EM Preview for the Week Ahead

EM remains vulnerable to deteriorating risk sentiment as the coronavirus spreads.  China announced a series of measures over the weekend to help support its financial markets, but this may not be enough to turn sentiment around yet.  China markets reopen Monday after the extended Lunar New Year holiday and it won’t be pretty.  Continue reading “EM Preview for the Week Ahead”

Drivers for the Week Ahead

  • The spread of the coronavirus continues and is likely to weigh on risk assets and EM; the dollar continues to climb
  • The FOMC meeting Wednesday is the highlight of the week and yet it’s likely to be a non-event
  • Risk-off sentiment has derailed the US curve steepening trade
  • The Bank of England meets Thursday and no change is expected; Germany has a heavy data week
  • Japan has a heavy data week, with most reports coming on Friday; Australia reports Q4 CPI Wednesday Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

The spread of the coronavirus continues and is likely to weigh on risk assets and EM.  Most markets in Emerging Asia are closed for all or part of this week due to the Lunar New Year holiday.  China has extended the holiday until February 2 as it struggles to contain the virus.  The Asian region is just starting to recover from the global trade tensions, and now it must cope with what is likely to be a sharp drop-off in tourism.  Policymakers in the region may have to tilt more dovish this year if the economic impact becomes significant. Continue reading “EM Preview for the Week Ahead”

Norges Bank Preview

Norway is one of the few countries that have tightened monetary policy post-crisis. However, that tightening cycle appears to have ended and the Norges Bank is likely to keep rates steady when it meets this Thursday. Meanwhile, political uncertainty is increasing with the recent collapse of the government. Continue reading “Norges Bank Preview”

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”