Tag Archive: US

US CPI, New Security Initiatives with Tokyo and Manila, Bank of Canada Meeting

2024-04-10

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2024-04-10

Overview: The dollar has been confined to narrow ranges ahead of the US CPI report. Given the backup of US rates and the stronger-than-expected jobs growth, the greenback's performance has been unimpressive.

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Dollar Consolidates Softer Ahead of Tomorrow’s CPI

2024-04-09

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2024-04-09

Overview: The dollar is trading with a softer bias in mostly narrow ranges against the G10 currencies. It did not rally much ahead of the US jobs data, and it was not able to sustain the upside momentum afterwards, despite the jump in US yields. Former St. Louis Fed President Bullard, who still has a strong reputation in the market, told Bloomberg TV yesterday that three cuts were his base case this year. The Scandis and Antipodeans are the...

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Will the Market Push the Dollar Above JPY152 as Japanese Prime Minister Heads to the US?

2024-04-08

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2024-04-08

Overview:  The jump in US rates after the employment report failed to ignite a sustained rally in the dollar and this shaken the market's near-term confidence. The dollar has been mostly confined to narrow ranges and the low yielding Swiss franc and Japanese yen are softest with the G10 complex today. The dollar is knocking on JPY152. The Scandis and Antipodeans lead the advancers. The euro has made little headway despite a much stronger than...

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US Employment Data to Set Dollar’s Course

2024-04-05

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2024-04-05

Overview: The focus is squarely on the US employment report. At the risk of oversimplifying, given the position adjustment in the past 48 hours, a solid report can see the greenback recover, while a disappointing report will likely see it deepen the correction of the rally that began with the February jobs report. The dollar recovered in the North American afternoon yesterday and many observers attributed it to the bevy of Fed comments. Yet, the...

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Greenback Losses Extended, but Look for Consolidation in North America

2024-04-04

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2024-04-04

Overview: The softer-than-expected ISM services report caught the market leaning the wrong way. Although interest rates had a muted reaction, the dollar was sold. In fact, the Dollar Index saw its second-biggest loss of the year, falling by about 0.50%. ISM services prices paid increases moderated to their slowest since March 2020. Supplier deliveries improved to their best since 2009, suggesting a supply chain improvement. Still, the Fed funds...

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Rate Adjustment Underpins Greenback

2024-04-03

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2024-04-03

Overview: The adjustment to US interest rates continues and this helps underpin the US dollar. The 10-year yield rose to 4.40% yesterday, the highest it has been since last November. It is trading 4.34%-4.38% today. The two-year yield is firm though holding below the Q1 high set last month near 4.75%. This week, for the first time since last October, the Fed funds futures do not have at least a quarter point cut discounted for July. As recently as...

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Gold, Oil, and Interest Rates Rise

2024-04-02

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2024-04-02

Overview:  The market put more weight on the rise in the US ISM manufacturing survey than the downward revision to the manufacturing PMI and the unexpected back-to-back decline in construction spending. US rates shot up and lifted the greenback. The Dollar Index made a new high for the year, a little above 105, which had been anticipated by the new lows recorded by the Bannockburn World Currency Index (a GDP-weighted basket of the currencies of...

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China PMI is Better than Expected but the Greenback Still Rises above CNY7.23

2024-04-01

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2024-04-01

Overview: The dollar is trading quietly against the G10 currencies as European markets remain on holiday. Narrow ranges have prevailed. The dollar-bloc currencies are leading with minor gains, perhaps helped on the margins by better-than-expected Chinese PMI, but the Scandis, which also typically do well amid a better global growth profile are the laggards. This may speak to the light liquidity conditions. Japan may have missed a tactical...

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Waller Pushes on Open Door: Push for Patience Lifts the Dollar, Complicating Japanese Efforts

2024-03-28

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2024-03-28

Overview: Comments by Fed Governor Waller, urging patience on rates and wanting more evidence that price pressures are moderating has helped the greenback extend its recent gains. The yen is the notable exception as the fear of intervention has restrained the dollar bulls. Poor German data, including a sharp 1.9% drop in February retail sales, the fourth consecutive monthly decline, underscored the euro's negative divergence, and the single...

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Heightened Threat of Japanese Intervention Pushes Greenback Away from JPY152

2024-03-27

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2024-03-27

Overview: The dollar neared JPY152, setting a new 34-year high. This appeared to spur a senior official meeting in Tokyo, ostensibly to talk about the response. Previously, we suggested that Friday, when most markets outside of Asia will be closed, could provide an interesting opportunity for intervention. The implicit threat was enough to take the dollar to JPY151.10 in the European morning. Most of the G10 currencies are softer against the dollar...

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Dollar’s Recent Gains Pared but Firm Undertone Remains Intact

2024-03-26

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2024-03-26

Overview: After surging at the last week, the dollar consolidated yesterday and is continuing to do so today as slightly lower levels. The Swiss franc is the only G10 currency unable to gain traction against the greenback today. Still, the dollar's pullback has barely met the minimum retracement targets of the jump last Thursday and Friday. The PBOC lower the dollar's fix slightly, but the proverbial toothpaste is out of the tube and officials are...

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CNY7.20 Gives Way as Strong Greenback Proves Too Much

2024-03-22

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2024-03-22

Overview: The dollar's post-FOMC sell-off has been completely reversed and the greenback has reached new highs for the week against most of the G10 currencies. Heightened intervention fears and softer US yields has helped steady the yen, which near unchanged now, and is the best performer. The Scandis and Antipodeans are the heaviest, off 0.65%-0.90%. For the first time since last November, the US dollar has risen above CNY7.20 and continued to...

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Heightened Speculation of a BOJ Move Tomorrow did not Stop the Nikkei from Rallying or Yen from Slipping

2024-03-18

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2024-03-18

Overview: The US dollar is trading with a mostly softer bias against the G10 currencies. The notable exceptions are the Japanese yen and Swiss franc. Ironically, speculation of a Bank of Japan rate hike appears to have increased, while there is a risk that the Swiss National Bank cuts rates this week. The Norwegian krone is the strongest of the major currencies. The central bank meets later this week but is widely expected to stand pat. The...

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Euro’s Recovery to $1.09 Looks Vulnerable while Yen Falls to New Lows for the Week After Strong Pay Raises Confirmed

2024-03-15

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2024-03-15

At the end of last week, the derivatives market was again pricing in nearly four Fed cuts this year, but this week's data have seen expectations re-converge with the Fed's three rate cuts signaled in December, while cutting the odds of June hike to the lowest in the more than four months.

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Ueda’s Comments Weigh on Yen as the Market Awaits US CPI

2024-03-12

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2024-03-12

Overview: The US CPI has become one of the most important high-frequency economic reports for the capital markets. The dollar is going into the report narrowly mixed against the G10 currencies. Comments by BOJ Governor Ueda about the weakness in consumption of non-durable goods was seen by some as reducing the likelihood of a change in policy next week.

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Japan’s Q4 23 Contraction Revised Away, Helping Keep Yen Bid

2024-03-11

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2024-03-11

Overview: News that the Japanese economy expanded rather than contracted in Q4 23 has fanned expectations that rates could be as early as next week. This is helping keep the yen supported, though it remains in the pre-weekend range, albeit barely.

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Forex Becalmed with the Greenback Mostly Firmer in Narrow Ranges

2024-03-05

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2024-03-05

(Business trip will interrupt the commentary over the next few days.  Check out the March monthly here.  Back with the Week Ahead on March 9. May have some comments on X @marcmakingsense.) Overview: Outside of the Australian and New Zealand dollars, which are off by 0.20%-0.25%, the other G10 currencies are little changed and mostly softer in narrow ranges. A firm Tokyo CPI, mostly on base effects and softer rates helped keep the US dollar below...

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Narrowly Mixed Dollar to Start the Big Week for Europe and North America

2024-03-04

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2024-03-04

Overview: The dollar is narrowly mixed against the G10 currencies to begin the week that features a Bank of Canada and ECB meetings, US jobs data, Federal Reserve Chair Powell's two-day testimony before Congress, and US President Biden's State of the Union address.

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Ueda’s Comments Knock the Yen Back, while the Euro Flirts with $1.08

2024-03-01

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2024-03-01

Overview: The US dollar is mixed today. The dollar-bloc currencies and the Scandis are enjoying a slightly firmer tone, while the euro and sterling are edging higher in European turnover.

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Yen Pops on BOJ Comments on Inflation, but the Dollar holds Most of Yesterday’s Gains against the other G10 Currencies

2024-02-29

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2024-02-29

The dollar is mixed as the market awaits the US personal consumption expenditure deflator, which is the measure of inflation the Fed targets. While there is headline risk, we argue that the signal has already been generated by the CPI and PPI releases.

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