EM Preview for the Week Ahead

EM FX remains vulnerable to ongoing global trade tensions. It may also suffer from the recalibration of market expectations regarding Fed policy. We remain negative on EM near-term until the outlook for both of these major drivers becomes clearer. Continue reading “EM Preview for the Week Ahead”

Dollar Mixed as US Yields Plunge Ahead of Holiday

  • US yields continue to drop despite the Fed’s dovish capitulation and the US-China trade truce
  • The fact that the dollar is holding up well in this environment suggests the move in US yields is not occurring in a vacuum
  • ADP today will round out the jobs picture, where a 140k gain is expected
  • Swedish Riksbank kept rates steady at -0.25%, as expected; BOJ tweaked its bond purchase program
  • Caixin reported weak June services and composite PMI readings; Poland is expected to keep rates steady at 1.5% Continue reading “Dollar Mixed as US Yields Plunge Ahead of Holiday”

Uridashi Issuance in H1 2019

So far this year, foreign currency Uridashi issuance has totaled $2.6 bln. The Q1 total was about $2.5 bln and so issuance basically came to a screeching halt in Q2. Annualized, this amounts to $5.2 bln and would be the lowest since the $2.2 bln issued in 2002. Continue reading “Uridashi Issuance in H1 2019”

Dollar Mixed as Post-G20 Euphoria Wanes

  • Markets are searching for direction and three of them warn of a reversal in risk sentiment for the worse
  • Just as US tensions with China seem to be easing, they are picking up with Europe
  • The euro is benefiting from reports that Italy is backing down from its budget confrontation with the EU
  • UK PMI readings for June continued today with a much weaker than expected construction PMI of 43.1
  • RBA cut rates 25 bp to 1.0%, as expected
  • Korea June CPI was steady at 0.7% y/y; USD/HKD traded at its lowest level since September Continue reading “Dollar Mixed as Post-G20 Euphoria Wanes”

Dollar Firm in Wake of G20 Summit

  • Market sentiment was given a shot in the arm by the G20 meeting
  • Reduced US recession risk supports our view that the market needs to adjust its Fed easing expectations
  • This process should help the dollar gain even more traction
  • Weak eurozone final June manufacturing PMI readings were reported; UK manufacturing PMI was 48.0
  • Oil prices jumped on reports of an extension of OPEC+ output cuts
  • EM so far has reported weak PMI readings for June Continue reading “Dollar Firm in Wake of G20 Summit”

Drivers for the Week Ahead

  • The G20 delivered as much good news for risk sentiment as one could want
  • There will be several major US data releases this week; Fed speaking engagements are surprisingly few this week
  • Eurozone final June manufacturing PMI will be reported Monday; BOJ released its Q2 Tankan report
  • RBA meets Tuesday and is expected to cut rates 25 bp to 1.0%; Swedish Riksbank meets Wednesday and is expected to keep rates at -0.25%
  • China reported weak PMI readings for June; Poland is the only EM central bank to meet and is expected to keep rates steady Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM and risk assets should get a near-term boost from the good news coming out of the G20 meeting. Still, we caution against getting too optimistic on EM. Current US tariffs on Chinese goods will remain in place, which will continue to act as a headwind on global growth and trade. Continue reading “EM Preview for the Week Ahead”

US Dollar Weighed Down by Dovish Fed Governors

Dollar Ends Eventful Quarter on a Soft Note

  • The dollar is closing out Q2 on a soft note; our upcoming FX Quarterly stresses that Q3 will be a waiting game
  • The G20 highlight is the Trump and Xi meeting Saturday morning at 1130 AM local time
  • During the North American session, the US has a busy data schedule
  • Eurozone reported preliminary June CPI steady at 1.2% y/y; Sweden reported weak May retail sales
  • Japan reported a slew of data; BOJ tweaked its bond purchase plans for July
  • Banco de Mexico delivered a dovish hold yesterday; South Africa reports May trade and budget data Continue reading “Dollar Ends Eventful Quarter on a Soft Note”

Dollar Mixed As Markets Await Fresh Drivers

  • Markets continue to search for direction ahead of this weekend’s G20 meeting in Osaka
  • Trump has already given markets plenty to digest
  • US reports revised Q1 GDP, weekly jobless claims, May pending home sales, and June KC Fed manufacturing index
  • Germany reports preliminary June CPI; Japan reported May retail sales
  • Brazil central bank releases its quarterly inflation report; Banco de Mexico is expected to keep rates steady at 8.25% Continue reading “Dollar Mixed As Markets Await Fresh Drivers”