Drivers for the Week Ahead

  • Risk-off sentiment intensified last week; the dollar continues to climb
  • This is another big data week for the US; the US economy remains strong
  • Fed Chair Powell testifies before the House Tuesday and the Senate Wednesday; the Senate holds confirmation hearings for Fed nominees Shelton and Waller Thursday
  • President Trump will unveil his budget proposal for FY2021 beginning October 1 this Monday
  • Eurozone and UK have heavy data weeks
  • Riksbank meets Wednesday and is expected to keep rates steady at 0.0%; RBNZ meets Wednesday and is expected to keep rates steady at 1.0% Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

Risk-off sentiment intensified last week.  Near-term, we think EM is likely to remain under pressure until the full impact of the coronavirus is better known.  On top of this, there is broad-based dollar strength.  Besides the safe haven flows, the US outlook remains very strong.  Taken in conjunction with the recent weak data out of Germany, France, and Japan, it’s clear that the US economy continues to outperform.  Continue reading “EM Preview for the Week Ahead”

Dollar Firm Ahead of US Jobs Report

  • The number of confirmed coronavirus cases and deaths continue to rise; the dollar continues to climb
  • The January jobs data is the highlight for the week; Canada also reports jobs data
  • The Fed submits its semiannual Monetary Policy Report to Congress today; Mexico and Brazil report January inflation data
  • The downdraft in eurozone industrial data continues; Russia cut rates 25 bp to 6.0% and signaled more easing ahead
  • RBA upbeat but Governor Lowe warns of “significant areas of uncertainty”
  • Japan reported weak December cash earnings and household spending; emerging Asia focuses on stimulus Continue reading “Dollar Firm Ahead of US Jobs Report”

Dollar Firm as Markets Await Fresh Drivers

  • China cut tariffs on $75 bln of US imports by half, while the US said it could reciprocate in some way
  • The dollar continues to climb; during the North American session, only minor data will be reported; Brazil cut rates 25 bp
  • Germany reported very weak December factory orders; all is not well in the German state of Thuringia
  • Czech expected to keep rates steady; Philippines cut 25 bp; India remained on hold
  • Australia reported December trade and retail sales Continue reading “Dollar Firm as Markets Await Fresh Drivers”

Latest Thoughts on the US Outlook

The US yield curve flirted with inversion again. The US economic outlook remains solid and so we believe Fed easing expectations are overdone and see US rates at the long end rising further. Annual benchmark revisions to the jobs data Friday will not derail ongoing strength in the US labor market, which ultimately supports our strong dollar call. Continue reading “Latest Thoughts on the US Outlook”

Dollar Mixed as Risk Appetite Improves

  • Markets rallied in the early London session after headlines of a “significant breakthrough” for coronavirus vaccine
  • The dollar continues to climb; ADP reports its private sector jobs estimate; betting markets have responded to the partial results from the Iowa caucus
  • Brazil COPOM is expected to cut rates 25 bp to 4.25%; Poland is expected to keep rates steady at 1.5%
  • UK and eurozone reported strong final January PMI readings
  • Thailand unexpectedly cut rates by 25 bp to 1.00%; Monetary Authority of Singapore sent a dovish signal to the markets Continue reading “Dollar Mixed as Risk Appetite Improves”

Dollar Mixed as Some Risk Appetite Returns

  • The dollar continues to climb; one of side-effects of the virus has been a swelling of the amount of negative yielding debt globally
  • The US primary season got off to a rocky start for the Democrats
  • During the North American session, December factory orders will be reported; the US economy remains strong
  • The UK reported January construction PMI
  • The RBA held rates at 0.75%, as expected; Korea January CPI came in hot at 1.5% y/y Continue reading “Dollar Mixed as Some Risk Appetite Returns”

Democratic Primary Timeline

The Iowa caucus today marks the official start of the US primary season. There is no credible challenger to President Trump on the Republican side and so this piece will set out the likely political timeline ahead as Democrats choose their candidate. Continue reading “Democratic Primary Timeline”

Dollar Rally Back on Track

  • Growth concerns continue to reverberate across global markets
  • The dollar rally back on track after a hiccup from the weaker than expected Chicago PMI
  • This is a big data week for the US; the US economy remains strong yet the US 3-month to 10-year curve remains inverted
  • Sterling is on the backfoot as PM Boris Johnson steps up his confrontational approach
  • Turkish CPI surprised on the upside at 12.15% y/y, putting the central bank in an even harder position
  • Chinese equity markets re-opened after the extended closure to the tune of a near 8% decline Continue reading “Dollar Rally Back on Track”