Dollar Under Pressure After FOMC Decision

  • The Fed delivered a dovish hold; implied yields across the Fed Funds futures strip have fallen
  • Bank of England meets; two more rounds of voting by MPs will be held today
  • Norges Bank hiked rates 25 bp to 1.25%, as expected; Bank of Japan kept policy steady, as expected
  • Brazil, Indonesia, and Taiwan kept rates steady, as expected; Philippines central bank delivered a hawkish surprise Continue reading “Dollar Under Pressure After FOMC Decision”

FOMC Post-Mortem

The Fed delivered another dovish surprise. Whilst the Fed did not pre-commit to a rate cut in July, markets are certainly taking it that way. We are maintaining our broad macro calls for now but acknowledge that excessive Fed dovishness will surely keep testing us. Continue reading “FOMC Post-Mortem”

Dollar Mixed Ahead of FOMC Decision

  • Global equity markets like what Draghi had to say
  • Other good news came in the form of resumed dialogue between the US and China
  • The FOMC decision will be delivered this afternoon even as Trump continues to jawbone the Fed
  • If the Fed disappoints today as we expect by not being more dovish, the dollar should benefit
  • Canada reports May CPI; Boris Johnson continues to dominate the Tory leadership vote
  • Japan reported weak May trade data
  • US is weighing new sanctions on Turkey; Brazil COPOM is expected to keep rates steady at 6.5% Continue reading “Dollar Mixed Ahead of FOMC Decision”

Dollar Gets a Boost From Mr. Draghi

  • The dollar got a boost from Mr. Draghi, who is setting the table for his successor to be able to add more stimulus
  • During the North American session, the US reports May housing starts and building permits
  • The Tory leadership race continues with the second-round vote today
  • RBA released its minutes
  • Turkey reported April IP; India slapped retaliatory tariffs on US goods Continue reading “Dollar Gets a Boost From Mr. Draghi”

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”