Drivers for the Week Ahead

  • House Democrats passed a package to support and protect the Postal Service Saturday; the Kansas City Fed holds its annual Jackson Hole symposium Thursday and Friday
  • We get the first revision US Q2 GDP Thursday; regional Fed manufacturing surveys for July will continue to roll out; Canada reports Q2 GDP Friday
  • Germany reports final Q2 GDP data and August IFO business climate index Tuesday; August Tokyo CPI will be reported Friday Continue reading “Drivers for the Week Ahead”

Where Has All the Carry Gone?

Despite broad-based dollar weakness, EM currencies have not fully participated in the risk on environment that’s now in place. The good news is that fundamentals matter again. The bad news is that there are a lot of EM countries with bad fundamentals, and the secular decline in carry no longer gives these weaklings any cover. Here, we posit that fundamentals will be the main driver for currencies in this new normal of near zero interest rates everywhere. Continue reading “Where Has All the Carry Gone?”

Some Thoughts on Current FX Positioning

Once again, we thought it would be helpful to take a look at the CFTC Commitment of Traders report. Here, we focus on non-commercial positions up to the week ended August 11. While this data represents a small slice of the speculative community, it does provide a window into overall market positioning.

Continue reading “Some Thoughts on Current FX Positioning”

Drivers for the Week Ahead

  • Markets are looking for more signs of life this week for the global economy; the dollar remains under pressure
  • A stimulus package is unlikely until September, if at all; Democratic lawmakers have been called back to Washington to address the postal service crisis
  • Regional Fed surveys for August will start to come out; FOMC minutes will be released Wednesday; weekly jobless claims will be reported Thursday; Canada has a big data week
  • EU and UK will hold a sixth round of trade talks in Brussels starting Tuesday; ECB releases the account of its July 15-16 meeting Thursday; eurozone preliminary August PMI readings will be reported Friday
  • UK has another heavy data week; Norges Bank meets Thursday and is expected to keep rates steady at zero
  • Japan has a heavy data week; RBA releases its minutes Tuesday Continue reading “Drivers for the Week Ahead”

Drivers for the Week Ahead

  • As of this writing, stimulus talks remain dead in the water; President Trump made a series of executive orders over the weekend, as expected
  • July retail sales data Friday will be the data highlight for the US; ahead of that, July inflation readings will be seen
  • US Treasury plans to sell a record $112 bln of bonds at this week’s quarterly refunding
  • Eurozone reports Q2 GDP revision and June trade Friday; UK has a big data week
  • Japan has a light data week; Australia reports July jobs data Friday; RBNZ meets Wednesday and is expected to keep rates steady at 0.25%

Continue reading “Drivers for the Week Ahead”

Drivers for the Week Ahead

  • The added jobless benefits expired Friday; the Fed made it clear that more fiscal stimulus is needed
  • Late Friday, Fitch moved the outlook on its AAA rating for the US from stable to negative; July jobs data Friday will be the data highlight of the week; Canada has a busy data week
  • BOE meets Thursday and no change in policy is expected; sterling tends to weaken on BOE decision days; eurozone reports final PMI readings this week
  • Japan has a busy data week; RBA meets Tuesday and no change in policy is expected

Continue reading “Drivers for the Week Ahead”

Drivers for the Week Ahead

  • The outlook for risk assets remains uncertain; the dollar should continue making new lows
  • The next round of stimulus in the US is proving difficult; the FOMC decision Wednesday is unlikely to contain any surprises 
  • We get the first look at US Q2 GDP Thursday; regional Fed manufacturing surveys for July will continue to roll out
  • Germany has a heavy data week; eurozone reports preliminary July CPI and Q2 GDP Friday
  • Markets appear to be coming to grips with the likelihood that Europe will outperform the US in Q3 and perhaps Q4
  • Informal Brexit talks continue this week between the UK and the EU’ Japan has a fairly busy data week; Australia reports Q2 CPI Wednesday

Continue reading “Drivers for the Week Ahead”

Drivers for the Week Ahead

  • Risk assets continue to fight a tug of war between improving economic data and worsening virus numbers; the dollar is likely to remain under pressure
  • Congress returns from recess Monday and the outlook for fiscal stimulus in the US remains uncertain; Trump said the next stimulus package “must” include a payroll tax cut
  • Regional Fed manufacturing surveys for July will continue to roll out; weekly jobless claims will be reported Thursday; Canada reports some important data
  • The EU summit produced no deal; eurozone preliminary July PMI readings will be reported Friday; UK has a fairly busy data week
  • Japan has a fairly heavy data week; RBA minutes will be released Tuesday

Continue reading “Drivers for the Week Ahead”