Some Thoughts on Current FX Positioning

Every now and then, we find it helpful to take a look at the CFTC Commitment of Traders report. Here, we focus on non-commercial positions up to the week ended June 16. While this data represents a small slice of the speculative community, it does provide a window into market positioning. Continue reading “Some Thoughts on Current FX Positioning”

Dollar Begins the Week Under Pressure

  • Concerns of a second wave of infections weighed on markets during the Asian sessions but seem to have faded as Europe opened
  • In the US, the virus news stream remains mixed; there are only minor US data out today
  • BOE Governor Andrew Bailey is apparently thinking about thinking about hiking rates; the UK government is reportedly discussion another round of counter-cyclical stimulus
  • RBA Governor Lowe said he was not concerned with recent AUD strength; Korea reported trade data for the first 20 days of June Continue reading “Dollar Begins the Week Under Pressure”

Drivers for the Week Ahead

  • There are some indexing events this week that could add to market volatility; the IMF will release updated global growth forecasts Wednesday
  • The regional Fed manufacturing surveys for June will continue to roll out; Fed speaking engagements are somewhat limited this week
  • Eurozone reports preliminary June PMI readings Tuesday; ECB releases its account of the June meeting Thursday
  • All quiet on the Brexit front; UK reports preliminary June PMI readings Tuesday
  • Japan reports preliminary June PMI readings Tuesday; the Antipodeans have a fairly quiet week; RBNZ meets Wednesday

Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM and most risk assets came under pressure last week as rising virus numbers and weak economic data outweighed the favorable liquidity backdrop. This week brings preliminary PMI readings for much of the world, with further improvement from May expected. Some countries and states will continue to ease lockdowns this week, while Beijing struggles to contain an outbreak. The liquidity backdrop remains support for risk assets, but the tug of war between improved economic data and worsening virus numbers is likely to continue for the time being. Continue reading “EM Preview for the Week Ahead”

SNB Preview

The Swiss National Bank meets Thursday. It is widely expected to maintain its current policy stances but is likely to push back against CHF strength. Here, we highlight here the potential choices that lie ahead for the SNB.

Continue reading “SNB Preview”

BOE Preview

The Bank of England meets Thursday. It is widely expected to increase its asset purchases by GBP100 bln. The bank is navigating tricky waters between the pandemic impact and Brexit negotiation, but all arrows still point to more easing with risks of a dovish surprise. Below is a list of what we see as the potential actions it can take.

Continue reading “BOE Preview”

Drivers for the Week Ahead

  • The dollar has benefited from risk-off conditions; the liquidity story should remain positive for risk assets this week, with several major central banks likely to emphasize their dovish stances
  • Markets are still digesting the FOMC decision; with the media embargo over, this will be a very heavy week of Fed speaker
  • May retail sales Tuesday will be the US data highlight for the week; Canada has a busy data week
  • ECB will hold a TLTRO operation Thursday; BOE meets Thursday and is expected to increase its asset purchases by GBP100 bln; UK has a busy data week
  • Norges Bank and SNB also meet Thursday and are expected to keep policy unchanged
  • BOJ meets Tuesday and is expected to keep policy unchanged; Australia has a fairly busy week

Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM and other risk assets stabilized to end the week after Thursday’s selloff, but remain vulnerable. The risks ahead are the same as before, which include a second wave of infections as well as a longer and shallower than expected recovery in global growth. The Fed’s message of low rates as far as the eye can see was balanced by Powell’s grim outlook for unemployment. The liquidity story should remain positive for EM, with the BOE expected to increase its QE this week, but that may not be enough to sustain continued gains in risk assets. Continue reading “EM Preview for the Week Ahead”

This Is What It Sounds Like When Doves Cry

As we expected, the Fed was about as dovish as it could be without delivering any new policy initiatives. The clear signal is that policy will remain accommodative as far as the eye can see, and that’s negative for the dollar.

Continue reading “This Is What It Sounds Like When Doves Cry”