Dollar Firms on Turnaround Tuesday

  • The dollar has gained some limited traction as the risk on euphoria is showing signs of letting up
  • China’s SAFE scrapped foreign investment limits in local stock and bond markets; China reported August CPI and PPI.
  • The UK bill forcing an extension to prevent a hard Brexit became law; UK reported firm July labor market data
  • The Scandies both reported lower than expected August CPI
  • South Africa July manufacturing production is expected to contract -1.5% y/y Continue reading “Dollar Firms on Turnaround Tuesday”

Dollar Mixed as New Week Begins

  • Despite last week’s setback, we remain dollar bulls; the three key issues for risk assets have not been resolved yet
  • The US economy remains in solid shape, at least for now; China reported weak August trade data
  • Germany reported July trade and current account data; UK reported July GDP, IP, construction output, and trade
  • Mexico August CPI is expected to rise 3.16% y/y Continue reading “Dollar Mixed as New Week Begins”

Drivers for the Week Ahead

  • Despite last week’s setback, we remain dollar bulls
  • The US data highlight of the week will be August retail sales; August PPI will be reported Wednesday and CPI Thursday
  • ECB meets Thursday and is expected to cut rates and restart QE
  • The UK has a heavy data week that’s front-loaded; at this point, the fundamentals are secondary as all eyes are on Brexit
  • Despite some positive developments last week, we think the three key issues for risk assets have not been resolved yet
  • In EM, the central banks of Poland, Turkey, and Peru meet Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

Despite some positive developments last week, we think the three key issues for risk assets have not been resolved yet.  Hong Kong protests continue, while reports suggest the US and China remain far apart.  Even Brexit has likely been given only a three month reprieve.  We remain negative on EM until these key issues have been ultimately resolved.  Continue reading “EM Preview for the Week Ahead”

What Has Changed in EM

  • PBOC cut reserve ratios for all commercial banks
  • Hong Kong Chief Executive Lam announced the withdrawal of the controversial extradition bill
  • Fitch cut Hong Kong’s sovereign rating a notch to AA with negative outlook
  • Central Bank of Russia cut rates 25 bp to 7.0%
  • Argentina announced capital controls
  • Chile cut rates 50 bp to 2.0%, as expected Continue reading “What Has Changed in EM”

Dollar Mixed Ahead of US Jobs Data

  • The highlight today will be US August jobs data; the pieces of the jobs puzzle have been mostly positive
  • Powell’s speech today is the last Fed speaking appearance before the media embargo kicks in
  • PBOC cut reserve ratios; Fitch cut Hong Kong’s sovereign rating a notch to AA with negative outlook. 
  • Germany reported weak July IP; yields on long-dated JGBs rose after BOJ Governor Kuroda’s comments
  • Canada reports August jobs data and Ivey PMI; Russia is expected to cut rates 25 bp to 7.0% Continue reading “Dollar Mixed Ahead of US Jobs Data”

Hong Kong Tensions Likely to Return

After Chief Executive Lam announced the withdrawal of the extradition bill, Hong Kong asset markets jumped. We think markets should not get too optimistic here, as we see the move as simply too little too late. We expect the protests to continue and tensions to remain high. Continue reading “Hong Kong Tensions Likely to Return”

Dollar Remains Soft as Risk On Sentiment Continues

  • The dollar is struggling to get some traction
  • China confirmed that officials will travel to Washington early next month for the next round of trade talks
  • The US reports ADP, non-manufacturing PMI, and July factory orders; Fed Beige Book report was balanced
  • The drop in perceived hard Brexit risks has helped sterling get some traction
  • Germany reported very weak July factory orders; Riksbank kept rates steady at -0.25%, as expected
  • Philippines August CPI rose 1.7% y/y; Russia August CPI is expected to rise 4.4% y/y Continue reading “Dollar Remains Soft as Risk On Sentiment Continues”

Dollar Soft as HK and UK Boost Market Sentiment

  • The dollar rally has seen a bit of a setback since the weaker than expected ISM manufacturing PMI yesterday
  • Risk on sentiment is being boosted by signs that Hong Kong tensions are easing and by signs of success in avoiding a hard Brexit
  • BOE Governor Carney appears before the Treasury Committee; UK reported weak August services and composite PMIs
  • BOC is expected to keep rates steady at 1.75%; Australia reported Q2 GDP
  • Late last night, Chile cut rates 50 bp to 2.0%, as expected Continue reading “Dollar Soft as HK and UK Boost Market Sentiment”