MARKT

Nieuws en analyses

Onze focus is gericht op het helpen van klanten om beter geïnformeerde handelsbeslissingen te nemen door een gebalanceerde, objectieve visie op de valutamarkt te bieden.

CBRT laat rentes ongemoeid, maar lira handelaren maken zich zorgen

CBRT laat rentes ongemoeid, maar lira handelaren maken zich zorgen

De CBRT hield rentes vandaag ongemoeid op 19%, en hoewel dit de marktverwachting was, was het besluit niet geheel zeker vanwege de voorliefde voor lagere rentes vanuit de nieuwe CBRT Gouverneur en President Erdogan. Dat rentes vandaag in elk geval niet verhoogd zouden worden was duidelijk: voorgaande Gouverneur Naci Abgal is in maart nog ontslagen na het besluit om de Turkse rente met 200 basispunten op te trekken naar 19%. Lees Meer

CBRT lays groundwork for lower rates in future as they begin to play a dangerous game

CBRT lays groundwork for lower rates in future as they begin to play a dangerous game

The CBRT met market expectations today and held rates at 19% despite both the new Governor and President Erdogan’s appetite for lower rates. The move was largely expected by markets, with 23/25 economists surveyed by Bloomberg anticipating rates will be held at 19%, as higher rates are deemed intolerable while cutting rates isn’t advisable given the momentum inflationary forces currently have. Lees Meer

Improved market mood stings the dollar ahead of US retail sales data

Improved market mood stings the dollar ahead of US retail sales data

The improved market sentiment weighed on the US dollar in yesterday’s trading session and saw the dollar index fall by another 0.23% after already having weakened over 1.5% since the start of the month. High inflationary pressures are likely priced into the US dollar now following Tuesday’s muted USD reaction to the CPI figures from March, meaning that today’s retail sales, which are set to jump by  5.8% MoM, may have a higher impact on procyclical currencies than on USD itself. Lees Meer

Euro traders look through J&J spat while US inflation didn’t provide the fireworks many expected

Euro traders look through J&J spat while US inflation didn’t provide the fireworks many expected

Recovery prospects remain optimistic as the vaccine roll-out is set to pick up this month, and euro traders chose to shrug off any jitters around the Johnson & Johnson vaccination pause which may delay the vaccination progress. Lees Meer

Tegenstrijdige marktreactie na stijging Amerikaanse inflatie 2,6%

Tegenstrijdige marktreactie na stijging Amerikaanse inflatie 2,6%

Het Amerikaanse inflatiecijfer van maart zorgde voor een tegenstrijdige reactie op de markten vanwege de boodschap van de Fed die stelt dat het monetair beleid ruim blijft, rentes laag blijven en kwantitatieve versoepeling voorlopig nog niet wordt afgebouwd. Lees Meer

UST yields in focus as markets attempt to distinguish signal from noise in today’s CPI

UST yields in focus as markets attempt to distinguish signal from noise in today’s CPI

For today, all eyes will be on the March CPI inflation data at 13:30 BST as transitory factors are expected to produce an elevated inflation print. The question for markets is if there is any signal beneath the noise in the print, and what does it say for US inflationary forces during the recovery.  Lees Meer

US Treasury auctions in scope for broad dollar ahead of March CPI release tomorrow

US Treasury auctions in scope for broad dollar ahead of March CPI release tomorrow

For today, US Treasuries will be watched ahead of auctions in 3Y and 10Y notes later this afternoon while the economic data calendar is sparse for today. The bid-to-cover ratio will be an important factor as Treasury demand will help shape the outlook on US debt prior to the CPI release. Lees Meer

US dollar back on the front foot as Treasury yields reverse yesterday’s losses

US dollar back on the front foot as Treasury yields reverse yesterday’s losses

The dollar traded firmly on the back foot in yesterday’s session, with all G10 currencies except the pound posting gains on the day. US Treasuries was the main story in town for FX markets yesterday, as highlighted by the USDJPY pairing. In a time when risk appetite is better supported, the Japanese yen tends to underperform. Lees Meer

Lane leads decision to increase PEPP as ECB combats reflationary dynamics

Lane leads decision to increase PEPP as ECB combats reflationary dynamics

The ECB meeting minutes made it abundantly clear that the March decision to significantly increase PEPP purchases wasn’t implicit yield curve control, but the main area of concern was the rise in longer-dated yields and the risk free rate and the impact it could have on broader financial conditions. Lees Meer

Dollar sits on back foot today as FOMC minutes confirm dovish message

Dollar sits on back foot today as FOMC minutes confirm dovish message

Yesterday’s FOMC minutes from the March meeting reiterated an improved economic outlook, with the Fed upgrading its economic forecast to reflect a faster-than-anticipated reopening pace and larger fiscal response following President Biden’s 1.9trn fiscal package and the ongoing infrastructure proposal. Lees Meer

NBP remains dovish as third virus wave undermines recovery despite elevated inflation

NBP remains dovish as third virus wave undermines recovery despite elevated inflation

he National Bank of Poland (NBP) kept a wait-and-see approach today and left its key policy rate unchanged at 0.10% while remaining tolerant of the above-target inflation.The Polish zloty barely reacted to the news as most market participants were expecting no policy changes. Lees Meer

Dollar steadies after four days of losses ahead of FOMC minutes tonight

Dollar steadies after four days of losses ahead of FOMC minutes tonight

With today’s calendar being virtually blank, markets will have all their eyes on the FOMC minutes which are scheduled for release at 19:00 BST. Given the high degree of divergence between market pricing in rate hikes compared to the FOMC projections, the minutes will be scrutinised for further clarity on the Fed’s reaction function.  Lees Meer

USD pares back Q1 gains as yields shrug off good data

USD pares back Q1 gains as yields shrug off good data

With US yields stalling and equities pushing higher since the beginning of the week, the dollar returned some of its Q1 gains as rising risk-on sentiment weighed on the currency. The US reported a strong rebound in jobs and services sector activity for March as Friday’s Nonfarm Payrolls and ISM  services index continued to climb higher. Lees Meer

FOMC and ECB meeting minutes to guide markets after Easter

FOMC and ECB meeting minutes to guide markets after Easter

Looking ahead to next week’s calendar for the 5th to 9th of April, it looks to be another where thin liquidity in markets could exacerbate marginal moves on the back of light economic data and events. Turkey’s CPI data on Monday and the release of central bank meeting minutes stand out.  Lees Meer

Monex Europe April 2021 FX Forecasts

Monex Europe April 2021 FX Forecasts

Dollar strength wasn’t just a theme over the course of the last month, but for Q1 as a whole. Reflationary dynamics in the US, brought about by a strong vaccination roll-out and additional fiscal stimulus packages, caused FX markets to price in US economic outperformance. Lees Meer

Aussie dollar drops to fresh 2021 low after stops triggered

Aussie dollar drops to fresh 2021 low after stops triggered

The Australian dollar is under pressure this morning after it dropped to its lowest point since December 23rd in early trading. Sitting 0.45% down at the time of writing, the currency has reclaimed some lost ground after losses extended to as much as 0.88% this morning. With thin liquidity conditions, it didn’t take much for the currency to break lower. Lees Meer

Flat Japanese yields on the back of YCC sets the ground for a weak yen recovery

Flat Japanese yields on the back of YCC sets the ground for a weak yen recovery

Contrary to our expectations of a smooth rally throughout the year, the Japanese yen broadly weakened against the US dollar over the first quarter of 2021. Most of the yen’s underperformance is attributable to a stronger dollar as markets aggressively priced in a faster economic recovery and sooner-than-signalled monetary policy normalisation from the Federal Reserve. Lees Meer

Details of Biden’s infrastructure proposal in focus for markets today

Details of Biden’s infrastructure proposal in focus for markets today

The focus in the US has been primarily on fiscal and vaccine developments, with both being conducive for the economic recovery of late. President Biden is set to announce his plan for additional fiscal stimulus today, which is expected to sit in the region of $3-4trn over the next 10-years, focusing on updating the US’s ageing infrastructure. Lees Meer

Remaining mildly bearish, but finding pockets of deeper depreciation

Remaining mildly bearish, but finding pockets of deeper depreciation

Together, both Biden's fiscal stimulus package and more aggressive vaccine rollout in the US have increased the likelihood that the US economy will substantially outperform peers in 2021, reflected in both the increase and steepening of the US yield curve. Lees Meer

Dollar firms across the board as US 10Y cracks 1.77%

Dollar firms across the board as US 10Y cracks 1.77%

This morning, the Aussie and Kiwi dollar gained following the turnaround in risk sentiment while they now stand at the top of the G10 currency board, however, against other G10 currencies the dollar remains more dominant this morning. Lees Meer

Risk appetite tentative this morning with US equity open in scope

Risk appetite tentative this morning with US equity open in scope

There is a mild risk-off mood around price action this morning, but this is likely due to a conglomerate of factors. Meanwhile, in Washington, rumours suggest President Bien will unveil plans for a major $3trn infrastructure-and-jobs program on Wednesday, and later in the week offer a glimpse of his 2022 budget. Lees Meer

Light events calendar vs thinning liquidity conditions

Light events calendar vs thinning liquidity conditions

Events are light from the 29th March – 2nd April 2021 in FX markets. However, key headlines from the OPEC+ meeting and February’s Nonfarm Payroll data may induce FX volatility as liquidity conditions thin. Lees Meer

Dollar dynamics still driving G10 direction 

Dollar dynamics still driving G10 direction 

At the beginning of yesterday’s session, it was a case of “no news is good news” for G10 FX markets. The lack of fresh downside risks materialising in the news cycle gave markets a breather, with the dollar unwinding some haven flows from previous days. Lees Meer

Sterling takes on water following vaccine export saga between UK-EU

Sterling takes on water following vaccine export saga between UK-EU

Sterling has struggled over the last two trading sessions, falling 1.3% in total. The pound is exposed to the downturn in risk appetite and the firming of the US dollar with little positive new information in play. The tit-for-tat vaccine developments between the UK and EU have also contributed to the downwards pressure placed on sterling. Lees Meer

Upbeat German PMIs fail to excite euro amid European third wave and risk aversion

Upbeat German PMIs fail to excite euro amid European third wave and risk aversion

The third wave in Europe is starting to materialise further with both Germany and the Netherlands extending their lockdown measures until mid-April and tightening them as cases surge. This weighed on the euro throughout yesterday’s trading session as it combined with the strengthening of the US dollar spurred by weak risk sentiment. Lees Meer

Kiwi dollar weighed down by government’s attempts to cool the housing market

Kiwi dollar weighed down by government’s attempts to cool the housing market

The kiwi dollar sits firmly at the bottom of the G10 pile this morning after Prime Minister Ardern announced that the government will remove tax incentives for investors to make speculative purchases in the housing market less lucrative and unlock more land to increase housing supply. Lees Meer

Political interference in Turkey spills over to sour broader market sentiment 

Political interference in Turkey spills over to sour broader market sentiment 

The Central Bank of the Republic of Turkey’s decision to hike rates was welcomed by markets, with the lira regaining ground against the dollar as the central bank evidenced its commitment to lowering the trajectory of inflation. However, the move looked to have been too politically sensitive for Ankara. Lees Meer

Diverging central bank policies call the tune for FX markets

Diverging central bank policies call the tune for FX markets

This week’s pivotal FOMC decision set the tone for FX markets when the Fed kept up its dovish stance despite the markets’ fear of the economy overheating which was reflected in rising yields across the whole curve. Lees Meer

Bank of Japan tweak policy to provide longevity to stimulus efforts 

Bank of Japan tweak policy to provide longevity to stimulus efforts 

The Japanese yen sits 0.2% higher this morning after the Bank of Japan outlined the results of its long-awaited policy review. To improve the sustainability of loose monetary policy, the central bank embarked on a few tweaks. The Bank of Japan scrapped its ¥6trn guide for annual ETF purchases, while maintaining the ¥12trn upper limit so it can step into markets should sentiment deteriorate. Lees Meer

Bank of England looks to hold the ship steady with placeholder announcement

Bank of England looks to hold the ship steady with placeholder announcement

While developments have been positive since the February meeting, the Bank of England decided to marginally push back against market expectations of an earlier normalisation by maintaining the current pace of quantitative easing (£4.4bn weekly) and requiring visible progress in inflation data towards the target. Lees Meer

Turkey overdelivers with rate hike to boost lira and reduce inflation impact

Turkey overdelivers with rate hike to boost lira and reduce inflation impact

Not one to be outshone by the central bank of Brazil, the CBRT doubled expectations by increasing rates by 200bps today as its commitment to reducing the inflationary channel and meeting its end-2021 target was clear. Lees Meer

NOK gains after NB vows to hike rates in 2021 H2

NOK gains after NB vows to hike rates in 2021 H2

The Norwegian krone enjoyed the decision by the Norges Bank to raise its projected interest rate curve to price in a rate hike in the latter half of 2021. Having already projected take-off in the first half of 2022 back in January, the decision turned the already hawkish central bank even more hawkish. Lees Meer

EUR/USD schiet omhoog na dovish verrassing Fed

EUR/USD schiet omhoog na dovish verrassing Fed

Markten hadden duidelijk een hawkish boodschap van de Fed verwacht. Waar obligatierentes opliepen en de Amerikaanse dollar aansterkte voorafgaande aan de persverklaring - in de veronderstelling dat de Fed haar oren zou laten hangen naar de wensen van markten - verraste de Fed markten met een inflatievooruitzicht van 2,1% in 2023. Lees Meer

Bank of England and Norges Bank set to resist dovish path laid out by Fed and ECB

Bank of England and Norges Bank set to resist dovish path laid out by Fed and ECB

The Bank of England is set to release its latest policy decision today after casting previously hawkish messages to markets about the natural tapering of the QE programme and a lack of concern regarding the Gilt curve. We anticipate that the BoE will adjust to the increasingly positive economic outlook. Lees Meer

Fed underdelivers with dovish dot plot weighing on dollar

Fed underdelivers with dovish dot plot weighing on dollar

Market pricing leading into tonight’s FOMC decision was tilted towards the hawkish side. Not only were money markets pricing in numerous interest rate hikes from the Fed, but yields were higher and the dollar firmer across the board. Lees Meer

Confidence issues challenge improved vaccination prospects

Confidence issues challenge improved vaccination prospects

Vaccine rollout continues in March for its third month now, but significant obstacles still stand in its way. Since our February chartbook, increased supply plans by the single-shot drug of Johnson & Johnson have improved prospects for the global campaign, with the pharmaceutical company expanding delivery plans by 0.6 billion doses. Lees Meer

FX markets float in limbo ahead of pivotal FOMC decision

FX markets float in limbo ahead of pivotal FOMC decision

It’s Fed day! The US dollar struggled to take a clear direction this week and traded in narrow range bounds with G10 peers given the decisive role of today’s FOMC meeting. The upcoming Federal Reserve decision is big for FX markets as a whole as it should give a clearer message as to what the FOMC’s stance is on rising US yields. Lees Meer

AstraZeneca setbacks in Europe add to EU’s vaccination roadblocks

AstraZeneca setbacks in Europe add to EU’s vaccination roadblocks

Yesterday’s session included a modest loss against the dollar amid broad USD strength while setbacks in AstraZeneca vaccines weighed on the euro. Germany, France, Italy, Portugal and Spain joined the growing list of countries to suspend the Astra vaccine after the Netherlands halted the shot on Monday Lees Meer

Federal Reserve preview: Look to the projections for guidance as Powell may keep lips tight

Federal Reserve preview: Look to the projections for guidance as Powell may keep lips tight

The March 17th FOMC meeting is likely to be one of the most important for Chair Powell in his tenure at the helm of the central bank, with many drawing comparisons with the task presented to his predecessor Bernanke back in 2013. Lees Meer

Dollar dynamics back in scope after US 10-year closes above 1.6% on Friday

Dollar dynamics back in scope after US 10-year closes above 1.6% on Friday

The rise in the US back-end, triggered by accelerated vaccination plans in the US as President Biden said every US adult would be eligible for a vaccination by May 1st, resulted in the DXY index climbing some 0.26%. The dollar is trading in a more mixed fashion this morning as it takes on water against higher beta currencies like NZD and CAD. Lees Meer

USD bites back after week of losses as fiscal stimulus and vaccine news steepens Treasury curve again

USD bites back after week of losses as fiscal stimulus and vaccine news steepens Treasury curve again

After a week of serenity in fixed income markets, the Presidential approval of the $1.9trn fiscal stimulus package and commitments by President Biden to make all US adults eligible for vaccinations by May 1st sent the US 10-year above the 1.60 handle this morning. Lees Meer

UK economy weathers storm better than expected with January’s growth hit just 2.9%

UK economy weathers storm better than expected with January’s growth hit just 2.9%

With growth contracting 2.9% MoM as the UK entered stricter nationwide lockdown measures in January, a smaller hit to the service sector (-3.5% vs exp -5.5%) and positive growth in construction output (0.9% vs exp -1.0%) meant the data printed a full 2% higher than the median expectation supplied to Bloomberg. Lees Meer

ECB meets expectations and ramps up near-term PEPP purchases

ECB meets expectations and ramps up near-term PEPP purchases

The big question for the ECB heading into today’s meeting is whether the Governing Council was going to rally behind a common message in relation to the recent rise in euro-area yields. That question has been answered with the ECB coming straight out of the block with the announcement that PEPP purchases will be “significantly” ramped up in the coming quarter. Lees Meer

ECB’s loose policy put to the test today amid continued rise in yields

ECB’s loose policy put to the test today amid continued rise in yields

It’s ECB day! With neither rhyme nor reason to the ECB’s verbal communication in the past weeks, markets struggle to assess the central bank’s reaction function and tolerance towards higher yields. Some policymakers stated the rise in yields following the bond rout is unwanted and should be addressed. Lees Meer

Bank of Canada offsets hawkish message with downside risks

Bank of Canada offsets hawkish message with downside risks

The Bank of Canada outlined the slew of negative risks that remain to the outlook despite incoming data beating expectations. The biggest risk beyond that directly related to the virus is the level of slack that remains in the labour market. Lees Meer

Dollar softens yesterday but bear steepening in USTs puts the greenback on the offensive again

Dollar softens yesterday but bear steepening in USTs puts the greenback on the offensive again

The dollar still remains elevated compared with analysts expectations for 2021 at the beginning of the year, but yesterday’s Treasury auction still highlighted that there is demand to pick up US treasuries at the current yield, potentially capping further upside. Lees Meer

Fixed income markets take a breather, resulting in a mild weakening of the dollar

Fixed income markets take a breather, resulting in a mild weakening of the dollar

The dollar DXY sits firmly in the red as US yields cool down, leading the rest of the G10 fixed income space lower. In this environment, risk is better supported, which is evident in the FX space with higher beta currencies outperforming against the greenback this morning. Lees Meer

Central banks vs bond markets: BoC and ECB in question

Central banks vs bond markets: BoC and ECB in question

After a volatile end to last month, the focus of FX markets continues to be on developments in the fixed income space. This week, the dollar has reigned supreme yet again despite mixed messages coming from the Federal Reserve over bond yields. Lees Meer

ECB’s asset purchase report in focus ahead of Thursday’s policy announcement

ECB’s asset purchase report in focus ahead of Thursday’s policy announcement

The euro is trading mixed across the G10 space as it is dragged into the broader USD strength, however idiosyncratic drivers for the euro may finally come to the fore as markets await for the European Central Bank’s APP report today after last week’s report showed a slowdown in bond-buying. Lees Meer

US dollar surges after Powell maintains a distant stance on rising yields

US dollar surges after Powell maintains a distant stance on rising yields

Yesterday saw sterling sell-off further as broad USD strength rippled through G10 FX markets. The catalyst was Chair Powell’s comments with the Wall Street Journal, which saw him strike more dovish tones than markets expected, resulting in another spike in US yields which filtered into a stronger dollar. Lees Meer

Dollar weakens as yields calm, with China’s “two sessions” and OPEC+ in scope for today

Dollar weakens as yields calm, with China’s “two sessions” and OPEC+ in scope for today

GBP Despite a bumper budget announced by Chancellor Rishi Sunak yesterday, sterling struggled to fend off the broadly stronger dollar, with GBPUSD closing the day out flat after a brief flurry higher. Against the euro, sterling’s fortunes were better displayed as the pound rose 0.21% over the course of the day. In the budget, Chancellor […] Lees Meer

NBP upwardly revises forecasts but remains dovish

NBP upwardly revises forecasts but remains dovish

Hawkish forecasts revisions for growth and inflation were not enough for the National Bank of Poland to change its dovish stance today. The NBP kept its rates unchanged at 0.10% as expected, while risks to economic growth from PLN appreciation was reiterated in the policy statement. Lees Meer

Sunak unveils bumper budget, but markets weary that someone has to foot the bill

Sunak unveils bumper budget, but markets weary that someone has to foot the bill

Sterling has been relatively stable throughout today’s budget, while front-end gilt yields have risen the most in the developed market space today - up 3.9bps on the 2-year. While the moves are minor, they come at a time when the dollar trades stronger against the G10 and front-end yields sit flat. Lees Meer

Budget in focus for sterling as it trades just shy of $1.40 this morning

Budget in focus for sterling as it trades just shy of $1.40 this morning

Sterling trades higher against the dollar and euro this morning, although the move is relatively contained considering the March budget is released later today - roughly around 12:30 GMT. Late last night, media outlets broke the news that Chancellor Sunak will extend the Coronavirus Job Retention Scheme this afternoon. Lees Meer

ECB slows down bond purchases despite signal to battle eurozone bond rout 

ECB slows down bond purchases despite signal to battle eurozone bond rout 

Yesterday’s European Central Bank data showed a slowdown in bond purchases from €17.2bn to €12bn over the last week, however, markets reacted only mildly to the news as the recent rhetoric by the ECB on rising yields has caught the markets' attention. Lees Meer

Monex Europe March 2021 FX Forecasts

Monex Europe March 2021 FX Forecasts

FX market price action focused heavily on vaccine developments and reflationary dynamics in February. Given the important role vaccine distribution plays in FX price action, we launched a monthly vaccine distribution chartbook as a means to monitor major vaccine developments around the globe. Lees Meer

Fixed income markets continue to keep USD traders on their toes 

Fixed income markets continue to keep USD traders on their toes 

After a volatile week last week, sterling has started the Monday morning session on a calmer note. Last week, gyrations in fixed income markets resulted in the pound dropping 1.5% against the dollar on Thursday and Friday, but developments over the weekend have seen GBPUSD trade back on the front foot this morning. Lees Meer

Rising yields place pressure on fiscal plans and central banks

Rising yields place pressure on fiscal plans and central banks

Rising yields captured the focus of FX markets last week, as the dollar bounced back into action with US equities also feeling the pain. The question for markets now is where do we go from here? Many have already suggested that central banks will start to intervene further in bond markets to keep borrowing costs low and aid the economic recovery Lees Meer

Bond rout sends FX markets into a tailspin, with EMFX bearing the brunt 

Bond rout sends FX markets into a tailspin, with EMFX bearing the brunt 

This morning, FX markets are striking a much calmer tone as the rout in bond markets stabilises somewhat. The dollar continues to trade stronger in the G10 space on the whole, with only CAD, CHF and JPY posting gains, while EM currencies that sustained the largest losses yesterday are retracing parts of their moves this morning. Lees Meer

SEK rally to continue although headwinds from Riksbank’s FX plan may emerge

SEK rally to continue although headwinds from Riksbank’s FX plan may emerge

As our previous EURSEK forecasts already envisaged moderate declines over the course of the next 12-months, the announcement by the Riksbank hasn’t resulted in any changes to our SEK forecasts against the euro while triangulations from our EURUSD forecasts have slightly altered USDSEK. Lees Meer

Uncertain dollar provides volatility in FX markets as they grapple with rising yields

Uncertain dollar provides volatility in FX markets as they grapple with rising yields

Yesterday was an indecisive session for the US dollar. The greenback opened in Europe broadly lower against the G10, with the exception of JPY and CHF in what looked like a traditional risk-on day for FX markets. However, once US markets opened, the dynamic shifted. Lees Meer

Sterling continues meteoric rise on vaccine optimism with Bailey set to testify

Sterling continues meteoric rise on vaccine optimism with Bailey set to testify

Sterling continues to trade on the front-foot as traders embrace reopening plans in the UK as they channel their bullish sentiment into the pound. The pound rose 0.35% yesterday despite negative labour market data for Q4, highlighting how the latest data will fall to the wayside for traders as they remain fixated on the light at the end of the tunnel. Lees Meer

ECB turns focus to rising bond yields while markets eye Powell’s testimony

ECB turns focus to rising bond yields while markets eye Powell’s testimony

The euro is trading around 1-month highs against the dollar this morning as the pair received a boost from European Central Bank President Christine Lagarde’s comments that the ECB is closely watching longer-term yields. Lees Meer

Pond verroert geen vin tijdens bekendmaking exit strategie VK

Pond verroert geen vin tijdens bekendmaking exit strategie VK

Met het snelle vaccinatieprogramma van de Britten en de verhoogde anticipatie op lockdown versoepelingen sterkte het Britse pond de afgelopen weken enorm aan, maar tijdens het bekendmaken van de lockdown exit strategie vandaag verroerde het pond geen vin. Lees Meer

Sterling unmoved by Johnson’s roadmap as path out of lockdown is still mired with uncertainty

Sterling unmoved by Johnson’s roadmap as path out of lockdown is still mired with uncertainty

Sterling was unmoved by today’s release of the roadmap to the recovery, with much of the announcement leaked prior to the Prime Minister’s formal statement. It was widely signalled this morning that schools are set to reopen on March 8th, and outdoor gathering limits eased along with outdoor sports facilities opened on March 29th. Lees Meer

Sterling draws all headlines as PMs roadmap to reopening is eyed

Sterling draws all headlines as PMs roadmap to reopening is eyed

Sterling is trading roughly flat against the dollar this morning despite the greenback strengthening across the board this morning, putting the pound near the top of the G10 pile this morning. Over the weekend, the UK Prime Minister’s plans to reopen the economy have gripped the media cycle. Lees Meer

GBP in focus next week as PM Boris Johnson carefully outlines exit plan 

GBP in focus next week as PM Boris Johnson carefully outlines exit plan 

With limited top tier data releases in next week’s calendar, we take a look at next week’s announcements in the UK and what they mean for the pound, while also preparing for the upcoming Reserve Bank of New Zealand policy decision due to be released on Wednesday. Lees Meer

Dollar decline resumes as reflationary trade is dampened by labour market data 

Dollar decline resumes as reflationary trade is dampened by labour market data 

Treasury Secretary Janet Yellen told CNBC yesterday the actual jobless rate is around 10% - not January’s official 6.7% - as many have stopped looking for jobs. She reiterated the need for the $1.9tn stimulus package and said the recent strength in retail sales and stock values do not change her view. Lees Meer

UK retail sales data shows toll of January lockdown, but markets look ahead to Johnson’s roadmap to recovery

UK retail sales data shows toll of January lockdown, but markets look ahead to Johnson’s roadmap to recovery

Sterling has dipped from session highs after headline and core retail sales figures for January undershot expectations substantially this morning, evidencing the toll January’s lockdown has had on the UK economy. Lees Meer

Vaccine distribution remains in focus as many challenges lie ahead

Vaccine distribution remains in focus as many challenges lie ahead

As markets focus on the distribution of vaccines, both on a country and global level, in order to gauge the timeline for the scaling back of lockdown measures and the resumption of economic recoveries, our monthly vaccine distribution chart book will log developments in vaccine distribution and the viability of government targets in major economies. Lees Meer

CBRT hold rates at 17% as expected but outlines inflation risks going forward

CBRT hold rates at 17% as expected but outlines inflation risks going forward

The Central Bank of the Republic of Turkey met both the market and our expectations today in holding rates steady at 17%. With headline inflation sitting below the one-week repo rate at 15%, real rates remain in positive territory. Lees Meer

Stabilisation in US yields and falling global covid cases supports return of risk taking

Stabilisation in US yields and falling global covid cases supports return of risk taking

It was another session of a strong US dollar yesterday as traders still decide how to trade in a market dominated by reflationary dynamics. US 10-year yields weren’t changed too much by the FOMC meeting minutes released last night, nor were they by relatively hawkish comments by Fed voter Barkin. Lees Meer

US dollar climbs with long-term yields after US returns from long weekend

US dollar climbs with long-term yields after US returns from long weekend

After returning from a long weekend after celebrating Presidents’ Day, US markets reversed the early morning trading and piled back into the dollar. This move was accompanied by an early rally in US equities and a further steepening of the US yield curve, although US equity indices closed out roughly flat across the board. Lees Meer

Amerikaanse inflatie kan scherp terugkeren tijdens herstelfase

Amerikaanse inflatie kan scherp terugkeren tijdens herstelfase

Nu de Democraten het Witte Huis en het Congres in handen hebben en de Fed meer dovish is dan ooit tevoren zijn de verwachtingen voor de Amerikaanse economische groei recentelijk sterk toegenomen. Lees Meer

Amerikaanse inflatie kan scherp terugkeren tijdens herstelfase

Amerikaanse inflatie kan scherp terugkeren tijdens herstelfase

Nu de Democraten het Witte Huis en het Congres in handen hebben en de Fed meer dovish is dan ooit tevoren zijn de verwachtingen voor de Amerikaanse economische groei recentelijk sterk toegenomen. Lees Meer

Markets return to risk assets amid a stabilising environment 

Markets return to risk assets amid a stabilising environment 

Risk sentiment has found further support in today’s market, spilling over from yesterday’s session, however, with US investors returning after a long weekend today, this afternoon may witness a different dynamic. Lees Meer

Dollar dynamics still drive markets as current economic conditions remain stagnant 

Dollar dynamics still drive markets as current economic conditions remain stagnant 

Markets are set to be quiet next week, especially on Monday with the combination of Lunar New Year celebrations in Asia and a federal holiday in North America. However, the European session could open quite choppy given the limited liquidity in markets and expectations that Italy could approve Mario Draghi as the next Prime Minister over the weekend. Lees Meer

CAD to continue structural rally but near-term headwinds remain

CAD to continue structural rally but near-term headwinds remain

Since our last CAD outlook, data released from Canada has been mixed. Sentiment gauges, PMIs and other soft data points have remained robust. Meanwhile, more timely hard data such as January’s labor force survey visibly highlight the pressure the Canadian economy remains under during the latest lockdown measures. Lees Meer

FX markets trade with caution amid holiday-thinned trade

FX markets trade with caution amid holiday-thinned trade

Sterling trades slightly lower against the dollar this morning, but flat against the euro, as the greenback bounces back in FX markets in general. This morning saw the release of December’s GDP data, which surprised to the upside at 1.2% month-on-month. Lees Meer

UK economy contracts by 9.9% in 2020, largest decline since 1709, but sterling isn’t moved on the announcement

UK economy contracts by 9.9% in 2020, largest decline since 1709, but sterling isn’t moved on the announcement

Today’s data release saw December’s preliminary GDP print at 1.2%, slightly higher than expectations of 1.0%. This brought the overall Q4 reading into positive territory, with the economy expanding by 1% QoQ in the final quarter of the year. Lees Meer

Dollar trades mixed in today’s session after dud CPI reading 

Dollar trades mixed in today’s session after dud CPI reading 

There was a lot of anticipation leading up to yesterday’s CPI inflation release at 13:30 GMT, with underlying pressures of rent prices rising substantially. Fears were elevated that the inflation print could shoot higher just months before base effects were likely to see inflation rise above the Fed’s 2% target. Lees Meer

Riksbank holds fire while acknowledging inflation won’t reach target for years

Riksbank holds fire while acknowledging inflation won’t reach target for years

The Riksbank’s decision this morning came out very much in line with expectations. The central bank left the repo rate unchanged at zero per cent while asset purchases will continue within the envelope of SEK700bn. Lees Meer

GBPUSD at highest level since April 2018 as risk sentiment supported in markets

GBPUSD at highest level since April 2018 as risk sentiment supported in markets

The pound has been carving fresh highs against the soggy greenback this week, with risk generally supported across all markets. The improvement in risk sentiment is best evidenced in how the FTSE 100 has been trading. Lees Meer

Vaccinatieprogramma’s zetten valutamarkten in beweging

Valuta-analist Ima Sammani van Monex Europe geeft antwoord op verschillende vragen omtrent corona, vaccinatie, distributies en hun effecten op de valutamarkten. Lees Meer

Reflationary environment props and drops dollar in yesterday’s session

Reflationary environment props and drops dollar in yesterday’s session

The opening of the US equity market saw positive risk sentiment flow around markets in general, with precious metals and oil also rallying. Ultimately, this weighed on the greenback despite it being a driver of USD outperformance earlier in the day. Lees Meer

Dollar bounces back as reflation trade back in the picture

Dollar bounces back as reflation trade back in the picture

The US dollar ended the week on a weaker note than where it started as a weak US jobs report on Friday underscored the need for more economic aid, sending the dollar lower against G10 peers. Upon open, the greenback began to pare back Friday’s losses as comments from Treasury Secretary Janet Yellen touted Joe Biden’s $1.9tn fiscal plan. Lees Meer

Dollar dominates G10 FX again as DXY rises to trade near 2-month high

Dollar dominates G10 FX again as DXY rises to trade near 2-month high

Central bank meetings in Sweden and Mexico are set to be less dramatic than that from the Bank of England on Thursday. Meanwhile, political developments in Italy and the US will remain in scope. Former ECB President Mario Draghi will continue talks over the weekend with party leaders. Lees Meer

Loonie looks to break-even this week despite labour market slip

Loonie looks to break-even this week despite labour market slip

The labour force survey highlighted that the sizably negative print in today's data was due to the effects of December's reference period occurring so early in the month (6th-12th December). After which, a number of provinces extended lockdown measures in response to increasing Covid-19 cases. Lees Meer

Bank of England stretches its hawkish wings, giving sterling a tailwind in the process

Bank of England stretches its hawkish wings, giving sterling a tailwind in the process

Sterling traded heavy in the early part of yesterday’s session, sustaining nearly half a percentage point of losses against the dollar. However, hawkish undertones from the Bank of England reversed sentiment around the pound, resulting in it climbing into the green despite a broad bid in the dollar within the G10 space. Lees Meer

NBP to continue weakening the zloty until an economic recovery kickstarts

NBP to continue weakening the zloty until an economic recovery kickstarts

Our view on the Polish zloty has remained generally bullish, although some tweaks to our short-term view have been made to adjust for the National Bank of Poland’s decision to intervene in FX markets in December. Lees Meer

Bank of England meeting pivotal for sterling and expectations of negative rates

Bank of England meeting pivotal for sterling and expectations of negative rates

While the BoE is unlikely to change its policy tools this time around, maintaining the Bank rate at 0.1% and leaving the QE programme untouched, a downgrade to its forecasts and an assessment on the viability of negative interest rates are expected. Lees Meer

National Bank of Poland warns for FX intervention as EURPLN reaches key levels

National Bank of Poland warns for FX intervention as EURPLN reaches key levels

The rather limited EURPLN reaction after today's central bank decision was perhaps not what the National Bank of Poland hoped for when they released their statement today, as the NBP has explicitly stated their preference over a weak zloty before and EURPLN had fallen by almost 2% since last Friday.  Lees Meer

Focus returns to Italy as former ECB President Mario Draghi tipped to be next Italian Prime Minister

Focus returns to Italy as former ECB President Mario Draghi tipped to be next Italian Prime Minister

The euro was trading in the red against most of its G10 peers over the course of yesterday but found some support overnight on reports that former European Central Bank President Mario Draghi may become the next Prime Minister in Italy. Lees Meer

Democrats open path to reconciliation while negotiations continue

Democrats open path to reconciliation while negotiations continue

Focus remains on US fiscal stimulus, with President Joe Biden and congressional Democrats signalling their intent on a large pandemic bill and moving forward with plans for budget reconciliation. Congress reported in a joint statement that yesterday’s White House meeting was productive. Lees Meer

Monex Europe February 2021 FX Forecasts

Monex Europe February 2021 FX Forecasts

January has proven to be an indecisive month for FX markets. After looking through most of the near-term risks in December and the first week of January, tighter lockdown measures and concerns over vaccine efficacy and distribution thrust the previous risk environment into a bit of a tailspin. Lees Meer

Bank of England’s discussion around negative rates will draw the focus of FX markets next week

Bank of England’s discussion around negative rates will draw the focus of FX markets next week

Next week, the focus remains on central banks with the Bank of England, Reserve Bank of Australia and National Bank of Poland due to release fresh policy decisions. Meanwhile, focus will remain on the distribution of vaccines globally as key providers struggle with supply constraints. Lees Meer

Markets continue to be fixated on vaccine distribution news as divergences remain

Markets continue to be fixated on vaccine distribution news as divergences remain

Sterling is outperforming in the G10 space this morning, trading some 0.4% higher against the dollar. The pound’s rally is being linked with news that UK officials will confirm all residents at eligible care homes have been offered the vaccine, a major milestone in protecting those most vulnerable. Lees Meer

Dollar traders look towards equity markets for the level of risk appetite

Dollar traders look towards equity markets for the level of risk appetite

Yesterday’s trading session was a bit of a wild one for the greenback as equity market dynamics dominated market risk sentiment, and in turn, how the broad dollar traded. Markets began yesterday’s session with a mild risk-averse tone, looking towards European equities trading in the red to dictate the mood. Lees Meer

Dollar bounces back as risk appetite deteriorates and equity markets enter a tailspin

Dollar bounces back as risk appetite deteriorates and equity markets enter a tailspin

The rebound in the dollar yesterday came at a time when equity market dynamics dominated the news cycle and then hijacked the Federal Reserve’s meeting. With the risk environment weak again in markets, the dollar rebounded against the G10 for yet another day, as traders awaited fresh guidance from the Federal Reserve. Lees Meer

Fed fireworks don’t go off as QE tapering not in question

Fed fireworks don’t go off as QE tapering not in question

No fireworks were expected and none were delivered in tonight’s FOMC press statement. The Federal Reserve left its monetary policy instruments unchanged but indicated the central bank will do everything they can to promote economic recovery and thereby the Fed’s maximum employment and price stability goals. Lees Meer

Fed QE tapering on everyone’s lips while ECB gives into euro strength concerns 

Fed QE tapering on everyone’s lips while ECB gives into euro strength concerns 

While most expect little additional information from the US central bank, recent commentary by regional Fed presidents means the topic of QE tapering is likely to be addressed at a formal level tonight. Lees Meer

Euro komt verder onder druk

Ruimte voor hoger Brits pond volgens Martijn Weller van Monex Europe. Lees Meer

BRL to remain volatile amid a challenging recovery and weak fiscal outlook

BRL to remain volatile amid a challenging recovery and weak fiscal outlook

Looking ahead, the currency outlook remains mixed and is poised to face yet more periods of severe volatility amid a challenging panorama. With ample losses to pare back to return to pre-pandemic levels, the real might gain attention due to an early hiking cycle from the BCB this year as inflation expectations grow. Lees Meer

US dollar continues to find a bid as economic recovery not as clear cut as expected

US dollar continues to find a bid as economic recovery not as clear cut as expected

The dollar showed a decent bid in the afternoon of yesterday’s trading session as the global risk environment remains tentative. Questions around the efficacy of vaccines and their distribution have tempered the market's optimism of an aggressive economic recovery in 2020 and a strong risk rally. Lees Meer

A post Brexit Britain leaves sterling at the mercy of Covid-19 developments

A post Brexit Britain leaves sterling at the mercy of Covid-19 developments

The stale nature of Brexit developments over the course of Q4 means it has been some time since our last GDP outlook. In the latter stage of 2020, despite Covid-19 developments, the pound continued to trade based off no-deal Brexit risk as the clock wound down and negotiations stalled. Lees Meer

FOMC in scope next week as QE tapering dominates investor focus

FOMC in scope next week as QE tapering dominates investor focus

Markets have focused on the wedge of central bank announcements this week, with notable meetings from the Bank of Canada, the Bank of Japan and the European Central Bank. In Canada, Governor Macklem’s optimistic tone resonated with markets and led the loonie to notch a fresh 33-month high against the dollar. Lees Meer

France expected to deploy third national lockdown, weighing on EURUSD this morning

France expected to deploy third national lockdown, weighing on EURUSD this morning

Tightened lockdown conditions are what is weighing on the single currency as Journal du Dimanche wrote a piece over the weekend stating that France could enter a third national lockdown on Wednesday night, citing unidentified sources. While France’s cases recently dipped, the tighter measures are expected due to the latest wave. Lees Meer

Risk sentiment swings again as dollar back in fashion

Risk sentiment swings again as dollar back in fashion

Yesterday’s session saw the US dollar take on water across the board as central banks across the globe struck cautiously optimistic tones as they focused on the medium-term recovery facilitated by vaccines. However, the imposition of tighter measures in the US, France, Portugal, Hong Kong and potentially Singapore is dampening risk appetite. Lees Meer

Lagarde deflects questions on PEPP, leaving little impression on the euro

Lagarde deflects questions on PEPP, leaving little impression on the euro

The European Central Bank left monetary policy unchanged today, in line with market expectations, as virus developments and the extension and tightening of lockdown measures didn’t prove dramatic enough to prompt any change of course. Lees Meer

Lira extends gains after CBRT shows commitment to keep high rates

Lira extends gains after CBRT shows commitment to keep high rates

The Turkish lira extended gains today after the CBRT's decision to keep the one-week repo rate unchanged at 17%, in line with market expectations. This is the third day of gains against the greenback as improved risk appetite led to a weaker dollar earlier in the week. Lees Meer

Norwegian krone shrugs its shoulders at uneventful Norges Bank meeting

Norwegian krone shrugs its shoulders at uneventful Norges Bank meeting

While markets were not expecting fireworks at today's meeting, the Norges Bank failed to address the rising case count in the accompanying press statement and only discussed that "economic developments have so far been broadly in line with the projections in the December Report". Lees Meer

ECB may tweak the pace of PEPP purchases as focus remains on spread control

ECB may tweak the pace of PEPP purchases as focus remains on spread control

The ECB will likely not make any adjustments to its monetary policy today, despite the deteriorating virus situation and recently extended and tightened lockdown measures weighing on the short term outlook since the December policy decision. Lees Meer

Loonie gets green light to hit fresh highs as mini rate cuts pushed out of scope

Loonie gets green light to hit fresh highs as mini rate cuts pushed out of scope

Today's Bank of Canada rate announcement saw the central bank maintain their current policy stance despite the near-term deterioration in the economic outlook, highlighted by the Bank's expectation of negative growth in Q1 this year. Lees Meer

All eyes on Biden’s inauguration after Italy’s Conte holds onto power in Rome 

All eyes on Biden’s inauguration after Italy’s Conte holds onto power in Rome 

The dollar broadly sold off against the G10 in yesterday’s session despite no new information being released for markets. The prospect of substantive fiscal stimulus remains in the US as the Biden administration is set to begin work today, which is helping support risk appetite in FX markets. Lees Meer

Yellen’s testimony to Senate to draw big crowd amid calls for market determined dollar

Yellen’s testimony to Senate to draw big crowd amid calls for market determined dollar

The US dollar trend has reversed since Monday following an improvement in risk appetite and US markets returning back from a long weekend after Martin Luther King Day. The Japanese yen and Swiss franc joined the dollar and sit at the bottom of the pile of G10 currencies this morning before Janet Yellen. Lees Meer

Deluge of central banks and political events will give markets plenty of fodder 

Deluge of central banks and political events will give markets plenty of fodder 

The European Central Bank is set to stand pat on Thursday at 12:45 GMT despite the recent risks to its economic projections due to the deteriorating virus situation and recently tightened/ extended lockdown measures throughout the eurozone. Lees Meer

Dollar bounces back as risk sentiment remains tentative while US observe federal holiday

Dollar bounces back as risk sentiment remains tentative while US observe federal holiday

The latest rebound in the dollar continues in this morning’s session despite the US observing a federal holiday today to remember Martin Luther King Jr. Elevated case counts in major economies and the near-term economic headwinds have kept market risk sentiment tentative over the last few weeks. Lees Meer

Dollar bounces back as risk environment slumps again

Dollar bounces back as risk environment slumps again

The dollar has been regaining ground since yesterday amid concerns that President-elect Joe Biden’s $1.9tn stimulus plan may fail to win broad-based support, as Republican opposition is possible over the big-ticket spending. Lees Meer

UK GDP slips in November as national lockdown measures bite

UK GDP slips in November as national lockdown measures bite

This morning’s UK GDP release saw the economy contract by 2.6% in November as the government imposed a four-week national lockdown on November 4th, with other devolved governments tightening measures at the margin also. Lees Meer

Italian political risks back in the picture while FX markets shrug at impeachment

Italian political risks back in the picture while FX markets shrug at impeachment

Italian political risks have been weighing on the euro since last night as former Prime Minister Matteo Renzi pulled his party’s ministers from the ruling coalition, bringing the population back to the polls and putting the government at risk of collapse. EURUSD remains above this year’s low. Lees Meer

NBP leaves rates unchanged but hints at more FX intervention to come

NBP leaves rates unchanged but hints at more FX intervention to come

The Polish central bank (NBP) lived up to market expectations today and left interest rates unchanged while it will continue to purchase government securities and government-guaranteed debt securities in the secondary market as part of the structural open market operations (QE).  Lees Meer

Sterling outperforms as BoE Governor Bailey signals that it is too early for negative rates

Sterling outperforms as BoE Governor Bailey signals that it is too early for negative rates

Overnight Index Swaps are now pricing a full rate cut to -0.1% in December 2021, moving it back by 3 meetings from August’s after Bailey’s comments, while markets have completely priced out the prospect of negative rates being announced in February. Lees Meer

US Treasury bear steepening, Fed tapering, developments in Washington and Covid dominates market focus

US Treasury bear steepening, Fed tapering, developments in Washington and Covid dominates market focus

The continued bear steepening in the US yield curve yesterday was likely the driver of the bounceback in the USD, along with continued fears of prolonged economic damage in Europe due to harsher lockdown measures. Lees Meer

Market sentiment collapses as Covid-19 cases rise and vaccine plans don’t live up to expectations

Market sentiment collapses as Covid-19 cases rise and vaccine plans don’t live up to expectations

UK Chief Medical Adviser Chriss Whitty stated this morning that once the vaccine is rolled out in months, the UK will be able to lift some of the restrictions. Today, health secretary Matt Hancock will unveil the new vaccine delivery plan while GBP will likely also take cues from Bank of England MPC member Silvana Tenreyro. Lees Meer

2021 starts with a bang for FX markets despite muted economic calendar 

2021 starts with a bang for FX markets despite muted economic calendar 

Despite a relaxed start to the year in terms of economic data, FX volatility was still plentiful. US political events provided much of the impetus for movements in the dollar, as the Democrats win in both Georgia run-offs resulted in the resumption of the reflationary trade. Lees Meer

NFP slip leads to marginal USD weakness, while USDCAD sits stable on similarly poor Canadian data

NFP slip leads to marginal USD weakness, while USDCAD sits stable on similarly poor Canadian data

Private payrolls fell by 95,000, below expectations of a 25,000 increase, while manufacturing payrolls increased by 38,000. With the slip in the net employment data offset by November's revision, the US unemployment rate holds steady at 6.7%. Lees Meer

USD rises from the ashes as the 10-year yield keeps on climbing

USD rises from the ashes as the 10-year yield keeps on climbing

The US dollar posted a fight in yesterday’s trading session after spending much of the earlier parts of the week on the back foot. Rising yields in the US, predominantly towards the back end of the curve on reflation hopes under a Biden administration, has helped to lift the dollar from the doldrums this week. Lees Meer

USDZAR update as Covid-19 cases spike in South Africa

USDZAR update as Covid-19 cases spike in South Africa

The covid-19 situation in South Africa has deteriorated substantially since the turn of the year, resulting in substantial sell-off in the rand and reversing the gains generated over the last six weeks. At 15.5, the rand sits close to 5% lower against the dollar year-to-date with only 5 trading sessions elapsed so far. Lees Meer

Protests in DC don’t rock markets, Biden confirmed next US President by Congress

Protests in DC don’t rock markets, Biden confirmed next US President by Congress

Despite last night’s events in Washington DC, FX markets remained relatively calm as the dollar weakened marginally. Notable risk gauges such as USDJPY, gold and the VIX index showed very little in terms of a reaction to the Capitol building being breached. Lees Meer

EURUSD reaches fresh highs as Democratic Senate Control looks more likely

EURUSD reaches fresh highs as Democratic Senate Control looks more likely

The euro is riding on the coattails of the Senate run-off in Georgia today as a weak dollar helped EURUSD reach fresh highs last seen in April 2018. During today’s early trading session, the pair rallied by a similar amount as throughout the entire trading session yesterday. Lees Meer

Euro kan naar 1,27 dollar

Dalende trend dollar houdt aan volgens Monex Europe Lees Meer

Sterling dropped as England and Scotland enter national lockdown, while Georgia run-offs dominate today

Sterling dropped as England and Scotland enter national lockdown, while Georgia run-offs dominate today

Further pressure piled onto the pound as political commentators suggested the measures implemented would see schools close and a prolonged national lockdown - this was to be confirmed in the Prime Minister’s speech to the nation at 20:00 GMT. Lees Meer

Monex Europe January 2021 FX Forecasts

Monex Europe January 2021 FX Forecasts

While our medium-term forecast of sustained USD depreciation remains intact, the decline in the dollar in December has led us to revise our near-term forecasts to factor in a weaker dollar heading into January 2021. Lees Meer

Firework displays may be cancelled, but Georgia may provide some on the 5th

Firework displays may be cancelled, but Georgia may provide some on the 5th

Many of the 2020 dynamics are set to spill over into 2021. Despite a Brexit deal being agreed prior to the end of the transition period on December 31st, teething problems to the new trading arrangement are likely to persist into early 2021, while an expansion in the narrow trade agreement could draw attention in the New Year. Lees Meer

A new year brings the same theme for markets; continued USD weakness

A new year brings the same theme for markets; continued USD weakness

The turn of the year comes with extended dollar weakness this morning as markets return for the first business day of 2021. The greenback is trading in the red against the entire G10 currency board this morning, with the dollar DXY index standing 0.46 percentage points lower over the 1-day window. Lees Meer

USDCHF stability to be a theme of the coming year as authorities enjoy franc depreciation vs the euro

USDCHF stability to be a theme of the coming year as authorities enjoy franc depreciation vs the euro

We have brought forward the previous EURCHF forecasts to also represent our expectations of a more aggressive euro rally in the first half of the year than previously expected – the previous 3-month forecast is now the 1-month forecast etc. Lees Meer

Dollar declines to fresh two-year low as year comes to an end

Dollar declines to fresh two-year low as year comes to an end

Sterling enjoyed broad USD weakness yesterday to continue drifting higher yesterday. With the euro also trading soft, sterling enjoyed gains against both USD and EUR, but the ratification of the Brexit trade deal didn’t look like a primary driver of the pound. Lees Meer

UK Parliament vote on Brexit deal eyed amid virus woes

UK Parliament vote on Brexit deal eyed amid virus woes

Sterling’s rally yesterday chipped away at Monday’s losses as broad USD weakness remained a dominating dynamic in markets. With additional fiscal stimulus hopes in the US fading, the dollar remains under pressure again this morning. Lees Meer

Dollar continues its downturn as House passes $2000 direct payments bill

Dollar continues its downturn as House passes $2000 direct payments bill

Despite price action being muted over the festive period, dollar weakness is written all over FX markets again this morning. The greenback is trading in the red against the entire G10 over the 1-day window as risk sentiment continues to improve following the approval of the pandemic relief bill. Lees Meer

Tis the season of gifting; Brexit deal and Pandemic relief package delivered to markets

Tis the season of gifting; Brexit deal and Pandemic relief package delivered to markets

The pound briefly sold off on the news once a deal had been struck late on in the Christmas eve session. Thin liquidity conditions and the fact that optimism had already been baked into the pound were the likely drivers behind the sell-off. Now markets track the race for ratification as both the EU and the UK need to enshrine the deal into law. Lees Meer

JPY to continue its smooth rally against the dollar as economic recovery progresses

JPY to continue its smooth rally against the dollar as economic recovery progresses

Despite rallying against the greenback, the yen has underperformed against other G10 currencies in the aftermath of the pandemic to date, with the trade-weighted exchange rate having weakened since the May surge. Lees Meer

Sterling enjoys early Christmas gift as Brexit deal imminent

Sterling enjoys early Christmas gift as Brexit deal imminent

Sterling has once again rallied as news headlines indicate a trade deal has been all but struck between the UK and EU. The spin from both sides remained intense all day but turned distinctly positive in the evening, and a deal is now expected to be announced imminently. Lees Meer

Borders reopen for the UK, but Brexit negotiations fall short 

Borders reopen for the UK, but Brexit negotiations fall short 

While the Dover port has reopened to lorry drivers that test negative for Covid-19, allowing trade to resume with the continent over the Christmas period, Brexit talks continued to hit hurdles in the form of fishing. Lees Meer

USD safe haven channel is wide open as new Covid strain results in unwind of recent risk rally

USD safe haven channel is wide open as new Covid strain results in unwind of recent risk rally

The dollar found further support overnight as focus in currency markets remains on the more infectious Covid-19 strain seen in the UK, the Brexit impasse and continued acceleration of daily case count globally in the background. Lees Meer

Economic dividends from successful elimination strategy boost Kiwi dollar outlook

Economic dividends from successful elimination strategy boost Kiwi dollar outlook

With Q3 GDP data showing a roaring economy and the RBNZ under increasing public and political scrutiny for its role in surging house prices, the central bank is now far less likely to need to resort to negative rates. Lees Meer

Deal or No Deal: a Christmas special

Deal or No Deal: a Christmas special

Volatility in the pound over the coming week is likely to provide a bang before any crackers are pulled. Secondly, fiscal stimulus talks in the US are year to bear fruit. With an estimated 12 million workers facing an unemployment cliff on December 26th according to The Century Foundation, markets will keep a close eye on developments in Washington up until Christmas. Lees Meer

New strain of Covid-19 sends ripples through markets this morning

New strain of Covid-19 sends ripples through markets this morning

The latest restrictions brought about by a new strain of Covid-19, which is assumed to transmit at a faster pace than the previous strain, has also seen the UK placed on an international travel ban by many countries including neighbouring Europe. Lees Meer

Brexit headlines continue to drive GBP as sentiment around a deal flips again

Brexit headlines continue to drive GBP as sentiment around a deal flips again

Sterling has switched back to “buy the rumour” mode in force this week as optimism builds about a UK-EU trade deal, and only slightly pared back some of the week’s gains this morning. Very little hard indications have been given about the actual state of negotiations by officials willing to put their own name reports. Lees Meer

Fed’s hawkish undertones doesn’t stop the dollar decline for long 

Fed’s hawkish undertones doesn’t stop the dollar decline for long 

A more hawkish than expected Federal Reserve levelled out the dollar in yesterday's session, with the greenback briefly spiking against the euro and Japanese yen before selling off again. The last FOMC meeting of the year saw rates remain on hold at 0-0.25%, while keeping the pace of asset purchases on hold at $120bn per month. Lees Meer

Fresh highs on EURUSD as the greenback gets whacked across the board ahead of tonight’s Fed meeting

Fresh highs on EURUSD as the greenback gets whacked across the board ahead of tonight’s Fed meeting

The euro was among the best performers against the US dollar this morning despite Germany going into a hard lockdown as of today, with EURUSD reaching highs last seen in April 2018. The euro found support in French and German Purchasing Managers’ Index figures which printed better than expected. Lees Meer

Ruble to benefit from renewed risk appetite and the hunt for yield

Ruble to benefit from renewed risk appetite and the hunt for yield

Improved global growth conditions will result in a positive demand outlook for oil and gas exports, while elevated real yields in Russia will result in positive carry conditions for the ruble. Domestically, a substantial vaccine programme will allow the domestic economy to reopen at a similar rate to most DM economies. Lees Meer

Dollar stabilises as markets digest fiscal stimulus optimism and electoral clarity

Dollar stabilises as markets digest fiscal stimulus optimism and electoral clarity

The dollar found a stronger footing in the afternoon of yesterday’s session as optimism rose around a bipartisan fiscal stimulus package and electoral clarity, however, it traded mixed against the euro overnight and is yet to show a definitive trend against the G10 this morning. Lees Meer

Brexit, US Stimulus and Central Banks set to deliver volatile last week before Christmas

Brexit, US Stimulus and Central Banks set to deliver volatile last week before Christmas

FX markets have been dominated this week by the return of no-deal Brexit risk and substantial volatility in GBPUSD. With another “final” deadline set for Sunday for negotiations to end, Monday is set to be another explosive day for the pound with many leaders stating that a no-deal outcome is the likeliest option now. Lees Meer

Sterling captures FX markets’ focus as no-deal Brexit is still avoided despite deadlines

Sterling captures FX markets’ focus as no-deal Brexit is still avoided despite deadlines

Sterling has yet again takenall of the focus in FX markets today as it popped a percentage point higher as Wellington opened markets late Sunday evening, with the rally continuing into the European open this morning. Sunday’s hard deadline didn’t look to be much of a game-changer for Brexit negotiations as a deal still remains in limbo. Lees Meer

Sterling takes another leg lower on no-deal prospect, EU confirms recovery fund

Sterling takes another leg lower on no-deal prospect, EU confirms recovery fund

After Prime Minister Johnson warned the UK to prepare for an exit from the EU with an Australian style trade relationship, the pound took another leg lower and now sits over half a percentage point down against both the US dollar and euro. Lees Meer

EURUSD reaches 4-day highs after ECB policy announcement

EURUSD reaches 4-day highs after ECB policy announcement

The ECB did not disappoint today, and delivered a whopping 500bn of additional stimulus to the PEPP envelope, bringing the total amount to 1.85tn. As icing on the cake, the central bank extended the program by 9 months, which is 3 months more than what median expectations foresaw. Lees Meer

No fireworks from Brussels, but the ECB in Frankfurt may deliver some at lunch

No fireworks from Brussels, but the ECB in Frankfurt may deliver some at lunch

Sterling returns to trading on the back foot this morning as Boris Johnson’s dinner date with European Commission President Ursula von der Leyen produced nothing new for markets to digest. EU leaders meet today to discuss key issues regarding sustainability initiatives. Lees Meer

Bank of Canada unchanged, putting emphasis on Beaudry’s speech tomorrow

Bank of Canada unchanged, putting emphasis on Beaudry’s speech tomorrow

The Bank of Canada today left its policy rate unchanged at 0.25%, while reiterating that rates will be held at the effective lower bound until 2023 and the QE programme will continue to be in effect at C$4bn a week until the recovery is well underway.  Lees Meer

US dollar sent lower after $916bn relief proposal by Steven Mnuchin 

US dollar sent lower after $916bn relief proposal by Steven Mnuchin 

The dollar’s decline had stabilised somewhat over the last few trading sessions as states tighten lockdown measures and fiscal stimulus discussion continue to remain in limbo. However, overnight Treasury Secretary Steven Mnuchin gave House Speaker Nancy Pelosi a new $916bn Covid-19 relief proposal Lees Meer

Sterling stabilises as Johnson heads to the continent, but how long can this last? 

Sterling stabilises as Johnson heads to the continent, but how long can this last? 

After falling 1.24% to session lows on negative Brexit headlines, the pound retraced its steps as the press release from the conversation between Prime Minister Boris Johnson and European Commission President Ursula von der Leyen stated that in-person talks would begin with Johnson heading to the continent. Lees Meer

Dollar retreat threatens to become a rout

Dollar retreat threatens to become a rout

It’s been a terrible week for the US dollar, which has fallen to fresh multi-month or multi-year lows against many major currencies, most notably the euro. The narrative that many observers have fit to this price move as a driver has been the progress of a new bipartisan proposal for $908 billion in fiscal stimulus. Lees Meer

Sterling collapses as reports suggest PM Johnson is set to walk away

Sterling collapses as reports suggest PM Johnson is set to walk away

Sterling is the currency catching everyone's eyes in FX markets this morning as headlines fly in that Brexit talks haven’t yielded the progress that many believed they had back on Friday, with The Sun newspaper reporting that British Prime Minister Boris Johnson is set to walk away from negotiations later this morning. Lees Meer

Global recovery to aid Swedish krona rally in 2021

Global recovery to aid Swedish krona rally in 2021

The Swedish krona remains the best performing G10 currency year-to-date, trading 9.99% up against the US dollar at the 8.5 level. While the krona hit decade lows in the aftermath of the outbreak, its recovery benefitted from the fact that the economy experienced a relatively benign first wave. Lees Meer

Broad USD weakness helps lift G10 currencies to fresh highs

Broad USD weakness helps lift G10 currencies to fresh highs

With the dollar in full retreat and the US economy facing elevated near-term risks from the second wave of coronavirus infections, today’s non-farm payrolls report, released at 13:30 GMT, has the potential to have a significant impact on the dollar. Lees Meer

CAD rally to resume in 2021 but BoC and economic headwinds may stall the rally towards year-end

CAD rally to resume in 2021 but BoC and economic headwinds may stall the rally towards year-end

We have maintained a constructive view on the loonie for some time now. In our previous round of forecasts back in October, we adjusted our near-term view to factor in US election risks and our view that the dollar would bounce on the basis of a swift result providing constitutional clarity. Lees Meer

EURUSD reaches 32-month high before PMIs spoil the party

EURUSD reaches 32-month high before PMIs spoil the party

The euro started today’s session in the green to mark an extension of the previous two-day rally, allowing EURUSD to set a new 32-month high. The currency shrugged off the extension of the German lockdown into mid-January as hopes for an upcoming vaccine are dominating markets. Lees Meer

Markets eye a structural break lower for the dollar

Markets eye a structural break lower for the dollar

Looking ahead, the outlook for the dollar will continue to be driven by these factors, as well as the newly emerging picture of a global economic recovery in 2021 as vaccination allows wide scale re-opening of major economies. Lees Meer

Sterling falls on Barnier comments despite Pfizer approval

Sterling falls on Barnier comments despite Pfizer approval

Sterling has been knocked sharply lower this morning by an anonymous report that Michel Barnier has told EU ambassadors that three obstacles remain in the path of a trade deal with the UK. The Medicines and Healthcare products Regulatory Agency has approved Pfizer’s vaccine for covid-19 for use in the UK from next week, marking the start of a global process. Lees Meer

Tempers fray in European politics as EURUSD threatens to break 1.20 again today

Tempers fray in European politics as EURUSD threatens to break 1.20 again today

Today’s euro rally faces a substantial hurdle, however, as EU members ratchet up pressure on the leaders of Poland and Hungary to pass the EU’s economic recovery package, with the legislation also including the bloc’s seven-year budget. Lees Meer

RBA and Canada’s budget in focus as dollar decline continues

RBA and Canada’s budget in focus as dollar decline continues

Tweaks to monetary policy have been the theme of what was a quiet week for markets. Both the Fed and European Central Bank minutes alluded to changes in their monetary policy stance at the upcoming meetings, with the ECB likely to alter PEPP and the Fed likely to attach forward guidance to its QE programme. Lees Meer

Sterling jumps as Brexit impasse temporarily removed from negotiations

Sterling jumps as Brexit impasse temporarily removed from negotiations

Brexit is back in focus for sterling today after white smoke appeared from negotiations over the weekend. The Telegraph newspaper leads this morning with news that the EU accepted an offer from the UK for a transition period on fishing rights, effective January 1st. Lees Meer

Trumps signals towards concession as the dollar dips again

Trumps signals towards concession as the dollar dips again

The dollar and the United States enjoyed a relatively quiet Thanksgiving yesterday, although the greenback did weaken further to several G10 currencies including AUD, NZD, and JPY. US President Donald Trump - presumably outgoing - came the closest yet to conceding he has lost the Presidential election to Democrat Joe Biden. Lees Meer

Dollar rout stabilises as American’s tuck into their Thanksgiving turkeys

Dollar rout stabilises as American’s tuck into their Thanksgiving turkeys

The US dollar is struggling to find a footing in markets at present, with many shrugging off the near-term risks brought about by subsequent Covid waves in order to trade off of a more promising 2021 outlook. Even stronger than expected PMIs in the US, released on Monday, failed to really slow the dollar downturn. Lees Meer

Centrale bank Turkije nog niet uit de gevarenzone

Ondanks een volgens Ima Sammani van Monex Europe langverwachte renteverhoging. Lees Meer

Markets caught between dismal near-term virus situation and encouraging medium-term vaccine development

Markets caught between dismal near-term virus situation and encouraging medium-term vaccine development

Broad risk appetite appears stuck between poor short-term news, with rising Covid-19 cases in Europe and the US, and encouraging vaccine data. Next week’s calendar offers a number of points of interest, including the UK Treasury facing up to this exact trade-off in its latest spending review, and FOMC meeting minutes set for release. Lees Meer

TRY veert fors op na betekenisvol rentebesluit van CBRT

TRY veert fors op na betekenisvol rentebesluit van CBRT

Het besluit van de Turkse centrale bank om de referentierente te verhogen lijkt  markten voldoende overtuigd te hebben dat de wisseling van de wacht gepaard gaat met een positieve verschuiving in de beleidsvorming van de centrale bank.  Lees Meer

CBRT: The return of the one-week repo rate

CBRT: The return of the one-week repo rate

The recent lira rally below the 8.00 handle caused by the changing of the guard at the CBRT and Finance Ministry, along with conducive comments for higher rates in the short-run by President Erdogan, would prove to be fickle if the CBRT didn’t meet expectations today. Lees Meer

Vaccine euphoria in markets ignores material questions about timelines and distribution

Vaccine euphoria in markets ignores material questions about timelines and distribution

Although the US election remains contested by Donald Trump, this week’s main news was the release of positive data from Pfizer’s Covid-19 trials. Price action in G10 and EM FX has been indecisive, with the US dollar mounting a modest rally against several currencies that has come under threat of reversing on Friday. Lees Meer

Valse beweging in Turkse lira?

Valutahandelaren wellicht te vroeg gejuicht volgens Ima Sammani van Monex Europe. Lees Meer

Pfizer results buoy risk appetite in markets

Pfizer results buoy risk appetite in markets

News that a vaccine developed by Pfizer Inc and partner BioNTech proved 90% effective in the first 94 subjects who were infected by the new coronavirus has helped buoy market risk appetite today, prompting big moves in USDJPY, higher-beta G10 currencies such as NOK and NZD, WTI and EM FX. Lees Meer

Don’t look beyond today’s TRY rally, the market may be setting itself up for disappointment

Don’t look beyond today’s TRY rally, the market may be setting itself up for disappointment

The lira enjoyed the biggest one-day jump in two years and is trading over 5.5% higher in today’s session, CDS pricing - insurance against Turkish government debt default - has also dropped, while the Borsa 100 index is 2.6% higher also. Lees Meer

Nervous tone in markets as US election heads goes down to the wire and into the courts

Nervous tone in markets as US election heads goes down to the wire and into the courts

One possible interpretation of this price action is that the possibility of a comfortable win for Democrats in the White House and Senate would lead to large fiscal stimulus, and therefore reflation – the close race undid this trade and caused a dollar bid throughout Wednesday night. Lees Meer

CAD labour market gains excel, but markets focus on Pennsylvania result

CAD labour market gains excel, but markets focus on Pennsylvania result

Today’s labour market report was always going to be difficult to unpack. Was the slowdown in the labour market recovery a product of the 28-day lockdown in Quebec and Ontario, or is this part of the natural slowdown in the recovery expected in this phase of the recovery. Lees Meer

Pond stijgt na opkoopbazooka van 150 miljard pond door Bank of England

Pond stijgt na opkoopbazooka van 150 miljard pond door Bank of England

Het Britse pond zag de zon weer schijnen vanmorgen toen de Bank of England marktverwachtingen overtrof en het opkoopprogramma opvoerde met maar liefst £150 miljard. De extra aankopen zijn allemaal staatsobligaties, en de centrale bank heeft unaniem besloten de rentes op de huidige 0.1% te houden. Lees Meer

Head of Market Analysis at Monex Europe discusses contested election consequences with Bloomberg

Head of Market Analysis at Monex Europe discusses contested election consequences with Bloomberg

Head of Market Analysis Ranko Berich discusses the consequences of a contested election with Bloomberg as the votes are counted and the outcome remains unclear. Lees Meer

The Risk of a Disputed Election Looms Over Markets

The Risk of a Disputed Election Looms Over Markets

The US election is set to eclipse all other events in terms of significance for financial markets next week, despite the calendar featuring otherwise important events such as Fed and Bank of England meetings, as well as non-farm payrolls.  Lees Meer

US election primer

US election primer

With markets having mostly digested the Federal Reserve’s change in reaction function, and the rout in risk assets of Q1 and Q2 now comfortably in the past, the US election stands out as the second biggest source of uncertainty for global macro markets, after the ongoing Covid-19 pandemic. This is not an ordinary situation. US elections rarely offer such drastic prospects for policy change that they significantly alter the global macro outlook. Lees Meer

Euro tumbles as Ms Lagarde opens door to ramped up stimulus

Euro tumbles as Ms Lagarde opens door to ramped up stimulus

Fresh national lockdowns in France and Germany initially caused the slump, the grim outlook of the European economic recovery painted by ECB President Christine Lagarde in yesterday’s press conference sent the euro down further. Lees Meer

No surprises at today’s European Central Bank meeting

No surprises at today’s European Central Bank meeting

Today's statement is almost identical to the one released after the September meeting, apart from the first paragraph. In this paragraph, the ECB stated that it will release its new macroeconomic projections with a thorough reassessment of the outlook and the balance of risks in December. Lees Meer

Renewed lockdown measures lead to the return of the dollar in FX markets

Renewed lockdown measures lead to the return of the dollar in FX markets

Markets were served a reminder of what it was like back in Q2 yesterday as Europe began to tighten lockdown measures yet again, resulting in the dollar being thrust higher across the G10 currency board. Lees Meer

Risk appetite plunges as Europe tightens lockdown measures

Risk appetite plunges as Europe tightens lockdown measures

Italy suffered the most daily deaths since May, while new infections in Spain surged by 59% vs a day earlier. France will likely announce new measures tonight, with the biggest one being a one-month lockdown starting this week. Lees Meer

USD bid as Supreme Court comes into focus for election

USD bid as Supreme Court comes into focus for election

The Supreme Court was the source of the day’s most significant news, with new Justice Amy Coney Barret being confirmed by the Senate in a 52-48 vote that fell entirely along partisan lines apart from one Republican Senator who voted against her confirmation. Lees Meer

Dollar rises on risk-off flows as cases continue to rise in major economies

Dollar rises on risk-off flows as cases continue to rise in major economies

The dollar is trading higher against several major currencies this morning, with the pattern of winners and losers roughly suggesting a hesitant tone in risk appetite. NOK, CAD, and AUD are the biggest losers in the G10 currencies, while among emerging markets ZAR and TRY are underperforming, the latter having reached a fresh all-time low against the greenback. Lees Meer

BoC and ECB to take center stage before US elections

BoC and ECB to take center stage before US elections

This week’s major theme has been the ongoing US fiscal stimulus talks between House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin. Headlines around the fiscal funding talks contributed to chopping and changing risk sentiment all week, flinging the US dollar with it. Lees Meer

“Just about there” with stimulus talks, but there’s still a Senate to pass 

“Just about there” with stimulus talks, but there’s still a Senate to pass 

GBP Sterling is currently trading some 0.3% higher than last Friday morning, which is appropriate given the merry-go-round that has occurred in Brexit news flow since then. Last Friday afternoon, Boris Johnson ostensibly broke off Brexit talks. Talks resumed yesterday and will continue every day until a deal is done – leaving sterling broadly unchanged. […] Lees Meer

Dollar gets dumped as pre-election stimulus package becomes a distant possibility

Dollar gets dumped as pre-election stimulus package becomes a distant possibility

A statement made yesterday by House Speaker Nancy Pelosi announcing that the door to passing a Covid-19 relief package will be opened after election day signalled that both time and political will has likely run out to find bipartisan support for an additional fiscal stimulus package. Lees Meer

Dollar drops as Pelosi’s fiscal deadline elapses

Dollar drops as Pelosi’s fiscal deadline elapses

The dollar has fallen to fresh one-month lows this morning, after House Speaker Nancy Pelosi’s deadline for stimulus talks passed without a collapse in talks, and Pelosi herself said that she was hopeful a deal could be reached this week. Lees Meer

Britse pond kan fors dalen bij uitblijven Brexit-deal

Analist Ima Sammani van Monex Europe bespreekt verschillende scenario's. Lees Meer

US stimulus deal remains under pressure as Pelosi deadline nears

US stimulus deal remains under pressure as Pelosi deadline nears

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin seem to be a step closer to narrowing their differences over a stimulus package, but the Democrats and the White House remain at odds over both the scope and scale of aid. Lees Meer

Domestic outbreak eases and economy starts to rebound but investors aren’t convinced

Domestic outbreak eases and economy starts to rebound but investors aren’t convinced

Since our last ZAR update, conditions in South Africa have improved markedly. Over the last two months, the number of new cases and the positive test rate have fallen dramatically, allowing the South African economy to lower its lockdown from level 3 to level 1 over the course of two stages. Lees Meer

Bank of Canada Business Outlook Survey falls to the wayside

Bank of Canada Business Outlook Survey falls to the wayside

The Overal Business Outlook Survey improved from -7.0 (revised to -6.9) in Q2 to -2.2, but this likely underreports the current situation as it doesn’t include the effects of the latest lockdown measures imposed in Canada’s two largest provinces; Quebec and Ontario. Lees Meer

Risk appetite sours as markets eye a winter of restrictions

Risk appetite sours as markets eye a winter of restrictions

This week’s major theme has been a deterioration in broad market optimism about growth and reflation, with the US dollar and back-end sovereign bonds the main beneficiaries of the move. Considering rising coronavirus case counts and the resulting increases in restrictions on economic activity being seen across many western economies, the deterioration in overall risk appetite makes sense. Lees Meer

US stimulus talks still at an impasse while internal markets bill may get watered down to allow Brexit deal

US stimulus talks still at an impasse while internal markets bill may get watered down to allow Brexit deal

On Friday Boris Johnson appeared to say the UK was walking away from trade talks with the EU, although the Prime Minister tried to blame the EU for the impasse in trade talks. Johnson called for “a fundamental change of approach” from the EU. Lees Meer

Crunch time for Brexit and Johnson decision over no-deal as EU summit concludes this evening 

Crunch time for Brexit and Johnson decision over no-deal as EU summit concludes this evening 

Traffic for sterling was one way in yesterday’s session as markets braced for a potential breakdown in Brexit negotiations while the dollar broadly rallied as major economies began to tighten lockdown restrictions. Lees Meer

EU summit in scope for sterling, while fiscal stimulus in the US stalls

EU summit in scope for sterling, while fiscal stimulus in the US stalls

Sterling shot up yesterday on headlines that trade negotiations were showing “some progress” according to unnamed sources. The news on the progress helped the currency unwind some of its recent negative trading as the tone of discussions suggested the UK wouldn’t walk away from the table should a deal not be struck in time for the EU summit. Lees Meer

Sterling slides back below 1.30 as no-deal risk rises ahead of key EU summit

Sterling slides back below 1.30 as no-deal risk rises ahead of key EU summit

Yesterday, concerns around Brexit negotiations continued to drive the pound lower as Boris Johnson’s self-imposed Brexit deadline, Thursday the 15th October, rapidly approaches with no deal in sight. Areas of contention such as state aid and fishing rights are yet to be bridged, meaning a narrow trade deal ahead of tomorrow’s EU summit is unlikely. Lees Meer

Markets await fresh lockdown measures in Europe as the dollar goes bid

Markets await fresh lockdown measures in Europe as the dollar goes bid

After climbing for four days on the bounce, the pound is struggling to hold its recent highs this morning as the market’s appetite for risk starts to unwind. The announcements that major economies will continue to tighten lockdown measures, albeit in a localised manner for now, continues to weigh on risk appetite as downside risks to the global economic recovery start to materialise. Lees Meer

EURPLN testing day’s high after negative rate comment

EURPLN testing day’s high after negative rate comment

EURPLN popped upwards today as the zloty weakened following an article by National Bank of Poland Monetary Policy Council member Eryk Lon, who wrote that Poland could move into negative rates if consumer sentiment worsens. Lees Meer

Counting the cost of the ongoing second wave of Covid-19

Counting the cost of the ongoing second wave of Covid-19

It’s been an indecisive week for G10 FX, with the major pairs remaining within recent trading ranges as hopes for US fiscal stimulus faded and several regions continued to report worsening Covid-19 pandemics. Sterling will be in focus next week, with plenty of MPC member speeches and labour market data scheduled ahead of Thursday’s potentially fateful EU summit. Lees Meer

Loonie enjoys employment gains to extend rally

Loonie enjoys employment gains to extend rally

In September, Canada's economy added 378,200 jobs compared with 245,800 in August, bringing the unemployment rate down from 10.2% to 9.0%. Much of the gains were a by-product of loosening containment policies in Canada as the survey was conducted between the 13th and 19th of September. However, this isn't to last. Lees Meer

USD fiscal relief price action continues to dominate market moves

USD fiscal relief price action continues to dominate market moves

The narrative over fiscal stimulus seemingly supports the Democrats prior to the election, with fiscal stimulus needed to help the recovery along the way while Pelosi’s $2.2trn stimulus bill remains on the table awaiting Senate approval. Lees Meer

Czech data may spur short-lived optimism as virus risks loom

Czech data may spur short-lived optimism as virus risks loom

From August to September, CZK had weakened over 4.5% against the euro, while the Polish zloty fell by almost 5% against the euro and the Hungarian forint even saw a 6.5% decrease vs the euro. However, since yesterday the Czech Republic has become the EU’s worst hotspot with the most cases per capita over the last two weeks. Lees Meer

Euro sits in range while markets await ECB minutes

Euro sits in range while markets await ECB minutes

Pressure on the euro rises as the eurozone continues to struggle with accelerating new daily infections, which is shown by the euro’s limited spot return against the US dollar compared to other G10 currencies. France will impose more restrictions today after the seven-day rolling average reached a record, while Spain also reported a record of 5,075 cases yesterday. Lees Meer

Dollar back in the dumps as fiscal stimulus optimism plummets

Dollar back in the dumps as fiscal stimulus optimism plummets

The news that further fiscal stimulus measures won’t be enacted prior to the November election ring through markets today, shortly after Fed chair Powell reiterated the need for active fiscal policy in response to this crisis yesterday. Lees Meer

Trump’s hospital exit gives risk appetite a boost

Trump’s hospital exit gives risk appetite a boost

The dollar has remained well on the back foot this morning after Donald Trump was discharged from hospital following admission for Covid-19. House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin spoke on the phone yesterday for about one hour, discussing potential further fiscal stimulus. Lees Meer

Trump covid-19 infection presents a wild card for markets as sterling goes on Brexit merry-go-round

Trump covid-19 infection presents a wild card for markets as sterling goes on Brexit merry-go-round

This week’s calendar offers several important looks at both Fed and ECB policy, while Brexit negotiations will likely continue after a high-stakes call between Boris Johnson and Ursula von der Leyden. Lees Meer

Donald Trump keeps diagnosis news out of market hours, little dollar reaction 

Donald Trump keeps diagnosis news out of market hours, little dollar reaction 

By the time trading in the dollar and US equity futures had resumed, the US President had time to be hospitalised, make assurances that he was already recovering rapidly, release a video, and take a televised car tour to see some supporters outside hospital. Lees Meer

Brexit reaches end-game as talks intensify while markets turn risk-off on Trump Covid news

Brexit reaches end-game as talks intensify while markets turn risk-off on Trump Covid news

The upshot of the stories is that although a lot of noise has been generated by various EU and UK officials, there is still no clear indication of if the two parties are moving towards a successful resolution of trade talks. Lees Meer

Polish zloty hops on October’s EM rally train

Polish zloty hops on October’s EM rally train

While other Eastern European currencies like the Czech krona and the Hungarian forint are also performing well amid general EM currency gains this week, the zloty got an additional boost after a Polish central banker signalled that having near-zero rates after 2020 would be harmful to the Polish economy. Lees Meer

Reality bites sterling as EU remain firm on state aid and and withdrawal agreement

Reality bites sterling as EU remain firm on state aid and and withdrawal agreement

The pound has been hammered this morning by the twin revelations that trade talks have failed to produce a breakthrough on the crucial issue of state aid, and that the EU has prepared a legal response to the Government’s Internal Markets Bill. Sterling is now facing up to the harsh reality of an uncompromising EU stance on state aid and last year’s withdrawal agreement. Lees Meer

Canada’s economy expands by 3% in July

Canada’s economy expands by 3% in July

Statistic’s Canada may have just won this month’s forecasting prize as July’s GDP comes in at 3.0% MoM, smack bang on their provisional estimate released along with the Q2 GDP report last month. Given that economists’ expectations centred around this preliminary estimate quite heavily, today’s GDP release caused little market reaction for the loonie. Lees Meer

Dollar on back foot after contentious Presidential debate

Dollar on back foot after contentious Presidential debate

Last night’s first Presidential debate was highly contentious, with incumbent Donald Trump and challenger Joe Biden trading barns on a variety of domestic topics such as the economy, law and order, and the coronavirus pandemic. Lees Meer

USDTRY hurtles towards the 8.00 level, which may force the TCMB into further aggressive hikes

USDTRY hurtles towards the 8.00 level, which may force the TCMB into further aggressive hikes

Even though the lira continues to carve fresh all-time lows on what seems a daily basis, progress has been made in an attempt to stop the haemorrhaging. Last week, the central bank (TCMB) opted to raise interest rates by 200 basis points, with the signal of an interest rate hike more important for markets than the actual hike itself. Lees Meer

Dollar drops as all eyes are on US debate and fiscal stimulus plan 

Dollar drops as all eyes are on US debate and fiscal stimulus plan 

Risk sentiment remains depressed as the global confirmed coronavirus deaths hit 1 million overnight and President Donald Trump stated he expects more virus cases in the weeks ahead, as the US ramps up its testing rate and deploys millions of rapid tests to states. Lees Meer

Global risk sentiment weighs on Kiwi dollar

Global risk sentiment weighs on Kiwi dollar

The New Zealand dollar strengthened over 2% against the Australian dollar in September but failed to escape the wave of US dollar strength that developed, as weak risk appetite continued to dominate FX markets. Lees Meer

Covid cases rise and the November election creeps back into the frame as markets begin to favour the dollar again

Covid cases rise and the November election creeps back into the frame as markets begin to favour the dollar again

The week ahead offers a moderately eventful calendar that will be capped off by non-farm payrolls. However, other themes are likely to provide plenty of impetus for further volatility in risk appetite, especially as Covid cases start to rise again in Europe and North America. Lees Meer

UK outlines Kurzarbeit spin-off, but the holes in the safety net are visible

UK outlines Kurzarbeit spin-off, but the holes in the safety net are visible

Sterling exhibited a minor flurry of strength in yesterday’s session as Chancellor of the Exchequer, Rishi Sunak, announced a new wage subsidy scheme to help ease the labour market off of the more expensive furlough scheme and aid companies retention of their workforce. Lees Meer

No change in the Norges Bank’s rate path means no good for NOK in the short term

No change in the Norges Bank’s rate path means no good for NOK in the short term

The Norges Bank took a cautious tone today when it announced no change in interest rates over the next couple of years. This is not a total surprise, as the Bank already flagged higher rates from the end of 2022 during its July meeting following a less severe economic shock in Norway than in most other economies. Lees Meer

Loonie feels the blow sustained by Trudeau’s fiscal outlay

Loonie feels the blow sustained by Trudeau’s fiscal outlay

Yesterday’s throne speech saw these political and credit risks rise to the fore. In combination with the general risk-off tone in markets this week, the speech resulted in the loonie feeling the pressure, extending its slide back towards the 1.34 level – USDCAD is now trading 1.60% higher on the week. Lees Meer

Swiss franc weakens vs euro after SNB sticks with FX interventions and announces to publish data quarterly

Swiss franc weakens vs euro after SNB sticks with FX interventions and announces to publish data quarterly

The Swiss franc fell to new lows against the euro and dollar this morning after the Swiss National Bank announced to keep rates unchanged and FX intervention at a high pace if necessary, considering the strengthening of CHF. In the short term, the central bank upwardly revised its inflation outlook since June, mainly due to a rise in oil prices. Lees Meer

Rishi Sunak to unveil new jobs-protection plan

Rishi Sunak to unveil new jobs-protection plan

Chancellor Rishi Sunak is expected to speak in Parliament today at 12:45 BST and give an economic statement that will hopefully include policy proposals. The core of the Treasury response will likely be some kind of targeted or partial wage subsidy scheme to replace the blanket furlough programme that ends in October. Lees Meer

Lower than expected PMIs flag that winter is coming

Lower than expected PMIs flag that winter is coming

This morning’s Purchasing Managers’ Index releases from September confirmed the bleak picture of the eurozone current state, with the bloc’s services PMI dropping to 47.6 down from August’s  50.5, and the composite PMI falling to 50.1 down from 51.9. In Germany. Lees Meer

Riksbank upgrades GDP outlook but kept interest rate projection flat

Riksbank upgrades GDP outlook but kept interest rate projection flat

QE is the way to go, according to Sweden's Riksbank which kept rates at zero today and stuck with a flat interest rate projection over the coming years. The central bank pledged to continue its asset purchase programme as it navigates its way through the pandemic, which is exactly what markets expected. Lees Meer

JPY gradually advances on the closing gap between the Fed and the BoJ

JPY gradually advances on the closing gap between the Fed and the BoJ

The BoJ brought no policy moves forward, but took an upbeat tone on the economic outlook. In contrast, the Fed's move towards strengthened forward guidance moved it a step closer to the BoJ's ultra-accommodative policy stance, raising the prospect of a structurally smaller difference between US and Japanese yields.  Lees Meer

Dollar bounces back as Europe sets for a second wave

Dollar bounces back as Europe sets for a second wave

GBP Sterling has weakened further against the US dollar and the euro this morning, extending yesterday’s general trends. Both GBPEUR and GBPUSD took a further dive this morning during a speech from Bank of England Governor Andrew Bailey. Speaking at a webinar for the British Chamber of Commerce, Bailey said that the BoE needs to […] Lees Meer

G10 central banks and markets mull implications of a new era in Federal Reserve policy

G10 central banks and markets mull implications of a new era in Federal Reserve policy

Central banks will continue to weigh the implications of the Fed’s dovish turn and recent dollar weakness on domestic inflation outlooks, with a number of meetings this week across the globe from Scandinavia to New Zealand. Lees Meer

Loonie to extend rally on monetary policy divergence but risks are plentiful as the economy enters “recuperation” phase

Loonie to extend rally on monetary policy divergence but risks are plentiful as the economy enters “recuperation” phase

While the risks outlined in our Q2 report meant that the Canadian dollar lagged the wider G10 rally, with the loonie’s move more concentrated in the month of August as opposed to July like the rest of the G10, the period of USD weakness meant that our previous point forecasts are now overly bearish. Lees Meer

MPC vindicates market bets on increasing likelihood of negative rates

MPC vindicates market bets on increasing likelihood of negative rates

The UK economy is enjoying a fairly solid economic upswing at the moment, but increasing anticipation of negative rates in financial markets, and now increasing discussion of the issue at the MPC, highlight the extent to which everyone knows the economy is not out of the woods just yet. Lees Meer

BoE minutes revealed strongest signal of negative rates yet as Brexit risk looms large

BoE minutes revealed strongest signal of negative rates yet as Brexit risk looms large

Sterling weakened sharply yesterday as the Bank of England revealed an increased willingness to investigate and discuss negative interest rates as a policy option, but since then has recouped its losses against the US dollar. The Bank of England kept rates unchanged in a unanimous vote on the Monetary Policy Committee. Lees Meer

SEK enjoys a prolonged boost as Sweden escapes a deep economic contraction

SEK enjoys a prolonged boost as Sweden escapes a deep economic contraction

Of the G10 group of currencies, the Swedish krone has seen the highest gains against EUR and USD over the year to date, surging a whopping 7% against the US dollar and almost 1% against the continuously strengthening euro. The surge came after the currency hit rock bottom in March as Covid-19 spread across the globe. Lees Meer

Markets get ready for BoE as they digest dovish FOMC announcement

Markets get ready for BoE as they digest dovish FOMC announcement

Today at 12:00 the Bank of England’s latest rate decision will be announced, alongside a policy statement and meeting minutes. The Bank is not likely to change any policy settings, but has a number of issues to address. Firstly, UK economic data has been fairly buoyant of late, but the end of the Government’s furlough scheme presents a likely shock to incomes as unemployment creeps up. Lees Meer

Slow mean-reversion amid a concerning fiscal outlook

Slow mean-reversion amid a concerning fiscal outlook

The Brazilian real has been the worst performing currency this year, with losses currently sitting over 22% and 26% against the USD and the EUR respectively. In addition to this, the BRL is the most volatile currency in the world when considering calculation periods from 1-month up to 1-year. Lees Meer

A Fed decision that could head to the history books is only hours away

A Fed decision that could head to the history books is only hours away

It's Fed day! That is right, the day for the history books, a day to get excited for. After announcing the shift towards an average inflation targeting framework, the Federal Reserve’s long awaited framework review is likely to have concluded, with the results expected to be released as early as today. Lees Meer

EM debt aversion and political risks likely to weigh down the Russian ruble until next year

EM debt aversion and political risks likely to weigh down the Russian ruble until next year

The Russian ruble is one of the worst performers in the EM space this year, even as oil rebounded by almost 30% after its initial crash at the early stages of the pandemic. Since June, the ruble saw the largest drop among EM currencies apart from the Turkish lira, plunging over 11% against the dollar and over 16% against the euro. Lees Meer

UK labour market shows early signs of impact as internal markets bill passes Commons

UK labour market shows early signs of impact as internal markets bill passes Commons

The Government’s internal markets bill passed its second reading in Parliament by 77 votes last night, despite 20 abstentions from Conservative MPs. More may join a rebellion in amending the bill next week, but for now, it seems the Government continues to command an effective majority on the issue. Lees Meer

Markets face Brexit endgame and packed central bank calendar

Markets face Brexit endgame and packed central bank calendar

The sensitivity of central banks to currency appreciation, discussions of the Fed’s new average inflation targeting framework, and Brexit were the main themes that markets latched onto this week. With the Fed potentially announcing the conclusion of its framework review on Wednesday, a suite of central bank policy decisions throughout the week, and the internal markets bill remaining in focus, the themes of this week are likely to spill over to the week ahead. Under these overarching themes, a few key market dynamics have emerged. It has almost become a market consensus that the dollar will remain weak as the Fed becomes less sensitive to the idea of an inflationary overshoot during the recovery phase. However, the idea of rate normalisation by the US central bank is one for the distant future, with focus on the evolution of QE programmes a more pressing matter for the near-term. This week’s Fed meeting may give some indication of the type of forward guidance markets are going to see from Jerome Powell and thus how the dollar is likely to trade in the earlier parts of the recovery phase. Additionally, a combination of Lagarde’s comments and a Bloomberg “sources” story has given the euro the green light to rally again, but will the ECB verbally intervene back up at the 1.20 level? Finally, sterling traders have been sent back to 2019 as markets begin to price in the risk of a no-deal Brexit. The key difference between now and then; the Bank of England. Money markets are now pricing in negative rates from the BoE as soon as February 2020. Also next week, all eyes will focus on the election of Japan's new Prime Minister, after Shinzo Abe put an end to its 8-year tenure in office due to health reasons. The Liberal Democratic Party presidential election begins on the 14th, with candidates Fumio Kishida, Shigeru Ishiba and Yoshihide Suga all jostling for the position. Suga is the current favourite but Abe’s successor will be officially announced on Wednesday 16th, just prior to the Bank of Japan’s policy meeting on the 17th.   THIS WEEK'S CALENDAR: Monday 14th: It’s a slow start to what is set to be a busy week, with only eurozone industrial production data for July released at 10:00BST and Canada’s Bloomberg Nanos Confidence index released at 13:00BST. Industrial production data is substantially lagged and will likely play a very minor role in EURUSD price action as investors already received Germany’s underwhelming industrial production data last week (+1.2% vs expectations of 4.5%). The data coming from Canada is likely to be more interesting, with consumer sentiment stalling as of late. The second reading of the controversial Internal Markets Bill in the UK is also scheduled. Tuesday 15th: Tuesday’s session starts with a bang in Asian markets. Meeting minutes from the Reserve Bank of Australia are due at 02:30BST, where markets are likely to get the rationale behind the RBA’s latest move to increase the accessibility of its Term Funding Facility. With rates set to stay at 0.25% for some time, Governor Lowe announced that the Bank “continues to consider how further monetary measures could support the recovery”. One measure was expanding the Term Funding Facility to allow banks up to 2% of outstanding credit at a fixed rate of 0.25% for three years. The facility now has a capacity of A$200bn, with A$52bn already being accessed. Will this be the last easing action by the RBA? The minutes should give us clarity. At 03:00, retail sales and industrial production data from August are due from China. These will be key metrics for markets to watch given China’s position as the leader of the global economic recovery. Retail sales are expected to grow to just -8.8% YTD, with industrial production set to break into positive territory YTD (0.3%) with a reading of 5.1% YoY expected. This highlights the two-speed recovery underway in China’s economy. The calendar then switches to UK data, with jobless data due at 07:00BST. Wednesday 16th: Markets can await the official announcement of Shinzo Abe’s successor Wednesday morning, with UK inflation data for August due out at 07:00BST. Low levels of inflation will be a concern for the Bank of England who meet the following day, but the level of inflation won’t be as important as the evolution of the economic growth rebound. The focus will then shift to the eurozone trade balance data released at 10:00BST, ahead of US retail sales data for July at 13:30BST. Retail sales data for the period in which the US economy was embroiled with the outbreak in the Sunbelt region will be a key metric for markets to analyse, with the Federal Reserve due that evening at 19:00BST. Just prior to the Fed, however, ECB member Holzmann is set to speak at 16:00BST at a virtual roundtable event, with ECB speakers in the limelight after last week’s communication blunder over the focus of the euro. Jerome Powell is set to give a post-FOMC press conference at 19:30BST, just prior to the Central Bank of Brazil’s rate announcement later in the evening. Details of the Fed and BCB meeting are below. Thursday 17th: Another busy Asian session begins with the Australian labour market report due at 02:30BST, with the unemployment rate expected to tick up to 7.7% in August, a likely by-product of the latest lockdown measures. The focus will then shift to the Bank of Japan who are expected to announce their latest policy decision, later than usual in the week due to the leadership election. The Bank of England are then up at their new early time of 07:00BST, with more details below. Just after lunchtime, the South African Reserve Bank will be in focus, with expectations suggesting another 25bps cut is incoming to help the economic recovery as fiscal policy is constrained and lockdown measures remained in play for longer than expected. US jobless claims round off the day’s events at 13:30BST. Friday 18th: After a busy week, Friday will come as a welcome relief for market participants, but the economic calendar continues at a rapid pace. To start the day, UK retail sales data for August is released at 07:00BST, while the Central Bank of Russia meet at 11:30BST. Economists’ expectations for a rate cut are practically split down the middle, with commentary from the CBR suggesting another rate cut is being discussed but isn’t a certainty. Canadian retail sales data is due at 13:30BST and will round off the week for most. Retail sales in Canada showed explosive growth in June, which is natural due to the re-opening of the economy, but Friday’s data will show if the recovery in consumption can continue. This will be of upmost importance for the Bank of Canada, which signaled this week that monetary policy will start to become more active in the coming months.   USD FOMC TO FILL IN DETAILS OF SWEEPING STRATEGY CHANGES OUTLINED BY POWELL Jerome Powell’s speech at the virtual Federal Reserve symposium this year made it clear that monetary policy in the US was moving to a structurally more dovish reaction function. The Fed Chair outlined historic changes in a new Statement on Longer-Run Goals and Policy Strategy. Powell announced a switch to average inflation targeting, and a move away from pre-emptive rate hikes as the economy approached estimates of maximum employment. Both of these changes add up to a significantly more dovish Fed, and the dollar has duly remained on the back foot since. The Fed’s ongoing framework review now appears to have been concluded, clearing the way for changes to nearer-term forward guidance issues as part of regular policy statements. This week’s Fed meeting may therefore see a third major change to the Fed’s policy, and one with more immediate implications for the dollar and US markets, in the form of outcome-based forward guidance: Recent meeting minutes and speeches have made it clear the FOMC is considering a range of possible calendar and outcome-based forward guidance. The likeliest outcome is further formalisation of the Fed’s shift away from viewing maximum employment as a constraint that will lead to rate hikes. Powell’s speech may provide a template for what outcome based guidance could look like. In his speech, the Chair stated “employment can run at or above real-time estimates of its maximum level without causing concern, unless accompanied by signs of unwanted increases in inflation”. In practice, the Fed could link changes in policy to a robust, sustained convergence of inflation to a level that would threaten even the Fed’s looser average inflation target. Further details of how average inflation targeting will be implemented would be nice, but are unlikely to be forthcoming. Some guidance on the length of the averaging period would be particularly interesting, with the Fed’s 3-year forecast horizon the obvious starting point. New member “dot plot” projections will be issued, providing a related insight into members’ opinions. The previous set of projections, from June, showed members’ expectations of rates flat over the forecast horizon, but still relatively unchanged at around 2.5% over the longer run. Asset purchases, which were included in the Fed’s framework review, will also be a topic of interest, although formal changes may not be announced this week. The Fed’s current “whatever it takes” approach to asset purchases gives it great flexibility – this may be changed to a regular monthly pace that is announced ahead of time as the US recovery continues.   FOMC member projections glued to lower bound over forecast horizon – what about the longer-run?   JPY BOJ TO MAINTAIN POLICY STANCE WHILE THE CURRENCY CAPTURES ATTENTION The Bank of Japan is scheduled to meet on September 17th, while markets will also focus attention on the election of the new Prime Minister after Shinzo Abe’s departure. The Bank is set to maintain its current monetary policy stance, with heavy focus on corporate financing. Ample liquidity provision attuned with the government’s financial support program has soothed strains in the corporate sector amid the pandemic. Asset purchases remain relevant for investors, as back-end yields in the JGB bond curve raise concerns of high debt issuance. The increase in Japanese yields underpins the gradual strength in the yen, which has traded above its 50-day moving average over the last month. The currency has also been supported by a recent correction in stocks markets, following doubts on the sustainability of record high valuations in the tech sector and daunting hopes in the vaccine race. As of now, the BoJ has not rang the alarm bells about the evolution of the currency, but it might soon be forced to face questions about the need to soften the yen’s appreciation –similar to what some ECB official members recently did. The USDJPY real effective exchange rate remains slightly undervalued with respect to its 10-year moving average, but its upward trend could weigh on the BoJ’s assessment of the balance of risks to the inflation outlook in the months to come. The consensus view suggests that a break through the 104/105 level in the USDJPY rate might trigger further monetary easing, as the currency becomes too expensive for foreign customers. The attention on the evolution of the yen might become a stronger point in the BoJ’s agenda under the influence of the soon-to-be Primer Minister Yoshihide Suga, the most likely winner in next week´s LDP presidential elections. Suga is set to build on the Abenomics heritage, centered on combined fiscal and monetary stimulus. In addition, the candidate has also been reportedly linked to the importance of the FX rate as a crisis management tool. Even though the currency value is not a monetary policy target per se, the topic is yet to be exhausted amid pain in the export sector.   JPY approaching its 10-year medium real effective cost might rise attention in Japanese institutions   GBP BOE MEETS AS STERLING GETS A WHIFF OF NO-DEAL RISK AND BREXIT APPROACHES ENDGAME Sterling has been by far the worst performing major currency this week, due to a sudden and dramatic escalation in the risk of no-deal Brexit following the introduction of the Internal Market Bill, which contains clauses that would breach last year’s withdrawal agreement. Sterling has weakened roughly 5% against both the dollar and the euro compared to a couple of weeks ago, with much of the depreciation coming in the last few days. In the wider scheme of things, both these moves, and the absolute levels of GBPUSD and GBPEUR, are not as extreme as during past close brushes with no-deal. This suggests that market participants are either less concerned about the economic and market impact of the collapse of trade talks, or are taking the possibility less seriously than during previous no-deal scares. Judging how far sterling may end up falling should both sides walk away from trade talks is difficult. A twitter poll conducted by Monex this week saw more than 60% of 285 respondents say they thought GBPUSD would fall to below 1.20.   Two main avenues of uncertainty will be worth watching this week: domestic opposition to the Bill, and bilateral UK-EU relations including both a possible legal challenge to the legislation and ongoing trade talks: Domestic opposition to the Bill escalated at the end of this week. Prominent Conservative member of the House of Lords Norman Lamont called the bill “impossible” to defend. Opposition in the Lords aside, a more practical concern for the Government may be a rebellion in the House of Commons, where Conservative MP Bob Neill has tabled amendments to the Internal Markets bill removing the offending clauses. The Bill will face its second reading in Parliament next week on Monday, with The Times guessing as many as 30 Conservative MPs may be ready to rebel. Given the Government’s comfortable working majority of above 80, this seems like a stretch – particularly when the votes of the Northern Irish DUP are considered. However, the history of Brexit so far should caution against assuming a status-quo outcome. Trade talks will continue with the EU this week, after EU leaders lined up to warn that the passage of the Internal Markets Bill would seriously threaten trade talks, but did not unilaterally withdraw. Instead, the European Commission has given the UK until the end of September to amend or withdraw the legislation, while talks continue. Given the lack of progress this week, a breakthrough on contentious issues such as state aid – the subject of the Internal Markets Bill breaches of the withdrawal agreement – seems unlikely.   TOO EARLY FOR BOE TO ENJOY AN “I TOLD-YOU-SO” MOMENT ABOUT RAPID UK RECOVERY Next week’s MPC meeting will likely be a non-event for markets, given the historic Brexit drama that will likely be playing out. Recent commentary from policymakers has been optimistic, and economic data indicates a robust recovery is underway, consistent with the BoE’s expectations. Several themes will be interesting, even if no policy change is forthcoming: Chief Economist Andy Haldane and Governor Andrew Bailey have both been fairly sanguine about the end of Government furlough schemes. Haldane recently said the Government should end support, saying businesses and consumers had been “incredibly resilient”. Bailey similarly said fiscal policy should “move forward” – meaning to end furlough subsidies. The meeting minutes will shed light on exactly how optimistic the MPC is about the UK labour market and wider economy. The housing market will also be relevant here, with prices hitting all-time highs by some measures in some regions, indicating a recovery in some parts of consumer behaviour. The pace and duration of QE will be the key topic, although little clear guidance on this is likely to be forthcoming. Further asset purchases at a reduced rate remain likely at some point later this year in the UK, depending on the development of the economy, but at this current juncture, no action is likely. Negative rates are becoming a perennial topic for the BoE and may come up. Despite clear guidance from both Andrew Bailey and the August Monetary Policy Report that the measure is not imminent, OIS pricing indicates markets are increasingly anticipating the BoE may cut rates to negative as early as this year. The August MPC said that negative rates were a tool that would most likely be effective during the “upswing” phase of a recovery, when banks were less concerned about balance sheet risks. The recent falls in short-term fixed-income pricing have coincided with the latest round of Brexit angst. This suggests that markets may be anticipating the possibility that an additional drag on the economy from a no-deal scenario will force the BoE to go negative in the coming months.   Sterling OIS pricing indicates increasing speculation of negative BoE rates The dotted line indicates pricing one month ago   BRL BCB TO MAINTAIN STATUS QUO AND KEEP REMAINING POWDER DRY The Central Bank of Brazil has pretty much exhausted the policy tools that are acceptable from a cost-benefit perspective. The Bank cut rates to the record low of 2%, from the 6.50% level in December last year, with 250 basis points scrapped amid the pandemic-driven recession. The latest Copom minutes highlights the reluctance of the committee to ease further via interest rate cuts, as the group weigh on the effects of overstepping the 2% effective lower bound. Assets purchases, on the other hand, are not a policy tool of the BCB liking either, as the Bank risks the public confidence over an extended debt portfolio. An unusual instrument among emerging markets was also deployed: forward guidance. More often used in developed economies´ central banking, a strengthened forward guidance entails the promise of not rising interest rates until certain goals in the economic outlook are met. This is a plausible commitment considering the subdued current and expected inflation profile, but it is also a bold bet in terms of financial stability and asset markets. BCB´s guidance, however, does not prevent the Bank to further cuts should it becomes handy - a scenario we don´t foresee at the moment. Even though the low level of interest rates might be supportive of a faster economic recovery and a stronger currency in the medium-to-long run, additional easing (or hints of it) might not be welcomed by the forex market any longer. The BRL has coped with increased pressure from both the economic and political fronts and is set to recover from the pandemic-driven recession only gradually. Next week BCB policy review is expected to maintain the current status quo, but the currency does still face a highly volatile outlook on the back of increasing risks.   ZAR SARB SET TO CONTINUE FILLING IN THE HOLES LEFT BY FISCAL SHORTFALL Despite the monetary policy committee showing increased reluctance to enact further rate cuts over the last few meetings, economists still expect another 25bps from the SARB on Thursday’s meeting. The 50.1% annualised GDP contraction in Q2 dwarfed the 40% contraction anticipated in the SARB’s previous forecasts, suggesting the growth projections are likely to be revised down. Coupled with inflation hugging the SARB’s lower band and the recovery being riddled with load shedding and prolonged lockdown measures, we expect the Reserve Bank to lower rates to 3.25% along with the median consensus supplied to Bloomberg. The main question will be over the split. Will the committee split 3-2 in favour of the rate cut as it has in the last two meetings, or will committee members shift to signal a greater consensus towards monetary easing? With the electricity supply gap its greatest on record despite weaker demand, signaling a structural buffer to the recovery and a risk to the level of potential growth, we would argue the SARB may opt to signal a more dovish rate cut than previously.   Last week’s Q2 GDP release may make the SARB’s decision easy this week RUB RATE CUT BY CBR ISN’T SET IN STONE WITH ECONOMISTS’ EXPECTATIONS SPLIT The Russian central bank stated it will consider a rate cut next week “thoughtfully and with care” after having already slashed the key rate to a record low of 4.25% earlier this year to help its economy recover from the pandemic and crash in oil prices. Deputy Central Bank Governor Alexei Zabotkin said on Thursday that “the board of directors will consider the necessity of further rate cuts”. However, he acknowledged that the virus adds “noise” to inflationary data that the bank considers in its decision making process. The poisoning of Russian opposition leader Alexei Navalny with a military grade nerve agent heightened the possibility that western countries could slap new sanctions on Russia, delivering a big blow to the ruble. However, Zabotkin earlier stated that the ruble’s plunge will not have a special economic impact, downplaying the fact that the currency has fallen to its weakest since 2016 against the euro. The recent ruble weakness pushed inflation to a higher peak in August, with the rate slowly on course to reach the CBR’s target of 4% by early next year. Headline inflation picked up to 3.6% year-on-year in August, up from 3.4% in July, matching the forecasted median provided by Bloomberg. Zabotkin said that the CBR could cut its key rate below 4% if that is needed to boost consumer inflation back to its 4% target. However, the Deputy’s wording may be perceived as a sign of holding rates at this week’s policy meeting, especially with Rosstat releasing its inflationary data for the first week of September highlighting CPI at 3%, thus reducing deflationary concerns. In addition, the Russian government recently announced a 3% increase in public sector salaries, which may bode well for inflation in the near future and increases chances of inflation reaching the 4% target at the end of the year. Half of the economists surveyed by Bloomberg foresee a 25bp cut on September 18, but the recent commentary by the CBR’s Deputy and the latest rise in inflation data may point to a pause in the CBR’s policy.   Authors:  Ranko Berich, Head of Market Analysis Simon Harvey, FX Market Analyst Olivia Alvarez Mendez, FX Market Analyst Ima Sammani, FX Market Analyst     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. Lees Meer

Virus concerns, Brexit and central banks set to dominate this week’s price action

Virus concerns, Brexit and central banks set to dominate this week’s price action

In terms of virus numbers, the eurozone is seeing a surge throughout the bloc, with France reporting more than 10,000 new cases on Saturday and cases also spiking in neighbouring countries including Germany and Spain. Lees Meer

Sterling in focus as it could record worst week since March

Sterling in focus as it could record worst week since March

In yesterday’s session, sterling picked up where it left off on Tuesday and continued its nosedive with a 1.5% decline against the dollar and 1.61% fall against the euro. Brexit developments came thick and fast yesterday, with both domestic politics and relations with the EU remaining in a state of turmoil. Lees Meer

Euro surges as ECB press conference is trumped by anonymous Bloomberg story reporting on….the ECB

Euro surges as ECB press conference is trumped by anonymous Bloomberg story reporting on….the ECB

Today’s ECB presser should have been a predictable affair, but instead, an anonymously sourced story released as the press conference began sent the euro on a tear. This begs the question: should we listen to official ECB communications, or will market-moving information about ECB discussions be released to select media on an ad-hoc and privileged basis? Lees Meer

USDTRY hits fresh all time highs amid geopolitical tensions

USDTRY hits fresh all time highs amid geopolitical tensions

The Turkish Lira has been at the forefront of losses in higher-risk EM currencies this quarter, with the recent recovery in the US dollar driving USDTRY to fresh all-time highs amid worsening geopolitical tensions between Turkey and Greece, as well as ongoing concerns about Turkey's economy. Lees Meer

Brexit riddled pound and ECB meeting in focus for the G10 today

Brexit riddled pound and ECB meeting in focus for the G10 today

Sterling mounted a minor rally against the US dollar overnight, having reached fresh lows against both the greenback and the euro in the evening. The Government published legislation on the UK internal market yesterday, confirming reports that the Bill would contain elements that breach the Brexit withdrawal agreement signed last year. Lees Meer

No-deal risk and second wave concerns send pound plummeting below $1.30

No-deal risk and second wave concerns send pound plummeting below $1.30

Sterling slumped for a fifth consecutive day against the dollar yesterday, its longest losing streak since May, as confidence in the pound is falling amid increased fears of a no-deal Brexit and a recall of coronavirus containment measures. Lees Meer

Slow road to the peso recovery

Slow road to the peso recovery

We believe the MXN should continue to gradually strengthen against both the USD and EUR, although less so against the latter as the single currency should also extend its current rally against the dollar in the following months. Lees Meer

Dollar gains on flare-up in US-Sino relations

Dollar gains on flare-up in US-Sino relations

The dollar rose along with other safe havens overnight after President Donald Trump pledged to scale back economic ties with China, a striking contrast to Joe Biden’s position on the matter. During the White House news conference on Monday, he threatened to punish any American companies that create jobs overseas. Lees Meer

Greenback finally catches a break

Greenback finally catches a break

Two major macro trends were seriously challenged this week, with the US dollar finally managing to stem its losses after weeks of broad declines, and US equities seeing their first major setback since March’s carnage. Lees Meer

All eyes on ECB’s expected euro-talk 

All eyes on ECB’s expected euro-talk 

This Thursday’s European Central Bank meeting will be of interest for markets this week after the recent strengthening of the euro and the latest Federal Reserve announcement regarding the Flexible Average Inflation Targetting (FAIT), which has also added upwards pressure to the euro. Lees Meer

Dollar on track for only second weekly loss since June

Dollar on track for only second weekly loss since June

The US dollar continued to rally against many major partners yesterday, and the weighted dollar index DXY is on track for only its second weekly gain since June despite the greenback paring back some of its gains overnight. Lees Meer

EUR under increasing pressure as PMIs slip despite incoming French recovery package

EUR under increasing pressure as PMIs slip despite incoming French recovery package

The pressure the single currency is notable in this morning’s session, with EURUSD sitting 0.25% lower on the day despite commentary from avid ECB hawk Jens Weidmann, who is suggesting exit plans from the ECB’s €1.35trn bond buying programme, while France unveiled its €100bn stimulus plan. Lees Meer

Dollar finally manages to stem losses

Dollar finally manages to stem losses

The dollar finally managed to stem its losses overnight, having reached fresh lows against most major currencies over the past couple of trading sessions. NOK, EUR, and AUD are leading the losses among the G10 group of currencies, with idiosyncratic factors driving the latter two currencies. Lees Meer

US dollar continues to weaken as vaccine trial comes into focus

US dollar continues to weaken as vaccine trial comes into focus

After a brief respite, the dollar is once again selling off. The Bloomberg dollar index, a broad trade weighted measure of dollar strength, has reached yet another two-year low this morning. Progress towards a covid-19 vaccine will be a major theme for this week, with AstraZeneca beginning a large-scale trial of as many as 30,000 people. Lees Meer

Markets digest major changes to Fed strategy

Markets digest major changes to Fed strategy

So far, the upshot of the week’s price action in FX has been more dollar weakness. Developments in fixed income markets were mixed, with the treasury yield curve steepening, while there was a notably sharp rise in breakeven inflation rates, particularly over the widely followed 5 year forward horizon. Lees Meer

Markets absorb the aftermath of the Fed’s announced changes

Markets absorb the aftermath of the Fed’s announced changes

The dollar is trading cautiously this morning after getting its teeth kicked in last week following Fed Chair Jerome Powell’s speech at Jackson Hole. With Powell outlining a new policy strategy and saying that the Fed will prioritise employment with an increased tolerance for higher inflation, this adds up to a significantly more dovish outlook for interest rates. Lees Meer

Markets digest the implications of a structurally more dovish Fed

Markets digest the implications of a structurally more dovish Fed

Jerome Powell used his speech at this year’s virtual Federal Reserve Symposium to announce a historic change in the central bank’s monetary policy strategy, causing volatility in the dollar during the speech that turned into another wave of weakness overnight and this morning. Lees Meer

Powell ushers in a structurally more dovish Fed

Powell ushers in a structurally more dovish Fed

Jerome Powell has announced sweeping changes to the Federal Reserve's Statement on Longer-Run Goals and Monetary Policy Strategy, encompassing a significantly more dovish reaction function for the world's most important central bank. Lees Meer

Powell speech heralds new era of monetary policy

Powell speech heralds new era of monetary policy

The dollar is trading cautiously ahead of the main event of the week - the Jackson Hole symposium. Fed chair Jerome Powell’s speech at 14:10 BST will be today’s main focus. Many market participants are expecting Powell to use the opportunity to outline a major change in the Fed’s approach to inflation targeting. Lees Meer

Singapore dollar reaches six-month high on fiscal stimulus and broad USD weakness

Singapore dollar reaches six-month high on fiscal stimulus and broad USD weakness

As of March 30th, the MAS adopted a 0% per annum rate of appreciation of the policy band to ensure monetary and financial stability throughout the Covid-19 pandemic, and re-centred the policy band downward to the then prevailing level of the S$NEER. Lees Meer

USD on the defensive ahead of Jackson Hole

USD on the defensive ahead of Jackson Hole

The US dollar has remained on the defensive on the whole this week, and most major currencies continued to strengthen against the greenback overnight. The virtual Republican Party convention and housing market data were among the main headlines of the day. Lees Meer

Tono positivo en conversaciones comerciales entre EE.UU. y China y esperanza de tratamientos para el virus debilitan el apetito por el dólar

Tono positivo en conversaciones comerciales entre EE.UU. y China y esperanza de tratamientos para el virus debilitan el apetito por el dólar

El dólar cayó frente a la mayoría de sus pares del G10 después de que los negociadores comerciales de Estados Unidos y China analizaron el estado de la fase uno del acuerdo bilateral y señalaron un avance de las relaciones comerciales. Lees Meer

Risk sentiment boosted amid progress on phase one talks

Risk sentiment boosted amid progress on phase one talks

The euro is trading flat against the dollar this morning, remaining relatively steady over the last week of August as risk appetite got a boost from progress in US-Sino trade developments, while headlines on a virus vaccine likely also squashed the dollar down. Lees Meer

Dollar stabilises at the end of the week, but fireworks may be in store next week with the Jackson Hole symposium scheduled

Dollar stabilises at the end of the week, but fireworks may be in store next week with the Jackson Hole symposium scheduled

In the G10 space, sterling was the top performer despite the negative Brexit outlook for the UK, and the Japanese Yen came in at a close second, owing its rally to renewed US-China tensions and lingering virus concerns about the US and global outlook. Lees Meer

Dollar returns to trading on the back foot with Jackson Hole in focus this week

Dollar returns to trading on the back foot with Jackson Hole in focus this week

This week the focus will be on the Jackson Hole Symposium on Thursday, with Federal Reserve President Jerome Powell expected to deliver a speech on the Fed’s long-awaited monetary policy framework review. Lees Meer

Currencies back to levels seen prior to FOMC minutes as dollar support slips

Currencies back to levels seen prior to FOMC minutes as dollar support slips

The US data front for today features the release of the preliminary manufacturing and services PMIs and may provide some fresh impetus for dollar price dynamics on the last trading day of the week. The US data front for today features the release of the preliminary manufacturing and services PMIs. Lees Meer

TCMB hold rates and opt to continue behind the scenes tightening

TCMB hold rates and opt to continue behind the scenes tightening

Today the TCMB opted to hold the policy one-week repo rate at 8.25%. This decision came as no surprise to both market spectators and economists due to how politically sensitive higher rates are but exposes the central bank to a more aggressive hiking cycle in the future if the gamble doesn't pay off. Lees Meer

Dollar enjoyed a short-lived boost after FOMC minutes suggested YCC isn’t expected soon

Dollar enjoyed a short-lived boost after FOMC minutes suggested YCC isn’t expected soon

The dollar saw a swathe of strength after the release of the FOMC minutes last night, rising across the entire G10 space. The minutes highlighted that a highly accommodative stance of monetary policy is likely needed for some time. Lees Meer

Dollar puts up more resistance today against G10 ahead of FOMC minutes

Dollar puts up more resistance today against G10 ahead of FOMC minutes

The greenback was once again on the back foot yesterday, incurring losses to most major currencies and reaching significant lows against sterling and the euro. The narrative as to why the dollar is weakening hasn’t changed too much over the last few weeks and continues to be centred around political deadlock and a slower growth outlook. Lees Meer

Morneau leaves but loonie continues to rally

Morneau leaves but loonie continues to rally

At around 7:30 pm eastern time yesterday, Finance Minister Bill Morneau held a press conference in Ottawa to announce his resignation from Trudeau’s cabinet and his position as a member of parliament. Morneau stated that he wasn’t asked by the Prime Minister to resign, but instead tendered his resignation as he no longer believed he was the appropriate person for the role. He will instead make a bid for the position of secretary general of the OECD. Job rotation within cabinets tend to occur frequently, but despite this, they tend to inject volatility in the respective currency due to the heightened level of political uncertainty. This is especially the case with the resignation occurring in such a pivotal position during Canada’s most severe economic shock in decades, where fiscal policy is expected to drive the recovery. However, the loonie barely flinched at the announcement and, in fact, extended its rally against the dollar to touch highs not seen since January. We expect the rationale behind this is two-fold. Firstly, since last weekend, speculation over Morneau’s departure has been rife. This is not only due to the WE scandal but also reported disagreements with the Prime Minister over the shape of the stimulus package. Given these reports and the current investigation into both Morneau and Trudeau due to the WE scandal, news of last night’s resignation is unlikely to have shocked many. Secondly, news that former Bank of England and Bank of Canada governor Mark Carney along with Michael Sabia, former head of Quebec’s pension fund, are within Trudeau’s inner circle likely quelled fears that rigorous economic reasoning left the cabinet along with Morneau. While a replacement has yet to be announced, the loonie continues to play catch up the G10 rally in this post-pandemic period, highlighting the market’s confidence in Trudeau’s policymaking – likely due to Carney and Sabia’s involvement in the interim. The Canadian dollar has rallied over 0.7% thus far this week despite the political rotation and the rally has been a lot smoother than one would expect. Deputy Prime Minister Chrystia Freeland has been touted as a possible replacement, along with Foreign Minister Francois-Philipe Champagne and Jean-Yves Duclos – a Quebec economist serving as president of the Treasury board. The announcement of Morneau’s replacement is likely to have limited implications for the loonie in the short-term given that the Finance Minister’s job has seemingly been diluted by the inclusion of additional economists within the decision-making process. This isn’t necessarily the norm. Markets tend to assess the economic credentials of the new Finance Minister along with their economic and political leanings to price fiscal expectations accordingly. However, with deficit spending becoming normalised across developed markets in response to the pandemic, the replacement of Morneau within the cabinet is unlikely to sway the fiscal trajectory too much in the short-term. That being said, the job isn’t an easy one to take over… Sovereign credit downgrades, high levels of unemployment, record deficits are all in play and the new Finance Minister will enter the job just week’s before Trudeau’s carte blanche on spending expires along with the CERB scheme. Volatility could also arise should Trudeau fail to announce a replacement swiftly, with the currency likely to feel the effects of the rise in speculation that a bigger event, such as Carney’s matriculation into office, is on the horizon. Although the latter is a tail risk and would only be the result of a by-election held in Toronto centre. One caveat to this view is that the participation of Carney and Sabia in the policymaking process isn’t necessarily a long-term deal. With fiscal policy now an integral part of the economic recovery, it is unlikely that Carney etc will step back from the table by their own admission. However, further down the line towards the back-end of the recovery, when fiscal policy isn’t as glamorous as it is now, is another question. That is when the concerns over who sits as Finance Minister will begin to rise and markets will begin to judge the new Finance Ministers credentials, political leanings and their effectiveness at shoring up both the economy and fiscal balance sheet.   Morneau’s departure doesn’t derail the loonie’s rally as the Canadian dollar plays catch up in G10 markets   Loonie lags G10 rally post-pandemic   Author: Simon Harvey, FX Market 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 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. Lees Meer

Bloomberg Dollar Index falls to lowest since 2018 with EU politics in focus today

Bloomberg Dollar Index falls to lowest since 2018 with EU politics in focus today

The dollar took yet another step down yesterday, with the Bloomberg dollar index falling to its lowest level since 2018, before the worst escalation in Donald Trump’s trade war with China.In the eurozone, the EU’s “frugal four” governments are in the spotlight again as they battle to protect their share of rebates from the EU budget. Lees Meer

TCMB walks the tightrope, will the dollar’s retreat slow?

TCMB walks the tightrope, will the dollar’s retreat slow?

FX traded with a tentative risk-on tone this week, with the dollar seeing losses to most of the G10. Euro periphery currencies such as NOK, SEK, CZK and PLN all saw noteworthy performances, consistent with improving sentiment about the region’s growth prospects. Lees Meer

Dollar falls as phase-one review delayed and Pelosi looks to recall House

Dollar falls as phase-one review delayed and Pelosi looks to recall House

The dollar remained under pressure at this week’s open and is trading in the red against all G10 currencies except NZD this morning after uncertainties around fiscal measures had the upper hand in headlines. Congress suspended talks for the Covid-19 stimulus package on Thursday already before it left for a month-long recess. Lees Meer

EURCHF to rally as European outlook improves

EURCHF to rally as European outlook improves

With regards to the Swiss franc, we predominantly forecast EURCHF and then triangulate out our USDCHF calls with the aid of our EURUSD forecasts. We do this for two reasons. First, the Swiss National Bank practically drew a line under the 1.05 level on EURCHF during the height of the pandemic with a series of FX interventions. Lees Meer

Dollar sees the week out trading in a mixed fashion

Dollar sees the week out trading in a mixed fashion

The dollar has traded mixed this week within the G10 space, while there has been a more definitive trend in EM FX. Inside the G10, the Japanese yen has rightly weakened against the dollar as it still trades substantially stronger than its pre-pandemic level. Lees Meer

Rapid euro rally adds note of caution to optimistic outlook

Rapid euro rally adds note of caution to optimistic outlook

The euro has surged over 9% against the dollar since mid-May, when Angela Merkel and Em-manuel Macron first signaled a desire for a joint response to the pandemic-driven recession. Compared to its G10 peers against the dollar over the last three months, the euro ranks in the middle of the currency board. Lees Meer

Dollar takes on water as real yields fall ahead of initial jobless claims data

Dollar takes on water as real yields fall ahead of initial jobless claims data

Despite broad risk sentiment being more or less unchanged over the past days, fresh selling around the dollar helped EURUSD to reverse yesterday’s dip as talks in Congress over the fiscal stimulus package remains in play but at an impasse. Lees Meer

Dollar continues to trade mixed vs G10 as fiscal stimulus sits at an impasse

Dollar continues to trade mixed vs G10 as fiscal stimulus sits at an impasse

Measured by the DXY index, the dollar has made marginal gains over the last two days, but this is predominantly due to weakness in the Japanese yen and doesn’t fully describe the manner in which the greenback has been trading. Lees Meer

Mixed price action continues for dollar

Mixed price action continues for dollar

The dollar has seen mixed price action so far this week, posting minor gains against the yen and losing ground to AUD, NZD, and NOK. The theme’s main weeks so far have been deadlocked negotiations for fiscal stimulus, and rising US-China tensions. Lees Meer

Battered dollar stumbles through August as Turkish authorities face tough choices

Battered dollar stumbles through August as Turkish authorities face tough choices

A quiet start to the trading week, but things are set to pick up on the data front with UK GDP and labour market figures, RBNZ and Banxico rate decisions to name a few. Here's a closer look at the week ahead in FX. Lees Meer

PLN trades flat despite Hawkish comments from NBP policy makers

PLN trades flat despite Hawkish comments from NBP policy makers

The Polish zloty is trading within its recent ranges this morning against USD and EUR, after comments from the National Bank of Poland’s Monetary Policy Member Eugeniusz Gatnar failed to stir volatility. Lees Meer

Markets eye fiscal stimulus impasse after Donald Trump’s executive order

Markets eye fiscal stimulus impasse after Donald Trump’s executive order

The US dollar has opened this week on a relatively steady footing, having appreciated against most major currencies on Friday following the release of the Non-farm Payrolls report, but slightly pared back some of its rally since then. Lees Meer

Greenback pares back losses before tie-breaking July’s Non-farm payrolls report

Greenback pares back losses before tie-breaking July’s Non-farm payrolls report

With the dollar barely resisting further collapse and stimulus talks stalled, today’s release of July’s non-farm payrolls report at 13:30 BST may be a watershed moment for the currency. Lees Meer

EUR/USD op hoogste niveau sinds 2008

Valutahandelaar Martijn Weller van Monex Europe geeft een update over de valutamarkten en probeert antwoord te geven op de vraag wat de dollar recent heeft doen verzwakken en wat de greenback de komende tijd kan ondersteunen. Lees Meer

Sterling bucks G10 trend and makes gains as Bank of England unchanged

Sterling bucks G10 trend and makes gains as Bank of England unchanged

Sterling is trading up against both the dollar and euro this morning after the Bank of England kept all policy settings unchanged in a unanimous decision. However, forecasts for 2021 were solidly downgraded, due to the MPC now assuming a greater degree of “scarring” to consumer behaviour and productivity. Lees Meer

Dollar smile becomes a dollar smirk… 

Dollar smile becomes a dollar smirk… 

The dollar has weakened in recent weeks and months, due to a potent confluence of factors including a uniquely bad COVID pandemic, a febrile political landscape, and anticipation of the FOMC delivering a lower US yield curve for well into the future. Lees Meer

EURNOK unmoved by oil recovery, dollar weakness and EU recovery fund

EURNOK unmoved by oil recovery, dollar weakness and EU recovery fund

The Norwegian krone was the worst performing G10 currency in the year to date, reaching 11.7 per USD in Q1 before rallying to current levels of around 9.02. While the oil crash and strong dollar demand in March were the main drivers for the krone’s initial crash, it is the same factors that are now spurring its recovery. Oil markets are gradually recovering, with both Brent and WTI rising towards a 5-month high at $45.35/b and $42.60/b respectively, lending wings to the Norwegian krone and other petrocurrencies. At the same time, a severe domestic outbreak and political risks are weighing on the US dollar. With a 7-day average of over 1000 deaths per day for a week straight now, the virus outbreak in the US is more widespread than anywhere else in developed markets. The 7-day average of new daily cases is at around 60,000 nationally but is slowly declining. This will likely show in the deaths figures later on as deaths will typically lag several weeks behind, but the numbers remain excessive relative to the EU and elsewhere. Across the pond, the euro is enjoying a boost from EU leaders finally reaching an agreement for the EU recovery fund, which removed significant tail risk of fiscal distress in places like Italy. Not only will the fund cushion the blow of the pandemic panic, but it also sends markets a message that the EU is capable of cooperating in times of emergency. As long as risks remain disproportionately centered on the US economy rather than the global economy, and oil markets continue to gradually recover, NOK is likely to hold steady. Additional points on price action drivers for the Norwegian krone: The Norwegian economy has been gradually reopening as lockdown measures were scaled back starting April 20. The domestic macro environment has been improving ever since, and the nation seems to have virus cases under control. Mainland Norway’s GDP rose 2.4% from April to May, while household consumption rose 4.8%. Exports fell by another 4.5% in May after having fallen in March and April already, but this was mainly driven by a decline in metal exports as the automotive and construction industries have been operating at a low ebb. Although Q2 GDP figures for Norway are not yet released, the monthly GDP figures may indicate that the final reading will not be as bad as the figures from the US (-32.9% QoQ) or even the eurozone (-12.1% QoQ). In terms of virus cases, Norway’s new daily case change is substantially lower than its neighbouring countries. In addition, Norway has one of the lowest fatality rates worldwide. In major advanced economies, Norway is among the countries that has moved closest to their pre-crisis daily activity levels, while the US is far below its usual level of activity, according to Bloomberg’s activity indicator (chart 1). House prices in Norway saw the fastest annual growth in two years between June and July, as the Norges Bank’s rate cut to the effective zero lower bound drove mortgage rates down. Norges Bank stated earlier it aims to keep rates on hold until the second half of 2022. With the above developments in the US, eurozone and Norway in mind, we expect the Norwegian krone to trade towards the following levels over the 1m, 3m, 6m and 12m horizon. Forecast:   Norway’s daily activity close to pre-crisis levels in Bloomberg activity indicator   Norway’s net change in cases below neighbouring countries   NOK gains vs EUR today following a boost in oil, but remains unchanged over 1-month window   Author: Ima Sammani, Junior FX Market 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 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. Lees Meer

Dollar on defensive again as sterling eyes tomorrow’s MPC

Dollar on defensive again as sterling eyes tomorrow’s MPC

After a brief period of stability the dollar once again found itself on the defensive against many major currencies overnight, with CAD, NZD and AUD racking up the biggest gains among the G10 currencies. Higher gold and commodity prices were also likely related to the pattern of gains overnight. Lees Meer

EURCHF latest forecasts

EURCHF latest forecasts

We've recently updated our EURCHF and USDCHF forecasts, an outlook will be scheduled for sometime next week. Discussion of EUR and USD dynamics will also be outlined in their respective outlooks due imminently. We predominantly forecast EURCHF and then triangulate out our USDCHF calls with the aid of our EURUSD forecasts. Lees Meer

Dollar stabilised as Trump administration explores fiscal policy by decree

Dollar stabilised as Trump administration explores fiscal policy by decree

The dollar stabilised in G10 FX markets yesterday after bouncing on Friday from two year lows, as measured by the dollar DXY index. The latest Covid case data did little to disrupt the dollar’s progress either as new infections slowed to 0.9% from 1.4% the week prior. Lees Meer

Non-Farms cap busy week of data

Non-Farms cap busy week of data

Covid cases rising in parts of Europe, Tokyo and Victoria could prompt the dollar to find support from the risk environment deteriorating in a broader sense as opposed to risks being isolated to the US economy. While the progression of Covid is monitored closely, key data points such as Nonfarm payrolls, central bank meetings in Australia, Brazil, the UK and India and eurozone retail sales are in focus. Lees Meer

EUR longs hit record high as traders question how much further can the greenback fall

EUR longs hit record high as traders question how much further can the greenback fall

The euro rose the most in a decade in July thanks to the dollar’s largest retreat since 2010. The euro’s largest rally in July is arguably due to expectations of a stronger economic recovery in Europe now the virus situation has stabilised. The divergence in growth expectations has also led to a build-up in EUR longs by speculative investors. Lees Meer

Italy and eurozone GDP in scope this morning as EURUSD cracks fresh highs

Italy and eurozone GDP in scope this morning as EURUSD cracks fresh highs

Focus is now turned to Italian and eurozone GDP, German retail sales from June, and the eurozone’s July Consumer Price Index, all to be released throughout the morning. The question is if they will be sufficient in denting the positivity around the euro at the moment.  Lees Meer

Rand recovery to stall in new range with rally tilted towards H121

Rand recovery to stall in new range with rally tilted towards H121

Amid capital outflows reminiscent of the 2008-09 financial crisis in early Q2 due to the outbreak of Covid-19, the South African rand hit a record low of 19.3540 against the dollar in early April. While the rand has recovered over 13% from its April low, it still remains over 5% weaker than the pre-virus levels seen in February. Lees Meer

Attention turns to a stalled US recovery in Q3

Attention turns to a stalled US recovery in Q3

Higher-frequency official and unofficial data suggest that the economy followed a path similar to an unfinished letter “V” in the second quarter. Output plummeted in March and April before growing in May and perhaps some of June. Lees Meer

The euro feels the pain of the German economic collapse in Q2

The euro feels the pain of the German economic collapse in Q2

The German economy shrank by 10.1% in Q2 on a quarterly basis, one percentage point deeper than the consensus forecast supplied to Bloomberg. The slump depicted the damage inflicted by lockdown measures imposed for most of the second quarter. Lees Meer

No action from FOMC – but they may not have the luxury of inaction for much longer

No action from FOMC – but they may not have the luxury of inaction for much longer

The FOMC kept rates unchanged, extended its swap facility, and added language to its statement emphasising that the path of the US economy depended heavily on the path of the virus. Lees Meer

Dollar bounces back post-FOMC with bleak GDP readings ahead

Dollar bounces back post-FOMC with bleak GDP readings ahead

After selling off further against many major currencies in the wake of last night’s Federal Open Market Committee rate decision and press conference, the dollar has managed to pare back some of its losses this morning. Lees Meer

Dollar struggles to keep up ahead of the FOMC

Dollar struggles to keep up ahead of the FOMC

The US dollar has barely managed to scrape itself up off the floor over the past 24 hours, having reached fresh lows of varying durations against many major currencies, and when measured broadly by indices such as DXY. Lees Meer

EURUSD reaches two-year high ahead of FOMC meeting

EURUSD reaches two-year high ahead of FOMC meeting

The euro is ranked as the best performing G10 currency against the US dollar over the course of the last two weeks after it broke through the 1.14 level on July 14 for the first time in over four weeks. Lees Meer

Dollar says enough is enough and starts to post bounceback

Dollar says enough is enough and starts to post bounceback

The US dollar said enough is enough this morning after its recent rout was extended in yesterday’s session. The dollar DXY index hit its lowest level since June 2018, with the Bloomberg dollar index, which measures the US dollar’s performance against a broader basket of currencies,  also falling to levels not seen since 2018. Lees Meer

USD calendar in focus after greenback takes battering

USD calendar in focus after greenback takes battering

This week’s dollar weakness was a tale of two halves. The week started off with fresh fiscal stimulus announced by the EU in the form of the €750bn recovery fund, which buoyed market sentiment and led to a risk rally. Lees Meer

Dollar weakening as Covid concerns continue and US-China tensions edge closer to boiling point

Dollar weakening as Covid concerns continue and US-China tensions edge closer to boiling point

Chinese authorities entered the US consulate in Chengdu this morning after ordering the facility to be vacated in retaliation for the forced closure of the Chinese consulate in Houston last week, marking a rise in US-Sino tensions. Lees Meer

Risk appetite thrown out the window giving USD a floor after a week of losses

Risk appetite thrown out the window giving USD a floor after a week of losses

The dollar has been teasing market participants this week by trading differently each day. Earlier in the week, the greenback was sold-off across the board, helping nearly every asset class to make gains as domestic Covid cases rose and US-China tensions simmered. Lees Meer

Dollar rout continues with tensions ramping up between the US and China 

Dollar rout continues with tensions ramping up between the US and China 

Sentiment towards the dollar continues to deteriorate this morning as US-Sino tensions and concerning Covid developments dominate headlines yet again, causing the Bloomberg dollar index to trade near its lowest level since March. Lees Meer

US Covid crisis finally takes its toll on the greenback

US Covid crisis finally takes its toll on the greenback

It doesn’t happen too often, but yesterday was one of those days where the dollar got its teeth kicked in by everything imaginable. Gold rose 1.42%, and continues to rise this morning, WTI closed just shy of $42 per barrel - its highest level since the March sell-off - and in FX markets, nearly all currencies took a chunk from the greenback. Lees Meer

USDCAD BREAKS OUT OF POST-FED RANGE AS USD IS ROUTED

USDCAD BREAKS OUT OF POST-FED RANGE AS USD IS ROUTED

The Canadian dollar has just broken out of its post-Fed range, where the currency pair traded for 27 consecutive working days. The impetus behind such a move isn’t as clean cut as one would like, but comes from general dollar weakness over the last two days. Lees Meer

Euro shrugs as European leaders reach historic deal for recovery package

Euro shrugs as European leaders reach historic deal for recovery package

After a marathon negotiation session, EU leaders have finally unanimously approved a fund consisting of €390bn of grants and €360bn of low-interest loans. The total size of the seven-year EU budget is €1047bn, as proposed by EU Council Presdient Charles Muchael. Lees Meer

Recovery fund rubber-stamped but euro longs shaken from market

Recovery fund rubber-stamped but euro longs shaken from market

It took the EU leaders more than four days of negotiations in Brussels, but the group finally unanimously approved a fund consisting of €390bn of grants and €360bn of low-interest loans. The joint debt issuance will help to offset the economic slump induced by the pandemic. Lees Meer

PMI reality check looms for major economies

PMI reality check looms for major economies

Familiar themes were the focus of attention for FX and macro markets this week, as the dollar continued to lose ground at a modest pace, US-China tensions escalated further, and China Q2 GDP handily beat expectations. Risk appetite on the whole has remained intact, despite a curious midweek fall in Chinese equities that did not result in a global rout.  Lees Meer

Dollar drifts lower after another indecisive week

Dollar drifts lower after another indecisive week

It’s been another indecisive week for the dollar, with the Bloomberg dollar index set to fall for a third consecutive week, while roughly half of the G10 currencies are up against the greenback. Some mild but fairly broad dollar strength was seen overnight that has not dented these overall dynamics. Lees Meer

ECB’s supportive message underpins gradual euro strength amid the recovery from the pandemic

ECB’s supportive message underpins gradual euro strength amid the recovery from the pandemic

The single currency is slightly trending upwards from the policy signal provided by the central bank, while it also awaits the joint recovery fund and MFF to be agreed by EU leaders at some point this summer. Lees Meer

China GDP bounces back but does little to help CNY rebuff risk-off move and equity slump

China GDP bounces back but does little to help CNY rebuff risk-off move and equity slump

China's Q2 GDP release surprised to the upside posting a 3.2% rebound from the historic 6.8% contraction in Q1. The pace of economic growth exceeded expectations by 0.8 percentage points, with industrial production continuing to lead the rebound in the second quarter, rising 4.8% in June. Lees Meer

Dollar surges as virus cases rise globally while Chinese equities dismiss Q2 GDP beat

Dollar surges as virus cases rise globally while Chinese equities dismiss Q2 GDP beat

With China’s Q2 GDP outstripping expectations by coming in at 3.2% YoY vs expectations of a 2.4% rebound, one would expect the dollar to be weakening at the margin in this morning’s trading session as risk appetite is supported. Lees Meer

AUD gains limited as euro also rallies

AUD gains limited as euro also rallies

This is evident in the currency market, with AUDUSD trading up to the 0.7 level in June – an 11-month high. The Aussie dollar also rallied close to its 2020 high against the euro, with gains more contained against the single currency as the euro also rallied from broad USD weakness. As a result, the AUD rally against the EUR wasn’t as dramatic as seen in AUDUSD. Lees Meer

BoC reactive: How long is a piece of string

BoC reactive: How long is a piece of string

Tiff Macklem's first press conference and Monetary Policy Report as Bank of Canada Governor went without a hitch today, mainly because nothing was really announced. Forward guidance was what the market wanted coming into this monetary policy meeting and with the MPR shifting from two illustrative scenarios to a central scenario more akin to point forecasts. Lees Meer

Moderna’s results send USD lower, but will all of this change with today’s Covid data from the US? 

Moderna’s results send USD lower, but will all of this change with today’s Covid data from the US? 

After spending most of yesterday’s session relatively well supported by a deteriorating risk climate in markets, the dollar’s strength tailed off in the back-end of yesterday’s session as the results of Moderna’s testing hit the wires. Lees Meer

Shadow cast over global recovery as UK GDP undershoots, Florida closes bars and restaurants and dollar goes bid

Shadow cast over global recovery as UK GDP undershoots, Florida closes bars and restaurants and dollar goes bid

A stark reminder to markets that the US economy is still embattled with the outbreak of Covid-19 and equity indices saw a marked turnaround to dive into negative territory. Lees Meer

China Q2 GDP marks blockbuster calendar

China Q2 GDP marks blockbuster calendar

This week’s busy data and event calendar offers multiple opportunities for both idiosyncratic moves in individual currencies, as well as broad thematic changes in risk appetite, which will be influenced by the trajectory of the global coronavirus pandemic itself, especially in the US. Lees Meer

Florida case count rips through markets and sends USD lower

Florida case count rips through markets and sends USD lower

The dollar has started the week on the back foot in both G10 and EM spaces this morning after news from Florida ripped through markets. The numbers from the sunshine state are staggering and put Florida in fourth place internationally for the largest daily increase in cases, behind the US, Brazil and India. Lees Meer

DKK taken for a ride on the dollarcoaster

DKK taken for a ride on the dollarcoaster

The Danish krone bounced back from its 3-day low against the dollar this morning after tumbling by over 0.90 percentage points following a fall in general risk appetite, with equities in the US falling and treasuries rising. Lees Meer

Measuring China’s rebound: Q2 GDP due on Thursday 16th

Measuring China’s rebound: Q2 GDP due on Thursday 16th

Since the economic shock in Q1, the road to recovery has been relatively smooth by current standards, although a minor outbreak in Beijing is likely to have shaken consumer sentiment, while flooding in southern China hampered agricultural output. Lees Meer

CAD labour market data

CAD labour market data

While expectations sit at a 700K rise in employment and a reduction in the unemployment rate from 13.7% to 12.1%, it must be noted that last month’s employment gain still resulted in a rise in the unemployment rate due to the number of workers re-entering the workforce. Lees Meer

Dollar bounces back on virus concerns and Federal election fears

Dollar bounces back on virus concerns and Federal election fears

The dollar spun around in yesterday’s session to close higher in the afternoon. General risk appetite diminished in the afternoon of the European session, with equities falling in the US and treasuries rising. California, Texas and Florida recorded their highest daily death count due to the virus on Wednesday, with figures yesterday showing 120 new deaths in Florida alone. Lees Meer

Fiscal snapshot gives transparency to markets

Fiscal snapshot gives transparency to markets

Finance Minister Bill Morneau's fiscal snapshot this afternoon has helped extend the loonie rally as the dollar broadly weakens towards the back-end of today's session. Additionally, the Canadian government bond curve bear steepened as issuance numbers are set to rise at unprecedented rates; the 30Y yield rose 7.68bps vs the 1.5bp rally in the 2-year yield. Lees Meer

Fiscal stimulus and positive data from the sunbelt supports risk appetite and sends the dollar lower

Fiscal stimulus and positive data from the sunbelt supports risk appetite and sends the dollar lower

The greenback fell against all of its G10 peers yesterday as risk sentiment was bolstered by fiscal pledges in Europe and the UK. A variety of fiscal measures were announced, including subsidies for employers bringing back furloughed workers or hiring young workers and direct funding increases for housing and the Department of Work and Pensions. Lees Meer

Sunak delivers crowd-pleasing trifecta, but reduces the pace of fiscal stimulus from “warp speed”

Sunak delivers crowd-pleasing trifecta, but reduces the pace of fiscal stimulus from “warp speed”

Rishi Sunak has delivered a trifecta of crowd-pleasing measures in the summer statement, but has nonetheless dialed the pace of stimulus down from its previous “warp speed” setting. Lees Meer

It’s all fiscal for GBP and CAD today

It’s all fiscal for GBP and CAD today

All eyes will be on the budget today and the implications it has for the OBR’s next fiscal projections set for release on the 14th July. The reaction in Gilt markets is likely to be in focus, especially with the front-end of the curve, except the 1Y, trading with a negative yield already.  Lees Meer

Lockdown in Melbourne gives markets stark reminder about the passage of recovery

Lockdown in Melbourne gives markets stark reminder about the passage of recovery

The aussie dollar leads losses in the G10 space today as the state of Victoria imposes a six-week lockdown after the surge in new cases continued despite their best efforts to control the outbreak previously with lockdowns of certain areas. Lees Meer

Loonie not impressed by BoC Business Outlook Survey

Loonie not impressed by BoC Business Outlook Survey

The loonie steadied near a two-week high against the dollar ahead of the Bank of Canada Q2 business outlook survey and was little changed after the survey was released. The quarterly business outlook survey helps guide monetary policy decisions as it provides a good anecdotal account of conditions in the real economy. Lees Meer

Eurozone data releases

Eurozone data releases

The euro's rally from earlier this morning ran out of steam after the morning’s data releases included a sharp expansion in German factory orders and a lower-than-expected improvement in investor confidence in the eurozone.  Lees Meer

Confusing data, Yield Curve Control and Canada’s fiscal “snapshot”

Confusing data, Yield Curve Control and Canada’s fiscal “snapshot”

The confusing subtleties of data releases during lockdown and the shift to alternative data, the Fed’s reluctance to begin yield curve controls, Canada’s upcoming fiscal deficit projections and labour market release, and finally inflation data in the EM space. Lees Meer

Chinese officials give markets the green light to rally, placing emphasis on risk appetite and US virus data

Chinese officials give markets the green light to rally, placing emphasis on risk appetite and US virus data

This morning’s price action has a fairly straightforward “risk-on” vibe; Chinese equities closed significantly higher while NOK, SEK, and AUD are the biggest winners among the G10 currencies. The buoyant performance of Chinese equities will place European and US markets in focus today. Lees Meer

Empty-handed BoJ to set the tone for a mildly strengthened JPY

Empty-handed BoJ to set the tone for a mildly strengthened JPY

Looking forward, our FX market analysts expect the Japanese yen to continue trending to the upside against the US dollar, while the trading ranges remain tight. Lees Meer

Labour day in US could reduce volumes, but Covid cases will still be watched globally

Labour day in US could reduce volumes, but Covid cases will still be watched globally

The dollar is trading mixed against the G10 this morning, but that could all change should the Covid data deteriorate further.  Lees Meer

Sterling is not an EM currency – But pre-Brexit exchange rates remain a distant dream

Sterling is not an EM currency – But pre-Brexit exchange rates remain a distant dream

The pound is likely to rally with the rest of the G10 against the US dollar as the global economy undergoes a gradual and inconsistent re-opening. Lees Meer

Dollar faces up to non-farm payrolls

Dollar faces up to non-farm payrolls

The dollar has seen mixed performance so far this week, amid a febrile mix of domestic US Covid news, Fed minutes, and increasing prospects of renewed geopolitical turmoil. Lees Meer

Dollar gets thrown to the wolves as the administration struggles to contain Covid surge

Dollar gets thrown to the wolves as the administration struggles to contain Covid surge

The dollar ended the second quarter on the defensive, weakening across the board late in the afternoon amid intensifying concerns about the severity of the domestic US Covid-19 outbreak. Lees Meer

Canada GDP: The worst economic monthly contraction on record

Canada GDP: The worst economic monthly contraction on record

The relative accuracy of the median forecast and the positive advanced Canadian May GDP reading, meant that the currency market passed the release by in a risk-off session that would have lapped up a negative surprise. Lees Meer

USD confusion as greenback fights back this morning despite Covid surge in the south

USD confusion as greenback fights back this morning despite Covid surge in the south

The dollar traded broadly weaker against the G10 yesterday, with the notable exception being GBP. As the case count in the US continues to rise at alarming rates, however, markets are given little extra insight on how the dollar will trade in this second wave outbreak in the US. Lees Meer

US Covid curve steepens, dollar to rise or fall?

US Covid curve steepens, dollar to rise or fall?

If the US economy underperforms its global peers in Q3 due to a severe domestic second wave, will the dollar continue to strengthen on haven demand? With FOMC minutes and US jobs data out this week markets will have plenty of impetus to ponder the question. Lees Meer

Dollar opens on back foot as domestic turmoil and virus counts rise

Dollar opens on back foot as domestic turmoil and virus counts rise

The US dollar has opened today very much on the back foot, with the entire G10 group of currencies up on the day. Reports of coronavirus vaccine progress may also be bouying risk appetite in general, and therefore reducing demand for the greenback as a safe haven. Lees Meer

US battle with virus drives markets  

US battle with virus drives markets  

The domestic US Covid-19 situation has clearly deteriorated this week, with new cases increasing on average across the nation and several states showing signs of severe outbreaks that may threaten to pressure healthcare systems. Lees Meer

Swift recovery in copper prices bodes well for ZMK

Swift recovery in copper prices bodes well for ZMK

The Zambian Kwacha enjoyed a relative patch of stability in January and February 2020  following significant tightening of the central bank’s monetary policy in November and December 2019. Lees Meer

Yuan to trade back to 7.00 but signs of stress remain

Yuan to trade back to 7.00 but signs of stress remain

While China’s economy was the first to experience lockdown measures due to it being the epicenter of the pandemic, it was also one of the first countries to flatten the curve. After contracting 6.8% in Q1 due to the lockdown measures rolled out nationally, the Chinese economy is set to rebound at a rapid pace in Q2. Lees Meer

Risk climate lightens but virus outbreaks remain a concern

Risk climate lightens but virus outbreaks remain a concern

Although sterling has indeed weakened with other “high beta” or more risk-sensitive currencies during recent risk-off events, other aspects of UK macro markets suggest that calling the pound an EM currency is an exaggeration. Lees Meer

Czech National Bank leaves key rate at the expected 0.25%

Czech National Bank leaves key rate at the expected 0.25%

Markets barely flinched at today’s decision by the Czech National Bank to leave its 2-week repurchase rate at 0.25%, as the move was fully priced in – all economists who provided Bloomberg with an estimate of today’s decision expected the Bank to keep rates on hold. Lees Meer

Dollar extends declines on economic recovery optimism despite virus concerns in Europe

Dollar extends declines on economic recovery optimism despite virus concerns in Europe

Yesterday’s disruptive comments on trade from White House adviser Peter Navarro turned out to be a storm in a teacup - no further indications have come that the US-China trade deal is currently in jeopardy. Lees Meer

Dollar pares back gains after Donald Trump reaffirms trade agreement

Dollar pares back gains after Donald Trump reaffirms trade agreement

After falling against most of its G10 peers yesterday on hopes of recovery, the dollar had a bumpy ride this morning and whipsawed back and forth following comments from US trade adviser Peter Navarro. Lees Meer

USD lower against G10 with AUD and GBP leading the way 

USD lower against G10 with AUD and GBP leading the way 

While the greenback has weakened substantially since the peak of the pandemic, market forces continue to seek US dollar liquidity in terms of heightened risk. Markets are already expecting the US to end its special trading relationship with Hong Kong. Lees Meer

Retail sales data in focus as markets await quadruple witching in the US

Retail sales data in focus as markets await quadruple witching in the US

With little data out from the US today, markets will focus on US equity markets as a quarterly event takes place; quadruple witching. On the third Friday of the last month of the quarter, options and futures on equities and indexes are set to expire, leading to heightened market activity. Lees Meer

Bank of England continues QE, but takes things down a notch from “Warp 10”

Bank of England continues QE, but takes things down a notch from “Warp 10”

The MPC has kept rates unchanged while expanding QE by £100bn, with an intention to reach the allotted asset purchases by the end of this year. In the minutes, members were cautiously upbeat about how bad the initial covid-19 shock to the UK and global economy has been. Lees Meer

NOK rises to 1-week high vs euro after Norges Bank announcement

NOK rises to 1-week high vs euro after Norges Bank announcement

The Norwegian krone ripped higher by just under a percentage point against the euro this morning, reaching a 1-week high after the Norges Bank raised its implied rate path for 2023 along with its forecasts for economic growth and core inflation for this year. Lees Meer

Central banks in focus for markets this morning 

Central banks in focus for markets this morning 

This morning’s session is defined by central bank announcements, with the Swiss National Bank kicking off proceedings. The SNB has been aggressively intervening in FX markets of late when the EURCHF rate fell close to its tolerance threshold. Lees Meer

NBP kept rates on hold as QE remains the focus

NBP kept rates on hold as QE remains the focus

After having cut interest rates by a total of 140 basis points between March and May, the National Bank of Poland kept its benchmark rate unchanged yesterday at 0.10%, in line with the forecasts of all economists surveyed by Bloomberg. Lees Meer

Dollar gains on global virus concerns

Dollar gains on global virus concerns

The dollar reversed Monday’s setback yesterday as global risk sentiment remained bounded following concerns over a resurgence of coronavirus cases in Beijing and more hints of a second wave in the US. Lees Meer

The Swedish krone recovers after hitting rock bottom

The Swedish krone recovers after hitting rock bottom

As a result of the pandemic, the Swedish Government has taken a number of measures amounting to more than SEK 100bn to limit both the rate of infection and the economic consequences. Lees Meer

Markets buoyed by Fed’s advance into corporate debt 

Markets buoyed by Fed’s advance into corporate debt 

The dollar traded with a negative correlation to risk appetite in general and US equities, in particular yesterday, with the decisive move lower in the greenback happening as US equities rallied after the Federal Reserve said it would commence corporate debt purchases. Lees Meer

The BoE to step up QE firepower amid looming economic risks

The BoE to step up QE firepower amid looming economic risks

Since the beginning of June, sterling has taken a leg higher on the back of improved global risk sentiment amid easing lockdown measures and economic resumption. The currency rallied for 10 consecutive days against the USD to a three-month high, the longest rising streak since 2012. Lees Meer

Covid cases in Beijing renews risk-off move in markets

Covid cases in Beijing renews risk-off move in markets

China took aggressive measures to control the outbreak in its earlier stages, and the report of new cases sparked fears of a second Covid-19 wave in other countries and dampened prospects for a V-shaped economic recovery in the US. Lees Meer

Rebound in stocks allows for tentative recovery in risk appetite

Rebound in stocks allows for tentative recovery in risk appetite

This morning, the dollar traded back in the red across the G10 board while still leading gains against the haven currencies, indicating a tentative recovery in risk sentiment. Lees Meer

BRL has ample room to recover while domestic and external risks abound

BRL has ample room to recover while domestic and external risks abound

The real has recovered around 40% of the lost ground since the beginning of the year, despite the grim domestic economic outlook and the poorly managed pandemic situation. Lees Meer

Dollar advances after FOMC announcement triggers risk-off sentiment across markets

Dollar advances after FOMC announcement triggers risk-off sentiment across markets

The dollar continued to weaken across the board yesterday as markets were waiting for the Federal Reserve to announce its latest decision on monetary policy. The US published inflation data from May yesterday which printed worse than the initially forecasted reading. Lees Meer

USD softens as the FOMC is expected to err on the side of caution in today’s meeting

USD softens as the FOMC is expected to err on the side of caution in today’s meeting

This morning, the gauge of the dollar dropped to a three-month low ahead of the Fed announcement. The Federal Reserve is unlikely to trigger any policy moves at today’s meeting and is expected to set a transitioning tone. Lees Meer

Fed expands Main Lending Street Program ahead of Wednesday’s decision

Fed expands Main Lending Street Program ahead of Wednesday’s decision

This morning, the currency managed to find its footing in the G10 space and pared back some of its losses from the past week in the buildup to the Federal Reserve meeting that starts today. Lees Meer

The Fed stands ready to switch to speedy recovery mode

The Fed stands ready to switch to speedy recovery mode

While the debate on negative interest rates is broadly at ease after Fed officials cooled down expectations, the central bank continues to expand firepower under several facilities to money markets, municipalities and credit markets as the economic outlook clears out. Lees Meer

All eyes are on Wednesday’s Federal Reserve announcement 

All eyes are on Wednesday’s Federal Reserve announcement 

While the economic calendar is far from empty for the US this week, all eyes are turned to the Federal Reserve meeting that takes place on Tuesday and Wednesday. Lees Meer

Things may start to brighten up for NOK as markets move out of the pandemic panic

Things may start to brighten up for NOK as markets move out of the pandemic panic

After being hit by the double whammy of a strengthening dollar and a collapse in oil markets, the Norwegian krone became the worst performing G10 currency in the year to date.  Lees Meer

ECB boosts pandemic firepower while passing the ball to fiscal policy’s court once again

ECB boosts pandemic firepower while passing the ball to fiscal policy’s court once again

The ECB delivers on market expectations and steps up the total amount of quantitative easing under PEPP purchases by €600 billion. The rise outperformed the consensus call by at least some €100 billion, bringing along a stronger-than-expected market reaction. Lees Meer

Euro erases gains ahead of European Central Bank meeting 

Euro erases gains ahead of European Central Bank meeting 

This morning, the euro pared back some of its gains and fell against the greenback for the first time in over a week, ahead of the European Central Bank monetary policy announcement that takes place this afternoon at 12:45 BST. Lees Meer

Greenback continues to take on water as hopes for economic recovery boost risk sentiment

Greenback continues to take on water as hopes for economic recovery boost risk sentiment

The dollar continued to drop along with Treasuries yesterday as optimism around economic recovery following the reopening of economies globally improved risk sentiment. Lees Meer

Loonie breaks out of post-Covid range but the sustainability of the rally is faced with a multitude of risks

Loonie breaks out of post-Covid range but the sustainability of the rally is faced with a multitude of risks

With social consumption collapsing, unemployment set to increase to levels above 2008-09, and the oil market in a state of tatters, the aggressive coordinated stimulus response from the Bank of Canada and Trudeau administration failed to prompt a recovery in the loonie. Lees Meer

Another round of UK-EU trade talks starts today after weeks of little progress

Another round of UK-EU trade talks starts today after weeks of little progress

The UK and the EU will start another round of negotiations today to try to reach a trade agreement, but each side has been blaming the other for the lack of progress so far. This morning, the pound continued its rally and saw another swathe of strength in the buildup to the trade talks. Lees Meer

ECB is set to recharge batteries once again

ECB is set to recharge batteries once again

The ECB is widely expected to bring further action in its next policy meeting on June 4th. In the April meeting, the ECB reinforced its readiness to increase the size and flexibility of the €750bn PEPP launched in March. Lees Meer

The dollar’s safe haven appeal wanes as markets remain unmoved by Trump comments

The dollar’s safe haven appeal wanes as markets remain unmoved by Trump comments

The main trigger for markets moving out of the greenback and into other currencies comes from improved market confidence, after US President Donald Trump’s threats to China did not strike to the degree that markets had feared earlier last week. Lees Meer

Markets await Trump’s China press conference 

Markets await Trump’s China press conference 

Tensions rose on concern that today’s news conference by US President Donald Trump on new China policies may further escalate tensions between the two nations after Beijing passed a security law curbing rights and freedoms in Hong Kong. Lees Meer

ZAR rallies in May on renewed risk appetite

ZAR rallies in May on renewed risk appetite

The South African rand sits atop the EM currency board for May, joining fellow carry currencies MXN and RUB. Increased fiscal and monetary support, combined with the relaxation of lockdown measures in major markets have improved the outlook for the global economy in the short-run. Lees Meer

US-China tensions escalate as US House passes sanctions bill 

US-China tensions escalate as US House passes sanctions bill 

The Trump administration stated yesterday that it can no longer certify that Hong Kong is politically autonomous from China, a decision that may have profound consequences for the city’s trade status. Lees Meer

Progression of EU stimulus to remain key EURUSD driver as political tensions now measured

Progression of EU stimulus to remain key EURUSD driver as political tensions now measured

The total financial firepower embedded in the EU budget is proposed to amount to €1.85 trillion, with the Next Generation EU fund of €750 billion to target the pandemic crisis, adding on top of the long-term EU budget for 2021-2027. Lees Meer

Aussie dollar enjoys tailwinds from gentle shock to economy and RBA aversion to negative rates

Aussie dollar enjoys tailwinds from gentle shock to economy and RBA aversion to negative rates

The modest domestic outbreak, the RBA’s relative aversion to negative rates, and the inherently high sensitivity of AUD to risk appetite and global growth, mean AUD has good prospects to perform well relative to both USD and the G10 basket. Lees Meer

News of potential US sanctions on China weighs on risk sentiment

News of potential US sanctions on China weighs on risk sentiment

he market mood shifted overnight when the US published a report describing a range of sanctions they are considering to punish China for its crackdown on Hong Kong. The US Treasury may impose controls on transactions and freeze assets for implementing the new national security law. Lees Meer

The Mexican peso pares back losses on risk-on sentiment while the economic collapse is broadly priced in

The Mexican peso pares back losses on risk-on sentiment while the economic collapse is broadly priced in

The Mexican economy shrank by 1.2% in Q1 on a quarterly basis, or 1.4% when compared with last year's same period (not seasonally adjusted). Lees Meer

National People’s Congress drop GDP target but Hong Kong bill destroys markets risk appetite

National People’s Congress drop GDP target but Hong Kong bill destroys markets risk appetite

With tensions rising again between the US and China after the Senate passed a bill to restrict semiconductor trade with Huawei, the latest measures taken by Beijing could see another collapse in US-Sino relations. Lees Meer

Upbeat market mood drives currency markets in the absence of US-China headlines

Upbeat market mood drives currency markets in the absence of US-China headlines

Headlines have taken a break from the US-China tensions this morning, but any developments between the two nations may turn risk sentiment upside down. Lees Meer

Sterling underperforms in May as idiosyncratic risks mount

Sterling underperforms in May as idiosyncratic risks mount

After a poor performance so far in May, sterling is lagging most of its peers in the G10 group of currencies, with only the New Zealand dollar and Norwegian Krone registering bigger losses against the dollar so far this year.  Lees Meer

Renewed US-China tensions triggered by Senate bill 

Renewed US-China tensions triggered by Senate bill 

Worsening risk appetite was the main theme, as market attention turned to the prospect of renewed tensions between the US and China. Two key developments from the US legislature suggested a trajectory of increased confrontation between the two superpowers. Lees Meer

SARB matches TCMB with a 50bp cut

SARB matches TCMB with a 50bp cut

At mid-day today, the Turkish central bank (TCMB) cut interest rates by 50bps from 8.75%, which fell in line with our expectations and the market's median projection. This afternoon the SARB followed in the TCMB's footsteps, cutting rates by 50bps to a record low of 3.75%, as continuing lockdown measures erode inflation and expand the output gap.  Lees Meer

USD bounces back as US-China tensions continue to rise

USD bounces back as US-China tensions continue to rise

Easing of lockdown measures has been the main driver of improved risk appetite, but this has broken down overnight after the Senate overwhelmingly approved legislation that could lead to Chinese companies such as Alibaba Group Holdings Ltd and Baidu Inc being barred from listing on US stock exchanges. Lees Meer

USD weakness continues as G10 makes inroads

USD weakness continues as G10 makes inroads

Broad US dollar weakness has been the theme of this week’s trading thus far. Today, the kiwi dollar leads gains in the G10 space as the New Zealand government dramatically eases lockdown restrictions. Lees Meer

Dollar weakening as optimism remains in markets 

Dollar weakening as optimism remains in markets 

The dollar spent another session declining yesterday as optimism was plentiful in markets. Little reaction from China over the latest Huawei restrictions has reduced the markets’ concerns over a potential re-emergence of the trade war. Lees Meer

G10 in Green as Powell and Mnuchin head to Capitol Hill

G10 in Green as Powell and Mnuchin head to Capitol Hill

USD is lower against most major currencies today, with JPY the sole loser among the G10. The week’s biggest new so far remains yesterday’s proposal for a mutual Eurozone recovery fund by the German and French Governments. Lees Meer

Euro in de lift na Europees steunpakket

Valutahandelaar Martijn Weller van Monex Europe geeft een update omtrent de ontwikkelingen op de valutamarkt. Het Europese economische steunpakket ter omvang van 500 miljard euro en de verbetering van het economische sentiment in Duitsland, de grootste economie van de eurozone, ondersteunen een herstel van het euro-dollar-paar. Lees Meer

Fiscal stimulus draws attention in both US and EU

Fiscal stimulus draws attention in both US and EU

With Powell’s earlier comments on the need for heightened fiscal support, it would not come as a surprise if he presses again for further fiscal stimulus in today’s video conference. Lees Meer

Dollar weakens despite another phase of US-China trade war looming

Dollar weakens despite another phase of US-China trade war looming

The dollar continues to trade weaker in today’s session despite news of rising US-Sino tensions after the US imposed restrictions on semiconductor sales to Chinese telecommunications company Huawei. Additionally, comments from White House trade advisor Peter Navarro add to the growing complaints from the Trump administration over China’s containment of the pandemic. Although the potential for another phase of the US-China trade war is likely, markets continue to trade in a risk-on mood as major global economies start to scale back lockdown measures. WTI is back above $30 a barrel, boosted further by comments from China, while Angela Merkel and Emmanuel Macron are set to announce a new Franco-German initiative this afternoon at 16:00 BST. Elsewhere, comments from the Bank of England’s chief economist, Andy Haldane, regarding negative interest rates and other unconventional monetary policy tools put the pound lower this morning. However, this didn’t last with the dollar continuing its losses and now GBPUSD sits near 0.5% higher on what is broadly a quiet day for markets.   G10 broadly rallies against a softer dollar despite US-China trade tensions threatening to rear their head again US-China trade tensions are re-emerging as a trending topic in markets as the US administration increases the tone of accusations over China's active role in the global outbreak of the pandemic. The US has already taken action last week, after it prevented foreign chipmakers using US technology from supplying components to Huawei or any of its 114 subsidiaries without a license. The move is intended to curtail the company's ability to produce its own chips for smartphones on the basis of Huawei´s close ties to the Chinese government posing a threat to US national security. Chip manufacturing makes up for nearly 90% of the company's overall revenue. China threatened retaliation on this and further moves, with a state-run newspaper hinting on a series of countermeasures without further detail. The restrictions may freeze the entire chipmaking industry because of its wide use of US fabrication plants. While recent institutional frictions within the EU and re-emerging US-China trade tensions have put a lid to the euro price action, gradual reopening plans have kept the single currency supported above 1.08 level. As the number of new cases and fatalities falls across the eurozone, the region is gradually moving towards easing lockdown restrictions, although at different paces. In Italy, the worst hit country, retail businesses are open as of today with strict social-distancing precautions. The reopening date for bars, restaurants and hair salons was also moved to today from June 1st However, according to the Confcommercio retail lobby, one in ten Italian businesses is at risk of failing, amid criticism that state help hasn't reached small businesses as promised. A move deemed as a “calculated risk”by Prime Minister Guiseppe Conte, Italy eyes the reopening of domestic and international borders on June, 3rd; while sports centres and theatres are planned for reopening on May, 25th and June 15th respectively. In Spain, the government has kept its phasing out program of the national lockdown, with the Valencia region joining the half of the country already in phase one. Some islands will enter the second of four phases as well. However, the government is seeking support in Parliament to extend the state of emergency by an extra month , set to end on May 23rd, which major opposition parties refuse as they seek alternative options for managing the easing of lockdown. Portugal launches the second phase of the scaled-sector plan as of Monday, where restaurants, museums and coffee shops are included at reduced capacity. Headlines broke this morning that a scheduled meeting between French President Emmanuel Macron and German Chancellor Angela Merkel will take place later today at 3:30pm Paris time. The agenda for the meeting hasn´t been disclosed yet but will likely include a discussion on the European recovery fund, along with a range of topics covering public health, green and digital transition and industrial sovereignty. The two countries have lead opposing positions on the EU joint policy response to the pandemic, with Germany largely refraining from the issuance of collective “coronabonds” proposed by France. The European Commission recently hinted at the prospects for a softer aid plan, in which some of the intended €2 trillion fund would be delivered as grants to member states, as opposed to loans. The euro is modestly abandoning the range-bound price action from this morning, in hopes of crucial guidelines to emerge from today's meeting. Reporters will have access to the meeting details at 16:00 BST. Sterling was pushed into negative territory this morning as the bank of England’s chief economist, Andy Haldane, told the Telegraph newspaper that the UK is heading towards an unemployment crisis comparable to that of the 1980’s, while the central bank is considering negative interest rates and unconventional tools. The commentary pushed overnight interest rate swaps to price a negative bank rate as early as December’s meeting. Haldane made similar comments to the same newspaper back in 2015, but with both Governor Bailey and Deputy Broadbent vocally dispelling the likelihood of negative rates it still remains a distant possibility. Additionally, this week the pound faces UK public sector borrowing data on Friday. Expectations suggest borrowing is expected to come in at around the £20bn mark for April, with considerable upward revisions to come in the future to both the March and April debt. This comes after the country’s fiscal watchdog said that in the scenario where the UK remains in lockdown for the whole of Q2, resulting in the economy contracting 35% QoQ, that the fiscal deficit would rise from £218bn to £273bn in FY20. This would result in a fiscal deficit of around 14% of GDP - the highest since World War II and 4% higher than the peak of the financial crisis. With this in mind, the Chancellor of the Exchequer Rishi Sunak is set to face questions in Parliament between 14:25 - 16:00 BST after extending his job retention scheme until October last week. Markets can expect questions to focus on how the government aims to finance the ever-increasing fiscal deficit. WTI is at a two-month high after production data shows a sharp drop in both OPEC+ and North America, while Chinese officials announced that oil demand is almost back at pre-virus levels. OPEC+ is well on the way to slashing output as reports suggest 9.7m barrels per day of output have already been scaled back. Additionally, data out of North America shows production in the US has reduced by 1.5m bpd, with a 700,000bpd fall in Canada. US exports of oil is also estimated to have fallen 15% since the collapse in prices. Over the weekend, Swiss National Bank Governing Board member Andrea Maechler highlighted the SNB’s increased efforts to offset market forces as CHF continues to appreciate on haven flows. The comments follow that by SNB Governor Jordan, which have also been supported by data on sight deposits - a proxy for the central bank’s intervention in FX markets to weaken the franc. Maechler avoided questions about the SNB directly defending the 1.05 level on EURCHF, stating that the central bank takes the general foreign exchange situation into account, but the market has failed to drive below it despite multiple attempts. Today’s sight deposit data suggests this may be the threshold for the SNB as CHF4.4bn was added to the SNB’s balance sheet in the week ending May 15th.   WTI crude prices break the $30pb mark for the first time in one month in thinner trade volumes   The euro gains some traction ahead of the Macron-Merkel meeting this afternoon SNB steps up the pace of FX intervention as it resists further franc appreciation   Authors: Simon Harvey, FX Market Analyst Olivia Alvarez Mendez, FX Market 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 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. Lees Meer

Negative rate expectations in focus as central banks prominent for the week ahead

Negative rate expectations in focus as central banks prominent for the week ahead

The main focus for markets, and for central bank communique, has been increasing speculation that major central banks such as the Fed and BoE would be forced to cut interest rates into negatives. Lees Meer

Negative rates in focus as US-China tensions rise to the surface

Negative rates in focus as US-China tensions rise to the surface

The dollar is trading mixed against the G10 this morning as markets gauge the building tensions between the US and China. The Trump administration took it a step further and suggested that Beijing sent airline passengers to spread the virus globally. Lees Meer

Negative rates and Trump-China chat put markets on edge

Negative rates and Trump-China chat put markets on edge

The dollar has remained on the offensive today, as central bankers focus on managing increasing speculation in financial markets that major central banks such as the Fed and BoE may be forced into negative rates. Lees Meer

USDSGD unlike to move below 1.40 without broad USD weakness 

USDSGD unlike to move below 1.40 without broad USD weakness 

While the Singapore dollar can trade within an undisclosed band, the tweaks to the exchange rate policy suggests USDSGD may struggle to break the 1.40 level. This is in part due to the premium the SGD has regained over its Asian peers since the March sell-off. Lees Meer

UK GDP data shows early signs of damage while the Fed is back in focus

UK GDP data shows early signs of damage while the Fed is back in focus

UK macro data in Q1 brought a modest unexpected boost to the pound, as the figures showed a relatively more resilient economy than expected amid initial coronavirus shock. Despite the initial positive surprise in the headlines, investors are left with a grim picture. Lees Meer

G10 mixed as markets focus on Powell’s upcoming speech

G10 mixed as markets focus on Powell’s upcoming speech

Today markets will keep a close eye on Fed Chair Jerome Powell’s online conference today at 14:00 BST on current economic issues. Any comments on negative rates, as well as on general further stimulus measures, will be closely watched. Lees Meer

FX trades with nervous tone amid fragile risk appetite

FX trades with nervous tone amid fragile risk appetite

G10 FX has traded with a nervous tone so far this week, as yesterday’s broad dollar strength has given way to selling today, with price action following a roughly “risk on” pattern. Lees Meer

Fed officials express apprehension about negative interest rates 

Fed officials express apprehension about negative interest rates 

Senior Federal Reserve policymakers Raphael Bostic and Charles Evans both made comments suggesting they were opposed to or did not anticipate negative interest rates in the US, ahead of a major speech from Fed Chair Jerome Powell tomorrow that may touch on the subject. Lees Meer

Dollar gains momentum amid fragile risk sentiment

Dollar gains momentum amid fragile risk sentiment

Risk appetite is still looking fragile today, after the US dollar has rallied from an early-morning sell-off. Among the G10 currencies NOK and CHF are the best performers. Lees Meer

Will the RBNZ go negative?

Will the RBNZ go negative?

Since the Reserve Bank of New Zealand's last formal Monetary Policy Statement in February, the Bank has engaged in a full suite of crisis response measures, similar to those undertaken by the Federal Reserve, RBA, and Bank of England. Lees Meer

Banxico to cut with prudence

Banxico to cut with prudence

Since the global outbreak of coronavirus in March, the Bank of Mexico has carried out two consecutive interest rates cuts of 50 basis points each in between meetings. Lees Meer

G10 FX opens the week quietly amid ongoing improvement in risk appetite

G10 FX opens the week quietly amid ongoing improvement in risk appetite

The dollar is trading with a mixed tone this morning; risk appetite has slightly improved and pushed riskier currencies like NOK, AUD and CAD in the green against the US dollar, but dollar price action against other currencies in the G10 basket makes for a less straightforward story.  Lees Meer

Nonfarm Payrolls dominate today’s market focus

Nonfarm Payrolls dominate today’s market focus

All eyes are now turned to today’s Non-Farm Payrolls at 13:30 BST. Economists surveyed by Bloomberg expect the US to have lost 22 million jobs in April, the largest expected drop on record. Lees Meer

BoE keeps key rate and asset purchases unchanged

BoE keeps key rate and asset purchases unchanged

Sterling is trading higher this morning, after the Monetary Policy Committee of the Bank of England voted 7-2 to keep asset purchases unchanged, in a decision that also kept the official interest rate unchanged at 0.1%. Lees Meer

BoE decision to avoid more QE is trivial, and forecasts look a touch optimistic

BoE decision to avoid more QE is trivial, and forecasts look a touch optimistic

The Bank of England has followed the OBR in rebranding their forecasts as an “illustrative scenario”, a change of language that reflects the extent to which the forecasts are conditional on changeable assumptions. Lees Meer

Turkish Lira joins the EM “record low” club

Turkish Lira joins the EM “record low” club

Despite the Central Bank of the Republic of Turkey's (CBRT) best efforts, the lira's breach of the 7.00 level against the dollar last Friday has been extended past its 2018 crisis low in this afternoon's session. Lees Meer

Euro struggles amid poor EC forecasts, ongoing ECB legal drama

Euro struggles amid poor EC forecasts, ongoing ECB legal drama

Today’s headlines are marked by the ongoing story of the German Federal Constitutional Court’s ruling that the European Central Bank must provide justification for its QE program within three months. The program in question is the Public Sector Purchase Program (PSPP) and would no longer have support from Bundesbank if the ECB fails to provide satisfactory justification for the program in the given time. The danger lies in the fact that unless the ruling is completely dismissed and the ECB finds the means to provide information that the Court is willing to consider, the ECB’s independence is in danger of being. The question now is whether the ECB will accept the jurisdiction of the German Court, and if that translates in saying that national courts can review monetary decisions. At this point, the ECB has not explicitly stated whether or not it has plans to comply, however, ECB Governing Council member Madis Muller sounded conciliatory this morning and stated that the central bank is “certainly able” to show its measures were proportionate, a key requirement the GFCC set out. Bundesbank President Jens Weidmann said to the German newspaper Die Zeit that the extraordinary measures enacted by the ECB were necessary to support the eurozone economy, but at the same time, the GFCC ruling is justified and the barrier between monetary financing and quantitative easing should be contained. The euro is still trading on the back foot since yesterday’s announcement by the Court, but even in the longer run, the situation may be enough reason for the euro to lose its footing as it may set the stage for other judicial systems in rejecting ECB rules.   EURUSD struggles to recover after GFCC decision European Commission releases gloomy economic forecasts In one line, the European Commission foresees a deep and uneven recession in the euro area that will bottom out in Q2, with a highly uncertain recovery path ahead. Overall, real GDP in the Eurozone is expected to crash by 7.7% in 2020, far deeper than the 4.3% in the 2009 recession during the financial crisis. Output will be severely hit in the second quarter of the year, clearing prospects for the worst economic recession in EU history. GDP growth is expected to rebound by an annual pace of 6,3% in 2021, leaving the EU economy 3% behind the pre-crisis estimated output level. This means that, even when the bounce back will likely be more sharp and quick than in the financial crisis in 2009, the recovery will be incomplete over the forecasting horizon. A few patterns to highlight: The recession will break through all economic sectors, although the biggest hit will likely land on the services sector and tourism in particular. The economic collapse and further recovery will hit across all economies within the area but in an uneven manner. Among the largest member states, the projected rebounds are more asymmetric than the expected declines, with Italy and Spain –the worst hit by the pandemic- experiencing worse recoveries. All demand components will be dragging severely on GDP growth, with the exception of public consumption and investment, which are set to play a counter-cyclical role. Private consumption should be the fastest to recover after a record drop in Q1, but uncertainty in the labour market will likely increase precautionary savings. The expected rebound of euro area investment next year should only help to recover some of the lost ground, with a projected shortfall of 6% compared to baseline estimates before the crisis for the year end. Net exports will add only a small contribution to growth, also meaning that the euro will receive only a mild boost from current account pressures. The path of recovery outlined contains unprecedented levels of uncertainty, given the nature of the underlying assumptions. Should any of the conditions divert from the given guidelines, forecasts could widen substantially, with risks mostly tilted to the downside. As per the currency standpoint, this could imply an ample degree of volatility, although it should be partly reduced by appropriate liquidity provision and monetary policy response towards preserving financial stability.   Projected real GDP growth path in the Euro area     Authors: Olivia Alvarez Mendez, FX Market Analyst Ima Sammani, Junior FX Market 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 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. Lees Meer

SNB may be forced to cut rates as EURCHF fails to break 1.06 as sight deposits rise

SNB may be forced to cut rates as EURCHF fails to break 1.06 as sight deposits rise

In the current Covid-19 environment, the Swiss franc has seen considerable pressure from safe haven inflows which are unlikely to abate until the global economy starts to show signs of recovery. Lees Meer

EUR drawing all attention while pound crashes on construction PMIs

EUR drawing all attention while pound crashes on construction PMIs

The euro sharply fell against the dollar yesterday and has managed only a minor recovery since then, after a ruling from Germany’s Constitutional Court that the European Central Bank’s QE programme violates the ECB’s mandate under EU law. Lees Meer

German constitutional court ruling casts shadow of doubt over ECB

German constitutional court ruling casts shadow of doubt over ECB

The euro is among the worst performers in the G10 today, after Germany’s top constitutional court ruled on a suit against the ECB. The German Federal Constitutional Court ruled in a 7-1 decision that the ECB had not violated treaty prohibitions against monetary financing, which were the core of the claim. Lees Meer

USD bid as German court ruling puts question mark over ECB remit

USD bid as German court ruling puts question mark over ECB remit

The euro is trading with a nervous tone this morning, and is among the worst performers against the dollar among the G10 currencies. Germany’s constitutional court announced a verdict today on the legality of the ECB’s asset purchase program, finding 7-1 in favour of the central bank. Lees Meer

Risk aversion continues to drive markets on renewed US-China tensions

Risk aversion continues to drive markets on renewed US-China tensions

With the global economy sitting in a fragile state due to the impacts of COVID-19, news from Europe that Italy will ease lockdown measures for manufacturing and construction sectors starting today would normally equate to a brief euro rally. Lees Meer

Bank of England to shift focus to liquidity support

Bank of England to shift focus to liquidity support

Thursday’s Bank of England meeting will mark a shift in priorities for the Monetary Policy Committee. At March’s extraordinary meeting on the 19th, the main objective was to restore functioning in UK financial markets, especially gilts, and preventing further tightening in financial conditions. Lees Meer

Dollar bounces back after month-end exodus, but euro still supported by ECB

Dollar bounces back after month-end exodus, but euro still supported by ECB

This week’s trend of dollar weakness intensified yesterday, with the greenback weakening against most major currencies. The dollar’s losses accelerated around 4pm London time, when the daily “fixed” exchange rates were recorded by WM/Reuters. Lees Meer

How do you say “whatever it takes” in French?

How do you say “whatever it takes” in French?

The ECB has kept its asset purchase program unchanged, but has tweaked its Long Term Refinancing Operations to make them more appealing to banks while also announcing a new facility, the Pandemic Long Term Refinancing Operations. Lees Meer

Quiet G10 session sees dollar weaken further as ECB steps into gap left by European leaders

Quiet G10 session sees dollar weaken further as ECB steps into gap left by European leaders

The dynamic loosely remains one of improving risk appetite: on the day, EUR and JPY are among the worst performers, GBP and SEK the best. Conditions in interbank lending markets appear to be showing a marked improvement. Lees Meer

USDZAR Note

USDZAR Note

The South African rand was one of the worst-performing currencies in the expanded majors during March as the dollar reigned supreme in the global flight to safety. The rand depreciated nearly 16% against the dollar and 15.8% against the euro in March. Lees Meer

ECB steps up to the plate after eurozone leaders under-deliver on virus response

ECB steps up to the plate after eurozone leaders under-deliver on virus response

The European Central Bank meeting will be in the spotlight today, with the rate decision being released at 12:45 BST and followed by a press conference at 13:30 BST. Lees Meer

The ECB is urged to “fill the gap” in the Eurozone

The ECB is urged to “fill the gap” in the Eurozone

Since the beginning of the coronavirus crisis, the European Central Bank has delivered a relatively rapid response to the economic challenges, mainly focusing on credit conditions. Lees Meer

USD continues to trade on backfoot after negative GDP reading with FOMC in scope 

USD continues to trade on backfoot after negative GDP reading with FOMC in scope 

Today marks the beginning of this week’s data calendar for the US, with the advanced reading of Q1 GDP and the first Federal Reserve meeting since rates were lowered to the zero lower bound in successive inter-meeting announcements in March. Lees Meer

Tension is mounting ahead of FOMC decision

Tension is mounting ahead of FOMC decision

With today’s Fed announcement, no further reductions in rates are expected as the FOMC has already cut rates close to zero and Fed Chair Jerome Powell stated earlier last month that he does not see negative policy rates as “likely to be an appropriate policy response here in the United States”. Lees Meer

USD hammered amid broad risk-on move

USD hammered amid broad risk-on move

As always it’s tempting to look for meaning in intraday price action. The most likely explanation of today’s dollar weakness seems to be a broad improvement in risk appetite. Lees Meer

Markets consider re-opening of economies as USD softens

Markets consider re-opening of economies as USD softens

The dollar was caught on the back foot yesterday as developments in the APAC area sparked a mild risk-on mood in markets. Exit strategies in parts of Australia and increasing monetary stimulus measures from the Bank of Japan shaved off some of the fear regarding global growth. Lees Meer

APAC news causes risk rally in otherwise quiet markets

APAC news causes risk rally in otherwise quiet markets

Little has changed from this morning’s session as markets still trade off of headlines that the Bank of Japan will increase their QE program, Australia will begin to relax lockdown measures, and the worst affected European nation’s eye exit plans. Lees Meer

FOMC meeting: no action, but plenty to think about

FOMC meeting: no action, but plenty to think about

Jerome Powell and the FOMC are entitled to at least a tentative note of self-congratulation at this week’s meeting, on Wednesday, as so far the Fed’s measures in response to the covid-19 crisis appear to be having their desired effect on the US economy and financial markets. Lees Meer

G10 rallies against USD as APAC news boosts growth sentiment

G10 rallies against USD as APAC news boosts growth sentiment

The dollar trades on the back foot this morning as the global coronavirus curve continued to flatten over the weekend, enabling governments to begin eyeing up exit plans. Lees Meer

COVID-19: Global Policy Responses

COVID-19: Global Policy Responses

Since the outbreak of the coronavirus in late December, COVID-19 has rapidly spread across the globe with nearly 3 million cases confirmed.  With this in mind, we have kept a track of all of the fiscal and monetary measures put in place by governments and central banks in the G10 since the onset of the virus. Lees Meer

EU leaders fail to reach agreement on recovery package

EU leaders fail to reach agreement on recovery package

The euro is reaching fresh lows this morning in the aftermath of the EU summit, and has weakened to its lowest level against the US dollar since March 24. Lees Meer

No PMI Panic

No PMI Panic

This morning’s purchasing managers indices for the eurozone and UK were by far the worst on record, confirming an unprecedented economic slowdown across the region’s major economies. Lees Meer

PMIs in focus as markets gauge economic toll of COVID-19

PMIs in focus as markets gauge economic toll of COVID-19

The tentative pricing likely reflects the April preliminary PMIs that were set to be released later on in the morning. At 09:30 BST, the data was released and the initial estimates followed suit with that seen in the eurozone. Lees Meer

MXN unaltered by Banxico’s emergency move

MXN unaltered by Banxico’s emergency move

The Bank of Mexico stepped in yesterday with a unanimous inter-meeting decision to cut the benchmark interest rate by 50 basis points to 6%. Lees Meer

US dollar weakens as Emerging Markets leads advances

US dollar weakens as Emerging Markets leads advances

While oil markets continue to draw the focus of markets today, risk sentiment has improved dramatically. In the G10, GBP and AUD lead the way in reclaiming ground lost earlier in the week while the dollar softens across the board. Lees Meer

Dollar rally eases as WTI stabilises on talk of oil support

Dollar rally eases as WTI stabilises on talk of oil support

Yesterday’s collapse in oil markets was the source for the dollar rally. While oil benchmarks sit in positive territory now, unlike WTI quotations for the last 2 days due to a quirk in the futures contracts. Lees Meer

ZEW Survey Current Assessment and Expectations

ZEW Survey Current Assessment and Expectations

The headline ZEW expectations index surged to 28.2 in April, following a dismal reading of -49.5 in March and overshooting Bloomberg's median forecast at -42.0. The assessment of the current situation printed -91.5, far below the forecasted -77.5 and the prior reading of 43.1.  The divergence between the current situation and the expectations has not been this large since the global financial crisis. With lockdown measures in full effect through April and eurozone countries making plans to gradually reopen the economy in the coming months, there are reasons to hope things won’t get much worse for the region. The timing of the easing of containment measures will be key in determining the recovery path. EURUSD saw a modest drop around the time of the release, but the many different factors in play at the moment make it nearly impossible to pinpoint the price action down to one event. Other factors, such as demand for the US dollar and crude oil volatility are also in play today.   EURUSD slightly drops around the time of the data release   ZEW Germany headline index, assessment of current situation vs 6-month expectations of economic growth   Author: Ima Sammani, Junior FX Market 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 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. Lees Meer

Oil slide more widespread keeping USD well bid

Oil slide more widespread keeping USD well bid

Dynamics in oil markets continue to dominate FX market pricing today. After yesterday's headline-grabbing slide in WTI, which saw May delivery prices dive deep into negative territory, oil markets remain on the back foot and with more meaningful consequences for FX. Lees Meer

Mild dollar strength after May delivery oil contract trades with negative price in US

Mild dollar strength after May delivery oil contract trades with negative price in US

The dollar strengthened overnight, after the widely traded West Texas Intermediate benchmark for crude oil delivery saw astonishing declines in prices for delivery next month. Lees Meer

NZD enjoys boost on easing of lockdown measures

NZD enjoys boost on easing of lockdown measures

This weakening of binary risk on/risk off dynamics may create trading conditions in G10 FX more conducive to idiosyncratic drivers such as economic and virus data. Lees Meer

A week of data beckons as markets weigh how long “risk on, risk off” dichotomy can dominate FX

A week of data beckons as markets weigh how long “risk on, risk off” dichotomy can dominate FX

Broad risk-on/risk-off moves have dictated FX price action for the past few weeks, with the US dollar strengthening with deteriorations in risk appetite, and weakening with improvements. Lees Meer

FX response more subdued to this morning’s plunge in crude oil, compared to a week ago

FX response more subdued to this morning’s plunge in crude oil, compared to a week ago

The prospect of negative front-end oil prices still remains a viable concept purely due to the lack of storage space, although markets are still some way off this being an inevitability at present. Lees Meer

Dollar strength fades as risk appetite improves

Dollar strength fades as risk appetite improves

The dollar is trading lower at the margin overnight, with the G10 currencies following a pattern consistent with an improvement in risk appetite. Lees Meer

US Job claims suggest COVID-19 wipes out financial crisis recovery 

US Job claims suggest COVID-19 wipes out financial crisis recovery 

Today’s jobless claims data from the US saw another dramatic rise in the number of unemployed persons claiming insurance benefits. The 5.245m number of claims registered in the week ending April 11th has seen the aggregate number of job losses, if this is a true measure, erase the employment gains made since the global financial crisis. The data followed a 6.62m increase in claims the week prior, pushing the four-week sum to 22m filings compared to the 21.5m jobs added during the economic recovery beginning June 2009. The US dollar has gone mildly bid in markets following the release as risk sentiment continues to drive market pricing. However, despite today’s data highlighting a dramatic collapse in the US labour market, with the advanced seasonally adjusted unemployment rate rising to a record high of 8.2% for the week ending April 4th, it isn’t necessarily an accurate representation of the real economy. Below, we highlight some of the reasons for this which include; the loss of output from those leaving the job market altogether therefore not claiming unemployment benefits, system failures in states, backlogs in processing and the impact of the CARES act. State data for week ending April 4th: Georgia (+256,312), Michigan (+84,219), Arizona (+43,488), Texas (+38,982), and Virginia (+34,872) saw the largest rise in claims. California (-139,511), Pennsylvania (-127,037), Florida (-58,599), Ohio (-48,097), and Massachusetts (-41,776) saw the largest falls in claims. A note on US Jobless claims in general The US Jobless claims figure has been one of the most contentious data points during the coronavirus outbreak. While the data is one of the timeliest metrics to assess the impact lockdown measures are having on the US labour market, in turn allowing markets to gauge the effects on consumption and therefore growth, it is subject to a number of quirks. The quirks make it hard for economists to filter through the noise and truly measure the economic impact of social distancing measures in the US via the labour market, but given the lack of timely data markets will still use this as their best nowcast of the US economy. This means that initial jobless claims are likely to continue having an elevated market impact as more accurate unemployment data is compiled. Last week, the initial jobless claims data release saw the number of people claiming unemployment benefits in the week ending April 4th dip trivially to 6,606K from an upwardly revised 6,867K the week prior. The dip in jobless claims was concentrated in Pennsylvania (-143K), Florida (-108K) and Massachusetts (-103K), but recent reports in the Washington Post highlight that the benefits system in states like Florida has led to the state underreporting the true number of claims. Rebecca Vallas reported that the red tape surrounding the state claims system was deliberately designed by the former Governor Rick Scott to “make it harder for people to get and keep benefits so the unemployment numbers were low”. This is supposedly just the tip of the iceberg. System failures nationally have arguably suppressed the true number of new unemployment claims. Reports of system crashes in New York, Michigan and Nevada are also backed up by reports of increased server capacity nationally and extended call center hours beginning next week. The influx of claims and the current backlog suggests that the initial claims data will remain elevated for some time to come as opposed to seeing the data subdue and a corresponding rise in continuing claims. Additionally, the CARES act will now see more claims fall under the official data stemming from unemployment benefits being paid to self-employed and gig economy workers. With the widening criteria of claims, expect the nominal number to remain elevated in the numerous millions for some weeks to follow. While the multitude of factors in play makes it harder to assess the true economic damage, further drawbacks are found in the fact that the claims data doesn’t measure the loss of economic activity from those leaving the labour market all together. In the March household survey, approximately 60% of workers that lost their job were counted as no longer in the labour market because they didn’t want a job or were not looking. Additionally, the structural contraction in the economy is difficult to assess due to the amount of temporary claims crowding out the true structural unemployment rate. Markets know the short-term contraction in the economy is set to be sharp but much of this can be recovered once containment measures are relaxed. The concern is what the longer-term impact to the economy is and to measure that, and in turn the effectiveness of the stimulus measures to counteract it, markets will need to see the noise around the labour market data to subside. While containment policies are in place, the data will continue to be marred with noise and only reflect the short-term economic impact, but it remains the best and most timely measure of economic activity for now. Eurozone Industrial Production data fails to move euro This morning's eurozone industrial output data from February included a sharp contraction of 1.9% on a year-on-year basis and a 0.1% contraction month-on-month, with a decrease in capital and durable goods causing much of the slump. The month-on-month slump is negligible due to the increase in intermediate and non-durable consumer goods, as well as energy production. The data was already hampered in February as the virus had China under lockdown, causing many disruptions in supply chains of trading partners, including the eurozone. With eurozone countries following nationwide lockdowns in March, a sharp downturn in the next data release is a given. Reasonably encouraging purchasing managers' indices from March suggested on the surface the slowdown was particularly sharp, but the PMIs were subject to noise from the inverse effect of the supply delivery times. With some eurozone countries looking at options to gradually revive the economy again, an important question that arises is when factories and companies will resume production. Germany has already announced plans to ease some of containment measures at the beginning of May and will reopen some smaller shops, while Spain will allow workers in manufacturing, construction and some services to return to work from this week onwards. The rest of the Spanish population remains in lockdown. The moment at which countries resume production will be the largest factor in assessing what the lowest point of production will be and will pave the way for a recovery in the eurozone industry. The reaction in FX markets to the data remains limited... As markets are mainly concerned with the shift in risk sentiment that has appeared since this week's collapse in oil markets and renewed safe haven demand for the US dollar. The euro has weakened against the dollar throughout the day, including the moments after the data release, but remained relatively stable against Sterling, signalling that this story is a matter of dollar strength rather than euro weakness. Looking ahead, industrial production data for March and April, combined with the timing of the easing of containment measures will be key in determining the bottom eurozone’s industrial downturn.   Eurozone industrial production vs surveyed values   Eurozone industrial production February 2020 (Covid Crisis) vs January 2009 (GFC)   Mexico’s rating erosion will make it harder for the peso to recover The ratings agency Fitch downgraded Mexican sovereign debt to BBB- from BBB yesterday, just one notch above speculative investment grade, with a stable outlook. The downgrade comes after the coronavirus crisis has dampened the already grim outlook of the Mexican economy and its public debt outlook. The agency now foresees an economic collapse of at least 4% in 2020, while pushing prospects of recovery back to 2021. Despite the fact that the government has not enacted any additional fiscal measures to rescue the economy amid the coronavirus crisis, the economic fallout could represent an increase of the primary deficit as percentage of GDP of some 2.5pp to 4.4%. In turn, this could push the debt-to-GDP ratio above the 50%, a record not seen since the 1980s. Fitch is the second major agency to cut Mexico’s sovereign debt rating in less than a month, after S&P downgraded it to two notches above junk at the end of March. The country is extremely sensitive to further downward revisions by major agencies despite AMLO's austerity stance, as structural growth could be impacted for years to come. According to the OECD's PPP standard, the Mexican peso is currently undervalued by nearly 160%, while the currency has lost over ¼ of its nominal value in less than two months. Even if USD strength starts to ease in the following quarters worldwide, poor domestic fundamentals will hardly help the peso to recover towards its pre-coronavirus levels in the short-to-medium term horizon.   Mexican debt-to-GDP ratio is set to jump to above multi-decade levels amid coronavirus economic collapse     Authors:  Simon Harvey, FX Market Analyst Olivia Alvarez Mendez, FX Market Analyst Ima Sammani, FX Market 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 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. Lees Meer

USD progress continues 

USD progress continues 

The dollar saw a burst of strength yesterday as crude oil prices collapsed and risk appetite deteriorated, and the dollar is up against most major currencies this morning, although the rate of its progress has slowed somewhat. Lees Meer

USD rips higher as OPEC+ cuts insufficient to stem global glut

USD rips higher as OPEC+ cuts insufficient to stem global glut

The dollar is broadly higher this morning after risk appetite soured as falls in crude oil prices accelerated. JPY is dominating G10 FX along with CHF, while EM currencies are mostly in the red. Lees Meer

Eurozone CPI data

Eurozone CPI data

The euro fell against the dollar this morning after reaching a 10-day high overnight, as French retail sales plunged 24% month-on-month according to data from the Bank of France. Lees Meer

Risk appetite sours as crude oil falls on demand fears

Risk appetite sours as crude oil falls on demand fears

Falls in crude oil prices this morning coincided with the change in tone in FX markets, as the Brent crude oil benchmark bell below $30 this morning after trading stable overnight. Lees Meer

Risk appetite continues to improve after Eurozone and OPEC deals, fresh Fed measures

Risk appetite continues to improve after Eurozone and OPEC deals, fresh Fed measures

Markets traded with a relaxed tone this morning, characterised by a modest but continued recovery in risk appetite and easing financial conditions, accompanied by a weaker US dollar. Lees Meer

Semblance of calm in FX markets as Europe lockdown persists

Semblance of calm in FX markets as Europe lockdown persists

Lockdown measures in hard-hit countries such as France and Italy will be in focus this week. The UK and EU will return to Brexit negotiations on Wednesday after the lead negotiators on both sides fell ill with Covid-19 last month. Lees Meer

US dollar falls amid Fed credit measures, OPEC+ and Eurogroup

US dollar falls amid Fed credit measures, OPEC+ and Eurogroup

The dollar is lower this afternoon, after the Fed announced a raft of aggressive new credit easing measures. On the whole it seems global macro markets are no longer trading in a binary “risk on, risk off” dynamic – this suggests risk appetite on the whole has improved, for the time being. Lees Meer

Dollar mixed with key announcements pencilled in for today’s session

Dollar mixed with key announcements pencilled in for today’s session

The main news for the greenback yesterday was the release of the first set of Fed minutes since its dramatic decision to drop rates to its effective lower bound. Today, Fed chair Powell will likely give more clarity to markets with an economic update scheduled via webcast at 15:00BST.  Lees Meer

Eurogroup failure sees ominous tightening in European interbank funding markets

Eurogroup failure sees ominous tightening in European interbank funding markets

European finance ministers failed to reach an agreement on a response to the virus pandemic after a marathon 16-hour conference call that went through last night. Lees Meer

EU finance ministers fail to reach consensus over virus response

EU finance ministers fail to reach consensus over virus response

The euro is trading lower this morning, after a marathon 16-hour eurogroup call failed to result in a joint statement or a breakthrough. Italy’s finance minister Roberto Gualtierie requested to have debt mutualisation explicitly mentioned in the final report sent to EU leaders. Lees Meer

Risk-on returns as investors eye signs of coronavirus slowing

Risk-on returns as investors eye signs of coronavirus slowing

While the number of fatalities and new confirmed cases continues to pile up, the daily change in both figures have shown consistent evidence that the pandemic curves could be somewhere near to peaking. Lees Meer

Dollar retreats as risk-on move prevails on slowing virus data in European hotspots

Dollar retreats as risk-on move prevails on slowing virus data in European hotspots

Yesterday’s tentative dollar weakness accelerated into a broad retreat overnight as US equity markets rallied and investor risk appetite seemed to almost turn bullish, despite the ongoing global coronavirus pandemic. Lees Meer

ZAR hits a record low but rebounds aggressively amid some optimism in global markets

ZAR hits a record low but rebounds aggressively amid some optimism in global markets

The introduction of COVID-19 has exacerbated the economic contraction as South Africa, along with many developed markets, enters an extended containment period which shuts down both manufacturing and social consumption. Lees Meer

FX trades with mild risk-on vibe amid signs of virus stabilization

FX trades with mild risk-on vibe amid signs of virus stabilization

G10 and EM FX are trading with a broad risk on vibe this afternoon, with the dollar lower against AUD, NZD, NOK and CAD, and enjoying some modest gains versus JPY and EUR. Lees Meer

OPEC+ and Eurogroup conference calls in focus as next major policy decisions

OPEC+ and Eurogroup conference calls in focus as next major policy decisions

WTI has opened today’s session marginally lower than it closed on Friday, due to the OPEC+ meeting being pushed from today to Thursday, but a level of support in oil markets still remains as optimism over a 10m barrel cut lingers from last week. Lees Meer

US dollar pares losses – but no sign of March madness despite a week of awful data

US dollar pares losses – but no sign of March madness despite a week of awful data

The US dollar is broadly higher this week, but at this point, it looks like a recouping of some of last week’s sell-off, as opposed to the beginning of another leg of intense dollar buying of the sort seen in mid-March. Lees Meer

Trump makes bold claims of oil production cuts from Saudi Arabia and Russia

Trump makes bold claims of oil production cuts from Saudi Arabia and Russia

Donald Trump continued his extraordinary efforts to support crude oil prices yesterday, by claiming that Saudi Arabia and Russia would cut oil output by 10-15 million barrels. Russian officials were quick to deny that Putin and the crown prince of Saudi Arabia had spoken. Lees Meer

Trump tweets send oil skyrocketing

Trump tweets send oil skyrocketing

Donald Trump has sent oil prices and petro-currencies soaring after saying that he hoped Saudi Arabia and Russia would agree to oil production cuts of 10-15m barrels. Lees Meer

Sky-rocket US jobless claims dictate FX dynamics today

Sky-rocket US jobless claims dictate FX dynamics today

Yesterday, the DXY dollar index ticked higher on an apparent bounce from last week's losses. The move could be hardly attributed to safe-heaven pressures as per the relaxed, or even positive, performance of most financial conditions indicators. Lees Meer

NOK and CAD rise as oil jumped on China’s purchase plan

NOK and CAD rise as oil jumped on China’s purchase plan

While both the krone and CAD are benefitting from the oil rally, the Norwegian krone is leading in the G10 space. NOK's faster recovery compared to the Canadian dollar shows that while oil has been the main character in today's gains. Lees Meer

Trump continues Open Mouth Operations aimed at crude oil markets

Trump continues Open Mouth Operations aimed at crude oil markets

Donald Trump continued open mouth operations aimed at raising crude oil prices, saying that he thought Saudi Arabia would “come up with something” to end their price war and save the US shale industry. Lees Meer

No one knows what to do with the dollar

No one knows what to do with the dollar

The dollar remains bid today, despite a period of relative calm in bond markets, financial conditions, and USD funding markets. This suggests that the dollar strength we have seen this week is not panic buying, but simply a steady demand for greenbacks after last week’s sell-off. Lees Meer

Dismal manufacturing PMIs from Hungary push the forint to another record low

Dismal manufacturing PMIs from Hungary push the forint to another record low

The Hungarian forint continues to slide, reaching another record low against the euro this morning in a new wave of selling following dismal manufacturing figures, combined with a global risk-off mood. Lees Meer

A mixed beginning to an uncertain second quarter for FX and macro markets

A mixed beginning to an uncertain second quarter for FX and macro markets

Global markets saw a volatile end to a volatile second quarter yesterday, with the dollar at first strengthening against JPY before rapidly losing ground in the evening. Lees Meer

Markets might get used to ugly data for a while

Markets might get used to ugly data for a while

G10 FX has had an eventful day so far, with the US dollar remaining bid and up against the whole G10 except for NOK. NZD and AUD were in the green briefly in the early hours of the morning after Chinese PMI data printed much better than expected. Lees Meer

Chinese PMIs, Trump and Putin call lift sentiment

Chinese PMIs, Trump and Putin call lift sentiment

Despite the overnight rally in crude oil prices, the significance of Trump and Putin’s call remains to be seen, as the core dynamic causing the plunge in crude oil prices remains the price war between Russia and Saudi Arabia. Lees Meer

USD bid during uneventful morning session

USD bid during uneventful morning session

Monday has proven to be a reasonably uneventful open to the week after the tumult of the past three weeks. The dollar is trading modestly higher against the G10 currencies today, although there is little sign of the intense investor panic and risk aversion that drove the dollar to highs earlier in the month. Lees Meer

South Africa lost Moody’s Investment-Grade Credit Rating

South Africa lost Moody’s Investment-Grade Credit Rating

March has not bought an easy end to the quarter for the South African economy, as the nation has been dealing with a mix of structural domestic concerns over the economy and international fears over the spread of coronavirus. Even before the virus spread globally, the country was struggled with various macro issues - since the end of 2019, unemployment has hit an 11-year high, manufacturing and production numbers have slumped to a 5-year low, and Eskom has experienced its worst ever generation crisis, leaving the entire economy without power for hours at a time. Long-standing structural labour market rigidities and persistent weak business and investor confidence finally made South Africa enter its second recession in two years. On Friday night last week, Moody's Investment Services announced that South Africa had lost its investment-grade credit rating after more than 25 years, meaning the country now has a junk rating from all three major international rating agencies. The announcement was made after the nation went on a three-week lockdown, on the same day as the number of infections passed 1,100 and the first victim died. Moodys' statement describes the key driver behind the rating downgrade from Ba1 to Baa3 as "the continuing deterioration in fiscal strength and structurally very weak growth", and does not expect current policy settings to address the concerns effectively. The rating agency has downgraded SA's long-term foreign-currency and local-currency issuer ratings and senior unsecured debt ratings, as well as the foreign-currency senior unsecured MTN and senior unsecured Shelf ratings to (P)Ba1 from (P)Baa3, as well as its foreign-currency other short-term rating to (P)NP from (P)P-3. Due to the downgrade, South African government bonds will be excluded from the FTSE World Government Bond Indexes, which are tracked by $3 trn of funds. The index will be reweighted in April, with South Africa's 0.45% weighting deducted from the index. The announcement was not entirely unexpected. Moody's downgraded their outlook on South African debt to negative in November, warning of SA's growing debt-to-GDP ratio, but the icing on the cake was when the country had no choice than to impose containment measures to curb the further spread of the coronavirus. South Africa's National Treasury sees the downgrade of the country's debt to junk by Moody's investors Service as an opportunity to fix the economy and stated that they "take this downgrade as an opportunity to do the right thing", and acknowledges that instead of putting more money into the economy, the nation should shift to structural reforms. South Africa's rand weakened to a record low this morning and breached 18 rand per dollar for the first time in history. An index of SA bank stocks slumped 6.1% on top of Friday's 12% drop. Acknowledging the still early stage of the spread and the economic damage that it has already done, this may signal that SA's economy may get impacted more severely as the virus hits its peak. While further short term downward risks certainly play a role for the rand given the economic outlook and downgraded rating, this does not directly have to translate into an even weaker rand in the long term. The shape that the structural reforms will take will be key in determining a longer term economic outlook. Finance Minister Tito Mboweni stated that the nation will approach the IMF and World Bank for assistance in mitigating the economic turmoil caused by the coronavirus.   The South African rand weakening past 18/$ for the first time ever recorded   USDZAR - 1 month window   MSCI Index    Eskom 2028 bond yield curve - now vs 1 month ago Author: Ima Sammani, Junior FX Market 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 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.   Lees Meer

GBPUSD remains vulnerable to further sentiment shocks despite historic easing measures

GBPUSD remains vulnerable to further sentiment shocks despite historic easing measures

From Monday’s lows to Friday’s high sterling rallied more than 9% against the US dollar last week, completing its best weekly performance since at least 2009. Lees Meer

Crude oil plunges as US dollar pares back last week’s losses

Crude oil plunges as US dollar pares back last week’s losses

Crude oil prices fell to fresh lows overnight, as lockdown conditions continue to hit global demand and the ongoing Saudi-Russia price war means that high production is contributing to a worsening supply glut. Lees Meer

Dollar holds steady, EU squabble and BoC surprise

Dollar holds steady, EU squabble and BoC surprise

The greenback fell by over a percentage point against all G10 currencies yesterday as liquidity conditions improved in markets and the dollar's synthetically produced strength due to credit and liquidity issues unwound. Lees Meer

Dollar weakens on increased liquidity measures and jump in COVID-19 cases

Dollar weakens on increased liquidity measures and jump in COVID-19 cases

The dollar spent another session yesterday sitting in the red against all of its G10 counterparts. The number of cases in the US surged by more than 17,000 yesterday as the US overtook China as the nation with the most infections. Lees Meer

Markets breathe a tentative sigh of relief

Markets breathe a tentative sigh of relief

Price action across FX, equities, and fixed income are suggesting a mood of relief today, with the US dollar lower across the board and equities higher after the US Senate passed a $2 trillion fiscal stimulus bill. Lees Meer

Markets still focus on virus data as fiscal stimulus released in North America

Markets still focus on virus data as fiscal stimulus released in North America

Markets look as if they are returning to normality today as the greenback trades mixed against its G10 peers, while currency moves against the dollar in the EM space appear to be less dramatic. Lees Meer

USD may find support as Central Banks up liquidity

USD may find support as Central Banks up liquidity

The US dollar continues to trade on the back foot in today’s session following its fall from grace yesterday. The DXY index, which tracks the dollar's performance against most major trading partners, continued its fall this week from a 4-year high. Lees Meer

Dollar falls and risk appetite improves as Senate reaches fiscal stimulus deal

Dollar falls and risk appetite improves as Senate reaches fiscal stimulus deal

After showing tentative signs of weakness yesterday morning, the dollar began a true retreat late yesterday evening and continued this morning, helped along by the news that the US Senate had reached a fiscal stimulus deal worth almost $2 trillion. Lees Meer

Latest Fed measures seem to be working, for now.

Latest Fed measures seem to be working, for now.

After a worrying initial market reaction yesterday, the Fed's aggressive monetary and credit easing measures appear to be working. The US dollar is generally weaker across the board, US equity futures are pointing up, and there are reasons to believe the pressure on financial conditions may be easing. Lees Meer

Norwegian krone sees record volatility

Norwegian krone sees record volatility

As the most volatile currency in the expanded major currency space over the past week, the Norwegian krone has been swept away in the worsening virus-driven economic knockout and was hit by the double whammy of a strengthening dollar and a collapse in oil markets. Lees Meer

USDMXN trades beyond dollar liquidity constraints

USDMXN trades beyond dollar liquidity constraints

The Mexican peso is sitting at a new record low against the US dollar on the back of an increasing risk-off mood. Risk sentiment has caused extreme demand for dollar liquidity and hasn't been soothed by Banxico's latest measures, which may be regarded as underwhelming.  However large both the Fed liquidity provision measures and Banxico stimulus might be, we see the bottom for USDMXN nowhere in sight provided the substantial global and domestic recession risks. The increased provision of USD liquidity to domestic Mexican markets funded by the swap line with the Fed may help ease the speed and size of the fall, but the peso faces notably downside risks in front of several policy choices. Last Friday, Banxico moved forward its monetary policy decision scheduled for March 26th, implementing an emergency interest rate cut of 50 basis points. At 6.5% now, the policy interest rate is still deemed to be restrictive relative to the estimated neutral interest level, which is estimated at around 5%. This restrains the ability of the Mexican economy to navigate through the inevitable recession, especially in a context of constrained fiscal space. One of the committee members even leaned towards a shorter 25bp reduction, suggesting the board is not fully on board with the idea of substantial easing. There are two reasons for Banxico to stay fairly conservative on its policy stance despite threatening growth prospects: The Mexican capital account is largely reliant on its premium payments given the increasing risks of credit downgrade by foreign rating agencies and The potentially large pass-through effects on inflation from the policy-induced currency depreciation. Banxico assessed that upside inflation risks from a weaker currency are broadly balanced with the negative impact of soft demand and lower energy prices under the current policy stance. However, the central bank stated that the uncertainty to the inflation outlook has increased, adding to the prospects of cautious forward guidance. We now expect Banxico to engage in further easing by at least 150bp of additional cuts over the next two quarters, in line with repriced market expectations of monetary easing after the last Banxico move. While this size of accommodation could prove insufficient to prevent Mexico from a large recession this year, further moves might be counterproductive for the domestic inflation outlook. Regardless, either policy choice in the cards of Banxico –a sharp or mild monetary easing- poses significantly negative risks for the peso. On one hand, lower interest relative yields on Mexican increasingly riskier assets will force a major sell-off of in the peso. On the other, sticking to a rather conservative stance and refraining from cutting rates aggressively could send the economy into an even larger recession, curtailing demand for MXN too. The remaining silver lining in the peso's outlook comes in the form of Banxico directly intervening in the FX market. Last week, the Fed engaged in a swap line arrangement with Banxico for provision of $60 billion of USD liquidity, which Banxico is now injecting in local markets via repo operations. However, in both of the offerings conducted so far of $2 billion each, the market intake of USD has fallen short of the amount offered, about 23% and 76% respectively. This surprising mismatch indicates that the MXN price action might not be driven by USD fund squeezing in full, but rather by a fundamental sell-off of MXN, which may have slightly eased just for now.   Markets are pricing in a more proactive policy stance after Banxico unexpectedly cut rates in an emergency meeting on March 20th.   MXN sell-off has probably surpassed USD fund squeezing limits and is fundamentally trading on risk-off mood.   Author: Olivia Alvarez Mendez, FX Market Analyst     DISCLAIMER: This information has been prepared by Monex Canada 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 Canada 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. Lees Meer

Flash PMI Data: UK & Eurozone

Flash PMI Data: UK & Eurozone

Flash Purchasing Managers Indices for the UK and leading Eurozone economies will be released on Tuesday morning, giving markets a first look at the impact of the coronavirus outbreak on business confidence. Lees Meer

BoE Primer

BoE Primer

The combined fiscal and monetary response from the UK is both cutting edge and timely and is likely to be studied in textbooks for decades to come. As far as mitigating the economic impact of the coronavirus, it is likely to be a “best in class” solution in terms of scope and timeliness. Lees Meer

Fed switches to “Whatever it takes” in bid to beat yield curve and financial conditions into submission

Fed switches to “Whatever it takes” in bid to beat yield curve and financial conditions into submission

Jerome Powell and the FOMC have finally had their “whatever it takes moment” and promised open ended asset purchases aimed at beating the US yield curve and financial conditions into submission. Lees Meer

Fiscal bazookas fire in UK and Germany, dollar strength abates…for now

Fiscal bazookas fire in UK and Germany, dollar strength abates…for now

Sterling is trading roughly flat against the euro this morning compared to Friday’s open, suggesting that Friday’s seismic fiscal measures from Rishi Sunak have not had a significant impact on sterling, which remains driven by global risk appetite. Lees Meer

Markets breathe a sigh of relief, but is it short lived?

Markets breathe a sigh of relief, but is it short lived?

All major currencies are in the green against the US dollar overnight, after the wave of risk aversion and dollar liquidity stress that drove the greenback higher has abated slightly. Lees Meer

Norges Bank surprises with another rate cut

Norges Bank surprises with another rate cut

Norges Bank unanimously decided to cut its benchmark policy rate by 75 bps to 0.25% this morning - a record low for Norway's economy. The previous cut was announced just a week ago when the central bank reduced its policy rate from 1.5% to 1%. Lees Meer

Currencies rally vs US dollar amid reprieve in global risk-aversion

Currencies rally vs US dollar amid reprieve in global risk-aversion

Global currencies began to rally overnight as risk appetite improved and bond yields fell in the developed world, although some major currencies have yet to recoup their losses from yesterday. Lees Meer

USD note

USD note

The dollar’s rampage continues into another session today in FX markets, focusing on the G10 currencies that previously performed well amidst the market turmoil; EUR, JPY and CHF. Lees Meer

BoE joins wave of desperate central bank action aimed at stabilising sovereign bond markets

BoE joins wave of desperate central bank action aimed at stabilising sovereign bond markets

The Bank of England has decided to cut interest rates by 15 basis points to 0.1%, and will increase asset holdings by £200 billion following an extraordinary meeting. Lees Meer

ECB joins the bazooka volley as US dollar runs rampant

ECB joins the bazooka volley as US dollar runs rampant

In a dramatic late night announcement that came after a marathon Governing Council conference call, the ECB announced plans to buy an additional €750 billion of bonds over the course of this year, covering both sovereign and corporate debt. Lees Meer

USDNOK reaches levels never seen before

USDNOK reaches levels never seen before

Worsening concerns about the global impact of Coronavirus and plunging crude oil prices have created a perfect storm for commodity currencies, especially NOK. Lees Meer

What to expect from SNB tomorrow

What to expect from SNB tomorrow

The Swiss franc currently sits at a 5-year high against the euro on the back of increased global demand for heaven assets triggered by fears of recessions occurring globally. Lees Meer

Canada unveils $82bn fiscal package

Canada unveils $82bn fiscal package

Worryingly for spectators, PM Trudeau sidestepped questions about whether the Canadian economy is set for a recession, which it undoubtedly is in the current climate. USDCAD continues to climb higher towards levels not seen since 2016, with the high of 1.4690 now in scope.  Lees Meer

Sterling falls to unstoppable US dollar as markets stare down the barrel of crisis…

Sterling falls to unstoppable US dollar as markets stare down the barrel of crisis…

Sterling has fallen to the lowest level against the US dollar since 1985 amid a global dollar liquidity shortage that has seen the greenback run rampant against all major currencies. Lees Meer

US float huge fiscal package and central banks open 2008 playbook

US float huge fiscal package and central banks open 2008 playbook

The fiscal windfall sent the dollar on a tear, with nothing standing in its path - a theme that may be set to continue playing out today. On top of all of these measures, the Fed will also begin reviewing easing bank leverage and accounting rules to improve the transmission of credit. Lees Meer

The Fed dusts off another 2008 liquidity tool

The Fed dusts off another 2008 liquidity tool

The Federal Reserve today said it has established a new Commercial Paper Funding Facility, similar to that used during the 2008 financial crisis, to try and appease further dollar funding stresses – this time in non-financial corporate debt markets. Lees Meer

MXN faces further downward risks under current market uncertainty

MXN faces further downward risks under current market uncertainty

The peso has led losses driven by the coronavirus within the EM space, and its dominant trading volume in Latam has made it particularly sensitive to recent market turmoil in the area. Lees Meer

Riksbank blow dust off of QE machine to avoid shame of negative rates

Riksbank blow dust off of QE machine to avoid shame of negative rates

Late on in yesterday's session, the Riksbank came out and signalled to markets that it was willing to spend as much as Kr300bn ($30bn), or almost 6% of GDP, from March to December this year on government bonds, municipal bonds and covered bonds. The bank also flagged that it may decide to expand into corporate bonds should it deem necessary. This marks the second batch of stimulus released by the Swedish central bank after Governor Ingves announced $50bn in bank loans back on the 13th March.  By restarting QE, the Riksbank has pledged to almost double its balance sheet. With the number of assets owned by the central bank increasing at a rapid rate, they had to get creative and include new securities in their purchasing programme, hence the inclusion of covered bonds and municipal bonds in their new QE programme. The measures taken didn't just stop there, however. The bank will also offer out Kr500bn to companies via banks to ensure that a credit shortage will not exacerbate the economic impacts of the virus any further. The Riksbank will offer up to Kr500bn against collateral for onward lending at a 0% rate (variable and fixed to the repo rate which is also predicted to stay at 0% for the foreseeable future) for up to 2-years. Further measures announced: Reduce the lending rate on overnight loans to banks from 0.75 to 0.2 percentage points above the repo rate. The repo rate remains at zero. Offer banks to borrow an unlimited amount of money on a weekly basis against collateral at three months' maturity at an interest rate of 0.2 percentage points above the repo rate. Increase flexibility with regard to the collateral banks can use when they borrow from the Riksbank, which will, among other things, give banks more scope to use mortgage bonds as collateral. The countercyclical buffer rate, the amount of capital to be held on the balance sheet of banks, is to drop from 2.5% to 0% in order to pre-emptively avoid a credit crunch. The Riksbank has also announced that they are prepared to take further measures and supply liquidity even between scheduled meetings, while purchases of bonds by non-financial institutions may also be considered.  Given the size and the scope of these measures, it is unlikely the Swedish central bank will dive back into negative rates after they fought long and hard to return the repo rate to 0%. The impact will be supportive of the economy, especially the retail sector given the loan support, and reiterates the global narrative that central banks will continue to deploy all tools at the zero lower bound to provide ample liquidity to support the economy. However, once the dust settles and conditions return to normal, the measures put in place by the Riksbank are likely to keep the currency pinned at weaker levels as the central banks purchasing crowds out potential foreign investment. The krona has sold off over 1.5% against a surging US dollar today, while it is, in fact, flat against the euro on the day. EURSEK chart   USDSEK   Author: Simon Harvey, Market Analyst at Monex Europe.   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. Lees Meer

Fear dominates FX as equities see worst day since 1987 Black Monday

Fear dominates FX as equities see worst day since 1987 Black Monday

The rout in equity markets was the largest since Black Monday in 1987, dwarfing what was seen last Thursday in the volatile session, sparking discussion whether benchmarks should be closed after trading in certain sub-sectors in Europe was halted. Lees Meer

Fed goes nuclear to suppress dollar demand and mitigate economic impact from virus

Fed goes nuclear to suppress dollar demand and mitigate economic impact from virus

The Federal Reserve has taken the extraordinary step of slashing interest rates a full percentage point, restarting quantitative easing, and announcing a host of additional liquidity and credit easing measures. Lees Meer

BoC, RBNZ and Fed latest to take rates closer to lower bound

BoC, RBNZ and Fed latest to take rates closer to lower bound

The measures included the Federal Funds rate being cut to its historical lower bound, $700bn of asset purchases, and a host of liquidity and credit measures including coordinated USD swap provision to other central banks. Lees Meer

Hunt for dollars hurts everything in its path

Hunt for dollars hurts everything in its path

The dollar reigned supreme yesterday as liquidity dried up in swap and treasury markets with investors ditching foreign assets and running for safety in US dollars. Lees Meer

ECB opts for scalpel instead of bazooka as Lagarde delivers train wreck press conference

ECB opts for scalpel instead of bazooka as Lagarde delivers train wreck press conference

Christine Lagarde has opted for a scalpel instead of a bazooka. Although there is merit to the ECB’s targeted lending approach, today is likely to go down in history for Lagarde’s fateful and possibly catastrophic remarks about sovereign spreads. Lees Meer

ECB expected to unveil further stimulus despite tool kit emptying

ECB expected to unveil further stimulus despite tool kit emptying

Christine Lagarde and the Governing Council of the European Central Bank will face up to the emerging coronavirus shock to the European economy and sky-high expectations for monetary stimulus. The euro has softened slightly after reaching a one year high earlier in the month. Lees Meer

The Bazooka Budget

The Bazooka Budget

Today’s measures show not just synchronisation between the Treasury and Bank of England, but massive coordinated fiscal and monetary stimulus. Sunak was keen to emphasise this coordination early in his speech; instead of merely taking policy action at the same time, the BoE and treasury have clearly built their response to be synergistic, particularly in targeting support to businesses. Lees Meer

BoE sends message of policy synchronization with Treasury, setting stage for historic budget

BoE sends message of policy synchronization with Treasury, setting stage for historic budget

The Bank of England has cut its policy rate by 50 basis points this morning, slightly surprising markets but failing to move the needle much for sterling. Lees Meer

Bank of England synchronises surprise 50bp cut with spring budget spending spree

Bank of England synchronises surprise 50bp cut with spring budget spending spree

Sterling is trading higher this morning, despite a surprise 50 basis point rate cut from the Bank of England. The BoE cut rates and announced additional measures to support lending to small and medium enterprises. Lees Meer

Stimulus from Trump et al brings rationality back to markets

Stimulus from Trump et al brings rationality back to markets

Trump is due to meet with representatives from both houses later today to discuss potential tax breaks and support for workers on hourly wage contracts “so they don’t get penalised for something that isn’t their fault”. Lees Meer

JPY has woken up

JPY has woken up

As economic and financial risks to the economy intensify, markets are looking to Japanese fiscal and monetary policy for an aggressive response. Lees Meer

UK budget set to blow the doors off

UK budget set to blow the doors off

Receptive market conditions, changing political ideologies, and the coronavirus shock all mean that this week’s UK budget is likely to see Rishi Sunak open the fiscal taps and allow the UK deficit to increase.  Lees Meer

ECB must ease – but has limited options

ECB must ease – but has limited options

G7 finance ministers and central bank heads may not have officially agreed to a synchronised monetary response at last week’s conference call, but the US Federal Reserve’s 50 basis point inter-meeting cut has made the issue of coordination moot. Lees Meer

Coronavirus fears forces a race to the bottom

Coronavirus fears forces a race to the bottom

Monetary policy has been the global economy’s front-line of defence against the spread of COVID-19, with fiscal support only now beginning to trickle through outside of Asia. Lees Meer

A concerned SNB will prevent further CHF overvaluation despite US Treasury vigilance

A concerned SNB will prevent further CHF overvaluation despite US Treasury vigilance

With CHF trading close to three-year highs against the euro and upside pressure building on the currency from global risk-off moves, SNB intervention remains likely despite surveillance by the US Treasury, limiting the extent to which we believe the franc can rally in the coming periods. Lees Meer

Market turmoil continues as oil markets head for price war

Market turmoil continues as oil markets head for price war

Oil markets slumped over 30% on open, marking the largest slide since the US war with Iraq in 1991, as Saudi officials planned to open the taps after Russia refused to support the cartel’s plan to cut oil production. Lees Meer

US yields tumble as stocks remain under pressure

US yields tumble as stocks remain under pressure

The dollar continues to trade on the back foot today with February’s Nonfarm Payroll release in scope. Treasury yields continued to fall in Asian trading today. Lees Meer

Tentative signs of USD softening against safe carry trade targets

Tentative signs of USD softening against safe carry trade targets

The dollar has traded on the back foot this morning, with modest losses coming against GBP and NZD in the G10 space and KRW, MYR, and TYD elsewhere. This pattern is consistent with a modest improvement in risk appetite relating to open, developed economies. Lees Meer

USDCAD and Bank of Canada

USDCAD and Bank of Canada

Yesterday's Bank of Canada meeting poses the greatest short-term risk to our outlook. Governor Stephen Poloz is currently in a precarious position; cut by 50 basis points and risk inflating house prices further or cut by 25 basis points and run the risk of currency appreciation unwinding the stimulus. Lees Meer

Jay Powell takes out the big guns with intra-meeting cut not seen since 2008

Jay Powell takes out the big guns with intra-meeting cut not seen since 2008

The Fed’s surprise rate cut was the first outside of a regular monetary policy meeting since 2008, and was accompanied by a press conference where Fed chair Jerome Powell said the US economy remained strong, but that the early indicators of the virus’s impact had worsened the outlook and prompted a rate cut. Lees Meer

FOMC cuts rates outside of a meeting for the first time since 2008

FOMC cuts rates outside of a meeting for the first time since 2008

Jay Powell and the Fed have taken the warning financial markets have given about coronavirus over the past weeks to heart and brought out the big guns with a 50bp intra-meeting rate cut. Lees Meer

Markets weigh more rate cuts as RBA sets the pace

Markets weigh more rate cuts as RBA sets the pace

The Australian dollar saw modest strength overnight as the Reserve Bank of Australia cut its Bank Rate by 25 basis points and warned of a “significant effect” from the coronavirus outbreak on the nation’s economy. Lees Meer

Murmurings of fiscal action in Germany

Murmurings of fiscal action in Germany

With the euro attempting a nascent recovery last week in the face of a worsening virus shock, and the ECB seemingly resistant to short term policy easing, hopes of a fiscal response from the eurozone’s largest economy came in to focus last week. Lees Meer

The Reserve Bank of Australia must weigh coronavirus shock against tailwind from rising house prices

The Reserve Bank of Australia must weigh coronavirus shock against tailwind from rising house prices

With AUDUSD reaching fresh decade lows last week and house prices rising, the RBA has considerable tail winds to weigh against the incoming coronavirus shock at Tuesday’s meeting. Lees Meer

Bank of Canada preview – wiggle room may dissipate by April’s meeting

Bank of Canada preview – wiggle room may dissipate by April’s meeting

Next week’s Bank of Canada meeting is arguably too soon to see a rate cut from Governor Poloz, but swap markets have aggressively priced in a greater than 50% probability on Friday afternoon alone. Lees Meer

Cracks finally show in US dollar as markets expect FOMC cuts driven by virus shock

Cracks finally show in US dollar as markets expect FOMC cuts driven by virus shock

As the virus outbreak spread to new countries and hopes of containment faded last week, the US dollar finally began to weaken against certain currencies, including low yielding G10 partners like EUR, CHF and JPY. Last week’s price action in global macro markets was consistent with intensifying risk aversion, coupled with increasing expectations of rate cuts from the FOMC. The strong performance of the euro in particular may have been also driven by the unwinding of carry trades funded in the single currency. To illustrate the importance of market expectations of Fed easing as a trigger for last week’s limited USD sell-off against EUR and JPY, we point to forward pricing of overnight index swaps dated for the second future Federal Reserve meeting. The current contract indicates the effective forward rate available after the April FOMC meeting – an effective guide to market expectations of Fed policy. For most of February, the dollar continued to appreciate, particularly against EUR and JPY. Over this time period, no rate cuts were priced from the Fed as US data remained firm despite the worsening global shock. The 21st of February offered the first signs of the global shock affecting US producers, with the US Markit Composite PMI contracting for the first time since October 2013. Pricing of the April FOMC meeting began to show some hints changing expectations shortly after the PMI release. The following Monday the 24th, US equity markets began to sell off rapidly, and the US yield curve became significantly more inverted over the 3 month 10 year horizon. Over the course of the following week, market expectations for a rate cut from the FOMC began to build rapidly and are now pricing in more than a full rate cut as early as March.   Dollar Strength Eases as Markets Price FOMC cuts February 21st – the date of the Markit Flash PMI release – marked by vertical orange line When viewed in the context of a growing and worsening global virus outbreak, we believe the inversion of the US yield curve points towards a rate cut from the FOMC either at the March or April meetings. With markets fully pricing a rate cut as early as March, failing to deliver would represent a marginal tightening in financial conditions. This is something the FOMC will likely shy away from given the worsening global macro risks of coronavirus and the sudden cooling in US data. The prospect rate cuts has not yet showed up in Fed speak, although last week’s comments from Fed Governor Lael Brainard in support of flexible inflation targeting added to the dovish atmosphere.   US Yield Curve inverts over 3m-10y horizon   This week’s US data offers further information on the extent to which virus fears are affecting US confidence and may potentially add to further volatility in markets given heightened sensitivity to data showing the effects of the coronavirus of late. Final Markit PMIs on Monday 14:45 will offer a revision to the disappointing flash figures released on the 21st. ISM PMIs will also be released the following day. The US labour market has been robust to multiple confidence shocks over the past decade, and so it’s unlikely Friday’s non-farm payrolls report will offer much for USD bears, although as always the release is a red-letter event for the dollar.   Author: Ranko Berich, Head of Market Analysis at Monex Europe.     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. Lees Meer

China PMIs: Time to address the elephant in the room

China PMIs: Time to address the elephant in the room

While a slowing global economy due to the impacts of the coronavirus and its containment is a well known narrative, markets have still grappled with how to price it. Lees Meer

Markets resume battle against virus with central bank policy on the front-line

Markets resume battle against virus with central bank policy on the front-line

GBP Sterling has joined the rest of the G10 in the small overnight rally seen against the US dollar, after a historically volatile past week for markets, amid worsening coronavirus fears. Boris Johnson and the Government will have a busy week, as trade negotiations with the EU begin this morning, and the Prime Minister chairs […] Lees Meer

NZ economy enjoys tail winds, but NZD rally contingent on coronavirus shock easing

NZ economy enjoys tail winds, but NZD rally contingent on coronavirus shock easing

New Zealand’s economic outlook stabilised in Q4 2019 after a plunge in business confidence earlier in the year due to US-China trade tensions. Combined with a moderately optimistic tone from the RBNZ and our base case for modest weakness in the US dollar, this led us to take a bullish view on the Kiwi dollar in 2020 in our last global outlook. Lees Meer

NOK faces coronavirus fears but should outperform in H2 on domestic data

NOK faces coronavirus fears but should outperform in H2 on domestic data

The Norwegian krone has sold off over 6% against the US dollar since the start of the year predominantly due to a deterioration in the external climate. The downturn in global growth prospects due to the coronavirus outbreak has not only fueled further dollar strength but also resulted in a softer euro. Lees Meer

Fundamentals remain good for AUD, provided coronavirus shock dissipates

Fundamentals remain good for AUD, provided coronavirus shock dissipates

Australia’s economic outlook began to improve in Q4 2019 - a change the Reserve Bank of Australia described as a “gentle turning point” after a significant slowdown over the course of the year. Lees Meer

Yen should strengthen modestly on the back of fiscal support

Yen should strengthen modestly on the back of fiscal support

A positive rebound in the global backdrop for the second half of the year, along with an expected domestic growth pick-up, should underpin the currency rally, while the USD strength gradually fades. Lees Meer

US economy remains robust, but the FOMC determinedly remains on the defensive

US economy remains robust, but the FOMC determinedly remains on the defensive

The US economy remains robust by most measures, having weathered last year’s trade war shocks to register 2.1% annualised growth across both Q3 and Q4 2019. Lees Meer

Loonie and BoC face fresh external growth concerns

Loonie and BoC face fresh external growth concerns

Market events since the publication of our 2020 outlook have forced us to revise our short-term USDCAD forecast upwards. Our 2020 outlook, written back in December, discussed how USDCAD would break the $1.30 barrier in the second half of 2020 should the US and China sign a phase-one trade deal. While the narrow trade deal was signed and the loonie broke the $1.30 barrier in the early part of January 2020, in part due to rising tensions in the Middle East spurring oil prices higher, the rally didn’t prove sustainable. A double whammy of a dovish Bank of Canada meeting on January 22nd and news of the coronavirus outbreak in China reversed sentiment in the Canadian dollar. USDCAD soon found itself trading in the $1.32 range, with the $1.33 barrier falling shortly after. A further deterioration in risk appetite now sees USDCAD trading up near $1.35. Given the fact that recent FX pricing has been driven by exogenous and unpredictable shocks, we maintain our view of a stronger Canadian dollar in the longer-run due to the structural outperformance of the Canadian economy relative to other developed markets. However, the ensuing impacts of the coronavirus on the global economy have forced us to trim our bullish CAD expectations in the short-run, with risks skewed towards a further weakening of the Canadian dollar. CAD Forecasts   External headwinds have re-emerged in the shape of the coronavirus In December’s meeting, with a narrow trade deal seemingly on the table, the Bank of Canada struck an optimistic tone that led to markets trimming the prospect of an insurance rate cut in the near future. However, the optimism wasn’t shared by the Governing Council in January’s meeting due to slowing economic activity in Q4 threatening the bank’s outlook coming into the new year. The dovish tone struck by Governor Poloz the second time around led to the largest daily USDCAD move year-to-date, with the currency pair jumping half a percentage point open-to-close. With domestic macroeconomic conditions already a concern, external headwinds to the economy, which previously took the form of US-China trade tensions, re-emerged in the repackaged form of the coronavirus. Initially, the Canadian dollar weathered the storm that faced many open economies linked to commodity markets as investors flocked to safer assets. The higher yield on Canadian government debt propped up the loonie, but this support was short-lived. The impact of the virus on tourism expenditure and oil prices pushed USDCAD above the $1.33 barrier, which it previously failed to break before oil prices dipped below $50.   Chart: US-CA 2-year yield spread points to a loonie rally should the BoC remain on hold and risk appetite improve   FX markets have priced the growth shock more aggressively than fixed income markets, which view March’s meeting as too premature to expect a rate cut. The probability of a rate cut implied by Overnight Index Swaps has barely moved since the last Bank of Canada meeting, with swap markets still pricing a roughly 50% chance of a 25 basis point rate cut in April’s meeting. We maintain that despite a slowdown in growth in Q4, the Canadian economy continues to grow at a resilient but low level, supported by a tight labour market. Preliminary activity data for Q1 suggests that concerns of lower domestic activity look stretched. However, this view is subject to change should official data from China highlight a more substantial slowdown in global growth which will likely drag on economic activity domestically. With Canada’s economy exposed to external growth conditions, data for February will prove key in assessing the impact the coronavirus had on domestic activity, and therefore predicting the next steps taken by the BoC. That being said, we believe the bar to further monetary easing is high, a view fixed income markets are similarly sharing, due to fears of spurring a housing bubble. We expect BoC policy to follow a similar pattern to that of 2019 – dovish tones without a material adjustment.   Chart: OIS pricing of rate cuts in the next two BoC meetings have barely changed since the January 22nd meeting despite the increasing risk of a coronavirus induced slowdown   Without another substantial demand-side shock we believe WTI will remain supported around the $50 level, conditional on further cuts by OPEC in March. Crude markets have arguably priced in the ensuing fall in demand from the coronavirus outbreak, with the epidemic shaving nearly $10 off the price of a barrel of WTI. With OPEC+ weighing up further production cuts conditional on Russia’s agreement, we believe oil prices have likely bottomed out for the time being. Oil prices are a major risk to the loonie outlook. However, the length of the containment programme in China is key for assessing how entrenched the demand shock truly is. Additional risks come in the form of production cuts, which are not a foregone conclusion. Neither additional cuts, nor the extension of the current policy have been confirmed by officials. Market participants are now looking to the March OPEC meeting to provide more clarity on the issue. A lower oil price not only hinders Canada’s current account, but also investment in the industry. This was the theme for much of 2019 and could further drag on economic activity if sustained.   Author: Simon Harvey, FX Market Analyst at Monex Europe.      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. Lees Meer

Domestic data should underpin SEK but short-term risks prevail for the krona

Domestic data should underpin SEK but short-term risks prevail for the krona

Our SEK calls remain mostly intact from our 2020 outlook, with just a minor upwards revision to USDSEK to account for the deteriorating global growth outlook. However, our adjustment for a weaker krona is lower than our euro adjustment, ultimately leading to a downwards revision in EURSEK. Lees Meer

Macro data, coronavirus, and EU-China trade will be the key themes for Q1

Macro data, coronavirus, and EU-China trade will be the key themes for Q1

Recent eurozone data flow has been poor, and the coronavirus outbreak presents an additional downside risk to the eurozone. Lees Meer

UK Economy in good place for whatever comes in Q1

UK Economy in good place for whatever comes in Q1

The recent fall in GBPUSD may look like more Brexit-related losses for the pound, but in reality the decline from around 1.32 at the beginning of February to 1.2900 this week has been mostly driven by the US dollar. Lees Meer

Global markets convulse with risk aversion

Global markets convulse with risk aversion

Another day, another EURUSD rally. At first glance, it may seem like the pair is ignoring the risk-off environment, with the eurozone economy likely vulnerable to the global growth shock. Lees Meer

Sterling sells off on latest brinkmanship from Boris

Sterling sells off on latest brinkmanship from Boris

As outlined in earlier speeches, the mandate is a bid for absolute control over UK standards for competition, environmental standards, labour rights, and the other areas that the EU has insisted must be subject to “level playing field” provisions. Lees Meer

Dollar sustaining losses on bets that the Fed will lower rates in March

Dollar sustaining losses on bets that the Fed will lower rates in March

The dollar continued to firm throughout yesterday’s session as coronavirus fears weighed on markets for yet another day. The greenback’s fortunes have been reversed somewhat in this morning’s trading session, however, with euro and SEK leading the line in the G10 rally. Lees Meer

Rand rallies despite upwards revisions to debt trajectory

Rand rallies despite upwards revisions to debt trajectory

Following the release of February’s medium-term budget statement, the South African rand reversed its losses early in today’s session to sit half a percentage point higher on a day where markets battle a heightened risk environment and the dollar continued to firm across the board. Lees Meer

Markets convulse as coronavirus outbreak teeters on the brink of becoming a pandemic

Markets convulse as coronavirus outbreak teeters on the brink of becoming a pandemic

The greenback took on some water yesterday as Monday’s aggressive pricing of coronavirus risk marginally unwound. The theme of dollar strength is back with a vengeance today. Lees Meer

Las bolsas internacionales entran en pánico por nuevos brotes del coronavirus

Las bolsas internacionales entran en pánico por nuevos brotes del coronavirus

Las bolsas europeas vieron ayer su mayor desplome intra-diario desde la debacle del referéndum del Brexit en 2016, en un día dominado por el pánico sobre los brotes del coronavirus en Italia. Lees Meer

Bloodbath for bullish investors as equity markets roiled by fresh virus concerns

Bloodbath for bullish investors as equity markets roiled by fresh virus concerns

US equity markets were slammed in yesterday’s session, with the day’s trading best described as a bloodbath. Fresh coronavirus fears sparked more risk-off selling and following the US PMI data, equity markets began to fear the worst. Lees Meer

Mboweni’s medium-term budget in scope for South African investors

Mboweni’s medium-term budget in scope for South African investors

Following an underwhelming State of the Nation Address by South African President Cyril Ramaphosa two weeks ago, market participants turn their eye to Finance Minister Tito Mboweni’s medium-term budget announcement on Wednesday 26th. Lees Meer

Euro weighed down by economic sentiment and a strong US dollar

Euro weighed down by economic sentiment and a strong US dollar

Last week, the currency fell through a 34-month support level against the dollar, after plummeting nearly 3% since the beginning of February and recording fresh lows for 13 consecutive sessions. Lees Meer

IFO Data Release Exceeds Expectations

IFO Data Release Exceeds Expectations

This morning’s IFO data release saw upside surprises in all three readings. Being based on ~9000 survey responses from German firms in different sectors, the IFO reading is a leading indicator of any turning points in the German economy. Lees Meer

USD dominant as markets focus on worsening regional macro risk

USD dominant as markets focus on worsening regional macro risk

The dollar’s bull run accelerated last week, as official data indicated the coronavirus outbreak in China was beginning to slow, but regional outbreaks in South Korea and Japan worsened, and investor risk appetite once again deteriorated. Lees Meer

Eurozone PMIs rise due to coronavirus supply chain disruption

Eurozone PMIs rise due to coronavirus supply chain disruption

The euro managed to resist further depreciation against the greenback yesterday, while global currencies traded with a risk-off tone and the greenback advanced elsewhere. This morning, the pair continued to bounce back from yesterday’s lows. Lees Meer

UK consumer spending uptick comes after noisy adjustments

UK consumer spending uptick comes after noisy adjustments

January’s retail sales report suggests that UK consumers are joining in the burst of optimism experienced by businesses in the new year. Lees Meer

Carnage for JPY as low growth and virus outbreak cause sentiment reversal

Carnage for JPY as low growth and virus outbreak cause sentiment reversal

The Japanese yen was utterly routed yesterday, and with its losses continuing this morning USDJPY is trading 2% higher than Tuesday’s lows. The weakness makes sense in the wider context of Japan’s macro-economy. Lees Meer

Canada’s inflationary overshoot may not last

Canada’s inflationary overshoot may not last

Today’s CPI release saw headline inflation overshoot expectations by 0.1 percentage points to post a print of 2.4% in January – the highest reading in 15 months. However, the loonie’s reaction was relatively muted. Lees Meer

Euro remains under relentless pressure as data disappoints

Euro remains under relentless pressure as data disappoints

The euro tumbled further yesterday as German ZEW economic sentiment slumped to 8.8 in February compared to the 21.5 consensus. EURUSD reached its lowest level since April 2017 in the hours after the release. Lees Meer

Sterling down over fears that UK-EU relations are about to turn frosty

Sterling down over fears that UK-EU relations are about to turn frosty

Sterling began to lose ground yesterday, with its losses accelerating this morning as the US dollar gained against most currencies. Some of the recent losses in sterling may be attributable to a combative speech in Brussels by David Frost. Lees Meer

Markets vs. the Fed: An ongoing debate

Markets vs. the Fed: An ongoing debate

The Federal Reserve fund futures prices show that markets are expecting more easing from the Fed this year, probably as a result of the macroeconomic impact of the coronavirus outbreak. Lees Meer

UK PMIs follow Javid resignation

UK PMIs follow Javid resignation

Sajid Javid’s resignation as Chancellor of the Exchequer last week triggered a rally in sterling, as markets began to speculate that his departure suggested an increased likelihood of fiscal stimulus from Boris Johnson’s government. Lees Meer

Coronavirus risk and souring data weigh on the euro

Coronavirus risk and souring data weigh on the euro

Last week, the single currency breached its 33-month low against the US dollar due to weak economic data and coronavirus fears. In the data, industrial production figures for December were especially disappointing. They came after January’s PMI surveys had suggested the slowdown in production had bottomed out. Eurozone industrial production plummeted for the 14th month in a row in December, with the 4.1% YoY contraction marking the sharpest downturn in the sector since the financial crisis. The euro proved highly sensitive to these releases, which is understandable considering the poor performance of the manufacturing sector in 2019 prompted fears of a recession. Output in the manufacturing sectors remains the weak point in the eurozone’s growth outlook. Fears about the coronavirus outbreak’s economic impact added to the downside risks facing the domestic economy, fueling arguments for looser policy from the ECB. Dovish expectations have arisen yet again despite ECB President Lagarde recently re-voicing her concerns about the negative side effects of prolonged monetary stimulus. Lagarde’s comments would normally have suggested that the central bank is searching for a path to normalization. Investors have begun to mull the idea of further stimulus as per the worsening economic outlook and EU states resistance to increase fiscal support. Although we believe the ECB is not yet on track for another policy move after the September stimulus package, hard macroeconomic data and forward-looking indicators that are released this week could prove pivotal in determining the ECB’s next move.   The Eurozone macroeconomic picture looks grim Euro area GDP grew by 0.1% QoQ in Q4 2019, marking its slowest quarter for growth since 2013. The drag was mainly driven by contractions in the French and Italian economies along with economic stagnation in Germany. Spain, on the other hand, was the lone economic outperformer among the four largest eurozone economies. Overall, the latest GDP print implies annual growth of 1.2% in 2019, notably lower than the 1.9% in 2018 and below the average rate of growth over the last decade. While the euro area economy remains underpinned by resilient domestic demand from the strongest labor market since the financial crisis, deteriorating external demand continues to drag on growth. The global industrial slump on the back of heightened US-China trade tensions has only amplified the weaknesses in the eurozone economy due to its large exposure to global demand conditions. While a similar divergence between services and manufacturing output in 2019 didn’t topple the eurozone economy, the widening spread between the two sectors suggests the bloc may enter negative growth in Q1 without a material improvement in manufacturing activity. Coronavirus fears have largely erased any positive sentiment stemming from the January PMIs and the US-China trade deal. Even though the eurozone has limited exposure to Chinese supply chains when compared to other countries, the potential damage of the outbreak on the eurozone economy is threefold. First, the contraction in Chinese demand on the back of a slowing economy could trim eurozone exports in Q1 – China is the bloc’s third largest trading partner after the US and UK. Second, among all European sectors, the automobile industry is one of the most exposed to Chinese inputs. The automobile sector is also highly sensitive to global demand conditions, with weaknesses in that industry spilling over in the bloc’s growth as a whole in 2019. Finally, the impact on market sentiment on the already weak euro area economy could have ample consequences in investment, even if the shocks from China on demand and supply were to revert in the short-run. This is likely to concern the ECB who are already battling record low inflation expectations. Chart: Falling German bond yields, a poor macro backdrop and political risks are dragging EURUSD down   Rumblings of Merkeldämmerung offer more uncertainty for Germany Even under normal circumstances, the sudden resignation of a Christian Democratic Union party leader and presumptive heir to Angela Merkel would have caused a storm in German politics. In light of the current malaise in the German economy, last week’s resignation by Annegret Kramp-Karrenbauer and the race to replace her takes on even more significance, both for the German economy and the eurozone as a whole. AKK’s resignation was triggered by regional elections in the state of Thuringia, where the CDU voted with the far-right Alternative for Germany (AFD) party to install a state premier. The range of possible outcomes in German politics is now very broad and uncertain and includes the possibility of resignation by Angela Merkel. This could lead to a collapse in the ruling coalition and a general election. In the immediate future, the CDU must choose a party leader and a candidate for the Chancellorship. Options range from continuity candidates such as Armin Laschet, to potentially more conservative politicians such as Friedrich Merz. The direction the CDU ultimately takes on issues such as European integration, the ECB, and fiscal policy could have a profound impact on the German economy.   Chart: Markets are beginning to expect policy action from the ECB   Even though no policy changes are likely in the coming weeks, any further developments in German politics will have the potential to have wider impacts in European markets.   Author: Olivia Alvarez Mendez, FX Market Analyst at Monex Europe in Madrid.      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. Lees Meer

Presidents’ day calm belies ongoing risks

Presidents’ day calm belies ongoing risks

With the US enjoying the Presidents’ day holiday today the dollar is trading with low volatility to most major currencies. EM currencies are in the green after the Chinese central bank lowered one year lending rates and offered medium term lending facilities to borrowers. Lees Meer

China’s new diagnostics rattle risk sentiment

China’s new diagnostics rattle risk sentiment

The greenback saw another swathe of strength yesterday as a new methodology in spotting virus infections in China caused not only 14,480 more cases to be diagnosed, but also a risk-off rally as fears of a more entrenched outbreak rippled through markets. Lees Meer

Sterling rallies on hopes that Sajid Javid’s resignation heralds a Trumpian spending spree

Sterling rallies on hopes that Sajid Javid’s resignation heralds a Trumpian spending spree

This morning’s cabinet shuffle turned out to be exiting after all, when Chancellor Sajid Javid resigned after reportedly being asked to replace his staff of advisors with choices picked by Number 10. Lees Meer

Risk appetite goes into reverse on virus case count revision

Risk appetite goes into reverse on virus case count revision

Yesterday saw the dollar come under pressure as risk appetite was improving, but this trend reversed overnight after China changed the way coronavirus cases are counted, resulting in an increase of more than 15,000 cases. Lees Meer

Markets subdued in risk climate with no coronavirus updates

Markets subdued in risk climate with no coronavirus updates

Improving risk appetite weighed on the US dollar yesterday and overnight, as the greenback sold off against NZD, AUD, RUB, and most other major currencies. Fed Chair Jerome Powell testified to lawmakers from the House on monetary policy and warned of risks to the global economy from the coronavirus infection. Lees Meer

Sajid Javid sets out UK’s ambition for equivalence agreement with EU

Sajid Javid sets out UK’s ambition for equivalence agreement with EU

GBP saw a slight rally yesterday and overnight, amid a major leak of part of the UK’s negotiating position in trade talks with the EU, and ahead of today’s release of gross domestic product data. The “opening position” of the UK was snapped by a long-lens camera while an unreleased briefing paper was carried into downing street, and is being widely reported on in UK newspapers. Lees Meer

OPEC undecided heading into the weekend

OPEC undecided heading into the weekend

Last week’s emergency three-day OPEC meeting in Vienna in response to news that China’s oil demand has fallen by 20% due to the coronavirus lockdown has yet to bear fruit. Lees Meer

Risks to the downside as RNBZ must navigate China slowdown

Risks to the downside as RNBZ must navigate China slowdown

The RBNZ surprised both our expectations and the market by holding rates unchanged in November, but must now navigate the risks of coronavirus to New Zealand’s small open economy. Lees Meer

PBOC toolkit prevents panic

PBOC toolkit prevents panic

Chinese authorities rolled out a now-familiar crisis response strategy to prevent panic in financial markets last week. Repo rates were cut by 10 basis points on Monday, and a net 550 billion yuan was pumped into repo markets over the first two days of the week. CNY was allowed to depreciate above the 7.00 level, with the PBOC leaning against further depreciation. Officials hinted at further measures, such as changes to Required Reserve Ratios, further rate cuts, and fiscal easing. On the whole, the response was effective: equity markets stabilised after Monday, USDCNY rallied and CNY was no longer reliant on the PBOC using its daily fix for support by Friday. The risk rally was less impressive globally, with USD remaining well bid against most major currencies, but on the whole, it seems global markets judged the PBOC’s measures sufficient to prevent a wider sell-off of the sort seen in 2015 or 2019. With markets avoiding a wider panic for now, focus will likely turn to the likely slowdown in the Chinese economy, prospects for containment, and the global impact on other markets and central banks. Chart 1: USDCNY and GS estimate of countercyclical factor     A lower countercyclical factor suggests the PBOC is setting the daily fix higher than it otherwise would be, in order to support CNY. First estimates of the impact of Coronavirus on Chinese and global GDP were released last week by various forecasters. Global central banks such as the Reserve Bank of Australia and the Monetary Authority of Singapore also began to respond to the possible effects of the virus. Despite the wide and often heroic assumptions required to make these estimates, they are relevant for FX and global markets. While relevant, they should be taken with a pinch of salt due to the fact that the duration and extent of the outbreak remains unknown: Using the 2003 SARS outbreak as a baseline, Goldman Sachs economists estimate a reduction in Q1 GDP, scaling up the impact by 50% relative to the 2003 SARS outbreak, due to wider travel restrictions. They estimate Q1 GDP growth will decelerate to 4% year on year, down from a previous forecast of 5.6%. This is equivalent to a 0.5% contraction in Q1 GDP. Growth is then expected to accelerate rapidly, reaching 6% y-o-y by the end of 2020. Pantheon Macroeconomics are expecting a more dramatic 1% quarter on quarter fall, followed by a strong pickup through to the end of the year. The Monetary Authority of Singapore loosened its monetary policy stance by allowing SGD to weaken, describing the change as being “in line with the weakening of economic conditions as a result of the outbreak of the 2019 novel coronavirus”. Reserve Bank of Australia Governor Philip Lowe warned that the impact of coronavirus would be worse than the 2003 SARS outbreak, while also reiterating the RBA’s relatively upbeat policy stance and explicitly saying that he considered the risks of further cuts to outweigh any benefits. Assuming that the effect of coronavirus is a sharp shock to Q1 growth in China, followed by a rapid recovery due to aggressive stimulus measures, there is a high potential for volatility in economic growth and financial markets globally. Central banks will make different policy responses based on domestic conditions, creating the potential for heightened FX volatility, particularly in countries with significant exposure to the Chinese economy. In addition to headline exports to China, economies reliant on particularly sensitive industries such as retail or tourism are likely to be more susceptible. Crude oil prices also have high potential for volatility, with OPEC’s supply response another key unknown variable at this point.   Chart 2: Exports to China as a Percentage of GDP, 2018   Author: Ranko Berich, Head of Market Analysis at Monex Europe.      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.   Lees Meer

The Riksbank’s return to zero – was it wise?

The Riksbank’s return to zero – was it wise?

Next week marks the first Riksbank meeting since December’s decision to hike the repo rate by 25 basis points and return policy to 0%. While the central bank signalled heavily that the return to zero would occur in either of the December or February meetings, the decision to hike rates sooner rather than later wasn’t unanimous. Lees Meer

PBOC liquidity injection supports risk appetite

PBOC liquidity injection supports risk appetite

Overnight China’s central bank began providing targeted lending aimed at enabling banks to provide cheaper and faster credit to businesses involved in combating the Coronavirus outbreak, and against shoring up risk appetite globally. Lees Meer

Greenback roars with NFP in scope

Greenback roars with NFP in scope

The weighted DXY index of USD vs major currencies is trading at a high for the year, and is on track to enjoy its biggest weekly gain since September. Today’s non-farm payrolls report, therefore, will be facing high expectations when it is released at 13:30 GMT. Lees Meer

Dollar takes no prisoners as risk climate continues to shift

Dollar takes no prisoners as risk climate continues to shift

The dollar broadly firmed for another trading day yesterday with the broad dollar DXY index reaching levels not seen since late November. The data likely helped the greenback as risk sentiment continues to chop and change in markets as survey-based measures of output and employment change showed the strong state of the US economy. Lees Meer

Markets lick wounds as PBOC measures deemed ample, for now

Markets lick wounds as PBOC measures deemed ample, for now

Sterling began yesterday with an extension of its sell-off from Monday, reaching fresh lows in the morning, but then stabilised and managed to end the day marginally higher against the dollar and euro. On the whole, the US dollar has been on the back foot against AUD, SEK and NOK since yesterday’s tentative risk rally began, but advancing against CHF and JPY. Lees Meer

PBOC shores up risk appetite

PBOC shores up risk appetite

The Chinese renminbi gained some strength overnight as Chinese stocks stabilized after the largest recorded market loss following the virus outbreak and boosted sentiment. Lees Meer

Banxico easing likely to continue

Banxico easing likely to continue

The Mexican peso outperformed in the first month of 2020, being one of the only four currencies in the EM space with positive spot returns against the dollar. Lees Meer

Sterling after Brexit

Sterling after Brexit

The pound continues to face two serious risks that are hampering a rally: ongoing political uncertainty, and murky growth prospects. Lees Meer

FX pricing of coronavirus has been limited but all may change

FX pricing of coronavirus has been limited but all may change

The coronavirus has rocked global financial markets this week although the effect has been limited in the G10 FX space compared to equity and commodity pricing. Lees Meer

CNY weakens but no signs of collapse

CNY weakens but no signs of collapse

The dollar is on firmer ground this morning after a partial sell-off at the end of the month on Friday. Data, politics, and geopolitics will create a rich mix of narratives this week for global markets, with the dollar caught up in the middle as usual. Lees Meer

Dollar strengthens with Trump acquittal and PCE in scope

Dollar strengthens with Trump acquittal and PCE in scope

The dollar had a mixed session yesterday, posting substantial losses against haven currencies and the pound while exacting a pound of flesh from commodity-linked G10 currencies. Lees Meer

Monetary Policy Committee majority not persuaded by “risk management considerations”

Monetary Policy Committee majority not persuaded by “risk management considerations”

The key factors driving the majority of the MPC voting to hold rates seems to have been the obvious ones: Brexit risk has fallen and the US and China have signed a trade truce. Lees Meer

Divisive BoE meeting could pressure sterling further

Divisive BoE meeting could pressure sterling further

Sterling traded lower again yesterday and continues today’s session in the same vein with the most divisive Bank of England policy meeting this afternoon at 12:00 GMT. Options markets are split almost 50/50 on whether the Monetary Policy Committee will cut rates by 25 basis points. Lees Meer

Fed meeting sparks little interest as coronavirus still prevalent

Fed meeting sparks little interest as coronavirus still prevalent

In usual times the FOMC decision tonight would be a major market event, however, committee members have signalled heavily that they have become more tolerant to an overshoot in inflation. Lees Meer

Loonie stands out in commodity-linked FX space as risk-off move sweeps markets

Loonie stands out in commodity-linked FX space as risk-off move sweeps markets

The loonie buffeted the slide in oil markets and the heightened risk-off climate relatively well yesterday when compared to other open economies in the G10 whose current account is exposed to commodity prices. Lees Meer

Volatility returns to USDCAD

Volatility returns to USDCAD

The Canadian dollar was one of the more exciting G10 currencies against the dollar last week with only the Norwegian krone and British pound proving more volatile. Lees Meer

FOMC in focus: on hold until proven otherwise

FOMC in focus: on hold until proven otherwise

This week’s FOMC meeting not only marks the first of eight meetings in 2020 but also the first time Jerome Powell faces both media and markets since the phase one trade deal was signed. Lees Meer

Monetary Policy Committee likely to hold rates in knife-edge decision

Monetary Policy Committee likely to hold rates in knife-edge decision

Thursday’s MPC decision will be the least clear cut in years, with UK data uncertainty and global conditions providing compelling arguments for both an “insurance” rate cut and for no change. Lees Meer

Global risk appetite sneezes

Global risk appetite sneezes

G10 FX markets are trading with a risk-off feel this morning, with the US dollar up against much of the G10, but down versus JPY and flat against EUR. The parameters of the virus’s epidemiological characteristics, namely its virulence and fatality, will be in focus this week, as will the extent of its international contagion. Lees Meer

UK businesses breathe a sigh of relief after election

UK businesses breathe a sigh of relief after election

The general election seems to have made a world of difference in UK business sentiment, which picked up sharply in January after what appears to have been a dismal fourth quarter. Lees Meer

Bank of England bets rest on today’s PMI releases

Bank of England bets rest on today’s PMI releases

Sterling traded in a tight range yesterday after showing a significant bout of strength on Wednesday due to November’s strong labour market data. The Bank of England rate decision at the end of the month remains the only game in town for the pound with swap markets pricing in a 50% probability of a rate cut. Lees Meer

Loonie lower post BoC but a rate cut isn’t a given

Loonie lower post BoC but a rate cut isn’t a given

The Monetary Policy Report highlights this shift in risk parameters for the BoC’s outlook from external headwinds to more domestic factors in 2020. Despite the financial market reaction, the projections don’t suggest a rate cut is a foregone conclusion before Poloz’s term ends. Lees Meer

EUR lower after Lagarde dodges big questions

EUR lower after Lagarde dodges big questions

The euro has reached fresh lows for the year after Christine Lagarde’s second press conference as ECB President. The ECB kept rates on hold, and formally announced the scope of its monetary policy strategy review. Lees Meer

Central banks take over market focus

Central banks take over market focus

The euro continued its two-way price moves yesterday and remained well within this week’s range, but saw a short drop after US President Donald Trump threatened to impose “very high” tariffs on car imports from the EU if the bloc does not agree to a trade deal. Lees Meer

Dollar firms on contagion risk and proposed tax cuts pre-election

Dollar firms on contagion risk and proposed tax cuts pre-election

The dollar generally trader higher amid a risk-off tone and falls in crude oil prices that weighed on NOK, AUD, NZD and CAD, as well as most EM currencies. US news flow offered plenty of engaging side plots yesterday. Lees Meer

Labour market data complicates UK macro picture even further

Labour market data complicates UK macro picture even further

The UK data picture is exceptionally murky currently, and today’s jobs figures only complicate things further. Last week saw expectations of rate cuts from the Bank of England soar after a weak GDP print, poor retail sales, and dovish comments from MPC members. Lees Meer

Markets return post-US holiday to a busy political schedule

Markets return post-US holiday to a busy political schedule

US markets were shut yesterday for Martin Luther King Jr day. The dollar spent much of the day in the green but ultimately ended up marginally lower upon closing. President Trump’s impeachment proceedings begin today under a rushed timetable outlined by US Senate Republican leader Mitch McConnell in his four-page resolution late last night. Lees Meer

USDCAD outlook remains intact as trade deal remains on pause

USDCAD outlook remains intact as trade deal remains on pause

While the pair broke the psychological barrier in the early part of January due to rising geopolitical tensions in the Middle East and its ensuing impact on oil markets, USDCAD has since resumed trading above $1.30 leaving the base case intact. Lees Meer

A week of bad data and dovish MPC commentary builds expectations of rate cut

A week of bad data and dovish MPC commentary builds expectations of rate cut

Last week’s UK data and MPC commentary overwhelmingly pointed towards a rate cut from the Bank of England. Lees Meer

Euro looking steadier as ECB likely to strike upbeat message this week

Euro looking steadier as ECB likely to strike upbeat message this week

The ECB’s first meeting of 2020 will be different to those of 2019, and not just due to the prospect of Christine Lagarde’s scarves replacing Draghi’s ties at press conferences. Based on recent data, meeting minutes, and macro conditions, the Governing Council is likely to strike a more optimistic tone and focus on the upcoming policy review. Lees Meer

Data calendar set to drive FX volatility on Davos week

Data calendar set to drive FX volatility on Davos week

Leaders in business and politics will gather in Davos this week for the annual World Economic Forum. Unlike previous years which have featured much anticipated, watershed geo-political speeches from Trump and Xi Jinping, the focus this year will be on the environmental crisis. Lees Meer

South African Reserve Bank unexpectedly cuts rates

South African Reserve Bank unexpectedly cuts rates

The South African Reserve Bank unexpectedly cut rates yesterday alongside downgrades to both their CPI and growth projections from November’s forecasts. The central bank’s quarterly projection model now forecasts the repo rate to close out there year at 6.1%, suggesting another 25 basis point cut is soon to come in Q4. Lees Meer

Chinese economy stabilises as markets continue to digest “phase one”

Chinese economy stabilises as markets continue to digest “phase one”

The dollar traded in a tight range overnight, as markets continued to digest the implications of the US-China “phase one” trade deal. Equity markets took the news quite well, with the S&P 500 reaching a fresh all-time high. Lees Meer

CBRT cut rates but at a slower pace than 2019

CBRT cut rates but at a slower pace than 2019

The Central Bank of the Republic of Turkey cut rates today by 75 basis points as the cutting cycle continues but at a dramatically slower pace than in 2019. Today’s decision marked the smallest cut in policy rates under Governor Uysal since he was appointed governor in July. Lees Meer

Markets cheer US-China trade deal

Markets cheer US-China trade deal

The dollar mostly traded in right ranges last night after the US and China put pen to paper on a trade agreement in Washington, with the Kiwi and Aussie dollars enjoying some gains versus the greenback. Lees Meer

CPI undershoots emboldening dovish pricing

CPI undershoots emboldening dovish pricing

Sterling continues to trade on the back foot this morning as the growing flock of doves at the Bank of England gets their second piece of confirmatory data to suggest a rate cut at the end of the month may be a done deal. Lees Meer

US set to maintain tariffs until November election passes

US set to maintain tariffs until November election passes

People familiar with the Trump administration announced yesterday that the US are unlikely to reduce the pre-existing tariffs levied on China, until after the November election subject to the conditionalities of the phase one deal being met. Lees Meer

US removes currency manipulator designation from China

US removes currency manipulator designation from China

The US dollar traded mixed overnight, with CNY the biggest gainer after signs of progress emerged from US-China trade talks. It really does seem like white smoke is rising from Washington as the US and China are closing a phase one trade deal. Lees Meer

Sterling trades heavy as GDP data confirms BoE concerns

Sterling trades heavy as GDP data confirms BoE concerns

Following comments from Bank of England policy setter Vlieghe over the weekend, markets are beginning to turn their attention back to the economic data in anticipating whether the central bank will embark on a 25 basis point cut on January 30th.  Lees Meer

Sterling slumps as markets digest heightened rate cut probability

Sterling slumps as markets digest heightened rate cut probability

Sterling was firmly on the back foot last week after Bank of England policy makers began to come out in numbers in support for looser monetary policy. Gertjan Vlieghe, an external Monetary Policy Committee member said his on whether to lower rates by 25 basis points to 0.5% would depend on survey data released towards the end of the month. Lees Meer

US nonfarm payrolls to capture market’s attention today

US nonfarm payrolls to capture market’s attention today

Recent US-Iran tensions have somewhat eased in financial markets, despite headlines this morning suggesting that a Tehran missile could have been responsible for the Ukrainian plane crash last Wednesday. Lees Meer

EU-UK post-Brexit red lines are drawn ahead of final vote on the divorce deal

EU-UK post-Brexit red lines are drawn ahead of final vote on the divorce deal

The first face-to-face meeting between Prime Minister and EU Commission President Ursula von der Leyen captured the attention of investors, with rival red lines being set out for the post-Brexit era. Lees Meer

Iran retaliation on US forces has a short-lived market reaction

Iran retaliation on US forces has a short-lived market reaction

Iran hit US-Iraqi bases with more than a dozen missiles, as a response to an air strike last Friday that killed the top Iranian general Qassem Soleimani. The direct attack on American forces on the region risks further action from President Donald Trump, which tweeted “All is well” in the aftermath of these events. Lees Meer

Markets keep a cautious eye on geopolitical tensions

Markets keep a cautious eye on geopolitical tensions

Tensions continue to dominate the landscape of financial markets, with events ramping up from the killing of the Iranian military general Soleimani last Friday and the Iranian withdrawal of the 2015 nuclear deal on Sunday. Lees Meer

Geopolitical rumblings affect risk appetite

Geopolitical rumblings affect risk appetite

The dollar is marginally higher this morning as markets digest this weekend’s geopolitical events. The Iraqi Parliament voted to expel US troops, putting pressure on the incumbent government to draw up a timeline. However, Trump announced that the US would not withdraw until Iraq repaid the cost for a US built airbase. Lees Meer

Risk off move after US drone strike raises Middle East tensions

Risk off move after US drone strike raises Middle East tensions

Sterling price action has mostly been quiet so far this week, and this morning the pound has followed most of its peers lower against the US dollar on fears of rising risk of conflict in the Middle East. Lees Meer

Trump tweets a New Year’s gift to markets

Trump tweets a New Year’s gift to markets

The dollar has had a quiet start to the year, opening broadly unchanged against the most significant global currencies. The week’s data calendar resumes today, with Challenger job cuts released at 12:30 GMT. Lees Meer

Dollar closes 2020 on back foot, amid hints of white smoke from Beijing

Dollar closes 2020 on back foot, amid hints of white smoke from Beijing

The dollar weakened against most of its major currency peers yesterday, although the pace of the decline was not as dramatic as at the end of last week. Chinese state media reported that Vice Premier Liu He is set to lead a delegation to Washington this Saturday. Lees Meer

Soggy US dollar collapses

Soggy US dollar collapses

Sterling was among the biggest winners from last week’s broad US dollar weakness, and regained much of its recent losses since the general election. Lees Meer

USD soggy over the festive period

USD soggy over the festive period

The dollar has drifted broadly lower against G10 companions over the course of the week, but the move has less impact with many market participants away from their desk. Lees Meer

No Christmas cheer for sterling

No Christmas cheer for sterling

Holiday cheer and a lack of data releases were no barrier to further sterling losses yesterday, as the pound fell for a fifth straight day against the US dollar, its longest such streak since May. Lees Meer

Markets trade without guidance as festive period begins

Markets trade without guidance as festive period begins

The show must go on sings the single currency. The eurozone is one of the only economies to continue releasing data across the festive period. Today’s release saw a welcome increase in import inflation for the economy which currently prints inflation readings well below the ECB’s target. Lees Meer