The U.S. dollar had a volatile week, no less the moves Thursday to Friday with the differing US jobs report the private ADP showed red hot job growth sending yields flying and the dollar soaring. Come Friday it all reversed with a lower government report, less than half of the ADP number. The dollar finished the week down reversing Japanese Yen and Chinese Yuan continued weakness this week. For the week the Japanese yen increased 1.5% and the Chinese (onshore) … Continue reading “Forex Traders Weekly Outlook – Conflicting Data Ramping Currency & Bonds Volatility”
Forex Traders Weekly Outlook – Mid Year Update, Yen and Yuan Weakness Deepens
The Japanese Yen and Chinese Yuan continued to weaken this week. The U.S. dollar index was around unchanged for the week. On Friday the dollar moved lower as traders focused lower inflation going forward after the May US core PCE prices May rose 0.3% as expected but the YoY level was mostly lower at 4.6% versus 4.7% last month and expected. The PCE price index fell from 4.3% to 3.8%. That was the 1st decline below 4% since early 2021. … Continue reading “Forex Traders Weekly Outlook – Mid Year Update, Yen and Yuan Weakness Deepens”
The British Pound Crisis Revisited, Will There be Deja Vu?
The Bank of England raised rates 50 bps last week as the bank battles with rampant inflation and the government and MPC appear to be willing to risk sending the British economy into recession to arrest spiraling prices. There is balancing act managing a confluence of inflation, economic stagnation, and financial fragility. With that and some of the Gilt action of late there have been concerns of another crisis in confidence that could hit the pound. In September last year … Continue reading “The British Pound Crisis Revisited, Will There be Deja Vu?”
Forex Traders Weekly Outlook – US Dollar Bid on Safe Haven & Tightening Forwards
The U.S. dollar gained much of its losses this week those currencies that the forward margin widened, after a heavy Central Bank week prior. There were two factors one safe haven buying which will likely become intensified with the latest’s events in Russia. The other a shift back in forwards after the dismal PMMI reports out of Europe, in particular France and Germany. In simple terms Notionnel and bund yields fell much further than Treasury yields. This also hit the … Continue reading “Forex Traders Weekly Outlook – US Dollar Bid on Safe Haven & Tightening Forwards”
Bank of England Raises Interest Rates to 15-year High 5.00%, Risk of British Recession Increases
The Bank of England MPC at its May meeting Thursday raised the key bank rate by raised by 50 bps to 5.00% as expected by many after the previous days hot inflation numbers. It was the 13th consecutive rate hike and BoE’s benchmark rate puts the cost of borrowing at the highest level since late-2008. The vote was 7-2 (Tenreyro and Dhingra voted to keep rates unchanged, similar to the last meeting). The bank risks pushing the UK into a brutal … Continue reading “Bank of England Raises Interest Rates to 15-year High 5.00%, Risk of British Recession Increases”
Forex Traders Weekly Outlook – Euro, Aussie and Loonie Forward Margins Widen
The U.S. dollar pullback picked up pace against those currencies that the forward margin widened, after a heavy Central Bank week. With the ECB, RBA and BOC all raising rates boosting those currencies at the same time the FOMC kept rates unchanged. The less hectic US CPI and PPI reports soothing the Fed and the market. The pound hit one-year highs as gilts yields rose ahead of next week’s BoE meeting. The Yen fell against the crosses and dollar after … Continue reading “Forex Traders Weekly Outlook – Euro, Aussie and Loonie Forward Margins Widen”
Forex Traders Weekly Outlook – Surprise RBA and BOC Rate Hikes Lead to USD Selling
The U.S. dollar rally took another breather this week, in a tight range for the US dollar index of 103.290-104.400, down -0.49% for the week. The dollar dribbled down from Monday after below-expectation US services ISM data, (50.3 v expected 52.2). More selling when the RBA on Tuesday unexpectedly raised the cash rate and signaled further tightening to control inflation. The Australian dollar rebounded from a week low of 0.6578 on Monday to a Friday high of 0.6750. On Wednesday … Continue reading “Forex Traders Weekly Outlook – Surprise RBA and BOC Rate Hikes Lead to USD Selling”
Forex Traders Weekly Outlook – Commodity Currencies Lift Ahead of RBA and BOC Rate Meetings
The U.S. dollar rally took a breather this week with a move lower in yields, on Friday after the US jobs report the shorter tenors in Treasuries sold off sending yields higher. The report gave renewed hope a hard landing will be avoided and at the same time the slowdown in earnings growth and the uptick in the unemployment rate suggest the Fed might lean to pause its rate hikes, or at least temper it. Dollar buying accelerated into the … Continue reading “Forex Traders Weekly Outlook – Commodity Currencies Lift Ahead of RBA and BOC Rate Meetings”
Forex Traders Weekly Outlook – Repricing of Fed Hikes Higher for Longer Pumps U.S. Dollar
The U.S. dollar rally continues into another week with the repricing of Fed hikes higher for longer. Two-year Treasury yields surged 30 bps this week to 4.56% (high since March 10th), trading 4.63 at one point. Benchmark MBS yields ripped 32 bps this week to a six-month high 5.79%. Futures are pricing in a 69% probability of a 25-bps hike on June 14th after strong PCE and durable goods data Friday. It has been seen hardest on USD/JPY, accelerating with … Continue reading “Forex Traders Weekly Outlook – Repricing of Fed Hikes Higher for Longer Pumps U.S. Dollar”
Forex Traders Weekly Outlook – U.S. Dollar Strengthens against BRICs and Yen, Commodity Currencies Rise
The U.S. dollar closed mixed this week with more Debt Ceiling shenanigans, the USD strongest against the BRIC currencies and the yen +1.51% and weakest against the Kiwi – 1.37%. Gold meanwhile fell another 1.67% this week. Overall, the dollar index (DXY) rose by 0.47%. Over the past few weeks, the Greenback has rebounded after being down about 8.5% from a peak last September, as measured by the US Dollar index or the WSJ Dollar Index. The Chinese Yuan has … Continue reading “Forex Traders Weekly Outlook – U.S. Dollar Strengthens against BRICs and Yen, Commodity Currencies Rise”