Medium-Term Trade Ideas

With market sentiment improving, equities and other risk assets are rallying sharply.  While we are not sure that we are out of the woods yet, we thought it would be helpful to identify which currencies are likely to outperform on the other side of the crisis.  The timing is of course anyone’s guess at this point, but we are confident that our currency picks below will eventually pay off. Continue reading “Medium-Term Trade Ideas”

Dollar Soft as Risk-On Sentiment Intensifies

  • High-frequency data on coronavirus infections and death rates continue to stabilize; the rebound in equity markets continues
  • Democrats are reportedly planning another round of stimulus; the Fed introduced a new program to help keep credit flowing to small businesses
  • Reports suggest the IMF is preparing a new program to help ease the global dollar shortage
  • Eurozone finance minister will hold a conference call today; UK Prime Minister Johnson remains in intensive care
  • State of emergency declared in seven Japan prefectures; Abe’s stimulus package proposal came in at JPY108.2 trln
  • RBA kept policy unchanged but hinted it may taper its QE and OMOs; MAS eased capital requirements in an effort to boost lending Continue reading “Dollar Soft as Risk-On Sentiment Intensifies”

Dollar Mixed, Equities Higher as Virus News Stream Improves

  • It was a relatively good weekend in virus-related news; measures of implied volatility continue to trend lower
  • The dollar is trying to build on its recent gains; investors continue to try and gauge just how bad the US economy will get hit
  • The outlook for oil prices remains highly uncertain and volatile
  • Germany signaled that its stance regarding aid to the weaker eurozone countries remains unchanged; the news stream for the UK has turned negative
  • Prime Minister Abe nearly doubled the size of the next stimulus package to JPY108 trln ($988 bln); Hong Kong Financial Secretary Paul Chan offered a sobering take on the local economy Continue reading “Dollar Mixed, Equities Higher as Virus News Stream Improves”

Dollar and Oil Continue to Climb

  • Confirmed Covid-19 cases reached the one million case milestone worldwide; the dollar continues to recover
  • The US data highlight will be March jobs data; here are some more thoughts about that latest shocking initial jobless claims print
  • Weak final eurozone services PMI readings were reported; incredibly, Italy’s services and composite  readings plunged to 17.4 and 20.2
  • Final UK services and composite PMIs fell too but not as dramatically
  • Turkish March inflation declined, opening the door for further easing; oil prices have been on a wild ride over the last two sessions on speculation of supply cuts by major players
  • Australia February retail sales rose 0.5% m/m; Caixin’s China services and composite PMIs bounced back in March Continue reading “Dollar and Oil Continue to Climb”

Dollar Mixed as Markets Consolidate

  • The situation in Italy and Spain continues to plateau in terms of deaths and new cases, but the focus remains on the US
  • Weekly jobless claims will be the data highlight today; Florida finally went on lockdown
  • Canadian government officials now put the total cost of its fiscal package to combat the virus impact at around CAD250 bln ($176 bln)
  • The EU has broken into two camps with regards to their visions for a virus rescue plan
  • Oil futures shot up today on a few different headlines
  • The Reserve Bank of New Zealand ordered banks to stop paying dividends to their parent companies Continue reading “Dollar Mixed as Markets Consolidate”

Dollar Bid as Market Sentiment Worsens

  • The virus news stream out of Europe has improved a bit
  • The US is already taking about the next relief bill; the Fed continues to roll out measures to address dollar funding issues
  • ADP and ISM manufacturing PMI are the US data highlights
  • Regulators across Europe are asking banks to stop paying dividends; eurozone and UK reported final manufacturing PMIs
  • Japan Q1 Tankan report was released; BOJ tweaked its bond buying program for April
  • RBA minutes were released; Korea reported weak March trade data Continue reading “Dollar Bid as Market Sentiment Worsens”

Dollar Builds on Recent Gains

  • The news on the virus front is decidedly mixed
  • DXY remains resilient and has retraced about a third of last week’s plunge; US manufacturing data today are expected to show continued weakness
  • Mexico announced yesterday that it will start using the dollar swap lines with the Fed; Chile is expected to cut rates 50 bp to 0.50%
  • Japan’s government proposed a stimulus package worth JPY60 trln ($554 bln); China reported strong official March PMI readings Continue reading “Dollar Builds on Recent Gains”

Dollar Starts the Week on Firm Footing

  • There has been some positive news on the virus front, especially from Italy
  • President Trump announced that social restrictions will likely have to be extended beyond Easter
  • This week, we will get more evidence of just how deep the damage to the US economy could be
  • Brazil reports central government budget data
  • Germany remains at risk; both South Africa and UK were downgraded Friday
  • Oil prices are making new lows to levels not seen in 17 years
  • China delivered another wave of monetary easing; MAS eased aggressively, as expected Continue reading “Dollar Starts the Week on Firm Footing”

Dollar Ends Bad Week on Firmer Footing

  • The number of confirmed cases in the US (85.6K) has overtaken that of China (81.3K)
  • S&P oversaw an absolute bloodbath in the ratings of the oil exporters late yesterday
  • Funding markets remain stressed, but they are improving in some areas; credit markets have followed the improvement in broad risk appetite over the last few sessions
  • There will be some minor US reports; Mexico reports February trade; Colombia is expected to cut rates 50 bp to 3.75%.  
  • Portugal is working on legislation for a moratorium on debt payments of up to six months
  • Japan passed the budget for FY2020 and reported Tokyo March CPI; RBI cut rates in an emergency move and suspended loan payments for companies and consumers Continue reading “Dollar Ends Bad Week on Firmer Footing”