Dollar Shrugs Pick-up in CPI Inflation, Swiss Franc Rises on Risk Aversion
Swiss Franc rises broadly today as risk aversion stays in the markets, even though Yen is firm but relatively unmoved. Sterling also recovers with help from stronger than expected wage growth. On the other hand, New Zealand and Canadian Dollars are the weakest while Australian is not too far...
Forex Steady Despite Risk Aversion, UK Job Data Watched
The forex markets are rather calm so far despite deep risk aversion elsewhere. Most notably, US 30-year yield plunged sharply by -0.118 to 2.130, closing in to 2.102 historical low. Major Asia indices are all in red, following selloff in US overnight. Nevertheless, all major forex pairs and crosses...
Markets Remain in Risk Aversion as Yen and Swiss Franc Maintain Momentum
Risk aversion is the main theme even though trading is generally subdued today. Yen is currently the strongest one, followed by Sterling and then Swiss Franc. The Pound is trying to recover upside is so far capped by no-deal Brexit risks. Commodity currencies are generally lower, led by Australian...
Political Turmoil In Italy Signals Further Widening Yield Spread
Matteo Salvini, the Deputy Prime Minister of Italy, announced last Friday that he would submit a no-confidence motion against Prime Minister Giuseppe Conte. This marks the collapse of the M5S- League coalition government. Two possibilities arise after Salvini’s move: snap election or a technocrat government. What makes the situation...
Yen and Franc Firm in Quiet Trading, More Upside Ahead
The financial markets are relatively quiet today with Japan and Singapore on holiday. Yen and Swiss franc generally firmer but there is no clear follow through buying to extend last week's rally yet. On the other hand, Dollar is soft, but focus should be more on weakness in Sterling...
CFTC Commitments of Traders – JPY Drifted to NET LENGTH for First Time in Over a Year as Market in Risk- Off Mode
As suggested in the CFTC Commitments of Traders report in the week ended August 6, NET LENGTH in USD Index added +1 046 contracts to 31 329. Speculative long positions added +26 contracts while short positions dropped -1 020 contracts during the week. Concerning European currencies, NET SHORT for...
CFTC Commitments of Traders – Net Length on Energy Futures Trimmed Further as Risk Appetite Diminished
Energy prices remained under pressure as US- China trade re-escalates. According to the CFTC Commitments of Traders report for the week ended August 6, NET LENGTH for crude oil futures declined -11 650 contracts to 375 641 for the week. Speculative long positions added +686 contracts and shorts jumped...
Global Risks Materializing, Stocks and Yields Tumbled, Yen and Franc Surged
US-China trade/currency war, no-deal Brexit, global slowdown and central bank easing were the main themes last week. The perceived risks to global economy were moving closer to materializing. Free fall in Chinese Yuan at the start of the week triggered US in designating China as currency manipulator. New 10%...
Sterling Tumbles as GDP Contraction Raises Recession Fears
Sterling weakens broadly today as surprised contraction in Q2 UK GDP raised concerns of recession. In the background, risk of no-deal Brexit continues to weigh on sentiments. Canadian Dollar is suffering some renewed selling in early US session after worse than expected job data. Dollar is not much better...
China PPI Returns to Deflation, PBOC Probably Cuts Rate in September
Headline CPI in China accelerated to +2.8% y/y in July, from +2.7% a month ago. Same as previous months, the key driver of inflation was food prices, which jumped +9.1% y/y in July. In June, food prices also rose +8.3% y/y. Of which, pork prices soared +27% y/y and...
Sterling Soft as Markets Await UK GDP and Productions
Sterling stays soft in Asian session and remain the second worst performing one for the week. Risk of no-deal Brexit continues to weigh on the Pound. UK GDP and production data could add more selling pressure. For the week, New Zealand Dollar remains the weakest one after the surprised...
Sterling Under Pressure as Johnson Might Delay General Election after Brexit Date
Sterling is back under pressure again in early US session and is trading as the weakest for today. Prime Minister Boris Johnson urged MPs to keep the promise to people an deliver Brexit on October 31. At the same time Financial Times reported that Johnson, if loses a confidence...
Markets in Consolidations as China Trade Data Support Sentiments
The forex markets are rather quiet today as major pairs and crosses are stuck in consolidations. Better than expected trade data from China gives sentiments a mild boost. But momentum of recovery is very weak so far. Treasury yields are also trying to recover after yesterday's steep decline. For...
US Crude Oil Inventory Gained for First Time since Mid- June
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks jumped +10.41 mmb to 1308.82 mmb in the week ended August 2. Crude oil inventory gained +2.39 mmb to 438.93 mmb (consensus: -2.85 mmb). Inventories increased in 3 out...
Yen Strengthens Again on Falling Treasury Yields, Swiss Follows
Yen strengthens broadly today, mainly follows decline in major benchmark yields. German 10-year yield hit another record low at -0.597. US 10-year yield also breaks 1.7 handle. Yields are pressured after deeper the surprised -50bps cut by RBNZ and expectation of more global central bank easing. Asian stocks ended...
New Zealand and Australian Dollars in Steep Decline after Surprised RBNZ 50bps Rate Cut
New Zealand Dollar is clearly the worst performing one today as selloff intensifies after RBNZ's surprised -50bps rate cut. Australian Dollar is also dragged down deeply while Canadian Dollar follows as third weakest so far. Asian markets ignore rebound in US stocks overnight and weaken generally. Yen and Swiss...
RBNZ Cut Policy Rate by -50 bps, Hinting Negative Interest Rate
RBNZ surprised the market by reducing the OCR, by -50 bps, to 1%. The market had only anticipated a -25 bps cut. The aggressive rate cut is "necessary" to help support employment and inflation in the country as downside risks are growing. Governor Orr also signaled that negative interests...
Dollar Recovering While Yen Softens as Currency War Fear Recedes Mildly
Market sentiments stabilized with recoveries seen in European stock markets, while US futures also point to a solid rebound. The China's Yuan also pares back some of yesterday's steep losses on rumors that a PBoC official reassured foreign companies that the currency won't continue to weaken significantly. Though, the...
Sentiments Stabilize While US-China Trade War Turns into Currency War
Asian markets tumbled sharply earlier today in response to US designation of China as currency manipulator. USD/CNH also jumped to new high at 7.1399. But China's PBoC appeared to be trying to "smooth" Yuan's decline despite hard line rhetorics elsewhere. Asian stocks quickly pared back much of today's losses....
US’ Designation of China as Currency Manipulator Makes it Harder to Reach Trade Deal
US Treasury Department on Monday labeled as currency manipulator, first time since 1994. Before the announcement, Trump has threatened to label as currency manipulator while the Treasury Department has long placed China in its monitoring list. According to the criteria, set by the Treasury Department in 2015, for a...