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Dollar Recovers With Weak Momentum in Quiet Session

Dollar recovers broadly in a quiet Asian session today but momentum is very week so far. The economic calendar is rather light today and trading might remain subdued. Nonetheless, volatility could build up again as the week goes with some key events scheduled. The list includes US budget proposal, FOMC minutes, BoC rate decision, Eurozone sentiment data, OPEC meeting, etc. While for now, some consolidations could be seen, the greenback will more likely extend recent fall ahead, than not. In other markets, Gold retreats mildly but is staying solid above 1250 handle. WTI crude oil extends recent rise and is on course for 53.76/55.24 resistance zone

Politics Drove the Markets as Dollar Tumbled While Euro Surged, Canadian Dollar Picked Up Strength With Oil

Dollar was sold off broadly last week as sentiments were rocked by political turmoil in the White House, regarding US President Donald Trump's alleged intervention in FBI investigation. Selloff in equities triggered massive safe haven flows into Swiss Franc and Japanese Yen. But Euro followed closely as political risks in the Eurozone faded and on ECB expectations. Commodity currencies performed poorly in spite of the rally in oil and gold price. Aussie and Kiwi ended the week as two of the weakest major currencies, just next to Dollar. Sterling and Canadian Dollar were among the weakest batch too but showed a turnaround as oil broke 50 handle. Political uncertainty in US is set to continue as former FBI director James Comey, fired by US President Donald Trump earlier this month, agreed to testify in open session before the Senate Intelligence Committee. Dollar is vulnerable to more selling against Euro and Yen.

Euro Rally Resumes on ECB Expectations, Dollar Recovery Short Lived

Euro extends recent rally against dollar today with EUR/USD hitting as high as 1.1188 so far. The common currency continues to draw support from expectation of a hawkish twist in ECB's June meeting. Also, based on recent solid economic data, there is realistic chance of upward revisions in the central bank's staff projections to be released at that meeting. Indeed, Euro's strength is even clearer considering that fact that it now overtakes Yen as the second strongest major currency for the week, following Swiss Franc. On the other hand, Dollar's recovery was weak and short lived as it's also back under some selling pressure against Sterling.

Dollar Recovered Mildly as Market Stabilized from Trump Turmoil, But Stays Weak

Dollar recovered mildly as markets calmed down from US President Donald Trump's political turmoil. But the greenback is still set to end the week as the weakest major currency. DOW also recovered overnight by adding 56.09 pts, or 0.27% to close at 20663.02 after suffering -372.8 pts loss on Wednesday. S&P 500 was up 8.69 pts or 0.37%, NASDAQ up 43.89 pts or 0.73%. 10 year yield also pared some loss and ended up 0.017 at 2.233, but was well off this month's high at 2.423. Gold retreats mildly after hitting as high as 1265 and is back below 1250 handle. WTI crude oil extended recent rise to 49.88 and is set to take on 50 handle today. In the currency markets, Swiss Franc and Japanese Yen remain the strongest ones on global risk aversion. That's closely followed by Euro as the third strongest, on optimism over Eurozone economy and anticipate of a hawkish twist in June ECB meeting. Commodity currencies are indeed generally weak with Kiwi and Aussie trading as the second and the third weakest ones.

Dollar Lacks Momentum for Rebound Despite Jobless Claims Dropped to 28 Year Low

Dollar is attempting a recovery today but stays weak against Japanese Yen. Risk aversion remains the main theme in the global financial markets with all major European indices trading in red at the time of writing. US futures also point to lower open. Upbeat economic data from US provide little support to the greenback as traders stay deeply concerned with US President Donald Trump's political turmoil. Initial jobless claims dropped 4k to 232k in the week ended May 13, better than expectation of 240k. That's also the lowest level in more than 28 years since 1973. Claims has now stayed below 300k handle for 115 straight week, longest stretch since 1970. Continuing claims dropped 22k to 1.9m in the week ended May, lowest since 1988. Continuing claims also stayed below 2m level for the fifth straight week. Philly Fed survey rose to 38.8 in May, beating expectation of 18.5.

Near-Term Economic And Political Divergence Fueld EURUSD Rally

USD's slump accelerated as increasing political uncertainty, accompanying disappointing inflation data, has intensified concerns over the country's growth outlook. Four consecutive days of selloff, accumulating loss of over -2%, has sent the DXY index to a 6-month low of 97.33 before recovery. Leading the rally against US dollar was the euro. With removal of one political risk after the French election, the market has turned its attention to the region's economy of which the development have been encouraging. Rebound in inflation and positive sentiment indices have raised speculations that the ECB would add some hawkish twists in its forward guidance. EURUSD has rallied as much as +2.7% over the past 4 trading days. The sustainability of the single currency's strength depends on the tone of ECB and FOMC meeting statements in June.

DOW Tumbled on Trump Turmoil, Dollar Dived as Markets Paring Fed June Hike Bets

The financial markets are rocked as US President Donald Trump's political turmoil intensified. DOW dropped sharply by -372.82 pts, or -1.78% to close at 20606.93 overnight, the worst day since last September. S&P 500 lost -43.64 pts, or -1.82% to close at 2357.03. NASDAQ fell -158.63 pts, or -2.57% to close at 6011.24. Treasury yield also tumbled sharply with 10 year yield losing -0.113 to close at 2.216. Dollar is deeply and broadly sold off with the dollar index hitting as low as 97.33. Gold surges on Dollar weakness and breaches 1260 handle, comparing to last week's low at 1214.3. In the currency markets, Swiss Franc and Japanese Yen are trading as the strongest major currencies for the week on safe haven flow. But Euro is not far behind as the third strongest one.

Dollar Selloff Continues as Trump-Comey Correspondences Demanded by House Oversight Chair

Dollar's selloff continues today as markets are in deep concerned with US President Donald Trump's political turmoil. The situation worsens after a report that Trump has intervened in FBI investigation on national security adviser Michael Flynn. House Oversight Committee chair Jason Chaffetz, a Republican, requested FBI to hand over all records of correspondence between form FBI director James Comey and Trump, by May 24. Chaffetz tweeted that "@GOPoversight is going to get the Comey memo, if it exists. I need to see it sooner rather than later. I have my subpoena pen ready." Meanwhile, Russian President Vladimir Putin offered to provide US Congress with a record of Trump's meeting with Russian officials, just after firing Comey. It's reported that Trump passed highly sensitive classified information to Russia at the meeting.

Euro Rally Extends, Dollar Weighed Down by Trump’s Political Turmoil

Euro's rally extends in the Asian session today as optimism continues. In particular, EUR/USD reaches new six months high as the greenback is troubled by political turmoil in Washington. But we'd like to point out that Dollar's weakness is mainly centered against Euro, Swiss Franc and Yen. GBP/USD is held steady in range below 1.2987 resistance. While Aussie and Canadian are helped by commodity and energy prices, movements in AUD/USD and USD/CAD since last week are so far corrective looking. We'd continue to view the current theme in the markets as Euro strength rather than Dollar weakness.

Euro Extends Rally as Data Affirms Optimism, Pound Unmoved by CPI

Euro surges broadly today as incoming economic data is in line with a brighter outlook. Some attributes that rally in Euro to the weakness of Dollar. The greenback is pressured as the markets are getting more doubtful on US President Donald Trump's implementation of economic policy. For the very least, he is constantly being distracted by other issues, like currently, his firing of former FBI director James Comey and subsequent sharing of sensitive information with Russia. But it should be noted that both DAX and FTSE 100 hits record highs today. The moves in the markets are clearly driven by optimism. Released in US, housing starts dropped to 1.17m annualized rate in April while building permits dropped to 1.23m.

Euro Surges Broadly With Optimism on the Economy, UK CPI Watched

While oil prices and Canadian Dollar took headlines, it's indeed the Euro that's the outstanding one in the early part of the week. The common currency resumed recent rally against dollar is back above 1.1 handle. Markets are getting more optimistic that subsiding political risks in the Eurozone clear up uncertainties over economic outlook. And recent solid economic data also pointing to better momentum in the recovery. If the developments continue, it's more likely that finally see the start of the end of ECB's stimulus after the current asset purchase program ends at the end of the year. But for sure, it's still too early to confirm anything, at least not before new staff economic projections from ECB to be published in June.

RBA Reaffirmed Importance Of Housing And Labor Markets On Decision-Making, Defends The Trend Of Rising Part-Time Workers

The RBA minutes for the May meeting contained little news but reiterated policymakers' the importance of the property market and the labor market conditions in its policy decision. The stance to leave the monetary policy unchanged was obviously due to the perceived uncertain outlook in these two areas. As noted in the concluding statement in the minutes, 'the board continued to judge that developments in the labour and housing markets warranted careful monitoring'.

Oil Surges as Saudi Arabia and Russia Agree to Extend Product Cut, Canadian Dollar Jumps

The surge in oil price is the main focus today after Saudi Arabia and Russia agreed to extend production cut. WTI crude oil is now having 50 handle back in sight. Meanwhile, rise in oil price takes FTSE 100 to new record high at 7460.20. DAX also follow to record high at 12832.29. But both indices cannot ride on the initial strength and quickly pare back gains. Nonetheless, in the forex markets, commodity currencies follow and trade broadly higher. USD/CAD's dip is now putting near term support at 1.3534 in focus. Elsewhere in the FX markets, Euro strengthens clearly against Dollar, Sterling and Yen.

Forex Markets Steady With Mild Strength in New Zealand Dollar and Canadian Dollar

The forex markets open the week rather steadily. New Zealand Dollar trades mildly higher after better than expected retail sales data. Canadian Dollar is also lifted mildly by rebound in oil price, which sees WTI back at 48.60, comparing to this month's low at 43.76. The Japanese Yen shows little reaction to another missile launch by North Korea while markets await the result of an emergency UN security meeting. Euro also shows little reaction to German CDU's win in an important state election. Meanwhile, UK is stepping up its rhetoric ahead of the Brexit negotiation. The focus of the week, though, will be on data from UK, Eurozone, Canada and Australia.

Dollar Risks Deeper Pull Back After Data Miss, Euro to Regain Strength

There are a couple of developments to note in the forex markets last week. Firstly, Dollar ended as the strongest major currencies as markets firmed up the expectation of a June hike by Fed. However, the greenback tumbled sharply against Euro and Swiss Franc before close after weaker than expected inflation data. The dollar index was rejected from 55 day EMA and closed lower at 99.19. That was also accompanied by steep decline in 10 year yield which closed at 2.335. Overall development suggests that the greenback would turn weaker against Euro again as the post French election pull back ends.

Dollar Reverses after CPI and Retail Sales Disappointment, Set to End the Week Mixed

Dollar weakens broadly in early US session after disappointment from economic data. While the greenback is still trading at the strongest major currency for the week at the time of writing, it could end the week mixed. Headline CPI slowed to 2.2% yoy in April, down from 2.4% yoy, and missed expectation of 2.3% yoy. Core CPI slowed to 1.9% yoy, down from 2.0% yoy and missed expectation of 2.0% yoy. Headline retail sales rose 0.4%, below consensus of 0.6%. Ex-auto sales rose 0.2%, also below consensus of 0.5%. Elsewhere, Eurozone industrial production dropped -0.1% mom in March. German GDP rose 0.6% qoq in Q1. CPI was finalized at 2.0% yoy in April. Japan M2 rose 4.3% yoy in April, New Zealand business NZ manufacturing index dropped to 56.8 in April.

Dollar Firm as Markets Look into US CPI and Retail Sales

Dollar remains the strongest major currency for the week as markets await a bunch of key economic data from US. The list include CPI which is expected to slowed to 2.3% yoy in April. Core CPI is expected to be unchanged at 2.0% yoy. Retail sales is expected to show 0.6% growth while ex-auto sales would show 0.5% rise. U of Michigan consumer sentiment and business inventories will also be released.

Dovish BoE Sent British Pound Lower

BOE left the Bank rate unchanged at 0.25% and the QE program at 435B pound. While this had been widely anticipated, BOE's downgrade of GDP growth outlook was disappointing. Policymakers also raised its inflation forecast for this year, warning that rising inflation begins to hurt consumers, but lowered the forecasts for 2018 and 2019. Expectations of a "smooth" Brexit led members to believe that interest rate may need to go up around the time the UK leaves the EU in 2019.

British Pound Sold Off after Mixed BoE Projections, Threatening Reversal

Sterling drops sharply after BoE left monetary policies unchanged as widely expected. The updated projections are mixed at best. And more importantly, they were based on the assumption of a "smooth" Brexit, which isn't clearly defined by the central bank. Markets are clearly unhappy with the announcement and the pound suffers steep selloff. Focus will now be on 1.2830 in GBP/USD and a firm break there will indicate near term reversal. On the other hand, the greenback is trying to extend this week's rebound against Euro after solid economic data including PPI and jobless claims. But momentum in Dollar is unconvincing so far. New Zealand Dollar remains the weakest one after RBNZ disappointment.

New Zealand Dollar Dives Broadly on Dovish RBNZ, British Pound Firm ahead of BoE Super Thursday

New Zealand Dollar tumbles sharply today after RBNZ left official cash unchanged at 1.75% but issued a dovish statement. There were anticipations that the central bank would raise the outlook on inflation after Q1's figure. But instead, RBNZ Governor Graeme Wheeler said in the statement that the increase in headline inflation in Q1 was "temporary", mainly due to "higher tradables inflation, particularly petrol and food prices." Meanwhile, "non-tradables and wage inflation remain moderate but are expected to increase gradually." That will bring future headline inflation to midpoint of target band "over the medium term". And, longer-term inflation expectation remained "well anchored at around 2 percent". The OCR outlook was basically unchanged from the February MPS. And the implication is that OCR will be unchanged till at least early 2019 with chance of a rate hike later in that year.