Dollar Bounce May Be Running Out of Steam

  • The dollar bounce continues but may be running out of steam; what started as a risk-off move has morphed into something more; the House passed e a stopgap bill by a 359-57 vote
  • There are several Fed speakers today; Chicago Fed President Evans raised eyebrows yesterday by saying the Fed could hike rates before average inflation of 2% is reached
  • US Markit flash PMI readings for September will be reported; Canada Parliament reopens today with the Trudeau government presenting its new fiscal agenda
  • Eurozone and UK PMI readings came in weak; Czech Republic is expected to keep policy steady
  • Japan and Australia data came in weak; RBNZ delivered a dovish hold; Malaysian markets are being hit by rising political instability; Thailand kept rates steady at 0.50%, as expected Continue reading “Dollar Bounce May Be Running Out of Steam”

Dollar Remains Firm Ahead of Powell Testimony

  • The dollar remains firm on continued safe haven flows but we still view this situation as temporary
  • Fed Chair Powell appears before the House Financial Services Panel with Treasury Secretary Mnuchin; the text of Powell’s testimony was released already
  • House Democrats plan to vote on a stopgap bill today; Fed manufacturing surveys for September will continue to roll out; Brazil COPOM minutes will be released
  • UK CBI September industrial trends survey came in weak; BOE Governor Bailey reiterated the discussion on negative rates but confirmed that implementation is nowhere in sight; new restrictive measures are trickling out in the UK
  • Riksbank kept policy unchanged, as expected; Hungary is expected to keep rates steady at 0.60%; Deputy Governor Debelle said the RBA is still weighing options to further support the economy Continue reading “Dollar Remains Firm Ahead of Powell Testimony”

Dollar Gains from Risk-Off Trading Unlikely to Persist

  • Markets are starting the week in risk-off mode; the dollar is firm on some safe haven flows but this is likely to prove temporary
  • US politics is coming in to focus as the election nears; we fear that the likely horse-trading and arm-twisting will take away any residual desire to get another stimulus package done
  • The trend towards more restrictive measures continues with London in focus; between the virus numbers and Brexit risks, sterling remains under pressure
  • China left its Loan Prime Rates (LPR) unchanged, as expected; trade data out of Korea and Taiwan came in firm Continue reading “Dollar Gains from Risk-Off Trading Unlikely to Persist”

Dollar Comes Under Renewed Pressure

  • There will likely be more chatter about restrictive measures out of the UK and Europe; the dollar remains under pressure
  • It appears some blame is being pinned on the Fed for the equity sell-off; our take on the drop in stocks is a much more fundamental one
  • Despite some movement on fiscal stimulus, talks remain deadlocked; US data today are minor; Canada reports July wholesale trade and retail sales
  • BOE delivered a dovish hold yesterday; UK rates markets have reacted accordingly; UK reported August retail sales
  • Russia is expected to keep rates steady at 4.25%; Japan reported August national CPI Continue reading “Dollar Comes Under Renewed Pressure”

Risk Appetite Ebbs Ahead of BOE Decision

  • The dollar has gotten some limited traction despite the dovish FOMC decision; the FOMC delivered no surprises
  • We are seeing some more movement on fiscal stimulus; August retail sales disappointed yesterday
  • Fed manufacturing surveys for September will continue to roll out; weekly jobless claims will be reported; Brazil left rates unchanged at 2.0% but introduced some additional dovish guidance
  • BOE is expected to deliver a dovish hold; UK government reached a compromise with rebel Tory MPs by giving them a major concession; ECB gave regional lenders more regulatory relief
  • BOJ remained on hold but upgraded its economic assessment; Australia reported strong August jobs data; Indonesia kept rates on hold at 4.0%, as expected Continue reading “Risk Appetite Ebbs Ahead of BOE Decision”

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”

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”

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”

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”