RBNZ Preview – Another Rate Cut is Needed to Boost Inflation and Support Employment
We expect RBNZ to cut the OCR, by -25 bps, to 1.25% in August. Given the disappointment in the inter-meeting data flow, the central bank would likely signal further easing later in the year. Meanwhile, the policy statement might focus on the downside risks on domestic economic growth outlook,...
Risk Aversion Dominates Globally as Yuan Fall Drags Sentiments
Global markets are dragged down by the steep decline in the Chinese Yuan today. Major European indices are all in deep red today, following the selloffs in Asia. DOW future is currently down over -1.4% or -370 pts. Treasury yields also suffer with German 10-year yield breaking -0.5 handle...
Free Fall in Chinese Yuan Spills Over to Asian Markets, Yen and Franc Strong
Yen and Swiss Franc extends last week's strong rally as risk aversion dominates Asian markets. A key trigger is the free fall in the Chinese Yuan, which dives through psychologically important 7 level against Dollar, in response to trade war escalations. Major Asian indices are all in deep red...
RBA Preview – Pausing (Not Ending) after Two Consecutive Rate Cuts
Following two consecutive rate cuts, RBA is widely expected to leave the cash rate unchanged at 1% in August. Incoming economic data since the last meeting have also supported the pause. Yet, given the aggressive target in the longer-term unemployment rate, downside risks to growth and ongoing uncertainty in...
Abrupt Trade War Escalation Overshadowed Fed’s Cut, Yen and Franc Jumped
The abrupt escalation of US-China trade war overshadowed Fed's rate cut last week. As the trade talks in Shanghai yielded no constructive result, Trump announced to impose 10% on USD 300B in Chinese imports, effective September 1. The list include practically all untaxed Chinese goods, which should have much...
CFTC Commitments of Traders – All Major Currencies in NET SHORT Positions, Except USD and CAD
As suggested in the CFTC Commitments of Traders report in the week ended August 1, NET LENGTH in USD Index added +1 155 contracts to 30 283. Speculative long positions rose +7 087 contracts while short positions gained +5 932 contracts during the week.Concerning European currencies, NET SHORT for...
CFTC Commitments of Traders – Traders Bet on Lower Crude Oil Prices
According to the CFTC Commitments of Traders report for the week ended August 1, NET LENGTH for crude oil futures declined -10 560 contracts to 387 291 for the week. Speculative long positions gained +2 298 contracts and shorts jumped +12 858 contracts. For refined oil products, NET LENGTH...
Yen and Franc Strong on Trade War, Dollar Mixed Despite Solid NFP
Swiss Franc and Yen continue to trade as the strongest ones for today on risk aversion, as US-China trade war escalates. Global equity markets are under heavy selling pressure, with DOW futures down around -100 pts. German 10-year yield hits another record low at -0.499 and stays soft. Dollar...
Yen Surges on Risk Aversion as US-China Trade War Escalates
Risk aversion dominates the markets as US-China trade war escalates again with Trump's new tariffs. In particular, 10-year yield dived through 2% handle with ease and determination, to close at 1.894, lowest since November 2016. In the currency markets, Yen and Swiss Franc overtake Dollar's position as the strongest...
Sterling Softens after BoE, Yen Surges Through Key Resistance
Sterling weakens broadly today and remains the worst performing one for the week. BoE rate decision provided little inspiration while growth forecasts are notably lowered in the Inflation Report. Euro is the second weakest one on expectation of ECB easing in September. On the other hand, Yen is currently...
Dollar Powered Up by Fed Powell, Broke Key Resistance Against Euro
Dollar was shot up overnight as Fed's rate cut was, overall, less dovish as expected. At least, Chair Jerome Powell clearly indicated that it's not the start of a lengthy easing cycle. The greenback remains firm in Asian session, together with Australia and New Zealand Dollar. The latter two...
US Oil Inventory Extends Recent Decline
The report from the US Energy Information Administration (EIA) shows that total crude oil and petroleum products (ex. SPR) stocks sank -10.14 mmb to 1298.4 mmb in the week ended July 25. Crude oil inventory slumped -8.5 mmb to 436.55 mmb (consensus: -2.59 mmb). Inventories fell in ALL 5...
FOMC Review – Market Disappointed as Powell Described Rate Cut as “Mid-Cycle Adjustment”
Fed announced to lower the policy rate by -25 bps to 2-2.25% in July. US dollar jumped while Wall Street declined although the decision came in widely anticipated. The market was probably disappointed by the lack of commitment of future rate cuts. The members remained confident about the domestic...
Dollar Shrugs Solid ADP Report as Fed Awaited
Dollar continues to trade with a soft tone in early US session. Job data from US is slightly better than expected. US-China trade negotiations concluded in Shanghai without any concrete progress. But traders' minds remain on FOMC rate cut later today. For now, New Zealand Dollar is the weakest...
Dollar Weakens Mildly as Focus Turns to FOMC Rate Cut
Dollar trading generally lower today as markets await Fed's highly anticipated rate cut. Though, the greenback is just the second weakest. New Zealand Dollar is the worst performing one for today so far on deteriorating business confidence. Swiss Franc is the third weakest as markets turned mixed. Australian Dollar...
Dollar Mixed after Core PCE Inflation Miss, Aussie Tumbles on Risk Aversion
Sterling remains the overwhelmingly weakest one on no-deal Brexit concerns. New Prime Minister Boris Johnson is pushing EU to re-open Brexit negotiation. But there is no sign from EU on a position shift yet. Australian and New Zealand Dollars are the next weakest as markets turn into risk averse...
Sterling Selloff Continues as No-Deal Brexit Risks Intensify
Selloff in Sterling remains the focus in Asian session today, as markets are adding their best to no-deal Brexit. The currency markets are relatively quiet elsewhere. Canadian Dollar is currently the second weakest, then Euro. Yen and Swiss Franc are the strongest, with help by falling treasury yields. Dollar...
BOE Preview – Standing On Sideline and Sending More Neutral Bias
We expect BOE to leave the Bank rate unchanged at 0.75% and keep the size of the asset purchase program at 435B pound. Heightened risk of no-deal Brexit, downside risks to economic outlook, market pricing of a rate cut later this year, and easing bias from the Fed and...
Sterling in Free Fall as Johnson’s Government Steps Up Hard Line Brexit Rhetorics
Sterling drops broadly today as the new government is starting step up their hard line rhetorics on Brexit. Australian and New Zealand Dollar are also weak as markets await US-China trade negotiations that start tomorrow. Expectations for the talks in Shanghai are so far rather low. Swiss Franc and...
Yen Higher as Markets Turn Cautious in a Week of Fed, BoJ, BoE and Important Data
Yen opens the week broadly higher, following mild risk aversion in Asian markets. Traders are turning cautious ahead of FOMC rate decision, a string of worldwide economic data, as well as resumption of US-China trade negotiations. Swiss Franc is the second strongest so far while Dollar is the third....