Drivers for the Week Ahead

  • For now, the weak dollar trend is hard to resist; suddenly, the US data matter again
  • Markets are in a sweet spot where the data are improving, and the Fed is still adding stimulus; the FOMC decision comes Wednesday
  • UK data dump will be seen Friday; after last week’s ECB meeting, subsequent eurozone data will be closely watched
  • Japan has a heavy data week; Australia reports several sentiment indicators this week

Continue reading “Drivers for the Week Ahead”

Dollar Takes a Breather as Risk Appetite Recovers

  • The dollar rally is taking a breather; Fed Chair Powell’s first day of testimony was a largely subdued affair
  • Bernie Sanders won the New Hampshire Democratic primary with 26% of the vote
  • Eurozone industrial production fell sharply to -4.1% y/y; Riksbank kept rates steady at 0.0%, as expected
  • Geopolitical tensions in Syria are rising
  • New Zealand kept rates steady at 1.0%, as expected; India reports January CPI and December IP Continue reading “Dollar Takes a Breather as Risk Appetite Recovers”

Dollar Firm Ahead of US Holiday Weekend

  • The dollar remains bid as optimism on US-China trade is still running high
  • China reports official August PMI readings Saturday local time; Hong Kong reported weak retail sales; Hong Kong protests show no sign of ending
  • US data highlight today is Chicago PMI, which is expected at 47.5 vs. 44.4 in July
  • Eurozone reported preliminary August CPI; Japan reported a huge raft of data
  • Bank of Korea delivered a dovish hold Continue reading “Dollar Firm Ahead of US Holiday Weekend”

Dollar May Prove Resilient if it is Turn Around Tuesday

  • The euro and sterling extended their recovery, helped by more constructive comments from the EC on Brexit
  • Sterling was also helped by stronger than expected UK weekly earnings data
  • The US economic calendar features the JOLTS report and wholesale trade and inventories
  • South Africa July manufacturing production is expected to rise 1.1% y/y; Argentina central bank is expected to keep rates steady at 60% Continue reading “Dollar May Prove Resilient if it is Turn Around Tuesday”

Globalization is more than Pax Americana

Doubts about globalization in light of the trade tensions may be understandable, but it arguably too pessimistic.  The EU and Japan signed a free-trade agreement that gets rid of more than 90% of the tariffs.  

Continue reading “Globalization is more than Pax Americana”

Beware of Linear Thinking about the Yield Curve

new united states

The flattening of the US yield curve is causing anxiety as an inverted curve is widely seen as a reliable indicator of a looming recession.  This is one of the debates among Fed officials and could impact the trajectory of monetary policy.

Continue reading “Beware of Linear Thinking about the Yield Curve”

Dollar’s Downside Correction Set to Continue

Blog icons - FX Outlook dollar

The US dollar entered a technical corrective phase after trending higher in recent weeks.  That technical correction has more room to run.  On the other hand, US 10-year yields may be near a low some 30 bp below the May peak, and oil prices may have another run at the highs, but the move is getting stretched.  The S&P 500 had a strong move ahead of the weekend, but 2800 needs to be overcome to be anything of note.  

Continue reading “Dollar’s Downside Correction Set to Continue”

Strong Job Creation, but Disappointing Earnings Growth


The optics of the US jobs data were mixed.  Jobs growth was better than expected, but earnings growth disappointed.  The rise in the unemployment rate, the first in many months, is a reflection of the increase in the participation rate.  Canada’s jobs and trade data disappointed, but not sufficiently so to alter expectations for a hike next week.   Continue reading “Strong Job Creation, but Disappointing Earnings Growth”