Dollar Gains from Risk-Off Trading Unlikely to Persist

  • Markets are starting the week in risk-off mode; the dollar is firm on some safe haven flows but this is likely to prove temporary
  • US politics is coming in to focus as the election nears; we fear that the likely horse-trading and arm-twisting will take away any residual desire to get another stimulus package done
  • The trend towards more restrictive measures continues with London in focus; between the virus numbers and Brexit risks, sterling remains under pressure
  • China left its Loan Prime Rates (LPR) unchanged, as expected; trade data out of Korea and Taiwan came in firm Continue reading “Dollar Gains from Risk-Off Trading Unlikely to Persist”

Drivers for the Week Ahead

  • The dollar is likely to remain under pressure
  • With the media embargo lifted, quite a few Fed officials will speak this week; Fed manufacturing surveys for September will continue to roll out; Canada Parliament reopens Wednesday with the Trudeau government presenting its new fiscal agenda
  • EU summit begins Thursday; reports suggest the ECB has launched a review of its PEPP; eurozone and UK Markit flash PMI readings for September will be reported Wednesday
  • Riksbank meets Tuesday; Norges Bank and SNB meet Thursday
  • Japan and Australia flash PMI readings for September will be reported Wednesday; RBNZ meets Wednesday and is expected to keep rates steady at 0.25% Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM currencies are coming off a solid week. The dollar remains on its back foot after the Fed delivered a dovish hold and US economic data continue to soften. Broad-based dollar weakness is likely to continue this week, and EM currencies should once again take advantage of this. That said, we continue to see divergences. TRY and BRL are likely to continue underperforming, while the Asian currencies should continue to outperform due to strong fundamentals. Continue reading “EM Preview for the Week Ahead”

Dollar Comes Under Renewed Pressure

  • There will likely be more chatter about restrictive measures out of the UK and Europe; the dollar remains under pressure
  • It appears some blame is being pinned on the Fed for the equity sell-off; our take on the drop in stocks is a much more fundamental one
  • Despite some movement on fiscal stimulus, talks remain deadlocked; US data today are minor; Canada reports July wholesale trade and retail sales
  • BOE delivered a dovish hold yesterday; UK rates markets have reacted accordingly; UK reported August retail sales
  • Russia is expected to keep rates steady at 4.25%; Japan reported August national CPI Continue reading “Dollar Comes Under Renewed Pressure”

Risk Appetite Ebbs Ahead of BOE Decision

  • The dollar has gotten some limited traction despite the dovish FOMC decision; the FOMC delivered no surprises
  • We are seeing some more movement on fiscal stimulus; August retail sales disappointed yesterday
  • Fed manufacturing surveys for September will continue to roll out; weekly jobless claims will be reported; Brazil left rates unchanged at 2.0% but introduced some additional dovish guidance
  • BOE is expected to deliver a dovish hold; UK government reached a compromise with rebel Tory MPs by giving them a major concession; ECB gave regional lenders more regulatory relief
  • BOJ remained on hold but upgraded its economic assessment; Australia reported strong August jobs data; Indonesia kept rates on hold at 4.0%, as expected Continue reading “Risk Appetite Ebbs Ahead of BOE Decision”

Bank of England Preview

The Bank of England wraps up its meeting tomorrow. It is widely expected to remain on hold whilst likely setting the table for further easing by year-end. Below is a list of what the BOE may or may not do. Continue reading “Bank of England Preview”

Dollar Remains Soft Ahead of FOMC Decision and US Retail Sales Data

  • The OECD updated its world economic forecasts; the dollar remains soft ahead of the FOMC decision
  • We expect the FOMC to deliver a dovish hold; the dollar tends to weaken on FOMC decision days
  • Ahead of the FOMC decision, we get August retail sales; we may be seeing some movement in potential fiscal stimulus; Judy Shelton lacks the votes right now to be confirmed
  • Canada reports August CPI; Brazil is expected to remain on hold; the rand continues to appreciate from a rare bit of positive political news
  • The UK government may roll out some additional fiscal support; UK reported August CPI; Japan reported August trade data Continue reading “Dollar Remains Soft Ahead of FOMC Decision and US Retail Sales Data”

FOMC Preview

The two-day FOMC meeting starts today and wraps up Wednesday afternoon. While no policy changes are expected, we highlight what the Fed may or may not do. We expect a dovish hold that should weigh on the dollar, with Powell underscoring the ultra-dovish message he sent at Jackson Hole. Continue reading “FOMC Preview”

Dollar Softness Continues Ahead of FOMC Meeting

  • The FOMC begins its two-day meeting today; Fed manufacturing surveys for September will start to roll out; Canada reports July manufacturing sales and August existing home sales
  • UK Internal Market Bill was approved in its second reading in Parliament yesterday, as expected; UK data today was a mixed bag
  • Israel reports August CPI; Poland is expected to remain on hold
  • Relatively upbeat RBA minutes showed little concern over the exchange rate; August data out of China continues to point towards a robust recovery Continue reading “Dollar Softness Continues Ahead of FOMC Meeting”