Dollar Remains Under Pressure as US Rates Fall, Portion of Curve Inverts

  • The dollar remains under pressure as the drop in US rates picks up steam
  • An inverted US yield curve has been the market bogey-man this year
  • This yield compression comes despite surging oil prices and firm US data
  • BOE Governor Carney defended the bank’s Brexit analysis that was released last week
  • Reserve Bank of Australia left rates steady, as expected
  • The EM manufacturing PMIs for November have so far been eye-opening

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Drivers for the Week Ahead

  • Markets are breathing a sigh of relief after the G20 meeting
  • Russia and Saudi Arabia agreed to extend their plan to support the oil market into 2019
  • The Trump-Xi dinner yielded a 90-day truce
  • The November US jobs report Friday will be the data highlight of the week
  • There is a full slate of Fed speakers this week before the pre-FOMC press embargo goes into effect next week
  • Ahead of the December 11 UK parliamentary vote on May’s Brexit plan, the bill will be debated
  • Reserve Bank of Australia meets Tuesday and Bank of Canada meets Wednesday

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Dollar Claws Back Losses Ahead of Weekend and G20

  • The dollar continues to claw back some of this week’s losses ahead of the weekend
  • Yesterday, FOMC minutes did not really reveal much new but markets of course focused on the dovish aspects
  • The G20 meeting gets under way today in Buenos Aires; the most important meeting will be that of Trump and Xi.
  • Eurozone reported preliminary November CPI; Italy signaled some willingness to tighten its budget
  • China reported weak official November PMI
  • Japan reported a fair amount of data; The BOJ tweaked its bond-buying program slightly
  • Bank of Korea hiked rates 25 bp to 1.75%, as expected; Poland November CPI rose 1.2% y/y; India reports Q3 GDP

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Dollar Stabilizes in the Wake of Powell Comments

  • The dollar has stabilized after the initial sell-off in the wake of Powell’s speech
  • Markets might be reassessing the knee-jerk reaction to Powell
  • Fed messaging could use some work; FOMC minutes will be released today
  • Oil prices have slid to new lows for this move today
  • Germany reports preliminary November CPI today, followed by the eurozone reading Friday
  • Banco de Mexico releases its monetary policy minutes

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Raising the Bar in Currency Administration

Increasingly, asset managers expect more of their Currency Administration service providers. In this new video, BBH’s Jay Moore, Global Head of Currency Administration, and Joe Conway, Global Head of Consultant Engagement, discuss current trends in the market, including new technologies that provide significantly more transparency and control over hedging programs.

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Markets Take Renewed Fed Criticism in Stride

  • The dollar is trying to build on its recent gains
  • President Trump’s criticism of Fed policy has resumed; Fed Chairman Powell speaks today
  • During the North American session, the highlight will be revised US Q3 GDP
  • Bank of England releases its Brexit analysis; May reportedly backed down on efforts to prevent parliament from amending the Brexit deal
  • Brazil reports November IGP-M wholesale inflation and October PPI

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Dollar Firm Ahead of Clarida and Powell

  • The dollar is gaining more traction as US rates markets are giving back some of the recent dovish drop
  • Fed Vice Chairman Clarida speaks today while Chairman Powell speaks Wednesday
  • UK Prime Minister May is in Northern Ireland as part of her campaign to get her Brexit deal passed
  • There are signs of some capitulation by Italy’s populist government
  • President Trump signaled that he will likely increase tariffs on $200 bln of Chinese goods from 10% to 25% come January 1
  • Brazil reports October current account and FDI; Mexico reports October trade

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Drivers for the Week Ahead

  • The dollar is caught between safe-haven flows and the shift in market Fed expectations
  • Clarida speaks Tuesday while Powell speaks Wednesday; FOMC minutes will be released Thursday
  • The EU signed off on May’s Brexit deal at the weekend summit in Brussels
  • It’s clear that the Q3 slowdown is more than just a temporary phenomenon in the eurozone
  • Italy signaled some willingness to tweak its budget
  • Oil prices are likely to continue falling
  • It’s a quiet week for EM in terms of central bank meetings and data

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Dollar Firms as US Returns from Holiday

  • The dollar has caught a bid as US markets return from holiday
  • The path to a Brexit deal has been anything but smooth
  • The EU will still hold a special summit this Sunday for leaders to approve the Brexit deal
  • Weaker than expected eurozone flash PMIs for November were reported
  • As we expected, SARB hiked rates 25 bp to 6.75% yesterday
  • Singapore October CPI rose 0.7% y/y vs. 0.8% expected; Brazil mid-November IPCA inflation is expected to rise 4.46% y/y

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