Dollar Bounce May Be Running Out of Steam

  • The dollar bounce continues but may be running out of steam; what started as a risk-off move has morphed into something more; the House passed e a stopgap bill by a 359-57 vote
  • There are several Fed speakers today; Chicago Fed President Evans raised eyebrows yesterday by saying the Fed could hike rates before average inflation of 2% is reached
  • US Markit flash PMI readings for September will be reported; Canada Parliament reopens today with the Trudeau government presenting its new fiscal agenda
  • Eurozone and UK PMI readings came in weak; Czech Republic is expected to keep policy steady
  • Japan and Australia data came in weak; RBNZ delivered a dovish hold; Malaysian markets are being hit by rising political instability; Thailand kept rates steady at 0.50%, as expected Continue reading “Dollar Bounce May Be Running Out of Steam”

Dollar Remains Firm Ahead of Powell Testimony

  • The dollar remains firm on continued safe haven flows but we still view this situation as temporary
  • Fed Chair Powell appears before the House Financial Services Panel with Treasury Secretary Mnuchin; the text of Powell’s testimony was released already
  • House Democrats plan to vote on a stopgap bill today; Fed manufacturing surveys for September will continue to roll out; Brazil COPOM minutes will be released
  • UK CBI September industrial trends survey came in weak; BOE Governor Bailey reiterated the discussion on negative rates but confirmed that implementation is nowhere in sight; new restrictive measures are trickling out in the UK
  • Riksbank kept policy unchanged, as expected; Hungary is expected to keep rates steady at 0.60%; Deputy Governor Debelle said the RBA is still weighing options to further support the economy Continue reading “Dollar Remains Firm Ahead of Powell Testimony”

Scandie Central Bank Preview

The Riksbank and Norges Bank both meet this week. The two are on different trajectories that should be underscored by the meeting outcomes; while the Riksbank is widely expected to stay on hold, we see the risk of hawkish language from the Norges Bank. This in turn could lead to some NOK outperformance that sees the NOK/SEK cross recover some of its recent losses. Continue reading “Scandie Central Bank Preview”

Dollar Gains from Risk-Off Trading Unlikely to Persist

  • Markets are starting the week in risk-off mode; the dollar is firm on some safe haven flows but this is likely to prove temporary
  • US politics is coming in to focus as the election nears; we fear that the likely horse-trading and arm-twisting will take away any residual desire to get another stimulus package done
  • The trend towards more restrictive measures continues with London in focus; between the virus numbers and Brexit risks, sterling remains under pressure
  • China left its Loan Prime Rates (LPR) unchanged, as expected; trade data out of Korea and Taiwan came in firm Continue reading “Dollar Gains from Risk-Off Trading Unlikely to Persist”

Drivers for the Week Ahead

  • The dollar is likely to remain under pressure
  • With the media embargo lifted, quite a few Fed officials will speak this week; Fed manufacturing surveys for September will continue to roll out; Canada Parliament reopens Wednesday with the Trudeau government presenting its new fiscal agenda
  • EU summit begins Thursday; reports suggest the ECB has launched a review of its PEPP; eurozone and UK Markit flash PMI readings for September will be reported Wednesday
  • Riksbank meets Tuesday; Norges Bank and SNB meet Thursday
  • Japan and Australia flash PMI readings for September will be reported Wednesday; RBNZ meets Wednesday and is expected to keep rates steady at 0.25% Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM currencies are coming off a solid week. The dollar remains on its back foot after the Fed delivered a dovish hold and US economic data continue to soften. Broad-based dollar weakness is likely to continue this week, and EM currencies should once again take advantage of this. That said, we continue to see divergences. TRY and BRL are likely to continue underperforming, while the Asian currencies should continue to outperform due to strong fundamentals. Continue reading “EM Preview for the Week Ahead”

Dollar Comes Under Renewed Pressure

  • There will likely be more chatter about restrictive measures out of the UK and Europe; the dollar remains under pressure
  • It appears some blame is being pinned on the Fed for the equity sell-off; our take on the drop in stocks is a much more fundamental one
  • Despite some movement on fiscal stimulus, talks remain deadlocked; US data today are minor; Canada reports July wholesale trade and retail sales
  • BOE delivered a dovish hold yesterday; UK rates markets have reacted accordingly; UK reported August retail sales
  • Russia is expected to keep rates steady at 4.25%; Japan reported August national CPI Continue reading “Dollar Comes Under Renewed Pressure”

Risk Appetite Ebbs Ahead of BOE Decision

  • The dollar has gotten some limited traction despite the dovish FOMC decision; the FOMC delivered no surprises
  • We are seeing some more movement on fiscal stimulus; August retail sales disappointed yesterday
  • Fed manufacturing surveys for September will continue to roll out; weekly jobless claims will be reported; Brazil left rates unchanged at 2.0% but introduced some additional dovish guidance
  • BOE is expected to deliver a dovish hold; UK government reached a compromise with rebel Tory MPs by giving them a major concession; ECB gave regional lenders more regulatory relief
  • BOJ remained on hold but upgraded its economic assessment; Australia reported strong August jobs data; Indonesia kept rates on hold at 4.0%, as expected Continue reading “Risk Appetite Ebbs Ahead of BOE Decision”

Bank of England Preview

The Bank of England wraps up its meeting tomorrow. It is widely expected to remain on hold whilst likely setting the table for further easing by year-end. Below is a list of what the BOE may or may not do. Continue reading “Bank of England Preview”