US-China Trade Ceasefire: Too Early to be Relieved
We remain cautious over the 90-day ceasefire on US- China trade dispute. Over the weekend, the US agrees to postpone raising tariff on US$200B worth of Chinese goods from 10% to 25%. In return, China would buy significant amount of US goods within agriculture, energy and industry products. Meanwhile,...
CFTC Commitments of Traders – Bets for Higher Euro Fell Sharply as Confidence Data Soured
As suggested in the CFTC Commitments of Traders report in the week ended November 27, NET LENGTH in USD Index slipped slightly whilst bets increased on both sides. All other major currencies stayed in NET SHORT positions. During the week, the greenback strengthened against major currencies. Note that the...
CFTC Commitments of Traders – Traders Trimmed Bets on USD, GBP, JPY and AUD on Rising Uncertainty
As suggested in the CFTC Commitments of Traders report in the week ended November 20, NET LENGTH in USD Index persisted although bets were trimmed on both sides. All other major currencies stayed in NET SHORT positions. This came in line with the FX movement that the greenback strengthened...
Brexit Update – The Remaining 1%, The Most Challenging
UK PM Theresa May demonstrates to us that her way to end dispute is compromise (to counterparty) and threat (to own people). After months of negotiation, the Withdrawal Agreement for Brexit was approval unanimously by EU member states on Sunday. The final draft has not addressed the concerns of...
CFTC Commitments of Traders – Bulls Outweighed Bears Amidst Thin Trading in USD
As suggested in the CFTC Commitments of Traders report in the week ended November 13, NET LENGTH in USD Index persisted despite little volume. All other major currencies stayed in NET SHORT positions. This came in line with the FX movement that the greenback strengthened against major currencies with...
Brexit Update – EU and UK Agree on Draft Deal, Still More Challenge Ahead
Brexit news again dominates the headline as UK Prime Minister Theresa May announced that she has gained support from the Cabinet the Withdrawal Deal hammered out between the UK and EU. End of the story? Not yet. If both the UK Cabinet and the EU approve the deal, the...
CFTC Commitments of Traders – USD Index Stayed in NET LENGTH Although Traders Trimmed Bets on Both Sides
The CFTC Commitments of Traders report in the week ended November 6 shows that all major currencies (except USD) remained in NET SHORT positions. Speculative longs on USD index fell -1 564 contracts while shorts declined -2 323, sending the NET LENGTH higher, by +759 contracts, to 40 282...
US Midterm Elections – Split Congress Paves the Way for Slower, but More Sustainable, Growth Outlook
The dust is settled on the result of US midterm elections. As polls have suggested, the Congress is split with Republicans continuing the control of the Senate and Democrats is taking over the House.
In our election preview, we have suggested that the most Democrats can do is delaying the...
CFTC Commitments of Traders – GBP Got Biggest Increase in NET SHORT, Ahead of BOE Comments
The CFTC Commitments of Traders report in the week ended October 30 shows that all major currencies (except USD) were in NET SHORT positions. Speculative longs on USD index added +1 040 contracts while shorts dropped -455, sending the NET LENGTH higher, by +1 495 contracts, to 39 523...
Brexit: No News is Bad News
At the meeting later this week, we expect BOE members to vote unanimously to keep the Bank rate unchanged at 0.75% and the asset purchase program at 435B pound. The macroeconomic indicators released during the inter-meeting period are mixed, while no progress on Brexit negotiations although the deadline is...
Populist Sentiment Still Evolving – Brazil and Germany Markets Responded Positively
The Brazilian presidential and German state elections over the weekend have sent a common message - the desire for change. The election results reveal that the anti-establishment and populist sentiment continues to ferment. Both elections have led to severe loss of the establishment and upsurge in the right-wing, populist...
Italy Credit Rating – Further Downgrades are Yet to Come
Italy's budget problem continues to haunt. S&P refrained from downgrading Italy's sovereign credit rating, keeping it at BBB, two notches above junk grade. Yet, the relief might just be temporary as the rating agency has placed the country in "negative" watch, suggesting a downgrade can come with the 24-month...
CFTC Commitments of Traders – All Major Currencies in NET SHORT, Except USD
The CFTC Commitments of Traders report in the week ended October 23 shows that all major currencies (except USD) were in NET SHORT positions. Bets on USD index increased on both sides. Speculative longs gained +2 989 contracts while shorts added +2 837, sending the NET LENGTH higher, by...
CFTC Commitments of Traders – Traders Trimmed Speculations on Currencies amid Looming Uncertainty
The CFTC Commitments of Traders report in the week ended October 16 indicates that positioning on major currencies lowered as a whole. Speculative long positions for USD index futures dropped -2 635 contracts while shorts fell -2 802, sending the NET LENGTH higher, by +167 contracts, to 37 876...
CFTC Commitments of Traders – USD Bulls Triumphed as Greenback Remained Firm
USD rose against major currencies with the exception of JPY and GBP. As suggested in the CFTC Commitments of Traders report in the week ended October 9, NET LENGTH of USD index climbed slightly, by +673 contracts, to 37 709 contracts. Both speculative long and short positions increased during...
Who is a Currency Manipulator?
As US-China trade war continues to evolve, the market is increasingly concerned over the pace of slowdown in China’s economic growth. Meanwhile, weakness in renminbi (China Yuan) has given more bullets for the White House to attack China and threaten to impose more restriction. US Treasury’s semiannual currency report,...
CFTC Commitments of Traders – EUR Futures Drifted to NET SHORT on Italy Deficit Concerns
USD bulls lost ground as the greenback corrected from its peak. As suggested in the CFTC Commitments of Traders report in the week ended October 2, NET LENGTH of USD index climbed mildly higher, by +27 contracts to 37 036 contracts. Both speculative long and short positions increased only...
Democrats Might Regain Control of House, And Then?
Opinion polls suggest that the upcoming US midterm elections, scheduled on November 6, would lead to a split Congress – Democrat regaining control of the House and Republic retaining majority of the Senate. Such outcome could lead to political gridlock and more vigilant oversight of Trump’s administration. Yet, the...
Italy Rating Downgrade Inevitable Although Government Might Water Down Stimulus
(Update: The Italian government has announced that it would now set the budget deficit targets to 2.4% of GDP for 2019, 2.1% for 2020 and 1.8% for 2021. Given short-lived and fractious nature of Italian government, we view these targets with suspicion. Suggest to continue monitoring the debt problems of...
Trump’s USMCA – NAFTA 2.0 or Old Wine in New Bottles? And, Prepared for China Too?
Canada and the US eventually reached a preliminary trade deal, named USMCA, just a few hours before the US-imposed negotiation deadline. Obviously, the market was thrilled by the “breakthrough”, evidenced by the rally of Canadian dollar and, to a lesser extent, Mexican peso against the greenback. While there are...