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”

Central Bank Watch – The Big Three Fed, ECB and BoE Set to Raise Rates Again

This week’s central bank main event was The Bank of Canada who hiked by 25bps to 4.50%. The Bank of Thailand raised its key interest rate by 25 basis points to 1.5%. Colombia’s BanRep hiked by 75bps but signaled the end of cycle nearing. Chile left their benchmark at 11.25% with a neutral bias. South Africa hiked the repo rate by 25bp to 7.25%. In the week ahead we get four central banks delivering policy decisions. We have the big … Continue reading “Central Bank Watch – The Big Three Fed, ECB and BoE Set to Raise Rates Again”

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”

Central Bank Watch – Fed Tempers Rhetoric, Bank of Canada Ahead

This week’s central bank main event was The Bank of Japan who kept the status quo sending the dollar yen up 300 pips putting a bid inequities and bonds. We saw no change from the People’s Bank of China, Norges Bank, Bank Negara Malaysia Bank, and Central Bank of Turkey from their monetary policy meetings. Bank Indonesia however raised another 25bps. The Federal Reserve Biege Book was consistent with what we have seeing with economic data released, not a lot … Continue reading “Central Bank Watch – Fed Tempers Rhetoric, Bank of Canada Ahead”

Central Bank Watch – Korea Raises, BOJ Sequel to JGB, Dollar Yen Massacre Ahead

This week’s main event was Chair Powell’s speech at the Riksbank International Symposium and the reaction to US CPI, the reaction was muted to a soft report, outside of rising Services inflation. The Bank of Korea raised the Base Rate to 3.50%, the highest level since late 2008 as expected. Bank of England policymaker Mann said more needs to be done on rates and there is no risk of overtightening yet. We had a slew of Fed speakers but nothing … Continue reading “Central Bank Watch – Korea Raises, BOJ Sequel to JGB, Dollar Yen Massacre Ahead”

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”

Central Bank Watch – Powell, ECB and BoE Speakers at Riksbank

We kicked off 2023 with no surprises from the FOMC December meeting minutes which were followed up a barrage of Fed Speakers later in the week. They continued the party line but did caution on too fast, too high. This week’s main event will be Chair Powell’s speech at the Riksbank International Symposium and the reaction to US CPI, particularly given U.S. Treasuries closed out the first week of 2023 in beastly form Friday following the December jobs report average hourly earnings … Continue reading “Central Bank Watch – Powell, ECB and BoE Speakers at Riksbank”

Central Bank Watch – Fed Minutes and Speakers Kick off 2023

The highlight this week will be the FOMC Minutes on Wednesday from the December meeting. The equivalent meeting last year was when it became clear the Fed was pivoting to an aggressive agenda and the S&P had topped just two days before. From then we got the beginnings of the end for the stock market, crypto, bonds and a slew of other assets. We also get a barrage of Fed Speakers on Thursday and Friday, no doubt aware of marker … Continue reading “Central Bank Watch – Fed Minutes and Speakers Kick off 2023”

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”