Dollar Firm as China’s Hong Kong Gambit Triggers Risk-Off Trading

  • Legislation was introduced that allows Beijing to directly impose a national security law on Hong Kong; US-China tensions are still rising; the dollar is bid as risk-off sentiment takes hold
  • There are no US data reports or Fed speakers today; Canada reports March retail sales; Mexico reports mid-May CPI
  • ECB publishes the account of its April 30 meeting; UK reported April retail sales and public sector net borrowing; parts of the UK curve remain negative
  • China scrapped its long-standing policy of setting an annual growth target
  • Legislation was introduced that allows Beijing to directly impose a national security law on Hong Kong; political risk has seen USD/HKD move off the strong end of the 7.75-7.85 trading band
  • BOJ met overnight; Fitch cut the outlook on its AAA rating for Australia to negative from stable Continue reading “Dollar Firm as China’s Hong Kong Gambit Triggers Risk-Off Trading”

Dollar Firm as US-China Tensions Flare

  • The virus news stream is mixed; the dollar has stabilized; US-China tensions continue to ratchet up
  • We will get some more US economic data for May; weekly jobless claims are expected at 2.4 mln
  • Eurozone and UK reported firm preliminary May PMI readings; BOE officials continue to take a very dovish tone
  • South Africa is expected to cut rates 50 bp to 3.75%; Turkey is expected to cut rates 50 bp to 8.25%
  • Japan and Australia reported preliminary May PMIs; Korea reported weak trade data for the first 20 days of May Continue reading “Dollar Firm as US-China Tensions Flare”

Dollar Treads Water Ahead of FOMC Minutes

  • The virus news stream is mixed; the dollar has stabilized a bit
  • FOMC minutes will be released; Canada reports April CPI and March wholesale trade sales; the news from Brazil keeps getting worse
  • Another group of EU nations will release their own plan in a rebuttal of France and Germany; UK reported April CPI data
  • Japan reported March core machine orders; Australia reported weak preliminary April retail sales
  • China kept its benchmark Loan Prime Rates unchanged; Thailand cut rates 25 bp to 0.50%, as expected Continue reading “Dollar Treads Water Ahead of FOMC Minutes”

Dollar Broadly Weaker as Market Sentiment Improves

  • Risk sentiment has gotten a big boost this week; the dollar has come under some pressure
  • President Trump continues to target the WHO; there will be several Fed speakers today
  • Germany and France came up with a compromise for a virus package; UK job figures were surprisingly resilient, but worse is still to come
  • Bank of Japan will hold an emergency meeting this Friday to finalize details of its funding program;  RBA minutes were released
  • Reports suggest China is targeting more Australian exports as the diplomatic spat widens; Indonesia once again went against consensus by standing pat Continue reading “Dollar Broadly Weaker as Market Sentiment Improves”

Dollar Mixed as Markets Await Fresh Drivers

  • The dollar continues to get traction
  • China bashing continues in the US; there will be many Fed speakers this week even as negative rates remain in focus
  • Comments by BOE Chief Economist Andrew Haldane led to another bout of speculation over negative rates in the UK
  • Clearstream and Euroclear have decided to suspend Turkish lira transactions on their platforms; oil prices continue their upswing
  • Japan’s preliminary Q1 GDP didn’t come in as dire as expected; other regional data came in better than expected Continue reading “Dollar Mixed as Markets Await Fresh Drivers”

Drivers for the Week Ahead

  • The dollar continues to get traction
  • FOMC minutes will be released Wednesday; there will be many Fed speakers this week; we get some more US economic data for May
  • Sterling will hit the trifecta again this week, in the form of Brexit risks, weak data, and dovish BOE; eurozone preliminary May PMI readings will be reported Thursday
  • Japan has a heavy data week; RBA minutes will be released Tuesday Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM had another rough week, as weak data and warnings from the Fed and top investment professional hurt market sentiment.  Virtually every currency losing ground against the dollar, and the only exceptions were TRY, THB, and IDR.  Risk sentiment is likely to remain on the ropes this week, as investors will have to wait several weeks to gauge how reopening economies fare around the world. Continue reading “EM Preview for the Week Ahead”

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FX Quarterly Outlook for Second Quarter 2020

In the latest FX Quarterly, our strategists recount the flurry of global policy responses around the world to the ongoing COVID-19 crisis. We also provide our outlook on developed and emerging markets in Q2 2020. Continue reading “FX Quarterly Outlook for Second Quarter 2020”