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”

Recent Euro Moves Far From Brutal

Many at the ECB continue to jawbone the euro. While this may help slow the single currency’s gains, we believe it will have limited lasting impact as the fundamentals favor a stronger euro over the near-term. Furthermore, we do not think that the scale of those gains warrant a panicked response from policymakers just yet. Continue reading “Recent Euro Moves Far From Brutal”

Dollar Weakness Resumes as Eventful Week Begins

  • Downward pressure on the dollar has resumed this week
  • There are no US data releases or Fed speakers today; the US House returns to Washington
  • The controversial UK Internal Markets Bill is back in Parliament for further debate; the ECB debate over the strong euro is by no means settled
  • Israel re-imposed a national lockdown due to rising infection and death numbers; Moody’s downgraded Turkey a notch to B2 and kept a negative outlook
  • Chief Cabinet Secretary Yoshihide Suga won the LDP’s leadership election; Philippine central bank agreed to increase lending to the government; India reports August CPI Continue reading “Dollar Weakness Resumes as Eventful Week Begins”

Drivers for the Week Ahead

  • Downward pressure on the dollar is likely to resume this week; FOMC meeting Wednesday will be very important
  • US data highlight will be August retail sales Wednesday; Fed manufacturing surveys for September will start to roll out; Canada has a busy week
  • UK has a busy week; BOE meets Thursday and is expected to deliver a dovish hold; UK-EU tensions are through the roof
  • Japan has an eventful week; BOJ meets Thursday and is expected to remain on hold; RBA minutes will be released Tuesday Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM currencies were mixed last week as the dollar got some traction against the major currencies. We think the dollar is likely to come under broad-based pressure this week as the FOMC is likely to re-emphasize its ultra-dovish stance established at Jackson Hole. EM FX should benefit but divergences should continue. US data is also likely to continue sequentially weakening. Continue reading “EM Preview for the Week Ahead”

Dollar Weakens Post-ECB

  • Downward pressure on the dollar has resumed; stimulus talks are going nowhere fast
  • Weekly jobless claims yesterday were worrisome; US 30-year auction went slightly better than the 10-year did
  • Main US data report today is August CPI; August budget statement today will be of interest
  • ECB delivered no surprises yesterday; the strong euro is not yet a concern. Or is it?
  • EU-UK tensions remain high; UK economy staged a solid bounce in July, but we see tougher times ahead
  • There are mixed signals about a consumption tax hike in Japan; Japan and the UK have agreed in principle to a free trade agreement; China’s credit figures for August indicate that the recovery is likely to continue at a strong pace Continue reading “Dollar Weakens Post-ECB”

Dollar Bounce Ends Ahead of ECB Decision

  • The dollar rally ran out of steam; US Senate will hold a vote today on its proposed “skinny” bill
  • US reports August PPI and weekly jobless claims; US will sell $23 bln of 30-year bonds today after a sloppy 10-year auction yesterday
  • BOC delivered a hawkish hold yesterday; Peru is expected to keep rates steady at 0.25%
  • ECB is expected to keep policy steady; there were some eurozone IP readings; UK published its so-called Internal Market Bill
  • Japan may go to the polls this fall; Indonesia announced an unexpected return to lockdown for Jakarta; Malaysia kept rates steady at 1.75%, as expected Continue reading “Dollar Bounce Ends Ahead of ECB Decision”