Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore

The Australian Dollar was the best performer of the week, buoyed by improving sentiment in commodities, iron ore hit a five-week high and oil prices YTD highs with hopes for a Chinese economy rebound. The New Zealand Dollar pulled along with it. The US dollar rally was tested this week and ultimately again benefiting from safe haven and yield chasing flows proved its resilience after rebuffing earlier selling. The Dollar Index bounced off 102.84 to close the week at 104.23. … Continue reading “Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore”

Forex Traders Weekly Outlook – US Dollar and Swiss Franc Attracting Safe Haven Flows

The US dollar rally continued again this week benefiting from safe haven and yield chasing flows. 10-year Treasury yields underpinning yen pairs with carry trade impact. Fed Chair Jerome Powell’s remarks at Jackson Hole renewed commitment to combating inflation prompted traders to elevate their expectations for another rate hike within the year. The yen fell to ¥146.6 per dollar after Jay Powell’s speech at one point. That was the lowest level against the dollar since November on Friday, pressuring the … Continue reading “Forex Traders Weekly Outlook – US Dollar and Swiss Franc Attracting Safe Haven Flows”

Forex Traders Weekly Outlook – Weak China Pressures Yen & Commodity Currencies Further

The US dollar rally continued again this week benefiting from safe haven and yield chasing flows. 10-year Treasury yields underpinning yen pairs with carry trade impact. The move higher in US yields again sees “risk off” extended to the emerging markets. EM currencies again under pressure with global risk aversion. We see the folly of BRICs and BRIC wannabes as the Turkish Lira hits another all-time low and the imploding Chinese recovery impacts the Yuan. The only currency the US … Continue reading “Forex Traders Weekly Outlook – Weak China Pressures Yen & Commodity Currencies Further”

Forex Traders Weekly Outlook – Higher Yields Pressure Yen & Emerging Currencies

The US dollar rallied, benefiting from safe haven and yield chasing flows. Treasury yields finished near the highs of Friday and not far from last week’s highs as curve steepeners continued on hopes for a soft landing with PPI slightly higher but CPI lower than forecasts. The move higher in US yields again sees “risk off” extended to the emerging markets. EM currencies quickly under pressure with global risk aversion. We see the folly of BRICs and BRIC wannabes as … Continue reading “Forex Traders Weekly Outlook – Higher Yields Pressure Yen & Emerging Currencies”

Forex Traders Weekly Outlook – Rating Change Crossfire Hit Emerging Markets Hardest

Many catalysts for the foreign exchange markets with the Bank of England, Reserve Bank of Australia and Bank of Japan JGB moves and the larger than expected US treasury funding program. Throw into the mix rating agency Fitch downgraded the United States of America’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’ on Tuesday. Following the increased funding needs and Firch downgrade the move higher in US yields saw “risk off” extended to the emerging markets. EM currencies … Continue reading “Forex Traders Weekly Outlook – Rating Change Crossfire Hit Emerging Markets Hardest”

Forex Traders Weekly Outlook – Yen Gone Wild, Eyes on RBA & BOE impact on Pound & Aussie

The focus in foreign exchange this week was the yen, with the Bank of Japan tinkering with the YCC increasing volatility in the USDJPY and the yen crosses. While the soft widening of the YCC initially saw the yen rally the dollar benefits from strong US data. Keeping it in perspective the two key pillars of the US dollar’s rally since it climbed from early 2021 have been growth and interest rate differentials. The curve that impacts forward swaps also … Continue reading “Forex Traders Weekly Outlook – Yen Gone Wild, Eyes on RBA & BOE impact on Pound & Aussie”

Forex Traders Weekly Outlook – Interest Rate Differential Risks with Fed, BoJ & ECB Meetings

The U.S. Dollar Index recovered 1.1% this week after the sell off since the last inflation reports. The two key pillars of the greenback’s rally since early 2021 were growth and interest rate differentials. Since then we have seen a slowdown in US inflation, a deceleration in the US labor markets and tighter credit conditions. This week we have the latest monetary policy decision from the Federal Reserve. Resilient core inflation pressures are suggesting that European central banks will keep … Continue reading “Forex Traders Weekly Outlook – Interest Rate Differential Risks with Fed, BoJ & ECB Meetings”

Forex Traders Weekly Outlook – US Dollar Pulls Back Further with Yields After CPI and PPI

The U.S. Dollar Index dropped a solid 2.4% this week to 99.96 along with yields. Sovereign yields were lower and led by US 2s decline post-CPI and a cumulative ½% lower since the July 6th peak and toward where they were three weeks ago. The lower yields pressured on the dollar this week, as the ECB and Bank of England are seen as having further to go with their rate-hike cycles. The 2-yr note yield declined 21 basis points this … Continue reading “Forex Traders Weekly Outlook – US Dollar Pulls Back Further with Yields After CPI and PPI”

Forex Traders Weekly Outlook – Conflicting Data Ramping Currency & Bonds Volatility

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”