Drivers for the Week Ahead

  • The dollar has benefited from risk-off conditions; the liquidity story should remain positive for risk assets this week, with several major central banks likely to emphasize their dovish stances
  • Markets are still digesting the FOMC decision; with the media embargo over, this will be a very heavy week of Fed speaker
  • May retail sales Tuesday will be the US data highlight for the week; Canada has a busy data week
  • ECB will hold a TLTRO operation Thursday; BOE meets Thursday and is expected to increase its asset purchases by GBP100 bln; UK has a busy data week
  • Norges Bank and SNB also meet Thursday and are expected to keep policy unchanged
  • BOJ meets Tuesday and is expected to keep policy unchanged; Australia has a fairly busy week

Continue reading “Drivers for the Week Ahead”

This Is What It Sounds Like When Doves Cry

As we expected, the Fed was about as dovish as it could be without delivering any new policy initiatives. The clear signal is that policy will remain accommodative as far as the eye can see, and that’s negative for the dollar.

Continue reading “This Is What It Sounds Like When Doves Cry”

Dollar Firmer as UST Yields Turn Supportive

Our Latest Thoughts on the Dollar

The dollar remains under pressure, due in large part to the Fed’s aggressive efforts to inject stimulus. We see dollar weakness persisting near-term. From a longer-term perspective, we note that the greenback remains largely rangebound and is unlikely to fall below its 2018 lows. Continue reading “Our Latest Thoughts on the Dollar”

ECB Preview

The ECB meets this Thursday and is widely expected to add more stimulus. New staff projections will be released and are likely to emphasize the deteriorating outlook. If the Fed’s open-ended QE is seen as dollar-negative, then increased ECB asset purchases should be euro-negative, as well. That said, the expected increase has been well telegraphed, so near-term pricing should already reflect this. Continue reading “ECB Preview”

Drivers for the Week Ahead

  • The dollar remains under pressure; widespread social unrest will have significant social, political, and economic costs here in the US
  • The US has a very heavy data week containing several major reports; May US jobs data Friday will be the main event
  • BOC meets Wednesday and is expected to keep policy steady; Canada also reports May Jobs Friday
  • ECB meets Thursday and is expected to ease; next round of Brexit negotiations will be held this week by video; final May UK and eurozone PMI readings will be reported
  • Japan has a light data week; RBA meets Tuesday and is expected to keep policy steady Continue reading “Drivers for the Week Ahead”

Hong Kong Turbulence Likely to Rise as US-China Relations Worsen

Recent moves by China call into direct question the “one country, two systems” approach.  Hong Kong assets have held up surprisingly well but we see turbulence ahead as US-China relations are set to deteriorate further. Continue reading “Hong Kong Turbulence Likely to Rise as US-China Relations Worsen”

Drivers for the Week Ahead

  • US-China tensions are likely to ratchet up further; the dollar is bid as risk-off sentiment takes hold
  • Regional Fed manufacturing surveys for May will continue to roll out this week; the Fed releases its Beige Book report Wednesday for the upcoming FOMC meeting June 10
  • The account of the ECB’s April 30 meeting supports our view that it will add stimulus at the June 4 meeting; BOE comments last week were universally dovish, feeding expectations that it may eventually go negative
  • Japan data dump will be seen Friday; all eyes are on China this week after the conclusion of the National People’s Congress; Protests erupted in Hong Kong over the weekend Continue reading “Drivers for the Week Ahead”