Forex Traders Weekly Outlook – Central Bank Meetings Dominate New Month

The US dollar continued its retreat this week, particularly against commodity currencies such as the Australian dollar (-2.0%), the Brazilian real (-1.9%), the Canadian dollar (-0.5%) and the New Zealand dollar (-0.3%). By week’s end we saw month end position squaring and eyes on next week’s big central bank decisions (Fed, ECB and BOE). This week the Bank of Canada raised rates as expected and the question is now how much of the next Central bank actions are built into … Continue reading “Forex Traders Weekly Outlook – Central Bank Meetings Dominate New Month”

Forex Traders Weekly Outlook – Risk on Flows Heading into Chinese New Year

Yen pairs dominated after the BoJ leaving monetary policy unchanged sparking a 300-pip rally in dollar yen which flowed across yen crosses. Japan’s CPI rose to 4% YoY, expect continued volatility as the BoJ Minutes and the Summary of Opinions are released into a less liquid Asian session next week. Both the NZD and AUD moved higher helped by “risk on” flows. Sticking with commodity currencies, The Bank of Canada will be in the spotlight when it updates with its … Continue reading “Forex Traders Weekly Outlook – Risk on Flows Heading into Chinese New Year”

Dollar Yen Soars After Bank of Japan Keeps Monetary Policy Steady, No Change to JGB Yield Band

The Bank of Japan as widely expected kept unchanged its -0.1% target for short-term interest rates, and 0% for the 10-year government bond yield. There was much anticipation after last month the market was shocked with BOJ Gov. Haruhiko Kuroda adjusting the central bank’s yield curve control program. The BoJ announced no change to the Yield Band (YCC) and said the decision on the was YCC by a unanimous vote. The bank left forward guidance on th rate on hold. … Continue reading “Dollar Yen Soars After Bank of Japan Keeps Monetary Policy Steady, No Change to JGB Yield Band”

Forex Traders Weekly Outlook – US Dollar Decline Continues Led by Yen Strength

The week can be summed up with markets are in the throes of a major short squeeze. One of the biggest shorts in 2022 were different currencies against the US dollar, most aggressively shorting the yen. We have seen these reverse abruptly and significantly, poorly positioned funds have experienced quick losses to bring in 2023. The yen has a two-week gain versus the dollar of 2.54%. These popular macro trades tend to be risk on or risk off and feed … Continue reading “Forex Traders Weekly Outlook – US Dollar Decline Continues Led by Yen Strength”

Forex Traders Weekly Outlook – US Dollar Topples with Yields After Soft US Data

The week can be summed up in forex by the ebbs and flows of Fridays market after the US December jobs report. There is a thought that the deluge of central bank rate hikes is nearing the end as the world topples into recession. The Treasury market had a flying start to the new year, highlighted by a 32 basis points decline in the 10-yr note yield to 3.56%. The 2s10s inversion widened to 71 basis points (from 54 basis … Continue reading “Forex Traders Weekly Outlook – US Dollar Topples with Yields After Soft US Data”

Forex Traders Weekly Outlook – Aussie Dollar, Yen, Won and Kiwi Strength at Year End

The US dollar continued its pullback to finish the year back at levels last seen in June. Perspective though, the U.S. Dollar Index declined 0.8% to 103.49, reducing 2022 gains to 8.2%. After beginning the year at 95.67, the Dollar Index almost hit 115 on September 28th at the height of anti-Truss hype with the UK bond market at the cusp of collapse. In the past weeks Treasury yields declined in the face of a surge in European yields which … Continue reading “Forex Traders Weekly Outlook – Aussie Dollar, Yen, Won and Kiwi Strength at Year End”

Yen Soars After Bank of Japan Mini Pivot Widens Yield Curve Control Band

The Bank of Japan as widely expected kept unchanged its -0.1% target for short-term interest rates, and 0% for the 10-year government bond yield. However, the market was shocked with Bank of Japan Gov. Haruhiko Kuroda adjusting the central bank’s yield curve control program with saw yields rise sharply and a similar move in the yen. Dollar Yen went from 137.20 to 133.20 on the announcement. 10-year JGB yields surged to 0.455%, the highest since 2015 leading to a limit … Continue reading “Yen Soars After Bank of Japan Mini Pivot Widens Yield Curve Control Band”

Forex Traders Weekly Outlook – Dialing in The Central Bank Rate Raising Maelstrom

A busy week for currency traders with a deluge of central bank rate hikes, big data points including U.S. CPI, global PMIs and commodity inventory levels. Treasury yields declined this week in the face of a surge in European yields which had influence across the forwards. Four major central banks hiked rates by 50 basis points at their final meeting of the year: the Fed, the SNB, the BoE and the ECB. The Fed and the ECB were the hawk. … Continue reading “Forex Traders Weekly Outlook – Dialing in The Central Bank Rate Raising Maelstrom”

Forex Traders Weekly Outlook – Terminal Rate Focus, Yen Weakens in Asia Pacific

The U.S. Dollar suffered DeJa’Vu Friday trying to rally on the hot PPI number for the second month in a row but like against the strong jobs report the previous Friday the rally was quickly wiped out. There was further dollar selling, though it pared those back as risk off sentiment saw stocks slide. With oil down for a sixth consecutive day risk and hedging flows were evident across currencies. A big week ahead with the US CPI and a … Continue reading “Forex Traders Weekly Outlook – Terminal Rate Focus, Yen Weakens in Asia Pacific”

Forex Traders Weekly Outlook – US Dollar Correction Continues with Lower Yields

The U.S. Dollar was offered all week ahead of non-farm payrolls with USD/JPY before the release spotting 133.64 early in Europe. After strong payrolls the greenback popped 150 pips across the board as yields jumped. Then deeper inspection of the jobs report saw bonds recover and the dollar give back those initial gains. Since the safe haven bid emerged last week, we have seen a relentless long bond bid for the second day. The 30yr UST fell 9 bps to … Continue reading “Forex Traders Weekly Outlook – US Dollar Correction Continues with Lower Yields”