EM Preview for the Week Ahead

Risk assets came under pressure last week as the virus news stream worsened. It’s clear that large parts of the US will be forced to delay reopening until their virus numbers improve. Markets had gotten too bullish on the US recovery story and so this reality check soured sentiment. This is a very important week for US data, and we think risk sentiment will remain under pressure ahead of what we think will be a likely downside surprise in the US jobs number Thursday. Continue reading “EM Preview for the Week Ahead”

Dollar Steady as US Virus Numbers Worsen

  • The continued rise in infection rates amongst many states in the US led to yet another record number of registered cases; the dollar continues to benefit from risk-off sentiment
  • The Fed ordered the largest US banks not to increase dividends or resume stock buybacks through at least Q3; yesterday’s jobless claims data are worth a mention
  • A major indexing event could add to US equity market volatility; Mexico cut the overnight rate by 50 bp to 5.0% yesterday
  • ECB reported M3 data for May; Turkey kept rates on hold yesterday at 8.25%; Japan reported June Tokyo CPI

Continue reading “Dollar Steady as US Virus Numbers Worsen”

Recent Trade Developments Suggest Some Caution Ahead Warranted

There’s never a good time for a trade war. Yet here we are on the cusp of one between the US and the EU over unfair aircraft subsidies and comes at a time when renewed COVID-19 outbreaks are making the global economic outlook even cloudier. These developments suggest some caution ahead is warranted for risk assets like EM and equities. Continue reading “Recent Trade Developments Suggest Some Caution Ahead Warranted”

CSDR FAQ – Securities Lending

The implementation of the Settlement Discipline Regime of CSDR is scheduled for February 2021. Globally, firms continue to progress toward operational readiness. We are committed to helping our clients successfully prepare. Here, we provide responses to questions specifically related to Securities Lending that our clients and industry participants are asking. Please also visit our CSDR Guide
Continue reading “CSDR FAQ – Securities Lending”

Dollar Firm as Risk-Off Sentiment Persists

  • Higher infection numbers in the US and other countries continue to fuel risk aversion across global markets; the IMF released more pessimistic global growth forecasts yesterday
  • The US has rekindled trade provocations against China through Huawei; weekly jobless claims will be reported; regional Fed manufacturing surveys for June will continue to roll out
  • Fitch cut Canada’s rating by a notch to AA+ with stable outlook; Mexico is expected to cut rates 50 bp to 5.0%; Brazil central bank releases its quarterly inflation report
  • The ECB announced a new euro liquidity facility for central banks outside the euro area; its account of the June meeting will be released
  • Turkey is expected to cut rates 25 bp to 8.0%; Philippine central bank unexpectedly cut rates 50 bp to 2.25%

Continue reading “Dollar Firm as Risk-Off Sentiment Persists”

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 Firm as Risk-Off Sentiment Returns

  • Risk-off sentiment has picked up from reports that the US will impose new tariffs against the EU; there’s also been a messy set of headlines regarding the virus contagion outlook in the US
  • The IMF will release updated global growth forecasts today; the dollar is benefiting from risk-off sentiment; another round of fiscal stimulus in the US is in the works
  • Brazil announced a slew of new easing measures to improve liquidity conditions in local credit markets; Mexico reports mid-June CPI
  • Germany’s June IFO survey came in on the stronger side of forecasts; Austria issued the second 100-year bond in its history and it was very well received
  • Czech Republic is expected to keep rates steady at 0.25%; Hungary surprised with a 15 bp cut yesterday
  • The BOJ’s initial emergency response to the pandemic appears to be over; RBNZ delivered a dovish hold; Thailand kept rates steady at 0.5%, as expected

Continue reading “Dollar Firm as Risk-Off Sentiment Returns”

Dollar Remains Under Pressure as Markets Celebrate Strong June PMIs

  • Global equities took a sharp but short-lived hit from what appears to have been a misinterpretation of US trade advisor Navarro’s comments about China; the dollar remains under pressure
  • The regional Fed manufacturing surveys for June continue to roll out; Brazil central bank releases its minutes
  • Eurozone and UK flash PMI readings for June were better than expected; Hungary is expected to keep policy steady
  • Japan and Australia June PMI readings improved

Continue reading “Dollar Remains Under Pressure as Markets Celebrate Strong June PMIs”

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”