resume the up trend that started back in February 2016. Sterling was the weakest one as markets responded negatively to the dovish BoE rate cut. But the pound is stubbornly holding on to key near term support against Dollar, Euro and Yen so far. Dollar ended the week mixed after all the events. FOMC delivered a forgettable statement, Jerome Powell was confirmed as President Donald Trump's nomination as next Fed chair, House released the tax bill. Nonetheless, resilience of the greenback after non-farm payroll miss could be seen as hint of underlying strength. And Dollar could be back into driving seat soon.

Dollar weakens mildly in early US session after mixed employment data. Headline job growth as shown in non-farm payrolls report was at 261k in October, below expectation of 310k. But prior months figure was revised up from -33k contraction to 18k rise, roughly makes up the miss. Unemployment rate dropped to 4.1%, below expectation of being unchanged at 4.2%. The biggest disappointment is that average hourly earnings stalled at 0.0% mom, below expectation of 0.2% mom growth. While the greenback is sold off after the report, weakness is so far limited. Also from US, trade deficit widened slightly to USD -43.5b in September.

Fed Governor Jerome Powell was finally confirmed as US President Donald Trump's nomination as the one to succeed Janet Yellen as Fed Chair next year. House republicans also released the tax bill finally. Stock markets responded well to the news with DOW closing up 81.25 pts, or 0.35% at new record high. S&P 500 also reversed earlier loss and closed up 0.02% at 2579.85. But judging from the reactions in bonds, Powell is taken as a dovish Fed chair. 10 year yield lost 0.029 to close at 2.347, notably lower comparing to last week's close at 2.428. Powell is seen as a safe choice that would largely follow Yellen's path of gradual tightening. Focus will now turn to non-farm payrolls report.

BOE voted 7-2 to raise the Bank rate by +25 bps to 0.5%, the first time in over a decade, in November. Two deputy governors, Sir Jon Cunliffe and Sir Dave Ramsden, voted to leave borrowing costs unchanged. BOE voted unanimously to leave the asset purchase program unchanged at 435B pound. Governor Carney declined to comment when the unwinding would begin. Traders have begun to dump British pound ahead of the announcement on profit-taking. The selloff accelerates upon release of the meeting statement and the quarterly inflation report. The rate hike this month is to remediate excessive inflation which has sustainably overshot the +2% target for months.

Sterling dives sharply as respond to BoE's dovish rate hike that suggests it's a one-off. Indeed, selling has already started around 30 minutes ahead of the announcement. At the time of writing, the Pound is still holding above key near term support level against Dollar, Euro and Yen. That is, GBP/USD is holding above 1.3026/68 support zone. GBP/JPY is staying above 148.88 support. EUR/GBP is staying well below 0.9032 resistance. More is needed to confirm underlying weakness in the Pound. For now, while traders will have one eye on Sterling, focus will also turn to US President Donald Trump's expected nomination of Jerome Powell as Fed chair, as well as Republican's release of the tax plan.

Dollar weakens broadly after FOMC rate decision that provides little news to the markets. Instead, traders are keen awaiting US President Donald Trump's announcement on nominating Fed Governor Jerome Powell to take over Fed chair job next year. The announcement is expected at 3pm New York Time today. Also, after a day of delay, House is set to reveal the details of the tax bill. But the greenback could continue to stay in range and wait for tomorrow's non-farm payroll report. Meanwhile, Sterling remains the strongest one for the week as markets await the highly anticipated BoE rate hike.

As widely anticipated, the November FOMC meeting contained few changes from the previous one. The members left the target range of the Fed funds rate unchanged at 1-1.25%. One surprise came from the upgrade of the growth assessment to 'solid' for the first time since 2015, despite disruptions by hurricanes. Inflation stayed below the +2% target and the members acknowledged that core inflation 'remained soft'. However, the encouraging growth outlook and further decline in the unemployment rate suggest that a December rate hike remains on track.

Dollar strengthens mildly in early US after after stronger than expected job data. ADP report shows 235k growth in private sector jobs in October, above expectation of 200k. But upside is limited at the time of writing. There a number of key events for the rest of the week. Fed is widely expected to keep interest rate unchanged today and save the move for December. US President Donald Trump will announce his nomination for the next Fed chair tomorrow. Republicans will also reveal the details of the tax plan tomorrow after a day of delay. Finally, non-farm payroll report will be released on Friday.

Dollar trades mildly firmer today as markets await FOMC rate decision. Nonetheless, that would likely be a non-event. Fed is widely expected to stand pat. And, December is the month for rate hike, not the current one. Also, traders mind are probably more on the path beyond December. And that heavily ties to who US President Donald Trump will nominate to succeed Janet Yellen as Fed chair after February. It's reported that Trump will announce to nominate Fed Governor Jerome Powell on Thursday. Meanwhile, House Republicans are delaying the rollout of the tax bill due to unresolved questions on some key elements. The announcement was originally scheduled for today but is now delayed by one day to Thursday. Economic data to be released today will also be closely watched including ADP employment and ISM manufacturing from US and PMI manufacturing from UK. We're expecting a lot of volatility for the rest of the week.

Dollar is trying to regain upside momentum in early US session after positive economic data. But it's being overwhelmed by Sterling and struggles against Euro. US Employment cost index rose 0.7% in Q3, in line with expectation. Meanwhile, in annualized term, employment cost rose 2.5%, hitting a nine-year high. Wages as 70% of employment cost rose 0.7% in Q3 while benefits rose 0.8%. Steady rise in labor costs and wage is supportive to more rate hike by Fed to prevent the economy from being overheating. S&P Case-Shiller 20 cities house price rose 5.9% yoy in August.

BOJ again voted 8-1 to leave the monetary policies unchanged in October. The targets for short- and long-term interest rates stay at -0.1% and around 0%, respectively while the guideline for JGB purchases remains at an annual pace of about 80 trillion yen. Again, BOJ revised lower its inflation forecasts for FY 2017 and FY 2018 but maintained that for FY 2019. The central bank upgraded the GDP growth outlook for FY 2017 while leaving others unadjusted. The new member was the lone dissent as he voted against the yield curve control measure for two meetings in a row. He judged that 'monetary easing effects gained from the current yield curve were not enough for 2% inflation to be achieved around fiscal 2019'. At the press conference, Governor Kuroda defended the yield curve control policy and the +2% target. As he suggested, the 'main objective is to achieve 2% inflation and stably maintain price growth at that level. There's no change to our view that monetary policy must be guided to achieve this objective' and there is no need to change the yield targets'.

The Japanese Yen traders mildly firmer this week and maintains gains after BoJ stands pat and lowers inflation forecast. Risk appetite recedes as traders are preparing for big events like BoE and NFP later in the week. Also, markets could be a bit disappointed by news that US will adopt a phased approach in the tax cuts. Meanwhile, disappointing Germany inflation is weighing down global yield slightly, and bond traders turned a bit more cautious ahead of Eurozone CPI today. Meanwhile, Sterling remains firm as markets await BoE rate hike. Aussie, Kiwi, Euro ad Swiss Franc are the softer ones.

Dollar is trading mixed in early US session despite positive economic data. Personal income rose 0.4% in September, up from 0.2% and met consensus. Spending jumped solidly by 1.0%, above expectation of 0.9%. Headline PCE accelerated to 1.6% yoy while core PCE was unchanged at 1.3% yoy. However, the greenback is weighed down, especially against Yen, by news that Special Prosecutor Robert Mueller launched the first charge on Russian probe. Paul Manafort, a former campaign manager for President Donald Trump, was indicted on 12 counts including "conspiracy against the United States."

The forex markets opened the week rather steadily. Euro recovers mildly as there was no escalation in Catalonia tension. sacked regional president Carles Puigdemont remained calm and called for peaceful "democratic opposition" the Madrid's takeover. Dollar pares back some more of recent gains as markets await an eventful week. It's repeatedly reported that US President Donald Trump favors Fed Governor Jerome Powell for the job of Fed Chair after Janet Yellen's term expires early next year. And Powell is seen as sone one who will speed up the pace of tightening. But it's far from being certain as some unnamed persons close to Trump were quote saying he changes his minds everyday.

Dollar closed broadly higher last week, and closed as the strongest as boosted by a couple of factors. Firstly, House approved Senate's version of budget blueprint, and cleared an important procedural step for getting the tax cuts done by the end of the year. Secondly, markets responded positively to news that Fed chair Janet Yellen is out of the race for a renewal. Instead, Fed Governor Jerome Powell and Stanford University economist John Taylor are now the front runners. Powell is reported to be slightly more favored by US President Donald Trump and is seen as a less hawkish candidate. But after all, there is still a possibility of Powell/Taylor combination for chair/vice of Fed. And either one seems to be more welcomed by the markets than Yellen. Thirdly, Q3 GDP came in at an impressive 3% annualized growth, despite the impacts of hurricanes.

Dollar's rally extends in early US session after stronger than expected data. GDP grew a solid 3.0% annualized in Q3, beating expectation of 2.6%. More importantly, taking into consideration of the impacts of the hurricanes, growth was just 0.1% below prior quarter's 3.1% annualized. That's very impressive. Meanwhile, GDP price index rose 2.2%, much higher than prior quarter's 1.0% and expectation of 1.8%. barring any disastrous developments ahead, a December rate hike now seems more likely than ever. And indeed, based on yesterday's pricing, fed fund futures were already indicating 95.2% chance of another 25bps hike in federal funds rate to 1.25-1.50%.

Dollar surged overnight and remains firm in Asian session today. ECB's dovish tapering is seen as a key factor driving the greenback higher. But more importantly, another step was taken forward as House passed Senate's versions of the budget bill. That procedural path is now cleared to move on to US President Donald Trump's tax cuts. Staying in the currency markets, commodity currencies remain the weakest ones for the week. Aussie's selloff accelerated after CPI miss earlier this week and weighed further down by PPI miss today. Canadian Dollar remains weak as post cautious BoC statement selloff continues. Euro, while weak, is trading mixed only.