Hong Kong’s Monetary Authority Raised Interest Rates 25bps Lockstep with US Federal Reserve

The Hong Kong Monetary Authority (HKMA), Hong Kong’s de-facto central bank, raised its benchmark interest rate for an eighth time this year, following the US Federal Reserve, by 25 basis points to 5.00% on Thursday. The latest move brought borrowing costs in the city to the highest level since January 2008. Hong Kong raises rates in line with the Fed due to the Hong Kong Dollar’s peg to the US Dollar. Hong Kong’s economy is not a strong position with … Continue reading “Hong Kong’s Monetary Authority Raised Interest Rates 25bps Lockstep with US Federal Reserve”

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”

Brazil and Argentina Plan for a Latin American Common Currency

Two of Latin America’s largest economies Brazil and Argentina with eyes to strength in numbers along the lines of the Euro, plan a common currency to reduce the risk that comes with relying on the US dollar. Both countries have been in a cycle of a financial roller coaster since the Latam financial crisis of the 1970’s. Market crashed continue to pop up in recent years. The hope is it would strengthen trade amongst the group. It would at first … Continue reading “Brazil and Argentina Plan for a Latin American Common Currency”

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”

Turkey Central Bank Left Interest Rates Unchanged at 9% As Lira Hits New Lows

The Central Bank of Turkey left its key one-week repo rate unchanged at 9% in its January meeting on Thursday, as expected, saying the current policy rate is adequate.  The bank had cut key interest rates in November for the fourth consecutive month. The Turkish lira held a record low of 18.8 per USD after the announcement. There has been concerted pressure from President Recep Tayyip Erdogan wanting rates cut to stimulate the economy, but the collapsed Lira and soaring … Continue reading “Turkey Central Bank Left Interest Rates Unchanged at 9% As Lira Hits New Lows”

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”

Brazilian Real Best Year Since 2016 with Interest Rates at 13.75%

The Brazilian Real at $5.3 closed up more than 6% in 2022 supported by a series of interest rate hikes by the central bank and an upbeat growth outlook. Banco Central do Brasil​ aggressively hiked its benchmark interest rate to 13.75% in twelve consecutive interest rate hikes since 2021 when the bank began its current tightening cycle early last year, the Selic was at a record low 2%. The lending rate is now at its highest level since 2017. The … Continue reading “Brazilian Real Best Year Since 2016 with Interest Rates at 13.75%”

Russian Stocks Plunge 44% in 2022

Russia’s MOEX Russia index closed Friday at 2,154, plunging 44% on the year. The ruble-based index reflected the fallout from the Russian invasion of Ukraine and consequent sanctions by Western countries. Russia’s action triggered investor’s exodus from oil and gas companies to McDonalds. The Moscow Exchange and the Central Bank of Russia both attempted to halt the selling, including closing the stock market for one month at the end of February, banning foreign investors from “unfriendly” countries, and prohibiting short … Continue reading “Russian Stocks Plunge 44% in 2022”

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”