FOMC Minutes Explained the Rationale for Precautionary Rate Cut. Further Reduction Likely in Coming Months
The FOMC minutes for the July meeting explained that the key reasons for the rate cut are slowdown in global economic outlook and subdued US inflation. An insurance reduction was needed to prevent these factors from dragging US economy. Yet, the decision to lower the Fed funds rate, by...
Canadian Dollar Jumps on CPI, Risk Appetite Lifted by Fed Expectations
Canadian Dollar jumps broadly in early US session after stronger than expected consumer inflation data. Australian Dollar follows as the second strongest, with help from risk appetite since European session. Fed Kashkari's push for forward guidance raises expectation that Fed will keep rates low for longer. Yen and Swiss...
Markets in Consolidation, But Risk Aversion Ready to Come Back Soon
Directions in the forex markets are not very clear for now as consolidations continued. There were lots of reasons for a move but traders remained generally cautious. The US is stepping up its hardline rhetoric on China, and prompted some worries of RBA Governor. Italy is in political turmoil...
Sterling Falls after Brexit Comments from UK and EU, Yen Rises Broadly
Sterling drops broadly today as comments from UK and EU suggested that there is no compromise on Brexit any time soon. Euro is also pressured as German is back pressing -0.7 handle. Yen jumps again and is trading as the strongest one with fading risk appetite. Aussie follows after...
Australian Dollar Mildly Higher after RBA Minutes, But No Follow Through Buying Seen
Asian markets opened higher earlier today, following another day of strong rebound in the US overnight. But buying lost momentum entering into European session. Australian Dollar is currently the strongest one for today as RBA minutes indicates the central bank will stand pat in September first. New Zealand Dollar...
RBA Minutes Indicates Data- Dependence in Future Policy. Further Rate Cuts Likely Given Limited Decline in Unemployment Rate
RBA’s minutes for the August meeting indicated that future monetary policy action would be data-dependent. While acknowledging some improvements in the economic developments after the two consecutive rate cuts, spare capacity in the labor market remained significant. The country’s unemployment rate would stay above the longer-term target for some...
Risk Appetite Coming Back on Huawei Reprieve and Stimulus Talks
Global markets stage a strong rebound today with help from talk of global stimulus. China has already indicated that it will reform rate system to lower lending cost. There were also talks that Germany is considering stimulus measures. Markets response well to US decision to delay Huawei sanctions for...
Risk Appetite Lifted by PBoC Reform, But Forex Markets Shrug
Risk appetite is striking a come back as another week starts, lifted by China's measure to lower lending rates. Though, the response in the currency markets is rather muted. For the moment, major pairs and crosses are stuck inside Friday's range. Dollar and Euro and the firmer ones while...
An Important Week for EUR/USD as Fed and ECB Easing Expectations Built
Euro ended last week as the weakest one as comments from a top ECB official suggested a forceful easing package to be announced in September. Additionally recession fear in Germany sent 10-year bund yield to new record low. New Zealand Dollar followed as the second weakest on dovish RBNZ...
CFTC Commitments of Traders – Long Bets Trimmed on Gold and Silver Futures
Energy prices remained under pressure as US- China trade re-escalates. According to the CFTC Commitments of Traders report for the week ended August 13, NET LENGTH for crude oil futures increased +6 503 contracts to 382 144 for the week. Speculative long positions gained +6 116 contracts and shorts...
CFTC Commitments of Traders – NET LENGTH for JPY Rose as Sentiment in Rick- Off Mode
As suggested in the CFTC Commitments of Traders report in the week ended August 13, NET LENGTH in USD Index declined -1 487 contracts to 29 842. Speculative long positions dropped -1 457 contracts while short positions added +30 contracts during the week. Concerning European currencies, NET SHORT for...
Euro Selloff Continues as German 10-Year Yield Hits Another Record Low Below -0.7%
Selloff in Euro picks up momentum again today as Germany yields dive on ECB easing expectations. Swiss Franc is also pressured as SNB could sometime be forced to intervene. Yen is the third weakest, following rebound in stocks rather than falling yields. On the other hand, Sterling recovers broadly,...
Dollar Mildly Higher as Sentiments Stablized, Yields Remain Pressured
Asian markets turned mixed after US stocks stabilized overnight. Treasury yields remain pressured though, as 10-year JGB yield hit the lowest level since 2016. In the currency markets, Dollar strengthens mildly today after a Fed dove dismissed an emergency rate cut. Though, Australian Dollar is the strongest one. On...
Euro Dives on German Yield, Dollar and Pound Supported by Retail Sales
The global financial markets turned a bit mixed today even though risk aversion remains the underlying theme. European stocks are generally lower while US stocks recovers, turning into consolidations. Comments from China suggests that retaliation is still underway despite delay of part of the new US tariffs. Germany 10-year...
Risk Aversion Continues as Markets Await UK and US Retail Sales
Risk aversion stays in Asia after the -3% crash in Dow overnight. More importantly, treasury yields took another dive on recession fears. US 30-year yield even drops through 2% handle in Asia and hit as low as 1.964. In the currency markets, though, Australian Dollar rises generally after better...
US Crude Inventory Gained While Refined Product Stockpile Declined
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks added +2.41 mmb to 1311.22 mmb in the week ended August 9. Crude oil inventory gained +1.58 mmb to 440.51 mmb (consensus: -2.78 mmb). Inventories increased in 4 out...
Loonie Could Weaken Further as Crude Oil Price Remains Volatile and Disappointing Data Raised Rate Cut Hopes
Risk to Canadian dollar is skewed to the downside in the near term. Disappointing economic data since the July BOC meeting have raised speculations of a rate cut, although the consensus remains no change in the monetary policy for the rest of the year. Crude oil price, a key...
Risk Aversion Back on Recession Fear, Yen Regains Control
Risk aversion quickly comes back to the market as German data suggests that the economy is on the edge of recession. Major European indices are trading in deep red and German 10-year yield also hit new record low at -0.649. Sentiments are further weighed down by US Commerce Secretary...
Chinese Data Surprised to Downside in July. Tariff Delay Won’t Help Arrest Slowdown
China’s economic data surprised to the downside in July. Delay in US tariff should have limited boost on China’s growth outlook. Industrial production gained +4.8% y/y in July, missing consensus of +5.8% and June’s 6.3%. The slowdown is the most severe since February 2009 and caught the market in...
Sentiments Lifted by Delay of Some US Tariffs on China, But Markets Stay Cautious
Market sentiments staged a strong rebound overnight after US Trade Representative announced to delay tariffs on some Chinese imports. However, there seems to be no committed follow through buying/selling yet. DOW hit as high as 26426.97 but closed at 26279.91, up just 1.44%. It's also technically limited below 55...