From the Securities Lending Trading Desk – Week of April 22nd

In the Americas, directional demand persists for cannabis producer, HEXO Corp.(HEXO). In Asia Pacific, Australian vitamin maker Blackmores Ltd announced a slump in third-quarter profits last week as it saw its sales in China decline once again. In Europe, lending demand for Mediaset strengthens as the TV company announced an appetite for M&A.

Continue reading “From the Securities Lending Trading Desk – Week of April 22nd”

Dollar Firm as Divergence Theme Builds

  • Many seemed puzzled as to why dollar was so bid yesterday
  • Strong US data and worries about a weak eurozone were in play last week and that too has carried over
  • With no real Brexit news to speak of, sterling continues its downward drift
  • CAD is soft ahead of the BOC decision
  • Australia reported very soft Q1 CPI data
  • EM FX remains under pressure; Mexico mid-April CPI is expected to rise 4.22% y/y Continue reading “Dollar Firm as Divergence Theme Builds”

Dovish Hold by BOJ Thursday Should Weaken the Yen

The Bank of Japan meets this Thursday. No change in policy is expected, but it will likely present new forecasts that extend its forward guidance. Such a dovish hold should help weaken the yen. The BOJ meeting comes ahead of the six-day “Super Golden Week” holiday that stretches out over two weeks from April 29-May 6.       Continue reading “Dovish Hold by BOJ Thursday Should Weaken the Yen”

More Trouble Ahead for TRY as Central Bank Meets Thursday

Turkey’s central bank meets Thursday and is expected to keep rates steady. There is a slight chance of a hawkish surprise, but not enough to turn the tide of deteriorating fundamentals. Confidence in policymaking remains low even as the economy is in recession, and so we expect Turkish assets to continue underperforming. Continue reading “More Trouble Ahead for TRY as Central Bank Meets Thursday”

Dollar Firm as Europe Returns from Holiday

  • The dollar is firmer on the first full day of trading since last Thursday
  • US rates are moving higher and that should help underpin the dollar
  • As expected, the US announced an end to waivers for buying Iranian oil
  • Another factor behind rising US yields is the improved US outlook
  • President Trump announced that Herman Cain had withdrawn his nomination to the Fed
  • UK Parliament returns from recess today; Japan reported March department store and supermarket sales
  • Surging oil prices will have a mixed impact for EM; Singapore March CPI rose 0.6% y/y Continue reading “Dollar Firm as Europe Returns from Holiday”

LKR to Suffer from Poor Fundamentals and Rising Political Risks

Sri Lanka was rocked by suicide bombings on Easter Sunday, shattering an uneasy calm. Political risk will likely morph into economic risk as tourism is likely to collapse, pressuring an economy that was already deteriorating. We see a period of protracted rupee weakness ahead. Continue reading “LKR to Suffer from Poor Fundamentals and Rising Political Risks”

Drivers for the Week Ahead

  • The dollar rally is back on track as the divergence theme re-emerges
  • The US data highlight this week will be advance Q1 GDP Friday
  • The US is expected to announce an end to waivers for buying Iranian oil today
  • It’s a very quiet week in terms of eurozone and UK data
  • UK Parliament returns from recess Tuesday; press reports suggest May has been given an ultimatum
  • Bank of Canada meets Wednesday; Bank of Japan meets Thursday; Riksbank meets Thursday
  • In EM, the central banks of Indonesia, Turkey, Russia, and Colombia meet Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

The dollar rally is back on track as the divergence theme re-emerges. DXY traded last week at its highest level since April 2 and is on track to test that day’s cycle high near 97.71. For EM, that has translated into broad-based losses this past week. ARS, RUB, and a handful of other were able to notch small gains last week, but most EM currencies were down against the greenback. COP, BRL, ZAR, and TRY were the worst performers and we see further EM losses ahead. Continue reading “EM Preview for the Week Ahead”

Dollar Narrowly Mixed in Thin Holiday Trading