Brazil COPOM Preview

Brazil COPOM meets Wednesday amidst a worsening domestic and global backdrop. Markets are screaming for rate cuts, but it seems too early now as the pension reform outlook remains uncertain. Continue reading “Brazil COPOM Preview”

Markets Quiet at the Start of an Eventful Week

  • Markets are starting off quietly in an incredibly eventful week
  • The US retail sales data are a game changer; the US yield curve is reflecting lower odds of recession
  • The Tory leadership race continues this week; BOE meets Thursday while UK data is weak
  • Singapore reported weak May trade data; much of South America was in the dark Sunday due to a massive power failure Continue reading “Markets Quiet at the Start of an Eventful Week”

Drivers for the Week Ahead

  • The FOMC begins a two-day meeting Tuesday with decision to be delivered Wednesday
  • The US retail sales data are a game changer
  • Bank of England meets Thursday; the Tory leadership race continues this week
  • Bank of Japan meets Thursday; eurozone June flash PMIs will be reported Friday
  • Norges Bank meets Thursday and is expected to hike rates 25 bp to 1.25%
  • Several EM central banks meet this week; Korea reports trade data for the first 20 days of June Friday Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

All eyes are on the Fed and we suspect it will stay true to its message of steady rates until the economic outlook worsens enough to warrant easing. In other words, the Fed is unlikely to be as dovish as the market hopes and so the dollar should benefit. Elsewhere, US-China trade tensions remain high and show no signs of letting up. The backdrop remains EM-negative. Continue reading “EM Preview for the Week Ahead”

What Has Changed in EM

  • China eased restrictions on how local governments can spend money
  • Trump threatened sanctions over the Nord Stream 2 project
  • Russia central bank started an easing cycle
  • Turkish central bank delivered a dovish hold
  • Argentina President Macri picked Peronist Senator Pichetto as his running mate
  • US tariffs on Mexico were called off Continue reading “What Has Changed in EM”

Dollar Broadly Firmer Ahead of US Retail Sales Data

  • The dollar has had a solid week, up against all the major currencies; US has a heavy slate of data today
  • China reported mixed May retail sales and IP data
  • White House advisor Larry Kudlow warned of consequences if Xi does not meet with Trump
  • New Zealand May manufacturing PMI sank to 50.2; Sweden May CPI unexpectedly accelerated
  • Russia central bank is expected to cut rates 25 bp to 7.5%; Colombia reports April retail sales and manufacturing production Continue reading “Dollar Broadly Firmer Ahead of US Retail Sales Data”

Trump Threatens Nord Stream Sanctions Ahead of Russian Central Bank Meeting

President Trump has threatened sanctions over the Nord Stream 2 project. Further details are awaited ahead of the Russian central bank decision tomorrow, where it is expected to start the easing cycle. Continue reading “Trump Threatens Nord Stream Sanctions Ahead of Russian Central Bank Meeting”

Dollar Mixed as Oil Rebounds on Tanker Attack

  • President Trump has now threatened sanctions over the Nord Stream 2 project
  • We got another downside miss for inflation yesterday
  • Oil prices rebounded today after two tankers were apparently attacked
  • Swiss National Bank kept policy unchanged, as expected; Australia reported May jobs data
  • Banco de Mexico said an easing cycle was unlikely under the ongoing threat of tariffs
  • Peru central bank is expected to keep rates steady at 2.75% Continue reading “Dollar Mixed as Oil Rebounds on Tanker Attack”

HKD Gains Despite Growing Unrest

Despite rising social unrest, the Hong Kong dollar traded today at its strongest level since December 18. While we see no threat to the peg, ongoing weakness in EM is likely to prevent HKD from strengthening too much more. Continue reading “HKD Gains Despite Growing Unrest”