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Monex’s June 2023 FX Forecasts
Market price action over the past month was dominated by the twin themes of political dysfunction and economic convergence. Read more
Testing the hiking narrative
Underpinning the dollar’s surge over the course of May was stronger US economic data, especially in the form of consumer spending. Read more
Eurozone core CPI cools, but we still expect ECB to hike twice more
The Eurozone's preliminary May inflation data released today confirms that inflation is beginning to slow across all major aggregates, even core services. Read more
Eurozone CPI data provides some positive signs for the ECB
Weakness in the euro yesterday following softer French and German inflation data was one of the main market stories. Read more
Strong Q1 growth adds support to a June hike from the BoC
The BoC has needed to considerably revise its growth forecasts, having anticipated a mere 0.5% reading for the quarter back in January. Read more
Softer Chinese data and Eurozone inflation sets up the dollar rally
The dollar is back in favour with a broad risk-off tone following softer official manufacturing and non-manufacturing PMI data out of China for May. Read more
Raising the ceiling
While there is an early bid in equities this morning as the risk of a US government default is heavily reduced, this hasn’t translated into the FX space. Read more
Crunch time on the debt ceiling
Next week, Eurozone CPI and US jobs data will deliver the latest update on the progress made by Fed and ECB policymakers in taming inflationary pressures. Read more
Bonds finally take a breather, for now
The tumultuous session in the bond market almost took place without investors getting battered by another round of debt ceiling headlines. Read more
Hawkish SARB fails to convince investors
The South African Reserve Bank found itself in a difficult position today having to adjust policy to tackle inflation driven by supply-side shocks. Read more
As the clock ticks lower the dollar grinds higher, for now
Today, the dollar is in favour yet again, led by little news apart from a renewed slide in the Chinese yuan overnight. Read more
EURSEK breaks post-2009 high and has momentum to carry on climbing
The persistent rally in EURSEK over recent weeks has not come as a surprise to us given the sustained deterioration in the market’s risk appetite. Read more
Another day without a deal
Although the dollar did exhibit a period of weakness yesterday, the slump was short-lived as debt ceiling developments remained the primary concern. Read more
April’s inflation to force the BoE into another hike in June
UK inflation data released this morning revealed a big upside miss across all CPI measures, prompting a spike in the pound. Read more
The NBH blinks first out of the CE3 central banks
In line with consensus expectations, the NBH took the first steps towards policy normalisation today with a cut in the effective rate of 100bp. Read more
UK PMIs don’t tip the balance for the BoE
Since the turn of the year, markets have been surprised by the robustness of the UK economy, a trend that took off following February’s flash PMIs. Read more
Eurozone services PMIs underscore the need for more ECB hikes
Markets have recently adjusted to the idea that the eurozone economy isn’t diverging as much from the US as previously thought. Read more
All hands on deck
The early hours of tomorrow morning are set to bring one of this week’s most noteworthy economic events. Read more
Debt ceiling discussions drag on as leaders try to reset staff talks
As was the case last week, cross-asset price action is likely to remain tentative as debt ceiling concerns remain a priority. Read more
Debt ceiling and overtightening concerns set to dominate
Next week, debt ceiling concerns will be the primary topic as Congressional leaders have promised a bipartisan bill is likely to be presented to the House. Read more
FX markets wake up to improved risk environment
Today, with the feel good factor spreading from US equities to shares in Asia and futures in Europe, there is a mild risk-on tone in FX markets. Read more
FX markets hold their breath as they await relief
With markets still fretting about the US debt ceiling, officials from both sides struck optimistic tones in their external communications yesterday. Read more
The bullish dollar bias is yet to change
Today, there remains a bullish dollar bias across the G10 space, with just the Kiwi dollar trading marginally higher against the greenback. Read more
Strong April inflation data makes BoC’s June decision a live meeting
Canadian inflation surged in April, rising by 0.7% despite expectations that it would cool to 0.4% from 0.5% last month. Read more
US retail sales undershoot expectations but core shows some improvement
After two consecutive months in decline, US retail sales increased in April by 0.4% MoM, resulting in an annual increase of just 1.6%. Read more
UK labour market shows signs of softening, confirming our call for the BoE to hold
With the Bank of England resorting to a completely data-dependent stance, the focus for rates markets is now squarely on the data. Read more
A pivotal day in debt ceiling discussions
With key discussions on the debt ceiling taking place today and US consumer data due, this afternoon is likely to prove quite volatile for most dollar pairs. Read more
Debt ceiling impasse keeps dollar supported
Over the course of the week, discussions on the US debt ceiling are likely to play a prominent role in broad USD price action. Read more
EM FX set to steal the show
In the coming week, the most meaningful FX developments are likely to focus on emerging markets, with political risks coming to the fore. Read more
Dollar shorts are trimmed as the risk thermometer rises
Today, the main overnight development has been the delay in the resumption of debt ceiling discussions between President Biden and Congressional leaders. Read more
BoE stays non-committal on rate path, but forecasts are more hawkish
The Monetary Policy Committee today voted 2-7 in favour of raising Bank Rate by 25bps to 4.5%, with the dissenting members Swati Dhingra and outgoing Silvana Tenreyro voting in favour of a hold. The decision to raise interest rates was widely expected. Read more
Bank of England to hike, but will it be for the last time?
GBP Sterling struggled to capitalise on yesterday’s soft US inflation print, retracing most of its rally after initially touching a fresh five month high against both the dollar and the euro. Capping the pound’s upside is general uncertainty over the future path of UK interest rates. Whilst a 25bp hike in the Bank Rate to 4.5% at today’s midday meeting is almost a foregone conclusion, the Bank’s next steps are still widely unknown. This has led to an array of forecasts for UK interest rates, with estimates of the terminal rate ranging from 4.5-5%. This puts the emphasis on today’s decision on the Bank’s forward guidance, however, we don’t expect this to be explicit given the Bank’s February forecasts have already shown quite a wide forecasting error. As such, we expect the rate statement is likely to retain language that “further tightening would be required” if there is evidence more persistent inflation pressures. Although, we note that if any edits are made to this statement that they are likely to be dovish in nature and will result in an aggressive market response. We think the Bank is aware of this, and as such they will likely be non-committal in their guidance, instead leaving market participants to read between the lines within the meeting minutes and the MPR to extract the more discrete information provided. This will largely take place within the latest round of economic projections, where the Bank is expected to update its forecast for inflation in light of stronger growth, faster momentum in price growth, yet renewed signs that inflation pressures are starting to moderate, its estimate of wage growth given higher average hourly earnings growth and signs that labour demand is cooling, and its forecast for GDP following more robust growth data and positive supply side developments. Specifically, we will be monitoring whether the BoE deems the improved growth outlook to be more inflationary or primarily driven by improving supply-side dynamics like Chief Economist Pill recently alluded to. Additionally, policymakers’ emphasis on higher headline wage growth or signs that growth in pay settlements is starting to moderate alongside cooling labour demand will be telling, especially as the Bank remains vigilant of signs that a wage-price spiral is taking hold. On the whole, we expect the full suite of BoE materials to signal to markets that the Bank doesn’t intend to take rates higher in the coming meetings, raising the threshold for economic data to force such actions. However, this may not be perceived as dovish by markets, especially because the Bank has taken this stance for some time now and has repeatedly been forced by incoming data in tightening policy further. In the absence of a more explicit signal from Governor Bailey or by the removal of the Bank's tightening bias in the rate statement, we think today’s BoE decision may not provide a bearish impetus for sterling. Instead, we look towards the next round of economic data released at the end of this month as the catalyst for markets to bring down the current implied terminal rate from 4.83% towards our estimate of 4.5%. EUR With little in the data calendar as far as market moving eurozone releases are concerned, all eyes and ears will once again be on ECB speakers, with a raft due to hit the airwaves yet again today. The theme of recent communications has been to push back on market expectations, with the implied terminal level having slipped following last week's interest rate decision. Despite raising rates by 25bp and indicating that future hiking was close to a certainty, markets took the step down from 50bp increments as a sign that the ECB is now in the home stretch of its tightening cycle, leading to a paring of expectations for the ECB terminal rate with fewer than two more rate hikes currently priced in. The response from ECB speakers has been understandably hawkish, beginning with comments from Head of the Dutch Central Bank Klaas Knot over the weekend, who suggested that eurozone rates could go to 5% or higher. This trend was continued once again yesterday, most notably by Bank of Latvia chief Martins Kazaks, indicating that markets should not assume that ECB hiking will stop in July. While the comments by Knot and Kazaks may have fallen on deaf ears given their stature, the story of today looks set to be little different, with ECB big hitters Schnabel (13:00 BST), de Gunidos (18:30 BST) and Governor of the Banco de España de Cos (11:30 BST, 15:45 BST) set to speak. However, with OIS implied expectations for ECB hiking seemingly resistant to repricing on hawkish commentary in the absence of the data confirming such stance, it appears likely that today's comments will once again be overlooked. As such, the impact on the euro from today's speakers should be marginal, with events elsewhere continuing to drive price action in EURUSD which has fallen by around half a percent this morning. GBPEUR will also be one to watch today, with event risk a potential driver for the cross, given a Bank of England decision due at 12:00 BST. USD The dollar broadly sold-off yesterday as fixed income traders reverted to pricing in more rate cuts from the Fed this year. After falling to just 67bps following the strong jobs report on Friday, a further 8bps of cuts were put back into the December OIS contract yesterday after April’s inflation report showed signs of softness despite both the headline and core measures meeting expectations at 0.4% MoM. Specifically, the Fed’s measure of underlying inflation, the so-called “supercore” measure of inflation which is core services ex shelter, continued to moderate while the number of above-target inflation drivers narrowed as a whole. Accounting for 89% of the monthly increase in headline inflation were just three components: shelter, used cars and trucks, and gasoline. Additionally, components where inflation is driven more directly by higher wage inputs or strong discretionary spending, such as dining out and airline fares, saw prices either print flat or fall on the month. While the data doesn’t necessarily signal that the Fed needs to imminently cut rates, it certainly did signal that the Fed’s rate hike last week was likely the last of this cycle. While the dollar traded slightly weaker yesterday afternoon and in the overnight session, the move has been retraced and then some heading into the European open this morning. It is notable that while an end to the Fed’s hiking cycle is positive for risk assets as the discount rate stabilises and the risk of recession is capped, this hasn’t necessarily transpired given lingering concerns over the US banking system and more importantly over the US government defaulting seeing as discussions on raising the debt ceiling continue to bear no fruit. With Congressional leaders set to meet again tomorrow to attempt to bridge the divide, today the dollar is likely to find support these concerns, while commentary from Kashkari and Waller is likely to follow on from Barkin’s last night by stressing that inflation remains stubbornly high despite signs of improving. CAD Checking the daily change in the loonie might suggest on the surface that nothing happened at all yesterday. To the contrary, intraday volatility was quite high. The main event, US inflation, broadly met expectations, while the headline index edged down to 4.9% despite economist expectations that it would hold steady at 5%. A tenth of a percentage point is hardly significant in the grand scheme of things, but the loonie rallied sharply against the dollar as traders priced out the tail risk of a Fed hike in June, and added to bets that it would cut rates by year-end. Why such a large market reaction to a minimal deviation from expectations? Simple—many traders were worried that inflation would come in hotter than economists had forecast, and positioned themselves accordingly. As the outcome the market had least expected played out, USD longs were unwound, resulting in a brief bout of robust CAD strength. But considering US inflation had not changed all that meaningfully, USD bulls who were previously on the sidelines merely viewed the USDCAD sell-off as a more favourable entry point. Throughout the remainder of the trading session, the flow of information was fairly minimal, and the loonie tracked closely with swings in US equities. Shortly after lunchtime in Toronto, however, it was clear the pendulum had swung too far in the other direction, and new CAD longs brought the currency back to flat on the day. Disclaimer This information has been prepared by Monex Europe Limited, an execution-only service provider. The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. No opinion given in the material constitutes a recommendation by Monex Europe Limited or the author that any particular transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, it is not subject to any prohibition on dealing ahead of the dissemination of investment research and as such is considered to be a marketing communication. Read more
Details of US inflation report are soft, emboldening bets on rate cuts
Following Friday’s strong jobs report, April’s inflation data needed to come in hotter than expected. However, with headline and core inflation both coming in at 0.4% MoM, prices developed as expected in April. Read more
US CPI presents an asymmetric risk for markets
Today, US inflation comes back into view for markets with April CPI set to be released at 13:30 BST, as expectations have shifted slightly from yesterday. Read more
With credit concerns eased for now, focus turns to inflation
While the focus yesterday was on the Fed’s mandate to maintain financial stability, today the emphasis is likely to drift to its inflation target. Read more
The end (of the cycle) is nigh
This week was a big one in the banking world, with a flurry of central bank announcements and growing pains in US regional banks. Read more
North American job growth beats expectations, putting central bank pauses into question
The latest release shows labour market and wage pressures remain robust, suggesting core inflationary pressures remain persistent in the US economy. Read more
Banking worries loom as markets continue to digest the latest round of policy tightening
The market spent much of yesterday’s session continuing to digest the FOMC’s latest policy rate announcement. Read more
ECB slows the pace of hiking, but is not done quite yet
The ECB has raised all three of its key policy rates by 25 basis points in line with both market and economist consensus. Read more
Broad dollar selloff follows Feds latest policy move
Price action in the dollar was a little strange yesterday: the broad dollar index fell by -0.7% on the day, but it was a steady and controlled decline. Read more
Fed hikes 25bps and hints at pause but leaves more hikes on the table
The Federal Reserve has once again raised the Fed funds target range by 25 basis points, taking it to a new high of 5.00-5.25%. Read more
Central bankers in focus as the Fed faces a pivotal call
A very busy week for financial markets will continue today with the latest interest rate decision from the Federal Reserve due to be revealed at 19:00 BST. Read more
Monex’s May 2023 FX Forecasts
With central banks in the US and elsewhere hitting the end of their hiking cycles, we see near-term policy expectations losing some impact on FX volatility. Read more
Stronger data leads Fed expectations higher, dragging up the dollar
After several weeks of doom and gloom around the state of the US economy, yesterday's ISM PMIs helped breathe a degree of optimism into markets. Read more
Getting some answers
Next week, markets could get clearer answers to their questions, thanks to upcoming ISM data and the Fed's early look at the Q2 Senior Loan Officer survey. Read more
A day for the doves as Spanish core inflation turns and BoJ holds
Despite today’s dovish developments, we still think the Bank of Japan is likely to begin tweaking its yield curve control framework at their June meeting. Read more
Dollar looks vulnerable as financial and economic risks seem isolated
Today, same drivers for USD are expected to dominate, with regulators weighing the prospect of downgrading their private assessment of First Republic Bank. Read more
Riksbank hikes 50bps, but impact is undermined by dovish guidance
The Riksbank announced its latest monetary policy decision at 8:30 BST, hiking the repo rate by 50bps to 3.5%, in line with market and analyst consensus. Read more
Financial stability concerns re-emerge for markets pre-FOMC
Today, given the focus on the health of the US economy, markets are likely to pay increased notice of second-tier data releases. Read more
A quiet start to the week looks set to continue as crosses catch the eye
Price action in the broad dollar was muted yesterday as we had expected, with most of the focus occurring in the crosses as dollar pairs remained within recent ranges. Read more
FX volatility set to start the week lower
This week’s eurozone inflation data and the first Bank of Japan meeting under Governor Ueda on Friday are likely to prove the most influential, especially given both EURUSD and USDJPY hold the largest weights within the DXY basket. Read more
European interest rates to steal the show
In the week ahead, markets will pay the closest attention to European interest rates, with several Eurozone economies publishing inflation data, as well as monetary policy decisions in Sweden and Hungary. Read more
Flash PMIs continue the trend of hotter than expected UK data
The pattern for UK data this week had been one of hotter-than-expected headline numbers, and April’s flash PMI print has continued that trend. Read more
Flash PMIs for April feeds into the case for the ECB to do 50bps
In today’s euro-area PMIs, activity levels surged in the services sector due to a robust demand backdrop, while manufacturing continued to contract. Read more
PMIs to steer policy debate
As is always the way with the PMI data, the market reaction will ultimately settle on what the mixture of measures say about the health of the economy. Read more
HUF and BRL steal the show as investors become wary
Given the subdued nature of G10 FX yesterday, attention started to drift to the EM complex where price action in HUF and BRL caught the eye. Read more
Lula’s full fiscal framework finally sees light
For much of this year, the Brazilian real has lagged the broader move higher in LATAM FX. Weighing on the currency has been uncertainty over President Lula da Silva’s fiscal framework, which was seen as crucial in allaying fears of ballooning government debt. Read more
BoE to hike one final time in May
With the BoE concerned about anchoring expectations and maintaining credibility, this now tips the balance towards a 25bp in May. Read more
Inflation data confirms a final hike from the BoE in May
All eyes were on this morning’s release of UK CPI data as the burden of proof for the Bank to pause in February had increased. Read more
Canada CPI falls to 4.3% YoY, in line with expectations
Consumer prices were 4.3% higher in March than a year prior, down sharply from the previous month’s 5.2% reading. Read more
Aussie leads gains on stronger Chinese data and hawkish RBA minutes
Leading gains against the greenback is the Aussie dollar, due to its exposure to Chinese growth conditions and a fairly hawkish set of RBA meeting minutes. Read more
Despite headline miss, there remains signs the UK labour market is cooling
A make-or-break week for the Bank of England rate decision kicked off this morning with the release of UK labour market data that contained a few surprises. Read more
Growth indicators to determine May’s hiking path this week
Growth conditions dominated last week’s session, even in the absence of any direct data on economic activity. Read more
Can growth hold up?
While the US data calendar is sparse next week, emphasis is going to remain on economic activity, especially with the release of flash PMIs for April. Read more
The dollar’s demise continues as it hits its year-to-date low
The broader market focus on bank earnings today won’t be on trading revenues or earnings, but instead deposits, especially for March. Read more
US inflation was just the right temperature
Just like Friday’s payrolls data, March’s inflation figures out of the US yesterday dispelled concerns that the US economy was nosediving into a recession. Read more
Bank of Canada remains on hold at 4.5% citing inflation, growth, and banking risks
The BoC continued its conditional pause, maintaining the policy interest rate at 4.5%, and said that quantitative tightening is still rolling out. Read more
Another positive reading for risk assets
March’s CPI report release has helped to partially dispel recession fears and has largely consolidated a further 25bp hike from the Federal Reserve in May. Read more
US CPI set to thrust Fed expectations back to the fore for markets
Today, the playbook for markets will be a better-known one as expectations for the Fed will be back in the driving seat with the release of March’s CPI data. Read more
Limited liquidity caused the dollar bid, not a strong payrolls report
Ahead of tomorrow’s release, the emphasis for markets will be on the more accurate cross-asset signal from Friday’s payrolls report. Read more
Trading financial risks for recession
Next week’s main event will come in the form of the US inflation readings for March on Wednesday, as markets increasingly position for a US recession. Read more
No slowdown in Canadian job growth
The Canadian economy added 35,000 jobs in March, which is up from last month’s 21.8k gain and more than quadruples the estimates for a slowdown to 7.5k. Read more
From bad news is good news, to bad news being just bad news
With recession fears capturing the attention of global markets, the UK looked like something of an outlier in yesterday's session. Read more
From financial fears to fundamentals
Economic fundamentals continued to drive FX markets yesterday as data on job openings in February dropped considerably for its second consecutive month. Read more
Monex’s April 2023 FX Forecasts
Whilst our FX Analysts' March forecasts have broadly panned out, it was the driving force behind these moves that came as a surprise to them. Read more
Dollar sells off as manufacturing sector squeezed
The US dollar weakened and Treasury yields slid in yesterday’s session as the ISM manufacturing index stoked fears about economic growth. Read more
Dollar ticks higher on snap OPEC production cut
The announcement from OPEC+ over the weekend to cut the production of oil by 1.1m barrels per day has spurred concerns over inflation persistence. Read more
Another quiet week before Easter?
Next week could see volatility in FX markets remain suppressed, especially given it is a shorter week in most markets and macro data is no longer having the impact it once did on monetary policy expectations. Read more
Canadian economy rebounds in January, lowering the high bar for another hike
Canada’s economy grew by 0.5% MoM in January, raising the YoY growth rate to 3.0%. Both figures came in close to expectations, beating their estimates by a tenth of a percent, while the MoM figure was two-tenths stronger than StatsCan’s advance reading. Read more
Core inflation could track up towards 6% in the eurozone
This morning, inflation remains top-of-mind ahead of the eurozone composite CPI reading, but the signal for markets was likely already delivered yesterday. Read more
Don’t get distracted by disinflation in headline CPI
Today should be more eventful for markets as flash inflation data is set for release from Spain and Germany ahead of the French and eurozone numbers. Read more
Dollar sells of as Senate testimony provides little new information
The dollar continued to slump in yesterday’s session as Congressional testimonies didn’t move the needle for US bank stocks. Read more
Risk sentiment finds a boost ahead of Senate appearances
Following a constructive overnight session in Asian equities, the unscheduled comments by Senators will be the focus for markets today. Read more
Finally, a break in the clouds
Today, following a fairly quiet weekend in terms of negative news on the banking industry, European bank stocks have largely opened in the green. Read more
Data remains a peripheral concern as financial stability is still in question
While next week’s data calendar remains fairly full in terms of events, ultimately it is likely to play second fiddle to the main event taking place in bank stocks and corporate debt markets. Read more
Don’t forget about the banking sector!
After trading on a strong note overnight following the Fed meeting on Wednesday, the single currency struggled to consolidate gains throughout the European session yesterday, especially as risk sentiment started to turn. Read more
Bank of England likely reaches terminal rates
Following in the footsteps of the Fed, the Bank of England today hiked rates by 25bp, bringing Bank Rate to 4.25% in line with market consensus and our pre-meeting call. Read more
SNB hikes 50bps, but further tightening may be focused through the FX channel
The Swiss National Bank today hiked its policy rate by 50bps to 1.5%, in line with the market and economist consensus. Read more
Dollar weakens on dovish Fed
In response to the emergence of financial stability risks a fortnight ago, most real money investors trimmed the positioning of their books. Read more
Fed tries to install confidence, but markets aren’t buying it
The Federal Reserve raised the Fed funds target range today by 25 basis points to 4.75-5.00%, a move that was in line with the consensus. Read more
A pivotal 24 hours in central banking
The next 24 hours will be decisive for markets as the central banks of the US and Switzerland are set to announce their latest monetary policy decisions. Read more
Fed preview: 25bps is looking more likely, but at what cost?
We expect the Fed to continue to signal a marginally hawkish message on rates while leaving financial stability concerns to supplementary measures. Read more
Canada CPI cools in February, reducing the pressure for more hikes
Headline inflation fell to 5.2% in Canada, missing expectations for 5.4%. Price pressures were also weaker than expected on a sequential basis. Read more
A period of market stability before the Fed
Overall, today’s session is likely to be dominated further by the performance of European and US banking stocks. Read more
Distress in the banking system continues to favour JPY haven flows
The Japanese yen continues to strengthen on haven flows as it sits 0.8% higher this morning, while higher beta currencies are trading lower. Read more
It isn’t over yet
This week is likely to see the same as last, with concerns over the stability of several banks continuing to linger. Read more
Confidence in bank stocks is stabilised, for now
Markets are beginning to calm following the intervention of Swiss regulators to support Credit Suisse, as confidence in bank stocks stabilises. Read more
ECB hikes 50bps, aborts forward guidance
In line with our expectations, the ECB took the decision to raise all three of its key interest rates by 50bps this afternoon. Read more
ECB to set rates amid financial stability concerns
Although markets have become a bit more hawkish in early trading today, we think the ECB's decision is to either hold rates completely or to hike by 50bps. Read more
Spring Budget gets away with growth agenda as bond markets distracted by bank stocks
In a return to time-honoured tradition, the Chancellor delivered his Budget to Parliament earlier today, the first since 2021. Read more
Another quieter day unless Hunt bodges the budget and Bank stocks nosedive again
As rumblings from the collapse of SVB subsided yesterday, attention increasingly focused on today’s main event: the UK Spring Budget. Read more
The dust is starting to settle, but markets are still wary that the other shoe is about to drop
Today, focus will remain on cross-asset price action and whether the dust is finally starting to settle within US banking stocks. Read more
Fed path is drastically reassessed, weighing on the dollar
The dollar DXY index enters this morning’s European session 1.1% lower than it did on Friday as rates traders have stricken off the prospect of a 50bp hike from the Fed next week and have moderated expectations for the overall hiking cycle. Read more
Another trip on the merry-go-round
The round trip in market pricing left traders with tired eyes, but they won’t have time to rest as concerns over the US credit market are likely to extend. Read more
Fed to stick with 25bps, but potentially for longer
The US economy added 311k jobs in February, down from January’s monstrous 504k but still printed above consensus estimates (225k) for the eleventh month in a row. Read more
Canada job growth beats expectations while wages rise, which could turn the BoC more hawkish
Canada’s economy added 22,000 jobs in February, more than doubling expectations for a 10,000 gain. While the figure was stronger than consensus, it marks a significant slowdown from January’s 150,000 increase. Read more
Judgement day
Today, the focus for markets shifts back to the US hard data that the Fed is currently basing their policy decisions on. Read more
Realized volatility in G10 FX plummets ahead of Friday’s payrolls release
Ahead of Friday's US payrolls data, markets are likely to trade in a cautious manner in general, with idiosyncratic developments driving volatility. Read more
Bank of Canada holds at 4.5%, delivers mildly hawkish rate statement
Today, the Bank of Canada followed through on its guidance from January, holding its policy interest rate at 4.5%. The Bank also noted that it is “prepared to increase the policy rate further if needed to return to the 2% [inflation] target.” Read more
The higher they climb
The fallout from Powell’s testimony was not limited to the United States, or even to that side of the Atlantic - impacts were felt an ocean away. Read more
EURSEK breaks lower but sustainability of the move is in question
EURSEK has recently fallen from a post-financial crisis high as the Riksbank shocked markets with a much more hawkish stance at their February meeting. Read more
Market activity set to pick up as Powell testifies
Today, participation in currency pairs will pick up as traders assess Powell’s perceived tolerance to reaccelerate the pace of the hiking cycle in March. Read more
Traders would rather pay a “what if” premium ahead of Friday’s BoJ meeting than position short USDJPY
USDJPY is trading below where its 10-year real yield differential places it as traders continue to anticipate a tightening in BoJ monetary policy in 2023 that will allow higher Japanese long-end rates. Read more
Markets open in a tentative manner despite a deluge of headlines from China’s NPC
It's unsurprising that markets opened this morning in a tentative manner, after a bombardment of headlines from China’s 14th National People’s Congress. Read more
Everything can change in a New York minute
Given the amount of market-moving events scheduled for next week, it is highly likely that volatility in FX markets picks up in a more sustained fashion. Read more
Range-bound volatility
Price action in the pound was driven primarily by the broad dollar yesterday; a disappointing outcome given there were two releases out of the BoE. Read more
Despite not turning the radiators on over the winter, the eurozone just got hot
The eurozone core CPI measure jumped 0.3 percentage points to another record high of 5.6% YoY, which was more than what economists had anticipated. Read more
Dollar snaps back as front-end Treasuries continue to climb
Today, normal service looks to have resumed with the broad dollar index retracing two-thirds of yesterday’s decline. Read more
Monex’s March 2023 FX Forecasts
Our FX analysts expect a reversal in some of February's price action on the back of reduced upside risk to US rates and potentially reduced volatility within the space. Here's a look at the latest Monex FX Forecasts for March 2023. Read more
Welcome back China
Within G10 markets, there has been quite a sizeable move in high beta currencies overnight on the back of stronger Chinese PMI data. Read more
Excess demand no more: Canadian economy doesn’t grow in Q4, undershoots BoC forecasts
Canadian GDP growth was nonexistent in the fourth quarter, ending a five-quarter streak of positive growth and missing expectations for a 1.6% annualised gain. Read more
A brief break in the clouds
The never-ending story that is Brexit continued in the UK yesterday, with a meeting between Rishi Sunak and Ursula von der Leyen in Windsor. Read more
The Northern Ireland Protocol comes back into scope as the fate of the Tory party hangs in the balance
Brits might be forgiven for waking up with deja vu this morning, with news outlets predicting a deal over the Northern Ireland Protocol is imminent. Read more
Terminal pricing is again in the driver’s seat for markets
Next week, terminal rate pricing should remain the market’s key driver with the ECB’s core inflation problem likely to get worse. Read more
It is eerily quiet on the FX front
As expected, yesterday’s session was a rare period of respite for traders that have been trying to navigate turbulent economic waters. Read more
A break in the volatility
Negotiations between the UK government and the EU over the Northern Ireland protocol was a focus of attention this morning. Read more
PMIs highlight core inflation pressures globally
With expectations that yesterday’s PMI readings would be pretty miserable, markets received a shock from a huge upside surprise in the print. Read more
US PMIs feed into the no landing discourse
The recent divergence in hard and soft data in the US has been notable and likely boils down to soft survey data having a subjective input. Read more
Temporary factors drive pick-up in Canada CPI, Bank of Canada to stay on hold
Inflation pressures picked up by +0.5% month-on-month in January, although economists feared a stronger print of +0.7%. Read more
UK PMIs highlight upside risks to our BoE terminal rate projection
With all the gloom from analysts and policymakers around the state of the UK economy, expectations for February's PMI readings had been fairly depressed. Read more
Eurozone PMIs show no reprieve in core inflation for the ECB
The eurozone-wide PMIs saw activity conditions improve more considerably with a composite reading of 52.3, consistent with a positive GDP reading for Q1. Read more
Terminal rate expectations to guide FX markets again
In a good news might mean bad news kind of dynamic, sterling dipped before rebounding this morning with the release of Public Sector Net borrowing figures. Read more
Political developments and another dense data calendar are likely to end a quiet start to the week for markets
After another week of data releases suggesting the UK economy is unlikely to avoid a recession, the barest hint of green shoots poked through this morning. Read more
Disinflation and CB reaction functions remain the primary drivers for FX markets
Next week’s data calendar suggests FX volatility is unlikely to abate, a view that is similarly shared within options markets. Read more
Sharp talons from Fed hawks burst the risk-on bubble
Yesterday’s session offered a brief reprieve in terms of volatility, with the main event of the US producer price index for January. Read more
It’s all about US rates…still
Price action in FX markets yesterday was dominated by a continued repricing of the implied path for US rates. Read more
Inflation data prompts divergence in Fed and BoE pricing
Given the somewhat contradictory readings when comparing headline wage data and inflation numbers, the market reaction has been somewhat muted. Read more
US inflation doesn’t fall as quickly as markets hoped, although non-housing services offered reprieve
US CPI for January printed at 6.4% YoY, down slightly from December’s reading of 6.5% and above expectations as base effects outweighed a 0.5% monthly gain. Read more
US inflation will be the focal point for markets today
With the latest US CPI report, markets will be paying attention to gauge whether the rate cuts priced in for the back half of the year are too sanguine. Read more
A Cold War continues in the skies
The Cold War in the skies has kept investor sentiment on a tentative footing this morning, although impact is concentrated in global equity benchmarks. Read more
US inflation data will keep the Fed debate alive
Next week is unlikely to see FX and rates volatility subside, with the release of US CPI, a trifecta of UK labour market, inflation, and retail sales data. Read more
Canada gets another huge jobs report, but read with caution
Canada’s economy added far more jobs than expected for the second consecutive month, with 150,000 new positions created in the month of January. Read more
If the Riksbank can do that?
The Swedish central bank raised rates by 50bps and lifted their projected rate path to a terminal level of 3.33%. Read more
Riksbank hikes 50bps and guides towards a higher terminal rate
At Governor Thedeen’s first meeting in charge, the Riksbank’s Executive Board decided to raise the policy rate by 50bps to 3%, meeting market expectations in doing so. Read more
Riksbank could come to the rescue for SEK today
Focusing on the Riksbank, after core inflation exceeded it’s projections in Q4, expectations for today’s decision has drifted towards a 50bp hike. Read more
Bank of Canada offers welcome insight in its latest meeting minutes
The Bank of Canada released its very first Summary of Governing Council deliberations today, offering markets and the general public a clearer view of how its policy decisions are made. Read more
Markets brush off their forensic linguistic skills to analyse Powell, again
With little news flow in the macro world, markets continued to bid up the dollar in a continuation of the previous days' price action. Read more
A hangover from Friday’s payrolls
Today, markets have slightly retraced yesterday’s price action, with equity futures tentatively trading in the green and a minor sell-off in the dollar. Read more
The risk-on balloon is burst
The pound began this morning broadly flat after a roughly 3% fall against the dollar last week following a raft of central bank announcements. Read more
Spotlight remains on central bank communications and bond market price action
Next week, the focus remains on monetary policy with a plethora of speeches from ECB, BoE and Fed officials. Read more
January payrolls throw expectations of rate cuts into question
While the attention rested on the average hourly earnings (AHE) data today, it was actually the net employment figure that did the damage in markets. Read more
Black Thursday for bond shorts
Price action in the euro yesterday was driven primarily by the reaction in the European government bond (EGB) market to the ECB decision. Read more
Bond markets are unconvinced of the ECBs path after March
The ECB followed its December guidance by hiking all of its interest rates by 50bps, vowing that the likeliest scenario in March is a successive 50bp hike. Read more
BoE lay the foundations for a lower terminal rate than markets expect
The Bank of England voted 2-7 in favour of a 50bp hike in the Bank Rate to 4%, with both Swati Dhingra and Sylvana Tenreyro continuing their dovish dissent. Read more
Monex’s February 2023 FX Forecasts
The market's repositioning has been quite aggressive to date, leading us to believe that the dollar is overdue a period of consolidation in the near-term. Read more
Powell fuels the risk rally ahead of the BoE and ECB
Today, the focus for the broad dollar now shifts to Europe, where we expect both the ECB and BoE to conduct a more hawkish message than the Fed yesterday. Read more
Powell’s cautious optimism killed the Fed’s message
The Fed today hiked the target range for the Fed funds rate by 25bps to 4.5-4.75%, meeting both our expectations and those priced into money markets. Read more
Bracing for Powell’s press conference
Fed Powell will be looking to leave the press conference with current market pricing intact. If achieved, a classic example of a damp squib for markets. Read more
Dollar firms on month-end flows ahead of employment cost index data
Any deviations in the ECI will likely move expectations of tomorrow’s meeting, and could have dramatic implications for the broad dollar. Read more
ECB preview: New information will be isolated to QT plans
Few surprises are expected from the ECB rate decision on Thursday, with markets and ECB President Lagarde appearing in lockstep for a second 50bp hike. Read more
Stress testing the risk rally
After a quiet week last week, markets will finally get to see some major economic news out of the UK on Thursday with the first rate decision of the year. Read more
Fresh interest rate decisions and Chinese PMI data to test risk rally
Next week, fresh interest rate decision from the Federal Reserve, Bank of England, and the European Central Bank will keep markets on their toes. Read more
Soft survey data is underestimating US growth
Price action in yesterday’s session was fairly lethargic, likely due to the limited impact incoming data will have on upcoming monetary policy decisions. Read more
Bank of Canada’s recognition of terminal weighs on rate expectations globally
The Bank of Canada was front and centre for markets yesterday, as the first G10 central bank to officially call an end to a hiking cycle for the ages. Read more
Bank of Canada is the first to hit its terminal rate
The Bank of Canada today raised its overnight rate by 25 basis points to 4.5%, in line with consensus and our expectations. The decision was largely driven by recent data outturns, which show the Canadian economy continuing to operate with excess demand. Read more
PMIs provided different pictures for G10 central banks
Both sets of PMIs out of the eurozone and US fed into speculation that both respective central banks would need to stay hawkish for longer. Read more
US PMIs show the Fed still has a labour market problem
The pace of the slowdown in US economic activity started to ease in January, primarily due to an improvement in service sector output. Read more
No Christmas party but still a new year’s hangover for the UK economy
Whilst the UK might just have managed to escape a technical recession at the end of 2022, the new year is bringing with it some rather unpleasant surprises. Read more
Flash PMIs show the ECB’s problem is looking awfully like the Fed’s
ECB members have largely delineated their battle against inflation from the Fed’s, emphasising the need to guard against inflation expectations. Read more
PMIs could trim market optimism
With news out of the UK of weak consumer demand and electricity use restrictions, a replication of this in the eurozone could weigh on PMIs. Read more
US data provides a fine line for markets to trade as recession fears will feed the dollar
The line between US data being supportive of the rotation out of the dollar and being so bad that it feeds the haven channel is key for markets this week. Read more
Bank of Canada set to be first to hit terminal rates
The tides began to change this week for markets as the soft landing narrative was tested and central bankers doubled down on previous forward guidance. Read more
Market volatility subsides as central bankers push back on rate repricing
Following the release of poor data from the US, the dollar has started to fight back as US equities tumble and overall risk conditions neutralise. Read more
Bad news for the economy isn’t good news for markets anymore
Overall, yesterday’s data forced markets to recognise that there is a regime change currently underway, as signs of recession are building. Read more
Bank of Japan keeps policy on hold, for now
The Bank of Japan voted 9-0 to keep all policy measures unchanged overnight, that includes maintaining its yield curve control band at +/- 0.5%. Read more
Canadian CPI keeps BoC on tracks for a final 25bp hike
Today’s inflation data from December highlights that core inflation pressures won’t give the BoC the space to take such a stance as early as next week. Read more
China’s growth data surprises in December, while rates are set to go 50bp higher in the UK and Europe
The yuan fell slightly this morning against the dollar on the back of new data showing the Chinese economy flatlining in the fourth quarter of 2022. Read more
UK labour market keeps the BoE on track for 50bp hike
The ILO measure of employment shows 27k jobs were added in the three months up to November and the unemployment rate held steady at 3.7%. Read more
Bank of Canada’s Q4 survey results suggests a pause could be in store
Overall, the BoS and CSCE surveys highlighted four major themes: a mild and temporary recession is expected in 2023, weighing on wage growth and consumption decisions. While this should improve inflation conditions, the signs are mixed at present. Read more
Monetary policy remains front and centre for FX markets this week
FX market volatility continued to track at historically elevated levels last week as the spotlight in markets shifted. Read more
Monetary policy to dominate market focus next week, spearheaded by the BoJ
Next week, the focus is to remain on central bank policy actions with the Bank of Japan’s policy announcement on Wednesday as the main event for markets. Read more
US CPI provides the fireworks as JPY continues its meteoric rise
Although December’s US CPI data printed bang on expectations for the first time in a long time, the overall release still proved influential for markets. Read more
UK economy grows in November, dampening recession concerns
The UK economy posted growth of +0.1% MoM in November, above expectations for renewed contraction of -0.2%. The data follows October’s which saw a 0.5% increase in economic activity. Read more
A consensus CPI print still weighs on the dollar
Headline inflation fell from 7.1% to 6.5% YoY in the US in December, owing to a combination of base effects and lower gasoline prices (-1.5% YoY). Read more
US inflation data proves pivotal for the dollar as pressure mounts
The main focus today will be US CPI data, given its implications for Fed decision making going into the February meeting. Read more
Positioning ahead of US CPI to dominate price action today
This morning, price action in the broad dollar is more bifurcated against the G10 as it sustains losses against the bulk of the G10 currency board. Read more
Macro Outlook 2023: The macro climate remains challenging for investors
Following a volatile year defined by rising inflation pressures, the macro environment is unlikely to ease up for investors in 2023. Read more
Downside in the dollar may stall ahead of CPI
With little in terms of economic events today and limited overnight headlines, price action in G10 FX pairs is likely to be less volatile today. Read more
Risk-on trading continues on positive Chinese growth headlines
This morning, the positive tone for risk assets continues as markets dial into headlines from Chinese officials, who have talked up the growth outlook. Read more
North American labour markets provide Goldilocks reports
Lower wage growth in November and December reduces pressure on Fed. Meanwhile, Canadian employment ticks up substantially, but similar to the US, this hasn’t ramped up pressure on the BoC. Read more
Data suggests the payrolls figure will be strong
Today’s payrolls data still has the ability to move the needle for markets. The dollar could still end the first week of 2023 even higher. Read more
G10 FX markets continue to froth ahead of payrolls
We expect GBP to trade in current ranges until a material shift in the macro landscape, which isn't likely until tomorrow’s US Nonfarm payrolls data. Read more
Markets remain volatile at the start of 2023
After falling to its lowest level in a month yesterday, the pound has pounced on the broadly softer US dollar today despite further economic reports highlighting the precarious economic conditions. Read more
Picking up where we left off
Falling 10% over the course of 2022, the pound ranks as the third worst performing G10 currency against the dollar. Read more
Bank of Japan steals the limelight just before Christmas
Today is less about the slowdown in the US housing market and more about the Bank of Japan, which overnight expanded its yield curve control policy band. Read more
Year-end flows to dominate as data calendar thins out
The pound leads gains alongside the Japanese yen and the Aussie dollar against a broadly soft dollar this morning. Read more
It’s a wrap
Given the absence of any ground-breaking events next week, we have taken the opportunity to look back at the past year for markets. Read more
Not all 50s are the same
Although the BoE and the ECB both hiked interest rates by 50bps yesterday, the market reaction to each couldn’t have differed more. Read more
ECB delivers 50 bps, but unlike peers, provides market fireworks
The ECB today raised all three of its interest rates by 50 basis points, with the benchmark deposit rate now sitting at 2%. Read more
Bank of England raises rates 50bps as the hawks start to hide
The Bank of England today voted 2-6-1 to raise Bank Rate by 50bps to 3.5%, rounding off 325 basis points of interest rate hikes this year. Read more
Swiss National Bank hikes rates to 1%, maintains neutral language
The Swiss National Bank today took the rare decision and met market expectations with its final policy decision of the year. Read more
What Fed meeting?
The dollar weakened by 0.4% yesterday, and though it briefly rallied on the Fed’s latest rate hike, those gains gradually faded by NY market close. Read more
Fed hikes 50bps and raises its terminal rate above 5%
The Federal Reserve raised the target range for the federal funds rate by 50 basis points to 4.25%-4.5%, rounding off a cumulative 425bps of tightening this year. Read more
Dollar slides after softer CPI, Fed could push back
We expect the Fed to continue relaying hawkish forward guidance, mainly via an upwards adjustment to their dot plot. Read more
Core CPI comes in soft, putting the ball in the Fed’s court
US inflation printed at 7.1% YoY in November, down from October’s reading of 7.7% and below expectations of 7.3%. Core CPI YoY also undershot expectations. Read more
ECB preview: back to 50s
The ECB is set to announce its final policy decision this year on Thursday 15th at 13:15 GMT, with President Lagarde briefing the media shortly after. Read more
US CPI report is set to cause some fireworks in FX markets
A rebound in the core CPI reading would likely see the dollar retrace much of its November losses against the G10. Read more
BoE to hike 50bps but with a divided committee
The Bank of England is expected to hike Bank Rate by 50bps on Thursday as the data falls largely in line with the expected path laid. Read more
Cold weather reports and positioning dominate FX markets this morning
The pound continues to retrace towards the mid-point of its recent range today as attention switches to this week’s deluge of economic data. Read more
Silly season begins for the economic calendar
The mood in global markets this week can be defined as the "calm before the storm" as next week's data calendar holds a substantial amount of event risk. Read more
US inflation data should spark life back into FX markets
US equities recorded a strong rally yesterday after posting sizeable losses during the early part of this week. Read more
Dollar sell-off continues despite growing recession fears
Today, flows in and out of the dollar are set to dominate markets yet again, with the greenback continuing to soften. Read more
Bank of Canada surprises markets with 50bp hike, opens door to a pause
The Bank of Canada raised interest rates by 50bps to 4.25% on Wednesday, delivering more tightening than expected by money markets. Read more
Much ado about nothing
Despite recording the largest move against the dollar at yesterday’s fix, the pound was unable to consolidate the move into the overnight session. Read more
Don’t write off the greenback just yet
Yesterday’s session was characterised by a strong rebound in the US dollar as it faded overnight losses driven by China’s reopening. Read more
Dollar recovery continues today despite headwinds from China’s reopening
This morning, the dollar started on a weaker footing with CNY leading gains against the greenback as Chinese cities soften their Covid restrictions. Read more
BoC to join the RBA with 25s
Next week, the market’s underlying appetite to shift its exposure to the US dollar will remain significant, but the focus now moves outside of the US. Read more
Canada’s job market cools off, solidifying our 25bp BoC call
The latest Canada jobs report builds upon signals from recent CPI and GDP releases, as the three reports collaboratively show that after previous strength, the Canadian economy is starting to sputter. Read more
Strong payrolls give the dollar ground to consolidate
In response to today’s payrolls report, the dollar retraced part of this week’s losses with the DXY index rallying a whole point to 105.40. Read more
Monex’s December 2022 FX Forecasts
Our house view has now shifted tactically neutral on the US dollar in the near term and await a shift in structural factors to trigger a secular decline in the dollar. Read more
Payrolls could slow the dollar’s decline
Today, the dollar downtrend has slowed somewhat, although large losses are still visible against NZD and JPY after they posted a strong overnight session. Read more
Powell’s sanguine tone gives the risk rally the green light
As anticipated, today’s economic calendar proved instrumental for the dollar’s near-term prospects and induced another round of sizable intraday volatility. Read more
Powell’s commentary will be influential for the dollar in the near-term
In today's Fed economic outlook, we expect Chair Powell to use today’s platform to push back on the recent easing in financial conditions. Read more
A quick turnaround in risk conditions
The pound looked toppy at current levels given the weakness in its economic fundamentals, exposed to a sudden change in risk conditions seen yesterday. Read more
Seeking haven
Civil unrest across major Chinese cities in response to the re-imposition of lockdown measures has sparked widespread risk aversion in markets this morning. Read more
Week Ahead: The return of the data calendar
Markets have primarily traded on titbits of economic information over the past week, however next week, the data calendar packs more of a punch. Read more
Another day of consolidation
Another 0.5% rally saw the pound close to the top of the G10 currency board yesterday, keeping sterling’s record as the best performing against the dollar. Read more
US PMIs and Fed meeting minutes play into the markets confirmation bias
As the data deluge out of the US included durable goods and initial jobless claims data, it was ultimately the PMI release that saw markets come to life. Read more
US PMI data brings bad news for economic growth, but good news on inflation
November’s flash PMIs today suggest that the economic contraction in the US is occurring at a faster rate than the eurozone. Read more
November’s PMIs point to a shallower eurozone recession
Today’s eurozone PMIs extended the broad theme of positive surprises in eurozone economic data and have helped allay fears of a deep upcoming recession. Read more
November’s flash PMIs provide slight lift for the pound, but worse still to come
In a similar fashion to the eurozone measures released earlier this morning, the UK flash PMIs for November exceeded expectations. Read more
Risk on environment faces up to flash PMIs and Fed meeting minutes
Today, price action in the pound is likely to be more illustrative of underlying fundamentals as traders face-up to the latest flash PMI reading for November. Read more
Dollar rallies on rising Covid cases in China
The dollar soared yesterday on risk-off trading as concerns over Chinese lockdowns weighed on pro-cyclical assets. Read more
Risk-on rally faces another hurdle, this time from China
Developments in China have taken some of the air out of the risk-on rally and enabled an extension in the dollar’s consolidation. Read more
Week Ahead: Respect the ranges
In our latest Week Ahead, we discuss how far the dollar can drop, and the potential market impact of a renewed escalation in Russia's war in Ukraine. Read more
It’s all getting technical now
This morning, the pound is back trading above key support levels tested in yesterday’s session, and with little scheduled in terms of market-moving events. Read more
UK budget thrusts weak economic fundamentals back into sight for traders
Chancellor Jeremy Hunt took a much more orthodox approach to today’s Autumn statement following the disastrous mini-budget. Read more
Fiscal consolidation in the UK is the topic of today
Sterling continued to rally against the dollar yesterday, but remained some ways off Tuesday’s highs as the decline in the broad dollar began to settle. Read more
Canada CPI doesn’t conclude debate on December’s rate hike
Canadian consumer prices rose by 0.7% in October, slightly missing the consensus estimate of 0.8% MoM. Read more
Dollar downturn is starting to hit some resistance
Markets continued to rotate out of long dollar positions yesterday, primarily on expectations that disinflation is well and truly underway in the US. Read more
Headline inflation isn’t as worrying as the steady core figure
Headline inflation in the UK jumped a full percentage point from 10.1% to 11.1% in October, primarily due to the higher Ofgem default energy cap. Read more
Another shakeout in USD long positioning
The shakeout in long USD positioning last week proved too aggressive for Fed officials yesterday as they hit the wires with a uniform message... Read more
Dollar stabilises as Fed officials push back on the easing in financial conditions
As Fed officials are looking to push back on easing in financial conditions, the dollar is likely to retrace in the near-term. Read more
Week Ahead: After a rocky week for the US dollar, eyes move to the UK government
Next week, looming large for markets is the release of the new UK government's first budget statement, which is likely to have a seismic impact on GBP. Read more
Cool US inflation data sparks rout in US dollar
Markets have increased bets that the Fed would slow the pace of monetary policy tightening, selling out of USD and buying in to perceived riskier assets. Read more
“Red wave” turns purple as markets buy back in to the buck
The Republicans failure to secure the ‘Red Wave’ in the US midterm elections has meant markets no longer expect any significant economic policy changes. Read more
Dollar remains soft amidst quiet market conditions
US midterm election results started filtering through overnight, with no clear outcome as yet, but speculation of Republican victories has not materialised. Read more
US dollar on the back foot – for now – as global sentiment improves
Boston Fed President Susan Collins has indicated that monetary policy could enter into a new phase, where smaller interest rate increases were required. Read more
Week Ahead – Divergence: Major central banks start to split
With very little headline economic data due out until Friday, sterling is likely to remain out of favour, at least for the first half of this week. Read more
Labour market readings and covid zero policy weaken dollar in run-up to mid-term elections
The pound followed most majors in recovering some ground against the dollar on Friday, as speculators took profits amidst the bout of sharp USD strength. Read more
Bank of England forecasts longest recession since records began
The Bank of England forecast that the economy would fall in to its longest recession since records began, predicting growth will only likely return in 2024. Read more
Fed hike strengthens USD; spotlight now moves to BoE
The big day is finally here for sterling, with today’s Bank of England meeting placing the currency firmly in to the market spotlight. Read more
All eyes on the Fed
Markets remain poised for tomorrow’s BoE interest rate decision. A 75 basis point hike, to raise the base rate to 3%, remains the consensus expectation. Read more
Inflation still rampant in the Eurozone
Preliminary Eurozone inflation data released yesterday showed the headline rate rising to an annualised 10.7%, above forecasts, and representing yet another fresh high. Read more
Monex’s November 2022 FX Forecasts
For now, our outlook on the dollar remains constructive until jobs and inflation data allow the Fed to downshift. Read more
Last week’s euro and pound gains at risk in central bank week
A quiet start to the new week for sterling, with the pound now simply consolidating its recent recovery against its major peers. Read more
Week Ahead: Fed pivot won’t be evident next week
Next week, we expect the BoE to also hike by 75bps, owing to the strong inflation pressures and growing risks to inflation expectations de-anchoring. Read more
US dollar may find further legs today from the data calendar and earnings
Continuation in negative earnings reports in US stocks today will likely see the dollar end the week on a stronger note than it started. Read more
ECB meets expectations with a 75bps hike, TLTRO adjustments, and QT delay
The European Central Bank hiked interest rates by 75bps today, bringing the deposit rate to 1.5% and the main refinancing rate to 2%. Read more
The BoC’s caution ushered in a risk-on rally yesterday, now for the ECB
Much of the focus today will be on the ECB’s forward guidance, through the tone of President Lagarde’s comments on inflation and growth. Read more
BoC meets our call for 50bps, missing economist and market expectations
The Bank of Canada raised its policy rate on Wednesday by 50bps to 3.75%, missing market expectations for 75bps but coming in line with our forecast. Read more
Markets rally again on cracks in the hawkish Fed narrative
Despite yesterday’s CBI data providing yet another clear recession signal for the UK economy, the pound outperformed in the G10 space. Read more
Still see EURCHF downside despite recent unwind
Despite the recent drop in the trade-weighted franc, we continue to see further downside in EURCHF over the winter months as the eurozone enters a recession. Read more
Quieter sessions in FX markets ahead of rate decisions
All eyes were on Westminster yesterday as traders awaited the latest news from the Tory party leadership race. Read more
Pound pops higher as Sunak seen out in front
The pound starts this week at the top of the G10 currency board with the withdrawal of former Prime Minister Boris Johnson from the leadership race. Read more
Week Ahead: Real rates to remain at the wheel for G10 FX next week
Next week, real rates will remain in focus along as fresh policy decisions are expected from the Bank of Canada, European Central Bank, and others. Read more
Political infighting could stretch from London to Brussels
The political circus continued to overshadow developments in UK markets as a vote on Labour’s tabled motion to ban all UK fracking turned into disarray. Read more
Inflation beats expectations, but doesn’t quite shout 75bps next week
Headline inflation in Canada beat expectations by two tenths of a percent in September, printing at 6.9% year-on-year. Read more
Bank of America fund manager survey sheds light on dollar volatility
The results of the latest Bank of America fund manager survey confirmed our view on how markets have been trading as of late. Read more
Feel good factor in the pound reverberates across FX land
The feel-good factor returned for the pound yesterday as it notched a 1.77% rally on the day to completely reverse Friday’s losses. Read more
Canadian business survey suggests further disinflation is in the pipeline
The BoC's Business Outlook Survey leaves two key takeaways: inflation pressures will continue to ease, but the economic outlook looks more pessimistic. Read more
Hunting for fiscal consolidation
Newly appointed Chancellor Jeremy Hunt today announced plans to raise a further estimated £32bn in tax revenue relative to the mini-budget projections. Read more
The Hunt for fiscal consolidation in the UK is on
Chancellor Hunt’s fiscal consolidation measures today need to be substantial enough to settle concerns over inflation and debt sustainability. Read more
Week Ahead: Will the gilt market behave?
Next week, the data calendar thins out further before central banks come back online with rate decisions from Europe and Canada the week after. Read more
The dollar fell on stronger inflation data?
Today could well be crunch time for UK asset markets, as the BoE is set to have its last scheduled day providing liquidity in longer-dated gilt markets. Read more
No slowdown in sight: another hot core inflation print melts markets
After the September NFP report announced the death of the Fed pivot, today’s inflation report put the nail in the coffin and poured cement over the top. Read more
A hot core CPI reading could wreak havoc on markets
Today, with the pivotal release of US CPI in the afternoon, which itself can cause havoc in global bond markets, the pound looks prime for a correction. Read more
Bailey tests the markets resolve but the porridge is still too hot to stop cooling it down
Price action in the pound yesterday was largely stable, as the currency enjoyed a sustained rally over the course of the European trading session. Read more
BoE’s bond market backstop is expanded as they continue to put out fires
The focus on the bond market continued this morning, as the Bank of England announced that it was expanding its liquidity backstop. Read more
UK labour market keeps the pressure on the BoE, but the release is overshadowed
Up until a month ago, the UK labour market data would have been influential in determining the Bank of England's next rate decision. Read more
Geopolitical risk comes back into focus as bridges get burnt over the weekend
The war has escalated again over the weekend after news reports of an attack on a key Russian transport bridge to Crimea. Read more
Week Ahead: All eyes on core CPI following payrolls
After a tumultuous September, the topic that has dominated most discussions in the first week of October was whether the Fed was going to pivot or not. Read more
The Fed pivot isn’t on just yet
The market discourse this week has centred on whether we’ve reached the peak level of hawkishness from the Fed. Read more
The stage is set for an explosive payrolls report
The payrolls report has largely exceeded expectations over the past six months, and we favour further dollar upside heading into the weekend. Read more
September’s DMP data confirms that the BoE will have to go big in November
The BoE’s decision maker panel data partially incorporates the effect of the latest energy caps on businesses for the next 6-months. Read more
The first step on the path back to fundamentals
The pound led losses in the G10 space yesterday, recording a drop of 1.28% on the day against the dollar, as it continues to exhibit much higher levels of volatility after the budget. Read more
ADP and ISM services data may correct the dollar decline today
Within this macroeconomic backdrop of lower global bond yields, the dollar traded lower across the board yesterday with some G10 currencies. Read more
Monex’s October 2022 FX Forecasts
Although a high level of bond market volatility is filtering through to FX markets our analysts believe the dollar has a structural basis to grind higher in Q4. Read more
Dollar tumbles on ISM data but too early to call the pivot
Volatility remained in abundance in the GBPUSD pair yesterday as the pound was initially whipsawed around by rumours of a reversal in the 45% tax rate cut. Read more
UK government reverses 45% tax cut as internal pressure mounts
Headlines from the Tory Party conference this morning suggest that the government was about to make a U-turn on the 45% income tax cut. Read more
Week Ahead: Volatile conditions to persist as investors reposition
FX markets were incredibly volatile this week, with the main source of volatility came from events in the UK, seeing the pound fall to an all-time low. Read more
FX markets remain choppy on month-end flows and equity turmoil
Given current valuations and still shaky fundamentals, we expect the bias in the pound to continue to be lower in the short-term. Read more
BoE backstops gilt market liquidity, but volatility is still high
The Bank of England launched a £65bn emergency programme yesterday as it tried to soothe concerns of a liquidity crunch in long-term bond markets. Read more
DXY could break 115 on rising European risk and further downside in equities
This morning, despite the slight moderation in 2-year yields and their reluctance to hold above 4.3%, the dollar’s ascendency continues. Read more
Bank of England rules out inter-meeting intervention, leaving sterling at risk
Investors in Europe woke up this morning to a substantial bout of overnight volatility in the pound after it dropped nearly 4.5% to an all-time low. Read more
Fiscal concerns and rising rates creates recipe to sell risk assets
After dropping to record lows in the early hours of yesterday morning, the pound partially recovered once UK markets opened and speculation over an emergency rate hike from the Bank of England built. Read more
GBPUSD slips to record lows overnight on fiscal policy concerns
Financial markets continue to voice their displeasure over the latest fiscal policy plans with their actions this morning as the fire sale in the pound continues. Read more
Week Ahead: Fire sale in markets may not ease despite thinner data calendar
In the week ahead, the economic calendar dies down slightly, although the start to the week might not be frictionless as traders return with the results of Italy’s latest election. Read more
The not so “mini” UK budget
At today’s mini-budget, newly appointed Chancellor Kwasi Kwarteng announced a substantial easing of fiscal policy that awoke the bond vigilantes and sent the gilt curve substantially higher, led by the front-end. Read more
UK budget could rub salt into the wound for the pound
The pound continued to hover around multi-decade lows against the dollar yesterday. Focus today will be on Chancellor Kwarteng this morning as he is set to announce a “mini-budget” at 09:30 BST. Read more
SGD Outlook: Singapore dollar to rally against currency basket on MAS tightening
In spite of the fundamentals, the risks to our USDSGD outlook skew to the downside as APAC central banks may intervene in FX markets to prevent excessive depreciation in their respective currencies. Read more
Bank of England delivers hawkish 50bp increase
The Bank of England today voted 5-4 in favour of raising Bank Rate by 50bps to 2.25%. In response to today’s BoE decision, the pound tracked near-term money market pricing lower as GBPUSD erased its pre-BoE rally. Read more
SNB hikes 75bps, Swissy slides as 100bp risk is priced out
The Swiss National Bank hiked its policy rate by 75bps to 0.5% today, a move that was largely expected by the sell-side community. Looking ahead, we expect the SNB to embark on another 75bps hike in December and 25bps in March 2023. Read more
USD pressure persists in markets and rates jump
Yesterday’s highly anticipated Federal Reserve meeting was always going to be a tough hurdle for Chair Powell to clear. Following the Asian open, traders in the East took the Fed’s hawkishness as credible, extending the dollar rally, pushing DXY through to a new cycle high. Read more
Fed turns incredibly hawkish, so much so that markets questioned its intentions
The Federal Reserve today hiked interest rates by 75 basis points, raising the target range to 3-3.25%. Given the decision largely fell in line with expectations, the initial market reaction was focused on the accompanying economic projections. Read more
Dollar surges ahead of pivotal Fed meeting
After a fairly benign session yesterday, the broad dollar is on the offensive this morning ahead of tonight’s Federal Reserve meeting. The dollar DXY index has rallied over 0.6% already this morning. Read more
Loonie slips on broad-based moderation in inflation pressures
Inflation in Canada cooled more quickly than expected in August, with the headline index down -0.3% on the month and falling in year-on-year terms by 0.6 percentage points to 7.0%. This marks the second consecutive monthly decline in the headline YoY figure from June’s peak of 8.1%, and similarly to July, was mostly driven by lower gasoline prices and base effects. Analysts expected a milder monthly decline of 0.1% for the MoM rate and 0.3 percentage points for the YoY figure. Many signs in the report will be viewed with optimism by the Bank of Canada. The headline inflation rate sits a full percentage point below their 8.0% YoY forecast for the third quarter. In addition, core price pressures, which have been in particular focus given their stickiness, also seemed to stall. CPI excluding food and energy came in flat in August, allowing base effects to cut the YoY figure by three tenths to 5.3%. Out of the BoC’s three preferred measures of core, both core-median (+4.8% YoY) and core-trim (+5.2% YoY) fell by two tenths. Only core-common (+5.7%), which is based upon a complex econometric factor model as opposed to simple statistical rules, went the other way. Nevertheless, most analysts have been putting very little weight on the core-common rate in recent months as it has been subject to large revisions of late; as a testament to that fact, the indicator’s reading for July was revised upward by five tenths to 6.0%, which is a dramatic revision. Aside from the softening in core prices, a few other key signals in the report will allow Bank of Canada officials to momentarily catch their collective breath. For one, price growth for both goods (-0.8% MoM) and services (+0.1% MoM) slowed, suggesting that an easing in elevated supply chain pressures, weaker domestic demand, and tighter monetary policy are all working in sync to slow inflation. Although the bulk of the decline in inflation was driven by lower transportation costs (-2.5% MoM) on cheaper gas (-9.6% MoM), which is heavily exposed to global conditions, some of the most interest-rate sensitive components, such as durable goods (-0.6% MoM) and shelter (-0.1%) saw prices fall, indicating that the quick pace of interest rate hikes is having its desired effect. The evidence suggests that demand is slowing, as discretionary services pertaining to travel were a major driver of the slowing in services inflation overall. Finally, the report also showed that inflation dipped in every single Canadian province, which was yet another sign of a broad-based slowdown in price growth. Following the release of the data, Canadian markets reacted in a slightly dovish manner, consistent with the idea that a faster-than-expected return to the 2% target removes some of the tail risk that the Bank of Canada will need to tighten policy well beyond the 4% handle. In accordance with that notion, bond yields fell by 7-9bps across the curve from moments prior to the report’s release, flipping the overall 1-day change from positive to negative and widening the discount on Canadian government bond yields relative to US treasuries. In money markets, expectations for the Bank of Canada’s next meeting in October fell from a fully priced 50bp hike and a 22% chance of 75bps to a fully priced 25bp move with 90% chance of 50bps. As a result, the loonie sold off, with USDCAD pushing half a cent higher and edging closer to yesterday’s 22-month high for the pair. Falling transportation costs drive the bulk of the slowdown in headline price pressures Author: Jay Zhao-Murray, FX Markets Analyst Disclaimer This information has been prepared by Monex Europe Limited, an execution-only service provider. The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice ona which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. No opinion given in the material constitutes a recommendation by Monex Europe Limited or the author that any particular transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, it is not subject to any prohibition on dealing ahead of the dissemination of investment research and as such is considered to be a marketing communication. Read more
Riksbank kickstarts the central bank calendar today
The latest Swedish Riksbank policy rate adjustment at 08:30 BST today, should see the pace of Swedish interest rate tightening to accelerate with a 75bp hike. Read more
Week Ahead: Deluge of central bank decisions populate next week’s calendar
In the week ahead, the data calendar is dominated by a torrent of interest rate decisions as nine major central banks prepare to adjust their monetary policy. The main event, however, will be Wednesday’s Federal Reserve decision. Read more
Dollar drives higher on stronger front-end Treasury yields
The dollar is going mildly bid this morning, edging closer to last week’s highs as global equity futures strike a unanimously risk-off tone and yields continue to climb. All of G10 FX is down against the dollar today, with NOK leading the losses and antipodes close to flat. Read more
Greenback remains strong after currencies struggle to fade CPI move
This morning, the mild dollar strength of yesterday afternoon has continued, with the broad dollar DXY index trading at the top end of the daily ranges seen yesterday and the day before. Read more
Dollar rallies as CPI data adds to Fed speculation
Yesterday's reading of the US inflation data for August ended the trend of improved risk appetite and market favouritism for European FX that has been in place since last Friday. Read more
August inflation eases pressure on BoE to raise 75bps
Headline inflation eased from July’s reading of 10.1% YoY to 9.9% in August. This sees the headline inflation rate fall back to levels that are in line with the Bank of England’s Q3 projections. Read more
Core CPI heats up, cementing the case for 75bps from the Fed next week
Both headline and core US CPI were hotter than expected in August, leading markets to embark on a swift reversal from recent price action. Read more
Markets continue to fade the dollar ahead of key US CPI report
Yesterday’s dollar price action was primarily driven by cross-asset correlations, as global risk sentiment was decisively positive, as equities rallied. Read more
UK labour market tightens further, but won’t tip the balance within the MPC
July’s labour market data out of the UK this morning showed the 3-month unemployment rate continued to tick down. Read more
Ukrainian counteroffensive boosts European risk sentiment
The pound has started this week on a stronger note as geopolitical developments over the weekend have provided a welcome boost to European risk sentiment. Read more
Week Ahead: Delayed BoE puts all the emphasis on US CPI next week
In the Week Ahead (12th-16th September), with the Bank of England meeting moved to accommodate a period of national mourning, the emphasis will rest on US CPI data on Tuesday. Read more
Canada lost 40k jobs in August, but wages grew quickly
The Canadian economy shed -39,700 jobs in August, accelerating the pace of employment decline from July, which saw -30,600 jobs lost. It was a substantial miss relative to expectations, as the median estimate was for a +15k gain and the most bearish analyst predicted just a -20.5k decline. Read more
Dollar declines as tough talking central banks spur G10 rally
The US dollar strengthened marginally against a basket of currencies on Thursday. Within the G10, CHF and CAD posted gains against the dollar. Read more
The hawks rule the roost as the ECB hikes 75bps
The ECB raised its three key interest rates by 75bps today: to 0.75% - Deposit Rate, 1.25% - Main Refinancing Rate, and 1.5% - Marginal Lending Rate. Read more
ECB next up to bat with downside risks to the euro prominent
This morning, part of the pre-emptive rally has been faded as the euro resumes trading below the parity threshold. Read more
Bank of Canada takes interest rates into restrictive territory with 75bp hike
The BoC raised its policy interest rate by 75bps to 3.25% on Wednesday, and the overnight target rate finally exceeds its estimated 2 to 3% “neutral” range. Read more
FX intervention risk rises in South East Asia
This morning, the focus in Asia persists for Foreign Exchange markets on the whole as short JPY momentum picks up. Read more
An energy relief rally in Europe?
Today, risk appetite in European currencies has received a welcome boost as Germany extends the life of two nuclear plants in order to ease supply issues. Read more
Nord Stream 1 maintenance sparks risk-off rout in Europe
News that Russian gas flows won’t resume due to an unexpected oil leak on a Nord Stream 1 turbine sent the euro tumbling from its post-payrolls. Read more
Week Ahead: The end of summer ushers in a fuller economic data calendar
Next week has been graciously set up by markets over the past few days as September marks the reintroduction of the central bank calendar. Read more
August’s payrolls data doesn’t close the debate on September’s meeting
August’s Nonfarm Payrolls report showed the US economy added 315,000 jobs in August, a marginal beat on Bloomberg’s survey of economist expectations. Read more
Dollar DXY index reaches fresh multi-decade high ahead of payrolls report
Given the Fed’s holistic view on payrolls data, markets will be sensitive to all components such as the participation rate. Read more
Monex’s September 2022 FX Forecasts
Our forecasts are more bullish on the dollar as we no longer expect the Fed’s downshift to 50bps in September to be as supportive for risk conditions. Read more
A new month but the same narrative for global markets
Today, the broader risk environment is doing the pound no favours as it continues to plumb fresh lows, extending a 1.5% decline against the dollar. Read more
Increased job openings in the US sparks a rally in Treasury yields
With the PBoC pushing back on CNY weakness and immediate energy concerns easing in Europe, the dollar started yesterday’s session lower. Read more
EURUSD hugs parity as energy pressures ease, for now
Today, markets may trade in a more limited range as the dust settles post-Jackson Hole, although developments in EURUSD poses a risk to this. Read more
Week Ahead: September’s Fed meeting is still in the balance post Jackson Hole
Next week, focus shifts to the Federal Reserve, as fresh jobs data on Friday will be important for the decision between 50 and 75bps. Read more
Jackson Hole draws all of the attention as Powell tries to walk a fine line
Today, domestic focus for GBP traders will be on rumoured fiscal support measures, but the pound is likely to remain trading off of the broader USD move. Read more
Dollar weakens as Chinese officials loosen the purse strings
This morning, news of increased stimulus in the pipeline in China has helped the pound rally close to half a percentage point against the dollar. Read more
US PMIs give the doves reason to stretch their wings
For the remainder of the week, GBP traders will be sensitive to developments in European energy pricing and US rates markets. Read more
Awful US PMI report leads money markets to price out some chance of 75bps, sparking dollar sell-off
In today’s first batch of PMI readings for August, the US composite PMI fell to 45.0 from 47.7, its weakest level since February 2021. Read more
UK’s flash August PMIs don’t take the burden off the BoE
August’s flash PMIs suggest that the UK economy practically stagnated this month with a sharp downturn in manufacturing activity. Read more
Demand in the eurozone continues to wain under intense inflation pressures and economic uncertainty
The common theme throughout this morning’s preliminary PMI reports for August was that demand conditions are continuing to falter. Read more
EURUSD bears finally progress in the trench war over parity
Markets are now pricing a weaker euro-area growth profile into the euro due to the impact energy prices will have on businesses via higher input costs. Read more
Technicals come back into scope for FX traders ahead of Jackson Hole
Technical support levels come back into scope for the pound after the currency was in free fall last week, recording its worst 5-day return since September 2020. Read more
Week Ahead: Jackson hole takes place as stagflation risk brings EURUSD parity back into the frame
Next week, focus shifts to activity indices, while the Fed is set to take centre stage again as the annual Jackson Hole Symposium takes place. Read more
Hawkish pricing is no longer supportive for European currencies
News of further gas levy’s on the German consumer aren’t helping concerns that the rising energy cost will push the eurozone economy into a sharp recession Read more
Dovish Fed minutes provide little respite for riskier currencies
Today, the pound remains on the backfoot as the broader market environment turns risk-off on Chinese growth concerns. Read more
Retail sales come in flat but US consumers trim discretionary spending
Headline retail sales out of the US held flat over the month of July, slightly below economist expectations for a 0.1% MoM gain. Read more
Sterling stumbles as Gilt curve inverts
With the spread close to -0.1%, the UK Gilt curve is now inverted over the 2-10 year horizon for the first time since Q3 2019, a key recession indicator. Read more
Headline inflation breaches 10% for the first time since 1982
UK headline inflation exceeded expectations to come in at 10.1% YoY- a 20-year high. The pound initially spikes higher on stronger inflation data but the rally wasn’t to last. Read more
Forget the headline dip: core inflation hits a record high in Canada, raising the odds of a 75bp BoC hike in September
Canadian CPI inflation edged up by 0.1% MoM in July, in line with economist expectations, similarly to last week’s US CPI print. Read more
Dollar rallies as growth concerns reappear
This morning, labour market data from June in the UK saw the real wages drop at the fastest pace on record between April and June. Read more
Week Ahead: Summer trading should lead to less FX volatility this week
With many traders on holiday and vega declining, FX volatility will likely be muted for the remainder of August. Read more
‘Tired of the experts’? All eyes on UK GDP after grim BoE predictions
Today sterling will be firmly back in the spotlight, with the hotly anticipated release of Q2 GDP figures from the UK due out this morning. Read more
Decelerating US inflation figures spark market excitement
General market nervousness, combined with the US Fed leading the way in raising interest rates, ensured that demand for the US dollar has remained strong Read more
Markets cheer on inflation dip, but Powell can’t pop champagne just yet
US CPI sputtered in July, posting a 0.0% month-on-month headline gain when a mild increase of 0.2% was expected. Today’s report marks a stark deceleration in the immediate inflationary impulse, considering that June CPI rose 1.3% MoM. Read more
Light data calendar ushers in Summer liquidity
This morning, the pound has struggled to make inroads against the dollar, weakening even against the euro. We expect the pound to continue trading on a softer footing this week. Read more
Thin data calendar could limit volatility this week
This week, the UK data calendar is completely sparse until Friday’s release of preliminary Q2 GDP, after last week's BoE meeting saw the pound fall. Read more
Week Ahead: Inflation takes centre stage following strong jobs growth
Next week, the data calendar thins out, but the focus for markets will remain the same as July's CPI report is released from the US. Read more
Payrolls leaves Powell with egg on his face
Today, just over a week since a deceleration in the Fed’s hiking cycle, payrolls data highlighted that labour demand still remains high in the US economy. Read more
Markets brace for slowdown in US employment gains
Potentially muting the impact of today’s decision on FX markets is the fact that August’s payrolls report is also due out ahead of September’s Fed meeting. Read more
BoE hikes rates by 50bp while signalling an imminent recession
The Bank of England met market expectations today by hiking rates 50bp to 1.75%, exceeding our base case in doing so. Read more
BoE set to underwhelm irrespective of the rate hike size
Downside in the pound may be visible again today as the Bank of England takes centre-stage for markets at 12:00 BST. Read more
Dollar rises on diplomatic tensions and hawkish Fed rhetoric
This morning, with bond yields fading yesterday’s rally, the dollar is back trading on the defensive, with focus very much still on political developments in South East Asia. Read more
Monex’s August 2022 FX Forecasts
DXY index is likely to stay supported, owing to our expectation that the euro-area’s growth outlook will force another run on parity this month. Read more
Pelosi’s trip to Taiwan sends risk assets south
The pound trades roughly lower with other pro-cyclical currencies as the risk backdrop deteriorates slightly due to events in Taiwan. Read more
Further dollar downside is viewed as growth concerns continue to pin policy expectations
In the monetary policy space, we expect plenty of Fed headlines over the next five trading days as the Fed’s communications blackout ends, although most of the scheduled events for Fed speakers don’t start until tomorrow. Read more
Week Ahead: Growth and inflation tango will keep FX volatility elevated
In the week commencing August 1st, growth and inflation dynamics will continue to dominate G10 FX markets with the release of multiple PMI reports globally and key rate decisions from Australia, Brazil, and the United Kingdom. Read more
Dollar drops as markets price lower US growth and rates
This morning, with risk assets better supported, the pound trades a third of a percentage point higher, in line with the early move in the euro. Read more
Dollar drops as Powell signals slowdown in Fed hiking cycle
With this risk prominent, traders may take profit in the recent GBP rally at current levels unless the broad dollar continues to exhibit substantial downside pressures. Read more
Powell suggests Fed tightening cycle will drop down a gear, weighing on the dollar
Today, the Federal Reserve voted unanimously to raise the target range for the federal funds rate by 75 basis points to 2.25-2.5%, in line with expectations. Read more
Markets await the latest Fed decision, with a 75bp hike widely expected
The Fed is widely expected to hike by 75bps, with almost 96% of Bloomberg survey respondents calling for such a move, with the remainder of economists evenly split between 50 and 100bps. Read more
Dollar stumbles as recession fears abate
After initially being buoyed by renewed recession fears overnight, the dollar’s strength was faded by European traders in what was a relatively light data session. Read more
Recession fears are back supporting the dollar
Given the firm consensus for this week’s decision, the focus for markets will rest on the Fed’s forward guidance, with the September decision subject to much finer margins now the Fed’s target rate is well within neutral territory. Read more
Week Ahead: Week Ahead: Fed set to hike by another 75bps, focus on September’s guidance
In the upcoming week, there will be plenty of market-moving economic data, with the Federal Reserve set to hike by another 75bps. Read more
Eurozone PMIs and Q3 SPF reinforce our confidence in a second 50bp hike from the ECB in September
This morning, markets received fresh information on growth conditions in Europe and forecasters expectations for inflation. Read more
ECB conducts historic meeting but euro struggles for direction
Today, markets will be paying close attention to the Q3 Survey of Professional Forecasters, released at 09:00 BST, which the ECB had priority access. Read more
ECB breaks the shackles of its own forward guidance, hiking 50 basis points
The European Central Bank raised all three key interest rates by 50bps today, marking the first rate hike in 11 years and an end to an 8-year negative interest rate framework. Read more
ECB set to hike rate rates for the first time in 11 years as the macroeconomic backdrop remains complicated
After 11 years, the European Central Bank is set to hike rates today, with the decision very much live after ECB sources reopened the debate for a 50bp hike on Tuesday. Read more
Robust core CPI measures to keep BoC on track despite underwhelming headline print
Headline inflation in Canada rose by 0.7% MoM in June, lifting the YoY rate from 7.7% to 8.1% despite base effects that would have taken 0.3pp off the headline rate. Read more
Inflation data isn’t compelling enough to make 50bp in August the base case
June’s CPI data saw headline inflation rise from 9.1% YoY to a new multi-decade high of 9.4%, a print that marginally exceeded expectations. Read more
EURUSD eyes 1.03 but hurdles remain
While the latest developments have been music to EUR bulls’ ears, downside risks to EURUSD persist, with the next few days proving pivotal for whether markets return to testing parity in the pair. Read more
Dollar retraces as inflation expectation data moderates curve inversion in US rates
Today, the dollar remains on the back foot amid a light data calendar and easing expectations of the Fed’s tightening cycle this year in response to Friday’s inflation expectations data and Governor Waller’s comments. Read more
Wage growth isn’t strong enough to force a 50bp hike from the BoE
UK labour market data for May showed a continued increase in employment, but with no signs of rising wage pressures, Bank of England policymakers are likely to be little concerned by today’s release. Read more
Dollar declines as Fed expectations ease at the start of a busy week for European markets
The broad dollar will likely take cues from cross-asset price action this week, while developments in the eurozone may mean that EURUSD sets the pace for the DXY index. Read more
Week Ahead: The ECB are next up to bat as the euro continues to test parity
In the week ahead, the market focus will shift to the ECB for official commentary as the central bank is expected to hike rates for the first time in 11 years, while the prospect of a 50bp hike from the BoE in August will be weighed as a fresh batch of UK economic data is released. Read more
Dollar drives higher before Waller tempers Fed expectations
GBPUSD will be dictated by broader market conditions as traders weigh valuations in the dollar against high beta currencies as growth and inflation concerns persist. Read more
Dollar continues to climb as markets speculate on larger Fed hike
With growth conditions still a major concern for markets and pressure from US rates reigniting, G10 FX pairs find themselves under renewed pressure this morning as the dollar reverses yesterday’s losses. Read more
Bank of Canada hikes 100bps to destroy demand and cool inflation
The Bank of Canada unexpectedly raised its policy interest rate by a full percentage point to 2.5%, dashing concerns that it would follow the Federal Reserve with only 75bps. Read more
US inflation accelerates on gas price spike, but composition remains strong
Headline inflation increased by 1.3% month-on-month in June, raising the year-on-year rate by 0.5 percentage points to 9.1%, the fastest pace of price growth since November 1981. Read more
US CPI holds the potential to break EURUSD parity
This morning’s price action is likely to be tentative, as June’s CPI data out of the US is likely to dictate how most G10 FX pairs close out the day. Read more
Speculation over EURUSD parity continues as resistance on route holds up
Unlike other pro-cyclical currencies that felt pressure from a stronger dollar, the euro sank to 20-year lows, with parity very likely in the near-term. Read more
EURUSD remains at the mercy of European energy benchmarks
The dollar starts this week on a stronger footing again as markets weigh increased recession risks in Europe and monitor the rise in Covid cases in China. Read more
Week Ahead: A summer lull in FX markets isn’t due anytime soon
FX markets defied a dull economic calendar last week, delivering substantial volatility and abnormally-large moves on the back of global recession fears and a mounting energy crisis in Europe. In the week ahead, there will be plenty of market-moving economic data, alongside central bank decisions from the Reserve Bank of New Zealand, which we expect to hike 50bps, and the Bank of Canada, which is likely to follow the US Federal Reserve with a 75bp hike. Read more
Contraction in Canadian employment won’t derail the BoC from hiking 75 basis points
Canada lost 43,200 net jobs in June, a substantial surprise considering economists expected the economy to add 22,500 new jobs, which would have been a milder but still positive increase compared to last month’s 39,800 gain. Read more
Nonfarm Payrolls exceed expectations, keeping the Fed on track for 75bps
The threshold for today’s jobs data to change the tightening course for the Fed at the end of the month was elevated, mainly due to the fact that labour market conditions seldom change markedly over the course of a month (lockdowns withstanding) and the US labour market entered today’s release at historically tight levels. Read more
North American jobs data draws attention following dramatic week in FX markets
Following yesterday’s 0.8% rally, GBPUSD is retracing somewhat today in line with the broad USD move. Read more
The EURUSD parity sharks circle as blood is left in the water
The persistent stagflationary shock stemming from Europe’s energy market has left blood in the water, and at current levels, the parity sharks are circling EURUSD. Read more
Markets meltdown as European energy concerns resonate
Despite the UK economy’s greater insulation from Europe’s energy crisis due to a more diverse supply network and reduced dependence on Russian gas, higher gas and electricity prices are still mapping over the channel. Read more
FX price action remains tentative leading into key meeting minutes
Today, with global bond yields cooling somewhat and equities pointing higher, the more conducive risk backdrop has spurred the pound to trade a tenth of a percentage point higher against the dollar heading into the European open. Read more
The dollar’s domination on growth fears is unlikely to abate this week
This morning, with US markets closed for the July 4th celebration, volatility in G10 pairs is limited as traders can’t take cues from how Treasury markets and US equity markets are trading at the start of the week. Read more
Week Ahead: Recession fears continue to dominate and prop up the dollar
The dollar remaining bid is unlikely to change next week as upcoming data releases won’t offset concerns over heightened probability of incoming recessions. Read more
Monex’s July 2022 FX Forecasts
Read Monex's July 2022 FX Forecasts. Find our what our top forecasters expect for currency markets, amid ongoing recession concerns and higher inflation. Read more
USD firms as growth fears continue
Unlike yesterday, however, the dollar is trading higher this morning on these dynamics as it resumes its role as a global safe haven. Read more
Recession fears resonate but month-end flows likely to dominate
This morning, the pound is bid against the dollar, likely due to depressed valuation, as data continues to highlight the weakening economic backdrop. Read more
Inflation in Spain jumps to 10%, fuelling speculation of a 50bp hike by the ECB
With the inflation data trickling out ahead of the main event at Sintra at 14:00 BST, which sees President Lagarde join Governor Bailey and Chair Powell on a panel, price action in EURUSD and European rates is likely to remain volatile as traders weigh up the likelihood of the ECB hiking rates by 50bp at July’s meeting. Read more
ECB could unveil new tools and point towards 50bp in July today
ECB sources have already hit the wires this morning to outline the possible way the ECB is looking to offset the impact of its new anti-fragmentation tool. Read more
Sintra starts amid a quiet economic calendar
The data calendar is more populated this week as the ECB’s annual central banking forum in Sintra is set to begin. Read more
Week Ahead: It’s time for Sintra as rates take dovish turn
FX markets became more navigable for traders this week as the cross-asset backdrop focused predominantly on the rising probability of recessions in Europe and the US. Read more
FX markets trade in narrow ranges after recession alarms ring
Released one-minute past midnight, consumer confidence data for June continued to plumb fresh all-time lows as the cost-of-living crisis persists. Read more
June’s flash PMIs signal a marked slowdown in H2 for the eurozone and UK economies
Today’s flash PMIs for June out of the eurozone and UK highlighted a consistent theme: momentum in economic activity. Read more
Recession fears continue to dominate
This morning, even as yields retrace yesterday’s move across European sovereigns and the US, UK Gilt yields continue to moderate. The vulnerability of market pricing for the Bank of England’s rate path are becoming starkly apparent. Read more
The BoC will need to up the ante as inflation heats up in Canada
Speculation over a 75 basis point hike from the Bank of Canada at their July 13th meeting was rife heading into today’s CPI report. Read more
CPI reports offer markets guidance on central bank policy actions
The pound opened this morning on the defensive as the previous constructive risk backdrop flipped. However, a softer than anticipated May inflation report is only compounding downside momentum in the pound as rates markets price out the probability of a preposterous rate path for the Bank of England. Read more
UK CPI rises to 9.1% YoY, but details will keep BoE hawks in check
Headline UK CPI increased 0.1 percentage points from April’s reading to hit a fresh 40-year high of 9.1% YoY in May. This was largely in line with economists' expectations, which saw CPI increasing at 0.7% MoM. Read more
US markets to come back online to a mildly weaker dollar
Despite the US Treasury market reopening with the curve up around 5bp higher, global equities continue to point higher. Read more
Week Ahead: There’s panic in policymakers voices
After a highly volatile week for short-term interest rate markets after a string of surprising central bank decisions, which induced heightened FX market volatility, markets turn their attention to incoming inflation data in Canada and the UK. Read more
Dollar is back in demand after turmoil in USDJPY overnight
Today, with turmoil in Japanese markets overnight, the dollar is back trading on the offensive. In the economic calendar, events are light in the US with just Chair Powell’s welcoming comments at a dollar conference standing out at 13:45 BST. Read more
Spooked by services inflation, the BoE doves fall back in line
The Bank of England voted 6-3 in favour of raising rates by 25bps to 1.25%. The dissenters (Haskell, Mann, and Saunders) all voted to hike rates by 50bps, in order to mitigate against risks that wage growth, firms’ pricing decisions, and inflation expectations fuel persistence in above-target inflation. Read more
SNB hikes 50bp as it targets a stronger real exchange rate
Swiss National Bank surprised markets with a 50bp hike, bringing the interest rate on sight deposits to -0.25%. While the consensus was for the SNB to use today’s meeting to signal a policy change in September, last week’s hawkish ECB meeting coupled with a more hawkish Federal Reserve last night likely forced the SNB into earlier action. Read more
Bank of England set to round off a busy 24 hours for G10 central banks
Today, focus shifts back to domestic factors for sterling traders as the Bank of England is set to announce its latest policy decision at 12:00 BST. Consensus is firm around a 25bp hike from the Old Lady, which would bring Bank Rate to 1.25%, meaning the market reaction will be determined by the Bank’s forward guidance. Read more
Fed follows market pricing with hike and dot plot, but could still underdeliver by year-end
The Federal Reserve voted 10-1 to increase its target range for the effective federal funds rate by 75bps to 1.5-1.75%, while raising its median dot plot projection for 2022 by 150bps to 3.375% and 2023 by 100bps to 3.75%. Read more
Panic brews among major central banks
The single currency was buoyed by hawkish commentary from Dutch National Bank President Klaas Knot yesterday. This morning, however, news that the ECB will be holding an emergency meeting at 10:00 BST/ 11:00 CET has lifted the euro by over half a percentage point. Read more
Bank of England set to hike by 25bps and continue pushing back on market expectations
The Bank of England is set to raise its policy interest rate by 25 basis points at 12:00 BST on Thursday, bringing Bank Rate to 1.25%. Given this is widely expected by economists and markets alike, the focus will shift from the hike itself to the way in which the decision is framed by the BoE. Read more
The dollar marches higher as Fed pricing explodes
Pricing of the Fed’s next policy move in rates markets caused the damage not only in FX markets but also in equities as the probability of the Fed raising rates by 75bps on Wednesday jumped to 93%, up from just 10% prior to Friday’s CPI report. Read more
Dollar drives higher as markets speculate on 75bps from the Fed
King dollar led the G10 once again on Friday after a hot CPI print suggested to markets that the Federal Reserve will need to move more aggressively to cool inflation. Following risk-off trading sessions in the Asian and European equity markets, the inflation data put further downward pressure on US equities after North American markets opened. Read more
Week Ahead: The full spectrum of central banks
This week will be another big one for FX market participants, as they brace themselves for a slew of central bank meetings. Read more
Canada’s labour market continues to fire, but gets outshone by US CPI data
Canada’s economy added 39,800 new jobs on net in May, more than the 27,500 expected by economists and the 15,300 jobs added in April. Read more
May’s CPI report boosts odds for three more 50bp Fed hikes
US headline inflation rose in May from 8.3% to 8.6%, outstripping expectations for a flat reading and by doing so, quashed speculation that the US economy had seen peak inflation back in April. Read more
ECB beats hawkish drum, but doesn’t get the desired effect
Today, the ECB will likely be in damage limitation mode, with French Governor already stating that the ECB has the means to tackle market fragmentation. Read more
BoC is worried about high debt levels and home prices
Today’s Financial Stability Report from the Bank of Canada suggests that, on the whole, vulnerabilities in the financial system have intensified. Read more
ECB signals 25bp hike in July and 50bp in September, but price it at your own peril
The European Central Bank maintained its core messaging that rates won’t rise until July’s meeting and will only exit negative territory at the end of Q3. Read more
ECB prepares markets for lift-off
Today, with limited data out, the focus for GBP traders will be on the EURGBP cross and whether it can return to its year-to-date high on the back of today’s ECB meeting. Read more
Path higher for Treasury yields isn’t smooth as growth concerns still remain
A decline in US yields towards the back-end of the afternoon session in Europe extended the pound’s recovery, and this morning, the pound resumes trading on the back foot as US yields start the morning trying to push higher yet again. Read more
50 is the new 25 as the RBA joins the larger rate hike crowd
With a 50bp hike expected by just 3 economists, today’s move extends the RBA’s recent tendency to shock markets with more aggressive policy tightening. Read more
A vote of no confidence brews within the UK Conservative party
After a long weekend, London traders will be returning to their desks asking the same question as the politicians returning to Westminster. Read more
Monex’s June 2022 FX Forecasts
Read Monex's June 2022 FX Forecasts. Find our what our top forecasters expect for currency markets, amid ongoing global growth and inflation concerns. Read more
BoC starts to get aggressive with its fight against inflation
While the BoC met market expectations and raised rates by 50bp to 1.5%, the accompanying statement proved more hawkish as the BoC laid the foundations for its own “expeditious” move towards neutral rates. Read more
Dollar fights back as yields consolidate gains on more hawkish Fed commentary
The retracement in the dollar came after three consecutive days of USD weakness and a 3% drawdown from the DXY index’s peak in the middle of May. Read more
Dollar rebounds as Treasury markets reopen to hawkish comments by Waller
This morning, as Treasury markets opened, the spike in yields across the curve weighed on European and North American equity futures and gave the dollar a boost. Read more
Dollar dives further as equity markets continue to rebound
Trading at a one-month high, GBPUSD is struggling to find much more upside as it trades just 0.04% higher this morning despite the broad dollar weakness across the G10 space. Read more
Week Ahead: North American money market rates set to realign lower
Next week, economic activity data remains in focus as China's May PMIs are released. Meanwhile, the Bank of Canada is set to hike rates by 50bp again on Wednesday, while Friday's US payrolls report could extend the market's dovish repricing of Fed expectations. Read more
Dollar drops on more dovish Fed pricing and rebound in equities
Yesterday marked another session where broad risk appetite defined how the dollar traded across the G10 space. While the Antipodean currencies traded relatively flat due to lingering growth concerns in China, other high beta currencies within the G10 received a welcome boost from how US equities traded. Read more
Dollar dips despite hawkish Fed minutes
The dollar started yesterday’s European session on the front foot, but around the NY open and the release time for durable goods data, the dollar topped out as bond yields hit lows on the day. Read more
Markets readjust to a more hawkish ECB and a lower growth outlook in the US
The fourth-largest one-month slip in the preliminary services PMI on record yesterday saw GBPUSD drop like a stone as markets began to price in a more dovish rate outlook in the UK. Read more
US economic output continues to slow as prices rise, but labour demand will keep the Fed hiking
Today’s reading of US flash purchasing managers’ indices for May showed a decline in all three of the metrics reported by S&P Global, fuelling continued fears that US and global economic growth conditions are souring. Read more
UK service sector activity starts to feel the pinch as consumers tighten their belts
This morning’s release of UK flash purchasing managers indices from May highlight the difficult macroeconomic backdrop currently facing the Bank of England, which in our view gives policymakers bandwidth to conduct one more 25bp hike at June’s meeting this year at a maximum. Read more
The euro is dancing to the ECB’s tune, for now
The pound drifted higher against the dollar yesterday as risk currencies broadly rallied, but sterling failed to keep pace with the euro after the single currency was backed by more hawkish ECB commentary. Read more
Dollar drops on potential trade war unwind
Commodity currencies with strong trade links to China, such as NZD and AUD, are leading gains amid the more supportive risk environment. Read more
Week Ahead: Flash activity indicators will either soothe or stoke growth fears
Next week, activity data will be key for markets that were recently roiled by recession concerns in the euro-area, UK and even the US. On top of that, Australia's Federal election, policy decisions from the Reserve Bank of New Zealand and Central Bank of the Republic of Turkey, and the release of the Fed's meeting sit top of mind for traders in the economic calendar. Read more
Dollar drops despite risk-off conditions persisting in the cross-asset space
Broader market conditions are largely driving the pound in our view, despite the deluge of economic data released out of the UK this week. Read more
UK retail sales rise in April, but it’s not all good news
Consumer sentiment and spending data this morning rounds off the deluge of UK economic data this week and gives the first flash answer to the question on the lips of every UK economist at the moment: how is the UK consumer faring under the pressure of higher inflation? Read more
CAD Update: Revising our USDCAD forecast to account for external growth pressures
Volatility has increased across markets, weakening the loonie as risk sentiment overtakes economic fundamentals as the driving force of the day in FX. Read more
Dollar retraces Tuesday’s losses as consumer stocks lead a 4% drawdown in US equities
In lieu of any domestic data today, sterling traders will keep an eye on developments in the eurozone and the impact that will have on GBPUSD via GBPEUR. Read more
Strong inflation report out of Canada helps the loonie outperform in the G10
April’s CPI report in Canada showed that headline inflation rose from 6.7% in March to 6.8%, largely due to a stronger month-on-month reading of 0.6%. Read more
GBPUSD and EURUSD jump on expectations of more aggressive policy tightening, but Powell hits back for the dollar
Sterling surged 1.4% against the dollar yesterday following strong headline wage data in March’s labour market report as traders started to factor in a more hawkish Bank of England reaction function once again. Read more
US retail sales keep the Fed on track, but higher prices and tighter financial conditions should start to bite for the consumer
Retail sales data for April showed consumption conditions in the US remained robust amid the first signs of tighter financial conditions and rising prices. Read more
Dollar declines as market risk appetite improves
Sterling’s gains have extended this morning, with the currency trading 0.7% higher against the dollar at the time of writing. Although part of the GBP move is reflective of the improve risk backdrop in markets, the currency was also boosted by a strong labour market report for March. Read more
Dollar surges again on concerns over global growth following weak Chinese data
GBPUSD opens this morning slightly lower, in line with the broader G10 move as the US dollar goes bid on global growth concerns. Read more
Week Ahead: Cross-asset volatility unlikely to subside as markets feel the pinch from inflation and growth
This week, CPI figures out of the UK, Canada, and others will provide the clearest signal regarding the way forward for central bank rate paths and FX markets. Read more
Dollar remains dominant as market concerns shift from inflation to growth
This morning, the pound is trading in extremely tight ranges despite a rebound in risk sentiment after negative GDP data out of Q1 in yesterday’s session. Read more
The UK economy has slow momentum heading into the second quarter
Data out of the UK this morning highlighted the stresses that rising inflation, on both the producer and consumer sides, is having on economic activity. Read more