Dollar Stabilizes Ahead of US Jobs Data

  • Markets are back to risk-on mode as US-China tensions appear to be on hold; the dollar is getting some modest traction
  • May US jobs data will be the main event; Canada also reports May jobs data
  • The euro and European credit spreads have reacted positively to the ECB decision; the latest round of high-level Brexit talks is set to end with little progress
  • Russia reports May CPI; oil continues to recover
  • Japan reported April household spending; Philippines reported May CPI

Continue reading “Dollar Stabilizes Ahead of US Jobs Data”

Dollar Firm as Risk-On Sentiment Ebbs Ahead of ECB Decision

  • Risk sentiment is taking a breather today after a strong run; the dollar is getting some modest traction
  • Fed tweaked its municipal bond program; weekly jobless claims are expected to rise 1.843 mln; Brazil and Mexico are seeing record high daily death counts
  • ECB is expected to ease today; Germany agreed on a new fiscal package that exceeded expectations
  • BOE warned that UK banks should plan for a possible hard Brexit; Swiss deflation is deepening
  • Australia reported weak April trade and retail sales data; Thailand reported May CPI

Continue reading “Dollar Firm as Risk-On Sentiment Ebbs Ahead of ECB Decision”

ECB Preview

The ECB meets this Thursday and is widely expected to add more stimulus. New staff projections will be released and are likely to emphasize the deteriorating outlook. If the Fed’s open-ended QE is seen as dollar-negative, then increased ECB asset purchases should be euro-negative, as well. That said, the expected increase has been well telegraphed, so near-term pricing should already reflect this. Continue reading “ECB Preview”

Dollar Soft as Risk-On Sentiment Persists

  • The dollar remains under pressure; amongst a heavy US data load, highlight will be ADP private sector jobs data; BOC is expected to keep policy steady
  • UK pushed back against reports suggesting a compromise on some key Brexit issues; Germany’s latest domestic stimulus plan failed to pass the first negotiating hurdle
  • ECB released details of its PEPP operations for the first time; Turkey reported higher than expected May CPI and clamped down on FX-based hedge funds
  • Australia Q1 GDP contracted -0.3% q/q vs. -0.4% expected; Indonesia continues to be one of the success stories for EM Continue reading “Dollar Soft as Risk-On Sentiment Persists”

Dollar Broadly Weaker After Reports of Possible Brexit Compromise

  • The dollar remains under pressure; there is a debate as to the root causes of recent dollar weakness
  • May auto sales will be the only US data release today; protests in the US are further denting Trump’s re-elections prospects, at least according to betting odds
  • The G7 meeting planned at Camp David this month was postponed after German Chancellor Merkel declined his invitation
  • Press reports suggest a possible compromise in the UK-EU trade negotiations; oil futures are rising on prospects of an extension of the OPEC+ output curbs
  • RBA kept policy steady, as expected; Moody’s downgraded India by a notch to Baa3 and maintained a negative outlook

Continue reading “Dollar Broadly Weaker After Reports of Possible Brexit Compromise”

Dollar Stabilizes as China Delivers a Warning

  • US-China tensions remain high after China responded by reportedly pausing agricultural imports from the US; the dollar has recovered from earlier losses as a result
  • ISM May manufacturing PMI will be the data highlight today
  • Brexit negotiations seem to be heading down the usual brinkmanship path; eurozone reported final manufacturing PMIs; Turkey is leaning on state banks for the next stage of the stimulus program
  • China’s Caixin manufacturing PMI surprised to the upside at 50.7; Korea reported weak May trade data; Hong Kong reported weak April retail sales data

Continue reading “Dollar Stabilizes as China Delivers a Warning”

Drivers for the Week Ahead

  • The dollar remains under pressure; widespread social unrest will have significant social, political, and economic costs here in the US
  • The US has a very heavy data week containing several major reports; May US jobs data Friday will be the main event
  • BOC meets Wednesday and is expected to keep policy steady; Canada also reports May Jobs Friday
  • ECB meets Thursday and is expected to ease; next round of Brexit negotiations will be held this week by video; final May UK and eurozone PMI readings will be reported
  • Japan has a light data week; RBA meets Tuesday and is expected to keep policy steady Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM FX had a solid week, helped by overall weakness in the dollar.  Trump’s threats against China turned out to be much ado about nothing and so risk assets ended the week on a strong note.  This week, markets will be looking for some sort of response from China but quite honestly, Trump did so little that we may not see anything beyond some snarky Tweets from the Global Times.  For now, the dollar is likely to remain under modest pressure ahead of the ECB meeting Thursday. Continue reading “EM Preview for the Week Ahead”