Risk Appetite Turns Softer But Aussie Supported by Services PMI
The forex markets are trading in rather tight range today. Risk appetite turn weaker on renewed worries over US-China trade negotiations. Asian stocks responded by opening lower. Yen could extend the rebound started on Friday if sentiments worsen ahead. But for now, the risk aversion currency is trading slightly...
Yen Jumps as Trade Optimism Waned Suddenly after China Canceled Farm Trip
Yen and Swiss Franc ended as the strongest ones last week. They're partly supported by lack of clear indication of imminent easing from respective central banks. There was additional buying on a pessimistic turn on US-China trade talks. Dollar ended mixed after Fed's hawkish rate cut. Theorectically, Fed should...
Dollar Regains Ground after US Exempts Some Tariffs on China
Dollar regains some ground in early US session as US exempts tariffs on some Chinese products temporarily. It seems that both sides are keen to create the right mood for continuing negotiations, at least for now. Though, at this points, Swiss Franc and Yen remain the stronger ones for...
Sterling Surges as EU Juncker said a Brexit Deal is Possible by Oct 31
Sterling rises broadly today on optimism that a Brexit deal could finally be reached by the end of next month. For now, Swiss Franc and Yen are following as next strongest. On the other hand, Dollar turns soft as post-FOMC lift continued to fade, followed by New Zealand Dollar...
BOE Stays Put But Warns of the Market Volatility in Case of Further Brexit Delay
BOE voted 9-0 to leave the Bank rate unchanged at 0.75%. It also maintained the asset purchase program at 435B pound and corporate purchase at 10B pound. BOE also made detailed discussion on the problems stemmed from Brexit uncertainty.
The members warned that “shifting expectations about the potential timing and...
Focus Turning to Trade Talks after BoE, SNB and BoJ
Swiss Franc and Yen are trading as the strongest for today so far. Both like lifted by somewhat dovish yet balanced central bank decisions. There are no clear indication of imminent policy easing from SNB nor BoJ yet. On other hand, commodity currencies are generally lower as led by...
SNB Raises Exemption Threshold for Negative Rate; CHF Rises on No Rate Cut
SNB left the policy rate unchanged at -0.75%. It reiterated the commitment to “intervene in the foreign exchange market as necessary, while taking the overall currency situation into consideration”. Additionally, the central bank adjusted the interest charged on banks’ excess reserve. The rationale is similar to ECB’s tiering system...
Dollar Lacks Follow Through Buying after Fed’s Hawkish Cut
The stock markets are mixed after the hawkish rate cut by Fed overnight but treasury yields are back under pressure. Dollar rose mildly after the announcement but there was no follow through buying. Yen surges broadly today, riding on falling yields, followed by Swiss Franc. Australian Dollar is the...
US Oil Inventory Climbed Higher Across the Board, After Weeks of Withdrawal
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks sank -3.14 mmb to 1295.96 mmb in the week ended September 13. Crude oil inventory added 1.06 mmb to 417.13 mmb (consensus: -2.5 mmb). Inventories decreased in 4 out...
FOMC Cut Rate by -25 bps. Third Cut Still Possible Despite Sounding Less Dovish
Fed lowered the policy rate by -25 bps to 1.75-2.00%, although market expectations of a rate cut diminished markedly ahead of the meeting. The decision was not unanimous. Yet, it revealed a more divided Fed. The updated median dot plot shows a significant minority favoring one more cut by...
Markets in Tight Range and Fed Rate Cut Awaited
The forex markets are generally stuck in very tight range today, as markets await Fed's rate cut. Dollar is the stronger one as followed by Canadian and Yen. Australian Dollar is the weakest one so far. Sterling follows as second weakest after lower than expected consumer inflation reading. New...
Dollar Mildly Higher as Fed Cut Turned From Done Deal to Debatable
Dollar firms up mildly today as all eyes are on FOMC rate decision. A rate cut has turned from being a done deal to debatable, based on market pricing. While a cut is still generally expected, the greenback could be supported if Fed signals that the door for further...
Euro Recovers as German Economic Sentiment Rebounds, Dollar also Higher
Euro recovers mildly today as partly supported by strong rebound in German economic sentiment. Though, upside is capped for now as outlook for the country remains negative. Follows as the second strongest, then Yen. Fed is still widely expected to cut interest rate again tomorrow. And the question is...
FOMC Preview – Focus on Dot Plot for Potential Third Rate Cut
Another rate cut, by -25 bps, is a done deal this week, although the market has trimmed its expectations to 66% from 92% a week ago. This would take Fed funds rate's target range to 1.75-2%. The focus of the meeting is the number of members in support of...
Australian Dollar Turns Soft after RBA Minutes, on Mild Risk Aversion
Australian Dollar weakens broadly in Asian session after RBA minutes suggested more rate cuts ahead. Commodity currencies are also generally lower on mild risk aversion. There is little support from news of US-Japan trade agreement. on the other hand, Swiss Franc and Euro are trading generally stronger, followed by...
Moody’s and Fitch’s Downgrade Hong Kong on Concerns about Closer Link with China
On the 100th day of Hong Kong’s anti-extradition movement, Moody’s downgraded the territory’s outlook to negative from stable. Although the credit rating stayed unchanged at Aa2 (two notches above China's A1), a negative outlook signals that a rating downgrade could come in one to two years. Less than two...
Euro & Sterling Weak after Johnson’s Meeting with Juncker Made No Progress
Euro drops broadly today on some dovish comments from ECB officials. Also, it's believed that surge in oil prices could hurt Eurozone's balance of payment. Sterling stays weak as meeting between Prime Minster Boris Johnson and EU Jean-Claude Juncker ended without any noticeable progress. Generally weaker sentiments also keep...
China Watch – Economy Going from Bad to Worse
China’s macroeconomic indicators showed significant weakness across the board. Industrial production gained +4.4% y/y in August, easing from +4.8% in the prior month. The growth rate came in weaker than consensus of +5.2% and marks the slowest in over 17 years. The rapid slowdown was partly driven by the...
Canadian Dollar Rebounds on Strong Oil Prices, Yen Firmer on Mild Risk Aversion
Canadian recovers notably today following the strong rally in oil prices, after attack on Saudi Arabia's oil production. Yen follows as the second strongest on mild risk aversion, as sentiments are also weighed down by poor Chinese data. On the other hand, Sterling is the paring some of last...
Fed Might Cut Just Once More in Mid-Cycle Adjustment as Sentiments Improved
Threat of US-China trade war escalation receded last week after both sides offered some concessions. Further than that, there is increasing hope of de-escalation of some form as the idea of an "interim" trade deal floated around. Both sides seemed to be communicating well in preparation for the meeting...