Dollar Catches Modest Bid but Weakness to Resume

  • Geopolitical tensions have risen after US officials accused Russia and Iran of meddling in the elections; the dollar has caught a modest bid today
  • Stimulus talks continue; Pelosi warned that a deal may not come together before the November 3 election; whether Republican Senators change their minds after the elections depends on the outcome
  • Measures of cross-asset volatility suggest a far too generous interpretation of the odds for a clean Democratic sweep; KC Fed survey and weekly jobless claims will be reported; Mexico reports mid-October CPI
  • The UK has agreed to come back to the Brexit negotiating table; Israel is expected to keep rates at 0.10%; Turkey is expected to hike rates 175 bp
  • Japan reported weak September department store sales; LDP tax chief Amari said the government will put together a third supplementary budget this year; China is preparing a possible administrative measure to allow greater capital outflows Continue reading “Dollar Catches Modest Bid but Weakness to Resume”

Dollar Falls, UST Yields Rise as Markets See Higher Odds of Stimulus Deal

  • The dollar remains under pressure as markets chase the reflation trade; stimulus talks continue; Senate Majority Leader McConnell holds the key
  • The 10-year UST yield traded today at the highest since June 9; the Fed releases its Beige Book report
  • UK inflation came in lower than expected September; Brexit negotiations seem to be moving towards a favorable outcome; there was very strong demand for the EU’s first-ever social bonds
  • Japan reported September supermarket sales; Australia reported September preliminary retail sales; Korea reported trade data for the first twenty days of October Continue reading “Dollar Falls, UST Yields Rise as Markets See Higher Odds of Stimulus Deal”

Dollar Soft as Markets Await Fresh News and Rumours

  • The dollar is coming under pressure again; markets are finally waking up to the fact that a stimulus deal before 2021 is unlikely; 10-year Treasury yields have been trading in a narrow range for months
  • The quiet US data week continues; Ireland broke from the pattern of how other European countries are tightening mobility rules; Hungary is expected to keep the base rate steady at 0.60%. 
  • Japan reported September convenience store sales; dovish RBA remains dovish; RBNZ Governor Orr tried to out-dove the RBA
  • PBOC maintained its benchmark loan rates, as expected; Taiwan reported strong September export orders Continue reading “Dollar Soft as Markets Await Fresh News and Rumours”

Dollar Weakens as Chinese Data and Brexit Compromises Boost Market Sentiment

  • The dollar is coming under pressure again; the stimulus bill discussions refuse to go away; there are no US data releases today
  • ECB officials are sounding very dovish; both sides of the Brexit debate are showing willingness to compromise; Moody’s UK downgrade late Friday has had little impact on UK assets
  • Japan September trade data improved but remain weak; Chinese data overnight remain supportive of the recovery narrative; NZ Prime Minister Ardern easily won weekend elections Continue reading “Dollar Weakens as Chinese Data and Brexit Compromises Boost Market Sentiment”

Drivers for the Week Ahead

  • Some are holding out hope but we think the stimulus package remains dead; Fed releases its Beige Book report Wednesday; there is a full slate of Fed speakers this week
  • Fed manufacturing surveys for October will continue to roll out; weekly jobless claims will be reported Thursday; BOC releases results of its Q3 Business Outlook Survey Monday
  • Renewed virus restrictions are weighing on the economic outlook for the eurozone; no wonder ECB officials are sounding very dovish
  • Despite all the threats and bluster, it appears that Brexit talks will continue this week; Moody’s downgraded the UK a notch to Aa3 with stable outlook ahead of the weekend; UK has another big data week
  • Japan has a heavy data week; RBA minutes will be released Tuesday; NZ Prime Minister Ardern and her Labour Party easily won weekend elections Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

Risk assets are coming off a tough week. The dollar was bid across the board except for the yen, which outperformed slightly. The only EM currencies to gain against the dollar were KRW and CLP. The major US equity indices somehow managed to eke out very modest gains but stock markets across Europe sank as the viral spread threatens to slam economic activity again. Yet we have seen time and time again that the safe haven bid for the dollar eventually gives way to broad-based dollar weakness and we expect that to happen this week. Strong China growth in Q3 is expected to underpin risk sentiment and this should help EM gain some traction.  Continue reading “EM Preview for the Week Ahead”

Dollar Softens as Market Sentiment Improves

  • The dollar bounce is running out of steam; Trump is still hoping for a stimulus deal; we think more stimulus is coming but on the other side of the election
  • The main event is September US retail sales; BOC announced some changes to its financial market support programs; it is coming under criticism from the opposition Conservatives
  • With the EU summit wrapping up with no Brexit breakthrough, we await the UK decision on whether to walk away or not; corporate credit risk in Europe has ticked higher this week but remains very subdued overall
  • New Zealand holds general elections Saturday; the RBNZ just delivered a dovish hold and appears to be setting the table for negative rates Continue reading “Dollar Softens as Market Sentiment Improves”

Dollar Gains as Market Sentiment Goes South

  • Virus restrictions across Europe continue to sour sentiment; the dollar is benefiting from the risk-off backdrop
  • The stimulus package is deader than Elvis; Fed manufacturing surveys for October will start to roll out; weekly jobless claims will be reported; Chile is expected to keep rates steady at 0.5%
  • The unofficial deadline for Brexit has likely been extended; the two-day EU summit in Brussels starts today; Israel reports September CPI
  • Australia reported September jobs data; the RBA is likely to add stimulus soon
  • China is seeing fading price pressures and a central bank that continues to pump liquidity into the system; protests in Thailand continue to rock the capital Continue reading “Dollar Gains as Market Sentiment Goes South”

Dollar Bounce Remains Modest as Headwinds Build

  • The dollar is making a modest comeback; stimulus talks have hit a dead end; we get more US inflation readings for September
  • Brexit talks continue ahead of the EU summit Thursday and Friday; a new bill by the UK government could change the investment landscape in the country
  • The EU recovery fund has hit some speed bumps; the Netherlands is the latest country to impose stricter measures; eurozone IP came in slightly lower than expected
  • China reported strong money and loan data; Singapore and Korea kept monetary policy unchanged, as expected Continue reading “Dollar Bounce Remains Modest as Headwinds Build”