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”
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”
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.
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.
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”
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”