Drivers for the Week Ahead

  • The dollar continues to climb; after last week’s huge US data dump, releases this week are fairly light; the US economy is still doing well
  • BOC meets Wednesday and is expected to keep rates steady at 1.75%
  • ECB meets Thursday and is expected to keep policy steady; UK reports jobs data Tuesday
  • Norges Bank meets Thursday and is expected to keep rates steady at 1.5%
  • BOJ meets Tuesday and is expected to keep policy steady; Australia reports December jobs data Thursday Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

Market sentiment on EM remains positive after the Phase One trade deal was signed.  Data out of China is also supportive for EM.  Key forward-looking data this week are Taiwan export orders and Korea trade data for the first 20 days of January.  The global liquidity story also remains beneficial for risk, with the ECB, Norges Bank, BOC, and BOJ all set to maintain steady rates this week. Continue reading “EM Preview for the Week Ahead”

Bank of Canada Preview

Bank of Canada meets next week. Data have been coming in soft, but it seems too soon to expect a rate cut. Markets are pricing in steady rates this year but may have to adjust expectations if the economy continues to weaken. Continue reading “Bank of Canada Preview”

UK Economy Continues to Suffer

The next Bank of England meeting is January 30 and it will be Governor Carney’s last. He has made some very dovish comments recently, and other MPC members have followed suit. The economy is slowing significantly and so markets should be bracing for a potential cut then. Continue reading “UK Economy Continues to Suffer”

Some Thoughts on the Latest Treasury FX Report

The US Treasury’s latest “Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States” report no longer considers China a currency manipulator. The underlying message is that the Trump administration will continue to use an ad hoc “carrot and stick” approach to improve US access to the domestic markets of its major trading partners. This suggests there will still be many minor trade skirmishes this year. Continue reading “Some Thoughts on the Latest Treasury FX Report”

Drivers for the Week Ahead

  • US-Iran tensions have eased.  Or have they?
  • Trade tensions are likely to remain on the back burner
  • This week sees a 1-2-3-4 punch of December US data with CPI Tuesday, PPI Wednesday, retail sales Thursday, and IP Friday
  • The Fed releases its Beige Book report for the upcoming January 29 FOMC meeting on Wednesday
  • The UK has a big data week; Japan has a fairly heavy data week Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM has been able to get some traction as markets basically shrugged off the risk-off sentiment after the Iran attacks.  This week’s planned signing of the Phase One trade deal should help boost EM further, but we remain cautious.  The Iran situation is by no means solved, and we see periodic bouts of risk-off sentiment coming from smaller skirmishes.  The World Bank also sounded a warning bell last week with its downward revisions to its global growth forecasts. Continue reading “EM Preview for the Week Ahead”

Some Thoughts (and Prayers) on the Australian Wildfires

The wildfires rage on in Australia. Here, we discuss the potential economic impact and the implications for fiscal and monetary policy. Ongoing uncertainty is likely to weigh on the Australian dollar for now, but there is scope for equities and bonds to outperform in 2020. It is very difficult to bring a dispassionate, analytical voice to such a tragedy, and our hearts go out to our friends and colleagues in Australia.

Continue reading “Some Thoughts (and Prayers) on the Australian Wildfires”

Drivers for the Week Ahead

  • Geopolitical concerns are roiling global markets
  • Recent price action in the dollar has been confounding, to put it mildly
  • The US has a busy data week, capped off with December jobs data Friday; the US economy is still doing better than anticipated in Q4
  • Canada has a busy data week; final eurozone and UK services and composite PMI readings will be seen Monday Continue reading “Drivers for the Week Ahead”