Dollar Firm as ECB Jawbones Ahead of FOMC Decision

  • The FOMC is widely expected to deliver a dovish hold this afternoon; Chile is expected to keep rates steady at 0.5%; Brazil central bank minutes came in on the hawkish side
  • The European Central Bank appears increasingly concerned about the exchange rate; ECB Chief Economist Lane speaks; German GfK consumer confidence for February came in weak
  • Australia reported Q4 CPI; China’s industrial profits data provides yet more evidence of the country’s relative outperformance; China affirmed its commitment to cut its steel production from last year’s record high 1 bln tons Continue reading “Dollar Firm as ECB Jawbones Ahead of FOMC Decision”

Dollar Trading Sideways as FOMC Meeting Begins

  • The FOMC begins its two-day meeting today with a decision out tomorrow afternoon; Senate Minority Leader McConnell has finally agreed to a power-sharing deal based on the 2001 model; President Biden signaled willingness to negotiate his stimulus proposal in order to get a bipartisan deal; Fed manufacturing surveys for January will continue to roll out; Brazil reports mid-January IPCA inflation
  • Italian Prime Minister Conte will reportedly resign today; Italian Treasury’s models suggest the budget deficit could blow out to -9.2% of GDP this year; UK reported labor market data; Hungary is expected to keep the base rate steady at 0.60%. 
  • BOJ minutes suggest it is looking for ways to strengthen the nation’s economic potential as part of its policy review; we are growing concerned that the policy review was not very well thought out; interbank rates in China spiked after a large overnight capital drain by the PBOC and a warning about asset price bubbles; Korea reported firm Q4 GDP data Continue reading “Dollar Trading Sideways as FOMC Meeting Begins”

Dollar Flat as Markets Await Fresh Drivers

  • Discussions on President Biden’s proposed $1.9 trln fiscal package are getting off to a rocky start; Fed manufacturing surveys for January will continue to roll out
  • ECB Governing Council member Olli Rehn viewed yield curve control for the region as “not sensible”; on the virus front, Norway tightened mobility restrictions, France looks set to impose another lockdown, and the UK considering closing borders; Germany IFO survey for January came in slightly lower than expected
  • Japan will sell JPY500 bln of 40-year JGBs tomorrow; polls suggest Suga’s government continues to lose support; the border dispute between India and China is flaring up again Continue reading “Dollar Flat as Markets Await Fresh Drivers”

Dollar Gets Some Traction on Negative Virus News Stream

  • Discussions on President Biden’s proposed $1.9 trln fiscal package will begin in earnest; weekly jobless claims data are worth discussing; today’s US data highlight is Markit preliminary January PMI readings; Mexico reports mid-January CPI
  • ECB kept policy unchanged but sounded a bit more upbeat; the euro is moving higher after Lagarde paid only the usual lip service to the exchange rate; eurozone preliminary January PMI readings were reported; UK data came in weaker than expected; UK officials are hinting that the lockdowns are likely to be kept in place for longer than expected
  • Japan reported weak data; Australia reported preliminary January PMI readings and December retail sales; Hong Kong authorities announced a lockdown in Kowloon; growing virus fears and uncertainty about the dollar is starting to weigh on commodity prices Continue reading “Dollar Gets Some Traction on Negative Virus News Stream”

Dollar Weakness Continues Ahead of ECB Decision

  • Joe Biden became the 46th President of the US; three Democratic Senators were also sworn in; weekly jobless claims data will be the highlight of an otherwise quiet week; Fed manufacturing surveys for January will continue to roll out; Brazil kept rates on hold at 2.0%, as expected
  • ECB is expected to keep policy unchanged; Norges Bank kept rates steady at 0%, as expected; Chancellor Sunak is reportedly drawing up plans to extend support for the UK labor market in the coming months; South Africa is expected to keep rates steady at 3.5%; Turkey central bank kept rates steady at 17%, as expected
  • BOJ kept policy unchanged, as expected; Australia reported solid December jobs data; Korea is posting strong export figures at the start of the year; Indonesia kept the 7-day target rate steady at 3.75%, as expected Continue reading “Dollar Weakness Continues Ahead of ECB Decision”

Dollar Continues to Soften Ahead of Inauguration

  • President-elect Biden will be inaugurated and becomes the 46th President of the United States at noon; he will hit the ground running by announcing a raft of executive orders upon taking office; Janet Yellen’s confirmation hearing was revealing; Canada and Brazil are expected to keep rates unchanged
  • Italian political tensions appear to have calmed; German government announced a hardening of mobility restrictions; UK reported December CPI
  • BOJ began its two-day meeting; PBOC left policy rates on hold, as expected; Malaysia kept rates steady at 1.75%, as expected; Taiwan December export orders surged Continue reading “Dollar Continues to Soften Ahead of Inauguration”

Dollar Soft as US Returns From Holiday

  • The Senate reconvenes and will immediately begin work on confirming Biden’s cabinet choices; we fully expect Yellen will be questioned about Biden’s $1.9 trln stimulus plan; reports suggest that if asked, Yellen will disavow a weak dollar policy whilst affirming commitment to a market-determined exchange rate
  • Eurozone January ZEW survey came in firm; Italian political intrigue continues; UK Chancellor Sunak is reportedly drawing up plans to boost welfare payments
  • Reports suggest the BOJ will consider widening the target band for the 10-year yield from the current 20 bp; China’s policymakers are signaling no change in stance after stronger than expected growth was reported in Q4 Continue reading “Dollar Soft as US Returns From Holiday”

Dollar Bounce Running Into Resistance

  • President-elect Biden unveiled a $1.9 bln fiscal package; Fed Chair Powell stressed his dovish leanings; US December retail sales will be the highlight; December PPI will also be reported; Fed manufacturing surveys for January will start to roll out
  • UK monthly data dump underscores ongoing weakness in the economy; we fully expect another slug of fiscal stimulus; we also expect further monetary easing but downplay notions of negative rates by the BOE; the ECB warned that the full impact of the pandemic has yet to be felt by eurozone banks
  • The Trump administration blacklisted 9 more Chinese companies; Korea kept rates steady at 0.5%, as expected Continue reading “Dollar Bounce Running Into Resistance”

Dollar Struggles as Stimulus Talk Revives Blue Wave Trades

  • The House of Representatives impeached President Trump; President-elect Biden will announce plans for the next round of fiscal stimulus today; weekly jobless claims will be of interest
  • Fed Beige Book report was suitably cautious; Fed officials continue to push back against any notions of tapering; Peru is expected to keep rates steady at 0.25%
  • Italian political turbulence continues; Germany reported stronger than expected 2020 GDP data; Japan reported stronger than expected data; China reported strong December trade data Continue reading “Dollar Struggles as Stimulus Talk Revives Blue Wave Trades”