Dollar Narrowly Mixed in Thin Holiday Trading

What Has Changed in EM

  • Malaysian bonds may be dropped from FTSE Russell’s World Government Bond Index (WGBI) due to liquidity concerns
  • Pakistan Finance Minister Asad Umar has resigned from the Cabinet
  • Poland continues to overhaul its pension system
  • The Bank of Israel said it is considering FX intervention if the shekel continues to appreciate
  • Egypt’s parliament overwhelmingly approved a constitutional amendment that would allow President El-Sisi to remain in office through 2030
  • Press reports suggest that Turkey’s central bank reserves are much lower than reported
  • Argentina central bank President Sandleris said it would hold its currency band at current levels until the end of the year
  • Brazil pension reforms look likely to be bogged down in Congress Continue reading “What Has Changed in EM”

Reinforcing Our Bullish Dollar Call

Every now and then, it’s helpful to reassess what’s changed in the global economy and whether it warrants any changes to our broad macro calls. Given what we see as continued economic and monetary policy divergence, we are maintaining our strong dollar call. Continue reading “Reinforcing Our Bullish Dollar Call”

Dollar Broadly Firmer Ahead of Holiday Weekend

  • The dollar is getting some more traction ahead of the holiday weekend
  • The US data highlight is March retail sales; Atlanta Fed’s GDPNow model is now tracking 2.4% SAAR for Q1
  • US and China officials are trying to reach a trade deal by early May
  • Eurozone flash PMI readings for April were reported; strong UK March retail sales were reported
  • BOK kept rates steady at 1.75%, as expected; TRY is underperforming on reports that foreign reserves are much lower than reported Continue reading “Dollar Broadly Firmer Ahead of Holiday Weekend”

From the Securities Lending Trading Desk – Week of April 15th

In the Americas, hydrogen fuel cell manufacturer, Ballard Power Systems, announces agreement with Norled A/S. In Asia-Pacific, the passing of the Chairman of Korea’s largest airline has threatened to disrupt his family’s control over the group company. In Europe, convertible bond activity has been a focus for securities lending demand this week.

Continue reading “From the Securities Lending Trading Desk – Week of April 15th”

Dollar Soft as China Data Stoke Animal Spirits

  • Risk sentiment has been boosted once again by firmer than expected China data overnight.
  • The dollar has been getting more traction, but trading remains choppy
  • We believe that any notions of Fed easing this year are way overdone
  • During the North American session, the US reports February trade and wholesale inventories
  • Canada reports March CPI and February trade data; UK reported March CPI data earlier
  • New Zealand reported weak Q1 CPI data
  • Singapore March trade data underscores ongoing weakness in the economy; South Africa reports February retail sales Continue reading “Dollar Soft as China Data Stoke Animal Spirits”

EM FX Model For Q2 2019

  • The broad-based dollar rally stalled out in Q1 following the more dovish market take on the Fed
  • However, the dollar has been getting some more traction of late as US rates rise
  • Developments elsewhere are also dollar-supportive
  • We believe markets are vastly overestimating the Fed’s capacity to ease in 2019
  • Our 1-rated (strongest fundamentals) grouping for Q2 2019 consists of CNY, TWD, THB, KRW, and RUB
  • Our 5-rated (weakest fundamentals) grouping for Q2 2019 consists of ARS, ZAR, TRY, RON, and PKR

Continue reading “EM FX Model For Q2 2019”

Dollar Firms on Potential Turnaround Tuesday

  • There has been a lot of chatter and press lately about abnormally low volatility across most financial markets
  • Yet past experience tells us that this cannot last
  • Dovish ECB comments are hitting the euro
  • During the North American session, the US reports March IP and Canada reports February manufacturing sales
  • UK reported labor market data earlier today; RBA minutes were released overnight
  • Turkey February IP contracted -5.1% y/y; Argentina reports March CPI Continue reading “Dollar Firms on Potential Turnaround Tuesday”

Indonesia Outlook Remains Solid After Elections This Week

Indonesia goes to the polls Wednesday. President Joko Widodo is widely expected to win a second term. Political continuity and solid economic fundamentals should help Indonesian assets outperform this year. Continue reading “Indonesia Outlook Remains Solid After Elections This Week”