Tag Archive: Australia

US Employment Data to Set Dollar’s Course

2024-04-05

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2024-04-05

Overview: The focus is squarely on the US employment report. At the risk of oversimplifying, given the position adjustment in the past 48 hours, a solid report can see the greenback recover, while a disappointing report will likely see it deepen the correction of the rally that began with the February jobs report. The dollar recovered in the North American afternoon yesterday and many observers attributed it to the bevy of Fed comments. Yet, the...

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Greenback Losses Extended, but Look for Consolidation in North America

2024-04-04

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2024-04-04

Overview: The softer-than-expected ISM services report caught the market leaning the wrong way. Although interest rates had a muted reaction, the dollar was sold. In fact, the Dollar Index saw its second-biggest loss of the year, falling by about 0.50%. ISM services prices paid increases moderated to their slowest since March 2020. Supplier deliveries improved to their best since 2009, suggesting a supply chain improvement. Still, the Fed funds...

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Rate Adjustment Underpins Greenback

2024-04-03

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2024-04-03

Overview: The adjustment to US interest rates continues and this helps underpin the US dollar. The 10-year yield rose to 4.40% yesterday, the highest it has been since last November. It is trading 4.34%-4.38% today. The two-year yield is firm though holding below the Q1 high set last month near 4.75%. This week, for the first time since last October, the Fed funds futures do not have at least a quarter point cut discounted for July. As recently as...

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Heightened Threat of Japanese Intervention Pushes Greenback Away from JPY152

2024-03-27

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2024-03-27

Overview: The dollar neared JPY152, setting a new 34-year high. This appeared to spur a senior official meeting in Tokyo, ostensibly to talk about the response. Previously, we suggested that Friday, when most markets outside of Asia will be closed, could provide an interesting opportunity for intervention. The implicit threat was enough to take the dollar to JPY151.10 in the European morning. Most of the G10 currencies are softer against the dollar...

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Market Hears a Dovish Fed and Sells the Greenback

2024-03-21

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2024-03-21

Overview:  The Federal Reserve triggered a dollar sell-off yesterday and follow-through selling was seen in Asia before profit-taking emerged. That created a new dollar selling opportunity in early European turnover. The FOMC revised up this year's growth forecast, shaved the unemployment projection, and while maintaining the PCE deflator forecast, and the median dot remained for three cuts this year. The soft-landing scenario was underscored and...

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Dollar Jumps

2024-02-28

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2024-02-28

Overview: A less hawkish Reserve Bank of New Zealand and a slightly softer than expected January CPI from Australia appears to have sparked a broad US dollar rally.

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While the Greenback has Tended to be Sold in Asia this Week, it has Recovered in North America

2024-02-23

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2024-02-23

Overview: Amid a light news stream, the dollar is mostly in narrow ranges against the G10 currencies. Leaving aside the Norwegian krone, the others in a +/- 0.15% against the dollar today. We note that the technical tone of the euro and sterling have improved withe the five-day moving averages crossing above the 20-day moving averages. On the other hand, the dollar is approaching the year's low set last week near JPY150.90. Emerging market...

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Risk On, Dollar Sold

2024-02-22

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2024-02-22

Overview: The post-close rally in US tech stocks after Nvidia's earnings has fueled risk-on activity today. The Nikkei closed at record highs with a 2.2% rally. China's CSI rose for the eighth consecutive session as official discourage sales at the open and close, and short sales in general. Europe's Stoxx 600 is up more than 0.5% to recoup the small losses seen in the last two sessions. US indices are poised to gap higher at the open. Benchmark...

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China’s CSI 300 Rises for Seventh Consecutive Session and Offshore Yuan Strengthens for the Sixth Session

2024-02-21

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2024-02-21

Overview: The dollar is trading quietly after being sold yesterday. It is still soft against the dollar bloc and the Swiss franc but is firmer against the other G10 currencies. Narrow ranges have dominated. Emerging market currencies are mixed, with central European currencies and the Taiwan dollar trading softer. The offshore Chinese yuan is firmer for the sixth consecutive session. The highlights of today's North American session features minutes...

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Divergence Highlighted by Back-to-Back Quarterly Contractions in Japan and the UK but Little FX Reaction

2024-02-15

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2024-02-15

Overview: There has been a string of disappointing economic news today. Japan's economy surprisingly contracted in Q4 23 and the Q3 contraction was a little deeper than initially estimates. Australia's jobs growth was weaker than expected and unemployment rose to 4.1%, matching the highest since November 2021.

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Japanese Officials Weigh-In and Help Yen Stabilize, while Euro and Sterling Extend Losses

2024-02-14

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2024-02-14

Overview: The market's reaction to the firmer than expected January CPI seems exaggerated. We do not think it was the game-changer for the Federal Reserve that the market seemed to think. The dollar was driven higher, and it is stabilizing today, though the euro and sterling extended their losses, most of the other G10 currencies did not. After the yen's six-week slide did not elicit a response from Japanese officials, yesterday's drop did, and...

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Sterling Buoyed by Labor Market Report Ahead of US CPI

2024-02-13

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2024-02-13

Overview: The US dollar is enjoying a mostly firmer bias ahead of today's CPI report. Sterling is the strongest among the G10 currencies after a more resilient than expected labor market report. The dollar extended its gains against the Japanese yen to a new high since last November, but the market seems cautious as it approaches JPY150, where large options expire today. On the other hand, emerging market currencies are mostly faring better. The...

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The US Dollar and Rates Rise Further

2024-02-05

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2024-02-05

Overview: The US dollar and interest rates have continued to rise after the strong employment report before the weekend helped drive home the Fed's message at last week's FOMC meeting. The greenback has been bid to new highs for the year against the G10 currencies but the Canadian dollar. The dollar also rose to a marginal new high for the year against the Chinese yuan. Interest rates are jumping, and the market has downgraded the chances of a May...

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The Euro and Australian Dollar Take Out January Lows to Start the New Month

2024-02-01

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2024-02-01

Overview:  Federal Reserve Chair push against speculation of a March rate cut as explicitly as could be imagined at yesterday's press conference lifted the dollar, while weighing on stocks. US regional banks sold off sharply yesterday, and challenges emanating from US real estate adversely impacted a Japan's Aozora Bank and Deutsche Bank quadrupled its loss provisions for such exposure. The greenback remains bid. The euro and Australian dollar have...

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US Tech Sell-Off Challenges Risk Appetites Ahead of the FOMC

2024-01-31

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2024-01-31

Overview: Ahead of the US Treasury's quarterly refunding announcement and the outcome of the FOMC meeting, the dollar is trading higher against all the G10 currencies. With US high-flying tech stocks posting steep losses after disappointing earnings reports, the currencies most sensitive to risk-appetites, the dollar bloc and the Norwegian krone are the weakest. Emerging market currencies are mixed. The South African rand, Philippine peso, and...

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EMU Q4 23 GDP Stagnates, Underscoring Divergence with the US

2024-01-30

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2024-01-30

Overview: The US dollar is mixed ahead of the start of the FOMC meeting and is mostly in its recent ranges. The euro, which was sold below $1.08 yesterday for the first time since mid-December is holding above it today. The less-than-expected projection of US Treasury borrowing requirements for Q1 and Q2 weighed on US rates, which, in turn, dragged the greenback lower against the yen. It is trading near a four-day low, a little above JPY147.00. The...

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PBOC Cuts Reserve Requirements, but USD Pullback may offer New Buying Opportunity in North America

2024-01-24

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2024-01-24

Overview: After a strong showing yesterday, the dollar was sold in Asia and Europe. China announced a cut in reserve requirements and took more informal action to support the stock market, which encouraged risk-taking. Yet, the dollar's decline has stretched intraday momentum indicators, which may provide early operators in North America a new dollar buying opportunity. The ECB and Norway's central banks meet tomorrow, and the US reports its first...

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Dollar Rally Pauses, but Fuel from Interest Rate Adjustment may not be Complete

2024-01-18

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2024-01-18

Overview: This week's dollar surge is consolidating today. Interest rates have steadied, but the adjustment, which involves pushing the first rate from March toward June does not appear complete. This suggests the dollar's recovery from last November-December's sell-off may not be complete either. Today, though, it is a little firmer against all the G10 currencies but the Swiss franc. Most emerging market currencies are also trading with a slightly...

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Can the US CPI Break the Dollar out of its Consolidation?

2024-01-11

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2024-01-11

Overview: Stocks and bonds are trading higher, and the dollar is narrowly mixed ahead of the December US CPI report. Most of the large bourses in Asia Pacific advanced, led by Japan to new 30-year-plus highs. Hong Kong's Hang Seng snapped seven-day slide to post its first gain of 2024. Europe's Stoxx 600 is up about 0.33%, to recoup most of its losses in the past two sessions. US index futures enjoy a modest upside bias. Benchmark 10-year yields in...

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Don’t be Burned in the Churn

2024-01-10

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2024-01-10

Overview: The broad consolidation in the dollar after the gyrations at the end of last week continues, and within it the greenback is a bit softer today. Among the G10 currencies, only the yen is failing to post gains. Most emerging market currencies, led by central Europe, are also firmer today. A notable exception is a handful of Asian currencies, include the South Korean won, Taiwanese dollar, and the Philippine peso. The market's focus is on...

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