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”

Dollar Soft, Equities Down Despite Passage of Senate Stimulus Bill

  • Spain is quickly becoming the next epicenter of the Covid-19 crisis; the dollar remains under pressure
  • The US senate approved the $2 bln stimulus plan by a 96-0 vote just before midnight last night; US jobless claims data will be the main focus today
  • The ECB has removed issuer limits on its most recent emergency EUR750 bln bond purchase program; reports suggest ECB officials are broadly in favor of activating OMT
  • UK reported weak February retail sales; BOE meeting is likely a non-event
  • Czech National Bank is expected to cut rates 50 bp to 1.25%; Singapore announced more stimulus as Q1 GDP disappoints; BOK started bond purchases; India announced stimulus measures Continue reading “Dollar Soft, Equities Down Despite Passage of Senate Stimulus Bill”

Market Sentiment Boosted by Senate Deal on Stimulus Bill

  • A deal was struck on the US stimulus plan, giving risk appetite another boost.
  • Markets continue to digest the Fed’s recent moves to open up the floodgates
  • Canada saw nearly 1 mln jobless claims filed last week, nearly double Prime Minister Trudeau’s estimate last week of 500k; this suggests huge upside risks to US claims data
  • Sterling received an extra boost from a report suggesting that hospitalization rates in the UK could be far lower than other countries
  • SARB will begin a bond purchase program; nationwide lockdown was announced in India yesterday; Thailand unexpectedly kept rates steady Continue reading “Market Sentiment Boosted by Senate Deal on Stimulus Bill”

Dollar Soft as Market Sentiment Buoyed by the Fed, Italy, and the Senate

  • There has been some positive news on the medical front; markets continue to digest the Fed’s bazooka moment; we are seeing some knee-jerk selling of the dollar
  • Reports suggest compromise on the Senate-led aid bill is near; Markit reports March US PMIs
  • Eurozone and UK flash PMIs were reported; UK Prime Minister Boris Johnson has finally succumbed to the internal and external pressure to impose a strict lockdown
  • National Bank of Hungary is expected to keep rates steady
  • Japan reported flash PMIs; New Zealand continues to lead global efforts to mitigate the economic impact of the virus spread
  • Korea announced a massive stimulus package; Philippine central bank cut reserve requirements Continue reading “Dollar Soft as Market Sentiment Buoyed by the Fed, Italy, and the Senate”

Dollar Firm as Senate Stimulus Bill Stalls

  • Sovereign debt yields continue to moderate while funding markets continue to stabilize
  • Underlying risks remain elevated and we expect the dollar to continue strengthening this week
  • The Senate-led aid bill has stalled; Chicago Fed National Activity Index for February will be reported
  • Germany could borrow as much as €350 bln; Bank of France Governor Villeroy said he is in favor of activating OMT
  • SNB appears to have intensified its FX intervention; RBNZ initiated its first bond purchase program; MAS will bring forward its policy meeting to March 30 Continue reading “Dollar Firm as Senate Stimulus Bill Stalls”

Dollar Soft as Market Sentiment Improves Ahead of the Weekend

  • Market sentiment has improved ahead of the weekend; the situation in funding markets continues to improve
  • The dollar is giving up some its recent gains; Fed announced temporary dollar swap lines with nine additional central banks
  • The surging dollar has led to some market chatter about possible coordinated FX intervention
  • The jump in initial jobless claims to 281k yesterday was big, but we have a long way to go still
  • Denmark hiked rates while Norway cut rates
  • Oil prices have jumped after President Trump suggested he would work to broker a compromise in the Saudi-Russia oil war
  • PBOC left its benchmark Loan Prime Rate (LPR) unchanged today, contrary to expectations for a cut Continue reading “Dollar Soft as Market Sentiment Improves Ahead of the Weekend”

Dollar Firm, Markets Unsettled Despite Aggressive Policy Responses Worldwide

  • Markets remain unsettled even as policymakers worldwide continue to take aggressive emergency measures; the dollar continues to power higher
  • Fed rolled out another crisis-era program last night; US Senate passed the House virus relief bill by a 90-8 vote
  • ECB held an emergency call last night and announced an additional bond purchase program to the tune of €750 bln that now includes commercial paper
  • SNB kept rates steady at -0.75% as expected; BOJ continues to flood the market with liquidity
  • RBA delivered another emergency 25 bp cut and started Yield Curve Control; there was another wave of rate cuts by EM Asian central banks Continue reading “Dollar Firm, Markets Unsettled Despite Aggressive Policy Responses Worldwide”

Dollar Powers Ahead as Equity Markets Sink Again

  • The dollar’s recovery has been nothing short of spectacular
  • The massive fiscal spending planned is starting to have an impact on the back end of sovereign yield curves
  • The White House and Fed are taking aggressive measures; Brazil COPOM is expected to cut rates 50 bp to 3.75%
  • Peripheral bonds are underperforming massively; the UK government and the BOE came out with a huge and coordinated rescue package
  • Japanese banks took up $32 bln from the Fed’s first swap operation; cross currency basis swaps have already started to normalize Continue reading “Dollar Powers Ahead as Equity Markets Sink Again”

Dollar Firm as Markets Consolidate After Yesterday’s Carnage

  • The dollar continues to climb; the US data highlight will be February retail sales
  • The pain in the US high yield sector continues, but it’s still very concentrated on the energy sector
  • ZEW reported very weak Germany and eurozone sentiment measures; UK reported solid labor market data
  • BOJ bought a record JPY121.6 bln of ETFs today; RBA minutes were released; New Zealand announced a fiscal package equal to 4% of GDP Continue reading “Dollar Firm as Markets Consolidate After Yesterday’s Carnage”