Dollar Firm In New Week with Same Drivers

  • The dollar remains firm as the same supportive drivers remain in place
  • The situation in Hong Kong is deteriorating; the yuan was fixed weaker overnight
  • Italian political leaders will meet today
  • After posting a new cycle low earlier, sterling saw a small bounce
  • NZ Treasury Department identified the lower bound for the policy rate at -0.35%
  • Fitch upgraded Russia one notch to BBB with stable outlook; Argentina is likely to come under pressure today after the weekend primary Continue reading “Dollar Firm In New Week with Same Drivers”

Dollar Narrowly Mixed as Eventful Week Closes on a Quiet Note

  • The dollar is narrowly mixed as another eventful week winds down
  • Italy Deputy Prime Minister Salvini pulled his support and called for early elections
  • Trade tensions continue; CNY was fixed weaker overnight; China reported July CPI and PPI
  • The most important US data of the week is July PPI today
  • UK reported Q2 GDP, June IP, construction output, and trade
  • Japan reported firm Q2 GDP data; BOJ tweaked its bond buying program
  • Turkey central bank fired several high-ranking officials; Peru cut rates 25 bp to 2.5% Continue reading “Dollar Narrowly Mixed as Eventful Week Closes on a Quiet Note”

Dollar Soft as China News Calms Markets

  • The dollar is seeing a bit of a correction as markets reacted to calming signs out of China
  • The yuan was fixed stronger than expected overnight; China reported firm July trade data
  • The most important US data this week is July PPI today; US holds a 30-year auction
  • Saudi Arabia has contacted other major oil producers to discuss possible policy responses to lower oil prices
  • Philippines cut rates 25 bp to 4.25%, as expected; Peru central bank is expected to cut rates 25 bp to 2.5%
  • Brazil and Mexico report inflation data that may set up rate cuts in September Continue reading “Dollar Soft as China News Calms Markets”

Dollar Firm as Asian Central Banks Yell “Surprise!”

  • The dollar is getting some traction as central banks in Asia delivered dovish surprises all around
  • The dollar is strengthening despite depressed US yields; US curve remains significantly inverted
  • The yuan was fixed weaker overnight
  • RBNZ surprised markets with a 50 bp rate cut to 1.0%; market expects RBA to cut again soon
  • RBI surprised markets with a 35 bp cut to 5.4%; BOT surprised markets with a 25 bp cut to 1.5% Continue reading “Dollar Firm as Asian Central Banks Yell “Surprise!””

Dollar Mixed as PBOC Moves to Stabilize the Yuan

  • US-China relations have deteriorated further; markets have calmed after the PBOC took steps to stabilize the yuan
  • During the North American session, only June JOLTS job openings will be reported
  • Four former Fed chairs wrote an op-ed piece for WSJ
  • RBA kept rates steady at 1.0%, as expected; New Zealand reported firm Q2 jobs data ahead of RBNZ meeting tomorrow
  • EM will likely remain under severe pressure; Philippines July CPI rose 2.4% y/y, as expected; Brazil COPOM minutes will be released Continue reading “Dollar Mixed as PBOC Moves to Stabilize the Yuan”

Dollar Mixed as Trade Tensions Feed Risk Off Sentiment

  • The dollar is undergoing a correction as the slide in US interest rates accelerates
  • We remain dollar bulls but just like the Fed, we are struggling with how to compensate for a trade war
  • EM remains under severe pressure; onshore yuan traded above 7 for the first time since early 2008
  • Eurozone and UK reported final services and composite PMIs
  • Turkey July CPI Monday rose 16.65% y/y vs. 16.90% expected and 15.72% in June Continue reading “Dollar Mixed as Trade Tensions Feed Risk Off Sentiment”

Dollar Gains, Trade Tensions Rise Ahead of US Jobs Report

  • Powell’s failure to deliver a huge cut may have spurred President Trump to ratchet up trade tensions
  • We remain dollar bulls; the US July jobs report has been relegated to a sideshow
  • Japan removed Korea from its so-called “white list” of trusted export destinations
  • UK July PMI readings continued today; BoJo’s parliamentary majority was reduced to one
  • The risk-off backdrop is clearly bad for EM Continue reading “Dollar Gains, Trade Tensions Rise Ahead of US Jobs Report”

Dollar Builds on Post-FOMC Gains

  • The Fed delivered a less dovish than anticipated cut; the dollar rally should continue
  • The US rates markets are starting to adjust, but more needs to be done
  • Bank of England is expected to keep policy on hold
  • UK, eurozone, and China reported manufacturing PMIs
  • Last night, Brazil COPOM cut rates 50 bp to 6.0%; Korea reported July CPI and trade; Czech to keep rates steady at 2.0% Continue reading “Dollar Builds on Post-FOMC Gains”

Dollar Narrowly Mixed Ahead of FOMC Decision

  • The FOMC decision is the highlight of the week and it is widely expected to cut rates 25 bp
  • Before the FOMC decision, we will get some important US data
  • US-China trade talks wrapped up today; China reported official July PMI readings
  • Eurozone reported Q2 GDP and July CPI; Australia reported Q2 CPI
  • Turkey central bank released its quarterly inflation report
  • Mexico Q2 GDP is expected to contract -0.4% y/y; Brazil COPOM is expected to cut rates 25 bp to 6.25% Continue reading “Dollar Narrowly Mixed Ahead of FOMC Decision”