Dollar Soft Ahead of Jobs Report

  • Re-shutdowns continue to spread across the US; the dollar has come under pressure again
  • Jobs data is the highlight ahead of the long holiday weekend in the US; weekly jobless claims will be reported
  • FOMC minutes were revelatory; the Fed for now will rely on “outcome-based” forward guidance and asset purchases to achieve its goals; US House passed the latest China sanctions bill
  • The UK offered a home to nearly 3 mln Hong Kong citizens; Russia President Putin will likely be around for much longer, but the real risk is a new round of sanctions
  • Japan’s ruling LDP is discussing how to attract finance professionals from Hong Kong; Korea reported June CPI

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Markets Search for Direction as Q3 Begins

  • Markets are searching for direction as Q3 gets under way; the dollar has hung on to most of its recent gains
  • Ahead of tomorrow’s jobs data, we will get some final clues today; FOMC minutes will be released; Powell and Mnuchin offered differing views on the economy
  • Firm eurozone final June manufacturing PMIs were reported; EMEA manufacturing PMIs were also upbeat
  • The Riksbank surprised with an expansion of QE whilst keeping rates on hold, as expected
  • Bank of Japan released its Q2 Tankan survey; Caixin reported its China manufacturing PMI for June; Korea reported weak June trade data Continue reading “Markets Search for Direction as Q3 Begins”

Dollar Remains Bid as Virus News Stream Worsens

  • The World Health organization said the worst of the pandemic is still to come; the dollar continues to benefit from risk-off sentiment
  • Fed Chair Powell warned of extraordinary uncertainty ahead; June Chicago PMI will be the data highlight; Colombia is expected to cut rates 50 bp to 2.25%
  • German lawmakers are moving to defuse the challenge to the ECB’s QE program; UK Prime Minister Johnson is going full FDR; we see heightened downgrade risks for the UK
  • China approved the controversial security law for Hong Kong; China official PMIs surprised on the upside; Japan IP and employment data continued to deteriorate

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US Dollar Weighed Down by Dovish Fed Governors

Dollar Begins the Week Under Pressure Again

  • The virus news stream remains negative; pressure on the dollar has resumed
  • The US economy is taking a step back just as Q3 is about to get under way; there are some minor US data reports today
  • UK Labour leader Starmer overtook Prime Minister Johnson in the latest opinion poll; Macron’s party did poorly in French local elections
  • French and German leaders meet to discuss the planned EU pandemic rescue package; UK and EU begin their “intensified timetable” for Brexit negotiations
  • Japan reported May retail sales and department store sales; China industrial profits rebounded nicely to 6.0% y/y in May

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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

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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%

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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

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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

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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”