Nieuws en Analyses

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CE3 Update: Inflation is running hot, but the NBP appears fireproof

As inflation concerns intensified over the course of the last two quarters, many central banks in the EM space were forced to hike their interest rates in order to prevent their currencies from selling off and to mitigate further price pressures. The effects were visible in the currencies of Hungary and the Czech Republic, which managed to steer away from weakening against the euro and dollar since March this year. Lees Meer

US dollar on back foot after a broad surge following August’s retail sales release 

The dollar went on the offensive yesterday after continuing claims data fell and August’s retail sales data printed in positive territory despite expectations of a 0.7% contraction. The retail sales data was not only better than the median forecast, but the most optimistic economic forecast submitted, and sent the dollar on the offensive. Lees Meer

Euro weighed down by ugly European car sales 

Car production is being weighed down by the global semiconductor shortage that carmakers have warned will extend well into next year. The declines were broad-based, with Germany, France, Italy and Spain all seeing significant drops over the past months. Lees Meer

Canadian CPI jumps above 4%, but BoC set to look through it

Headline CPI rose to 4.1% YoY in August, the fastest pace since March 2003, while on a sequential basis, inflation rose only 0.2%, down from a 0.6% MoM increase in July. The loonie took the CPI data largely within its stride as it briefly dipped below the 1.2670 handle. Lees Meer

UK inflation jumps to highs not seen since 2012, putting floor underneath GBP 

This morning’s CPI data saw headline inflation rise from 2% in July to 3.2% in August, above expectations of an increase to 2.9%, while the core measure also rose substantially from 1.8% to 3.1%. On a monthly basis, which removes favourable base effects, inflation showed rapid sequential growth; CPI rose 0.7% MoM after printing flat in July. Lees Meer

Antipodean update: light at the end of the tunnel, but risks remain elevated

Our Monex analysts expect NZD to outperform in the short-run due to diverging monetary policy with Australia, however, a more stable macro backdrop in February 2022 should enable the RBA to start ramping up its normalisation cycle and thus AUD should benefit from a delayed tailwind. Lees Meer

All eyes on US CPI before next week’s Fed

For today, all eyes are turned to the US CPI inflation release at 13:30 BST as markets deem this critical for next week’s Federal Reserve decision. As the Fed naturally gets closer to their QE taper decision, their assumption that base effects and bottlenecks are largely to blame for the current price growth and that these are transitory will be tested by markets. Lees Meer

Dollar starts off with mild bid as Covid concerns linger from the weekend

The dollar starts this week with a mild haven bid against the majority of G10 and EM currencies as data over the weekend points towards rising cases in parts of the state of Victoria (Australia), Auckland (New Zealand), and Putian (China). Treasuries open this morning marginally higher at the front-end, but have failed to follow the general move higher across the back-end with eurozone and Asian 10-year yields rising this morning. Lees Meer

Inflation to sit top of mind next week

Next week’s data calendar focuses heavily on inflation data in major developed market economies, while core CPI readings from Poland and inflation expectations data in Turkey will be viewed amid historically high CPI readings. Lees Meer

Another bumper jobs figure for Canada

Canada’s economy added another 90,200 jobs in August after posting a similarly elevated 94,000 net employment gain in July. This now leaves the overall employment just 0.8% below February 2020 levels, the closest it has been since the pandemic began. The data has compounded positive sentiment around the loonie. Lees Meer

Beleid ECB blijft komend jaar zeer ruim ondanks PEPP verlaging

Hoewel de Europese Centrale Bank heeft aangekondigd om het tempo van het Pandemic Emergency Purchase Programme bescheiden te gaan afbouwen, blijft het monetaire beleid van de Europese centrale bank het aankomend jaar zeer ruim. Dit zei valuta-analist Ima Sammani van Monex Europe voor de camera van ABM Financial News. Lees Meer

UK economic recovery stalls in July 

Data this morning showed that the UK economy expanded at just 0.1% MoM in July, undershooting expectations of a 0.5% expansion and slowing from June’s 1% growth rate. The data not only undershot market economists’ expectations, but also those of the Bank of England. The central bank expects the economy to expand 3% in Q3, but with third quarter growth starting on such a weak base, it looks unlikely that their forecast will be met. Lees Meer

EURUSD mildly ticks up after statement confirms slowdown in PEPP 

The euro enjoyed today’s decision by the European Central Bank to reverse engines and moderately slow down net purchases under the Pandemic Emergency Purchase Programme (PEPP), even though this was widely expected by markets as all signs were pointing to slower purchases. Lees Meer

ECB to put PEPP reduction into dovish disguise 

Markets are all prepped for the European Central Bank’s monetary policy decision today, and expectations are high for it to be a more exciting meeting than any of the previous ones over the last half year. As always, the decision will be announced at 12:45 BST and is followed by a press conference at 13:30 BST. Lees Meer

Bank of Canada holds fire but maintains positive outlook

With today’s BoC statement completely following our expectations, our expectations of the normalisation timeline remains intact. We still see the Bank tapering their QE programme by a further C$1bn at October’s meeting, where the idea of delayed growth is likely to be formalised within their latest forecasts, with a final taper pencilled in for December. Lees Meer

String of central bank decisions begin with Bank of Canada today 

For today, all focus turns to the Bank of Canada who will likely tread carefully given the deterioration in the outlook since July as well as the presence of the election campaign. We expect the Bank to hold off on tapering its QE programme until the October meeting, as today’s meeting won’t be accompanied by a monetary policy report. Lees Meer

Social care plan at the forefront for GBP

Today, PM Johnson will announce his long-awaited social care reform plan, risking major backlash within his own party as it is expected to be financed by a hike in national insurance that will increase revenue by £10bn. The political backlash may weigh on the pound, especially if it magnifies into a scenario where a vote of no confidence becomes a plausible scenario. Lees Meer

Dollar recovers after Friday’s NFP miss as markets focus on earnings

The dollar is trading mildly in the green against G10 peers this morning amid a minor correction off Friday’s lows after the US jobs report showed an underwhelming increase in the Nonfarm Payrolls. US hiring posted the smallest jobs gain in seven months, challenging a potential decision by the Fed to begin tapering their asset purchases by year-end. Lees Meer

Central banks set to stretch hawkish wings 

Next week, price action in US fixed income markets will continue to garner a lot of market attention, while increasingly hawkish central bank developments will also be in scope. Of note is the Reserve Bank of Australia, who we expect to press on with tapering their QE programme, the Bank of Russia who are expected to hike by 50bps, the National Bank of Poland who will battle with record high inflation, and the European Central Bank. Lees Meer

Nonfarms undershoots expectations, confirming previous market pricing

With a total of 235,000 jobs added in August, compared with 1.053m in July, the employment gain undershot expectations by 500,000. While some of the edge was taken off by the July figure being revised up from 943,000 to 1,053m, the lacklustre job growth in August now makes the prospect of the Fed’s median dot signalling a 25bps hike as early as 2022 a distant possibility.  Lees Meer

Nonfarm Payrolls set to be decisive for G10 price action 

Expectations for today’s payrolls data is lower than that for July’s data, however, with downside shocks to the ADP number, risks are building for a negative surprise to the 725k expectation. Given the markets aggressive pricing, especially in the dollar, the retracement should be sizable if either the net employment number or wage growth figure surprise substantially to the upside. Lees Meer

Hot hand rand

The South African rand has remained a rollercoaster currency over the past few weeks. Having broken above the 15.00 handle for the first time since March to hit a high of 15.39 in late August, the rand is now grabbing market participants’ attention due to its aggressive retracement. Lees Meer

Eurozone hawks and US labour market speculation dominates G10 price action

To which, today’s eurozone producer price index data for July may be of interest, especially among the debate of how sustainable the current inflationary overshoot will prove. Released at 10:00 BST, the data is expected to show a rise from 1.4% to 1.8%.  Lees Meer

Monex Europe September 2021 FX Forecasts

We continue to envisage mild US dollar weakness across the G10 but expect volatility to remain abundant as liquidity conditions improve. In September alone, markets will have to contend with elections in both Canada and Germany, a rate hike from Norway, and pivotal central bank meetings in the US and Europe. Lees Meer

Canada’s economy contracts in Q2 as third wave takes its toll

Canada’s GDP data for June showed the economy expanded 0.7% MoM as provincial lockdown measures were scaled back, but a downward revision for May (-0.3% revised to -0.5%) resulted in the economy contracting in Q2 by 0.3% QoQ. With the economy weathering the tightening of measures relatively well during the third wave and sitting just 1.5% below pre-pandemic levels, today's data is unlikely to unsettle the Bank of Canada. Lees Meer

G10 market back focusing on yields as European bonds lead charge in yesterday’s session

GBP The pound was trading as much as 0.34% higher against the US dollar yesterday until month-end flows at the 4pm fix hammered it back down again to post marginal losses on the day. This morning, moves in the G10 are limited as FX traders continue to take cues from fixed income markets as bond […] Lees Meer

Dollar on back foot as risk is supported despite bleak Chinese PMI data

The US dollar continues to decline in today’s session as bond yields fall and risk is supported in markets. This comes despite China’s official composite PMI falling into contractionary territory of 48.9, driven by the non-manufacturing PMI falling to 47.5 as tighter restrictions are imposed due to rising Covid cases. Lees Meer

Markets continue to price the fallout from Powell’s dovish speech 

The US dollar has garnered all of the attention recently as markets digest the latest Fed commentary and shift their expectations of policy normalisation. This was especially the case on Friday when Chair Powell stated that the Delta variant posed increased uncertainty to the economic outlook Lees Meer

Focus shifts from Jackson Hole to US jobs data

In the week beginning Monday 30th August, the market’s emphasis shifts to monitoring the severity of the latest Covid-19 waves driven by the delta variant, the economic impact they are having via timely data points, and August’s Nonfarm Payrolls data next week. Fixed income and money markets will be taking their cues from the latest payroll data in order to price expectations of September’s Fed meeting. Lees Meer

Fed Chair Powell seen avoiding taper announcement due to deteriorating health backdrop

This morning’s session has seen the dollar unwind part of yesterday’s rally as traders become more confident that Jerome Powell won’t announce the formal tapering timeline at today’s speech at 15:00 BST. Lees Meer

Covid weighs on risk rally as Jackson Hole begins 

This morning the dollar edged higher after Covid headlines were back on the table with US hospitalisations having reached levels last seen in January. A full agenda of tomorrow’s speakers at Jackson Hole will be released by the Kansas City Fed today, and until then, markets may continue their wait-and-see approach as the Jackson Hole risk event draws closer. Lees Meer

Softer decline in US Durable Goods Orders underpin US dollar

US Durable Goods Orders fell by less than expected in July, with transportation and defense being the main drag on the figure. Transportation equipment, which was down after two consecutive monthly increases, drove the decrease down by $1.7bn to reach $75.3bn. Lees Meer

Risk rally more subdued on Wednesday ahead of Jackson Hole

The risk rally started to run out of steam this morning and the dollar pared back a small part of its losses against commodity currencies and EMFX this morning. Multiple narratives are in play at the moment, with progress on fiscal spending in the US allowing progress on the US$550bn infrastructure package being weighed against the sharp rise in US Covid cases. Lees Meer

G7 meeting in focus while risk rally extends

Prime Minister Boris Johnson will convene G7 leaders today on urgent talks on the situation in Afghanistan. Johnson wants the US-led evacuation from Afghanistan extended beyond August 31, although British defence minister James Heappey admitted that the Taliban had “a vote” on whether to allow the evacuation to continue from Kabul airport into September. Lees Meer

Market sentiment rebounds ahead of Fed Symposium

On Friday, the DXY index reached levels last seen in November 2020 as Covid headlines continued to dominate markets, however this was reversed in the afternoon after a less hawkish tilt from the Fed’s Robert Kaplan pushed back expectations for policy normalisation. Improved risk sentiment has taken the wind out of the USD rally over the weekend, extending Friday’s theme after Kaplan’s comments. Lees Meer

Jackson Hole arrives after a volatile week for macro conditions

With a tentative macroeconomic backdrop, next week’s data is likely to have a larger market impact than usual, especially with the quantity of preliminary PMI releases for August. The Fed’s annual Jackson Hole symposium should provide markets with a bit more clarity as to its tapering timeline. Lees Meer

UK retail sales fall in July due to transitory factors and Covid concerns

The release of this morning’s retail sales data for July, which saw sales volumes contract by 2.5% MoM relative to expectations of 0.2% growth, pushed the pound slightly lower against the dollar as it compounds falling consumer confidence metrics and tentative risk sentiment after Covid and growth concerns reappeared in markets during yesterday’s session. Lees Meer

USD soars as risk sentiment crumbles on vaccine efficacy and hawkish FOMC minutes

It wasn’t just the Fed’s July meeting minutes and hawkish commentary around the building consensus for tapering to begin in 2021, but reports of reduced vaccine efficacy after 6 months and further regulation shifts in China that ultimately crippled the markets risk appetite. Lees Meer

Dollar surging as Fed hints at actual tapering this year

The past few sessions have all been about the broad US dollar, and yesterday wasn’t any different. With the release of the latest FOMC meeting minutes, dollar gyrations drove volatility in FX markets. While Fed officials said in July’s meeting that the conditions for tapering haven’t been met yet, some officials signalled that the tapering of their QE programme could commence as early as this year. Lees Meer

July CPI not enough to move the Bank of Canada

Headline CPI came in hot for July, rising from 3.1% in June to 3.7% YoY, above expectations for a reading of 3.4%. However, despite the headline figure climbing towards the Bank of Canada’s forecasted inflation peak of 3.9%, which they don’t expect to be reached until late Q3, we expect the Bank to maintain its stance that the inflationary overshoot is transitory. Lees Meer

Just a prudent delay by the RBNZ

The main takeaway from the Reserve Bank of New Zealand's policy meeting was the still hawkish tone struck, signalling that today’s decision was not a change of course in the policy path, but a prudent delay. The RBNZ decision today triggered a knee-jerk downside reaction in the currency, but the Kiwi dollar quickly rebounded to sit higher on the day. Lees Meer

EURUSD in focus as it sits just above the 1.17 support level prior to Fed meeting minutes

Traders will continue to focus on EURUSD as it sits near a strong psychological support level as they await a strong enough catalyst for the pair to plump fresh 16-month lows. Should Fed officials strike a hawkish enough tone in tonight’s meeting minutes, that may be enough to push US yields higher and send EURUSD plummeting lower.  Lees Meer

Demand for UK workers remains, but wage pressures moderate

This morning’s headline labour market data for the 3-months heading up to June can be viewed as disappointing, with only 95,000 jobs added in the rolling quarter. Taken on the whole, the labour market data continues to be choppy and show a very murky picture for economists to dissect. Lees Meer

Trudeau calls snap election, loonie unfazed at present

The worst kept secret was finally confirmed over the weekend as Prime Minister Justin Trudeau met with Governor General Mary Simon to dissolve Parliament and set a snap election for September 20th. The announcement of a firm election date over the weekend had a limited impact on financial markets this morning. Lees Meer

Hungarian forint to be anchored by MNB hiking cycle

With the external backdrop stabilising somewhat in early August, the July rate hike did cause a reversal in the bearish HUF trend as markets had expected the MNB to hike rates by only 20bps. Given our expectation for inflation to rise further towards year-end, a sustained hiking cycle is set to remain in place from the MNB, which we see as a key driver for a further recovery in the forint. Lees Meer

Risk sentiment sours further, propping up both dollar and yen 

FX markets have awoken this morning to another bout of USD strength as events over the weekend chipped away at risk sentiment. While Afghanistan took the news headlines, the spillover into market price action is limited, however, it compounds the already weak risk sentiment driven by higher Covid cases in Asia and slowing Chinese economic data. Lees Meer

CHF Outlook: Renewed Swiss Franc overvaluation is put to the test

The Swiss Franc appreciated sharply over the last five months, with the EURCHF cross sitting near the 1.07 handle in early August, a far cry from the 1.11 handle it was trading at in March. The CHF appreciation resembled the dynamics in 2020, when markets tested the Swiss National Bank's tolerance for a strong currency, with the central bank finally drawing the line at the 1.05 level. Lees Meer

Meet the Monex marathon team | Sam Fowler

The Monex marathon team is training for the 2021 Virgin Money London Marathon to help raise money for the incredible charity Get Kids Going! To track the team’s incredible journey in the run-up to the big day, we will be releasing a fortnightly interview with each of the runners. Lees Meer

Partial shutdown in Chinese container ports raise fears for further supply chain disruptions

The Meishan Terminal of China’s Ningbo-Zhoushan Port, one of the world’s busiest container ports, shut down yesterday after an employee was tested positive. The closure of the terminal increases concerns that ports around the world may face similar outbreaks going forward, adding pressure to the already disrupted supply chains and leading to a recurrence of last year’s Covid nightmare when restrictions slowed the flows from goods from food to electronics. Lees Meer

CBRT holds rates, emphasis on Erdogan’s response 

By holding rates at 19%, the CBRT has effectively tried to appease both the President and financial markets. The retention of the line in the statement that rates will be held in positive real territory also keeps the status quo for the lira, however, questions remain over how long the central bank can continue treading water Lees Meer

Sterling price action muted after Q2 GDP falls on expectations

This morning, the pound focused on UK GDP from Q2, which hit expectations of 4.8% growth. The UK economy expanded by 1% in June month-on-month, with the expansion driven largely by the reopening of the services sector. The index of services recorded 1.5% growth in July compared with expectations of 0.9%. Lees Meer

Miss in core print sends USD lower

The US dollar rose along with Treasury yields ahead of today’s crucial CPI release as the robust Nonfarms figure from July paved the way for expectations that the Fed may have to take its foot off the gas sooner rather than later. Today’s CPI report showed categories sensitive to reopening moderated, posting their weakest contribution to the MoM gain since March. Lees Meer

Markets turn to US CPI after mixed commentary from Fed members

For today, all eyes turn to US consumer price inflation figures at 13:30 BST, as today’s data will add to the series of figures that help markets gauge the speed and sustainability of the economic recovery and in turn the Federal Reserve’s reaction function. Given the high focus on today’s release, the market impact is likely to be significant, regardless of whether the reading undershoots or overshoots expectations. Lees Meer

Markets remain focused on Fed pricing amid a desolate data calendar

The dollar continues to perform well after Friday’s run of strong US job figures solidified expectations for the Federal Reserve to take their foot off the gas sooner than suggested in the July meeting. Yesterday’s robust job openings data supported this, as the surprising increase of 590k new jobs led to a record total job openings of 10.1 million in June. Lees Meer

Markets continue to digest Friday’s robust US jobs data 

An incredibly strong labour market report on Friday saw the dollar enjoy gains across the G10 currency board, particularly against lower-yielding currencies, as the data supported the view that the Federal Reserve would be able to taper its QE programme later this year. Total Nonfarm employment now stands 5.7mln below its pre-covid level - a large gap to fill but clear progress has been made, especially given jobs gained in July were spread broadly across most sectors. Lees Meer

To hike or not to hike, that is the question

Markets this week have largely focused on underlying growth conditions, FOMC speakers and Friday’s labour market data, with US bond markets sending conflicting signals to FX traders. Next week (9th – 13th August), the key pieces of data centre around rate decisions from Banxico and the CBRT, both of which have reasons to hike rates due to rising inflation but also have grounds to stay pat.  Lees Meer

Canadian employment underperforms, but it isn’t all bad

July’s employment data out of Canada saw the economy add 94,000 jobs. While on the surface, the slip looks seismic, the nature of the job additions and the stage in which the Canadian labour market recovery is at means the underperformance of the net employment data isn’t as concerning as the headline suggests. Lees Meer

Dollar on the offensive as bumper jobs number is delivered

The labour force participation rate came in at the expected rate of 61.7%, which is a good sign the drop in unemployment is representative of economic conditions, rather than a consequence of people leaving the labour force. Lees Meer

NOK Outlook: NOK rally more subdued with upside now priced in

The krone has underperformed since as the global economic backdrop deteriorated with the rise of the delta variant, offsetting the impact of the hawkish central bank. This meant NOK became an underperformer of the last couple of months. Lees Meer

Pivotal Nonfarm Payrolls data set to create sparks for financial markets 

The US dollar is trading moderately stronger ahead of today’s Nonfarm Payrolls report, with the DXY index increasing past yesterday’s peak to weekly highs. Minneapolis Fed Chief Neel Kashkari stated yesterday he is optimistic about the US labour market, although the country hasn’t yet made “substantial progress” on jobs. Lees Meer

Bank of England confirms hawkish disposition

The Bank of England today confirmed to markets that it was leaning on the hawkish side despite interest rates being held at 0.1% and the split on the decision to maintain the current QE programme sitting on the milder side of 7-1. Lees Meer

Bank of England set to give markets more forward guidance at today’s meeting 

GBPUSD could post a breakout and a new trend after today’s Bank of England meeting. Released at 12:00 BST, the initial policy statement and accompanying monetary policy report will garner the markets attention. Within the rate statement, investors will be looking at the vote split on ending the QE programme before the current year-end target. Lees Meer

GBP Outlook: Staying bullish on the pound over the medium-term

Headwinds are likely to persist over the coming month as Covid conditions remain volatile. Over the more medium-term, we expect GBPUSD to rally above the 1.40 handle on the basis of a more structural improvement in the growth outlook. Lees Meer

AUD outperforms after RBA kept the taper ball rolling, US data in focus

The Aussie dollar leads gains with NZD in the G10 today after the Reserve Bank of Australia reiterated its commitment to taper their QE programme from September to a rate of AUD$4bn a week from the current rate of AUD$5bn. Lees Meer

Monex Europe August 2021 FX Forecasts

With the economic backdrop stabilising somewhat towards the end of July as markets have finally priced in the latest wave of Covid-19 globally, August could arguably be plainer sailing for FX markets, although risks remain. Given the amount of uncertainties that still remain, we expect the dollar to remain broadly firm over the coming month before our expectation of further dollar depreciation plays out over the medium term. Lees Meer

Risk sentiment broadly stabilises ahead of Thursday’s Bank of England

With risk sentiment broadly supported in markets again this morning, with no detrimental news coming out over the weekend, the pound is floating higher against the greenback while European equities also remain bid. This week is likely to be a volatile one for GBPUSD as it looks to trade in a new higher range after last week’s rally. Lees Meer

Bank of England in focus after inflation overshoots and labour market progress

Next week, the focus will be on the Bank of England to announce its policy decision and comment on the recent inflation overshoots and recovery in the labour market. Lees Meer

Dollar loses ground after slip in Q2 GDP pushed back expectations for tightening

Yesterday’s slip in the Q2 GDP print from the US sent EURUSD back to levels last seen late June while losses against the Japanese yen were more limited due to the yen weakening simultaneously amid a stabilising risk environment. Lees Meer

Slip in US Q2 growth rate piles pressure on the dollar

With the dollar already under pressure today as the risk environment stabilises and markets embrace the dovish rhetoric from Fed Chair Powell yesterday, the announcement that the GDP release missed expectations by nearly 2 percentage points put the dollar under the pump some more. Lees Meer

Powell’s dovish message weighs on the dollar, US Q2 GDP in focus this afternoon

With markets concerned over the impact of the Delta variant on growth, the US 10-year declining to lows of 1.2%, and speculation of the Fed normalising policy in the near future, markets awaited the latest assessment from Chair Powell to guide their next steps. The meeting as a whole didn’t disappoint on this front. Lees Meer

Hawkish rate statement is dialled back by Powell, weighing on the dollar

The change to today’s rate statement led to a flurry of USD strength across the board which was driven by a spike in front-end yields as markets position for the likely announcement of the tapering timeline at either September or December’s meeting. Lees Meer

Slip in headline CPI trims CAD gains

The Canadian dollar has spent much of today’s European session retracing yesterday’s losses as events in China begin to stabilise. However, the release of June’s CPI data has trimmed the loonie’s rally as inflation data begins to moderate and embolden claims that the overshoot is in fact transitory. Lees Meer

EUR Outlook: EURUSD in range bound over summer

The recovery in the euro may hit a hurdle in the next six months as headwinds from policy intensify with both the ECB and Fed decisions set to thrust diverging policy stances back into focus for markets. Lees Meer

All eyes on Powell tonight for QE taper discussions

It’s Fed day today! The decision will be of importance to markets as they look for discussions around the tapering of the Fed’s asset purchase programme. Chair Powell has been clear in his devotion to the central bank’s dual mandate. Lees Meer

US durable goods in focus ahead of Wednesday’s FOMC decision

The dollar index is holding steady below recent peaks as risk sentiment remains subdued, with markets remaining weary of Wednesday’s FOMC decision, where the discussion around the tapering of asset purchases will take centre stage. Lees Meer

Risk-off mood sees high beta currencies pressured ahead of Fed

This week’s main market event will be the Federal Reserve’s monetary policy decision on Wednesday where the pace of the Fed’s bond-buying programme will be in focus as Chair Powell balances the downside risks from ongoing virus uncertainties with upside risks to inflation. Lees Meer

Q2 GDP data and the Fed are in focus amid a global third wave

Markets will pay close attention to commentary by Chair Powell and the Fed’s assessment of current conditions. A first glance at economic performance in advanced economies in Q2 is also pinned for the week, although growing fears over the coming months might cloud the impact positive GDP figures have on markets. Lees Meer

Retail sales beat fails to excite CAD

The release of May’s retail sales data failed to spark any volatility in the USDCAD pair despite the report highlighting a 0.9% beat relative to expectations and a preliminary reading of 4.4% growth in sales in June. Lees Meer

Inflation fears prompt updated forward guidance by CBR

Going into today’s Central Bank of Russia decision, markets knew to expect a significant rate hike, but the question was how large a hike this would be. The Russian ruble found modest support from today’s rate decision, while the lion’s share of the move occurred prior to the announcement. Lees Meer

Sterling weighed down by July PMIs

Sterling has sat firmly at the bottom of the G10 pile this morning with losses exceeding 0.25% against the dollar. While the rest of the G10 has incrementally recovered against the greenback over the course of the morning, sterling’s price action has been sluggish. Lees Meer

Lower rates for longer not welcomed by all ECB members

The European Central Bank added more conditions for policy normalisation in its monetary policy decision yesterday, outlining that the inflation outlook must reach 2% well ahead of the forecast horizon and must be durable at 2% for the remainder of the projection period. Lees Meer

ECB makes policy tightening less achievable

In line with the strategy review, the ECB’s statement is arguably net dovish despite the decision including no actual policy changes. Financial markets took the dovish interpretation from the ECB as a positive, with European stock indices holding near intraday highs while EURUSD breaks fresh ground to the upside. Lees Meer

Investors turn to pivotal ECB meeting after dovish strategy review

After three days of little data and no new broader macro trends failed to send the euro in new directions, today’s European Central Bank policy decision will be widely watched by markets in the hope that today’s session will pave the way for monetary policy debates over the summer and in September. Lees Meer

Markets resort back to yesterday’s playbook and head into the dollar

For G10 FX markets yesterday it was a case of more of the same, with the US dollar firming across the board, even against the Japanese yen this time. This morning, with little scheduled in the data calendar, markets have found comfort in resorting back to yesterday’s playbook with the dollar remaining robust against G10 FX markets.  Lees Meer

Markets resort back to yesterday’s playbook and head into the dollar

For G10 FX markets yesterday it was a case of more of the same, with the US dollar firming across the board, even against the Japanese yen this time. This morning, with little scheduled in the data calendar, markets have found comfort in resorting back to yesterday’s playbook with the dollar remaining robust against G10 FX markets.  Lees Meer

Global virus woes and US-China tensions keep safe havens buoyed

The prominence of the third wave of cases internationally stoked concerns that global demand won’t recover as aggressively as previously expected. Geopolitical tensions have been rising after the US accused the Chinese government of sponsoring domestic gangs in their cyberattacks against thousands of organisations including the likes of China. Lees Meer

Renewed risk-off market mood takes DXY to 3-month highs

This morning, a clear risk-off market mood kept the dollar buoyed as the Delta variant continues to spread globally, with cases mostly surging in Asia and Europe while there has been an uptick in the US as well. . As a result, the dollar index climbed to levels not seen since April. Lees Meer

ECB guidance to take centre stage next week, CBR set to hike rates

The ECB takes centre stage next week, with a revamped strategy review setting the tone for a persistently more dovish course of action in the months to come, while the CBR is set to hike rates further amid a light data calendar. Lees Meer

Mixed messages from Fed members keep markets guessing

James Bullard from the St. Louis branch urged for a tapering of asset purchases as the economy is booming, bringing forward expectations for a rate hike just a day after Fed Chair Jerome Powell’s testimony was released and cast a dovish tone. Lees Meer

US dollar hit by Fed Chair Powell’s cautious tone

In his semi-annual monetary policy report, Powell continued to cast a dovish tone and stated the central bank would deliver powerful support until the economic recovery is complete. Lees Meer

BoC: Markets weigh further C$1bn taper against cautious tone

Although today’s decision by the Bank of Canada to taper its QE programme by another C$1bn to reach C$2bn per week was widely expected by markets, the market reaction still was significant as the accompanying monetary policy report provided more cues. Lees Meer

Lira unfazed by widely expected CBRT rate decision

The lira held steady in the build-up to the event with little change after the announcement too, as most market participants expected the CBRT to hold rates steady today. Lees Meer

Strong CPI figures and higher 30Y yields support USD ahead of Powell

For today, all eyes are on Fed Chair Jerome Powell who will testify before the House Financial Services committee today to deliver the semi-annual monetary policy report to Congress at 17:00 BST. Lees Meer

Weathering the storm

We have maintained our view of a mild depreciation in the broad dollar over the coming 12-month period, but single out currencies that are likely to buck this broad trend as they are exposed to rising US real yields over this horizon. Lees Meer

All eyes on US CPI data ahead of tomorrow’s testimony by Fed’s Powell

The US CPI inflation data, which is scheduled for release at 13:30 BST, will be in focus for markets ahead of Federal Chair Jerome Powell’s testimony before the House Financial Services Committee on Wednesday, and the Senate Banking panel a day later. Lees Meer

US dollar remains well bid amid delta virus concerns

Risk sentiment turned sour this morning, driving high-beta G10 FX lower and safe haven currencies such as the US dollar higher as virus matters remained front and central. New daily Covid cases jumped by 45% in Sydney while the Netherlands tightened containment measures again. Lees Meer

Central banks in focus next week after Fed’s hawkish shift

Next week will be critical to assessing the way forward as a fresh batch of inflation data is released and several central banks face the press cameras. On the side, political developments might add excitement to markets. Lees Meer

Sterling weighed down by stalling recovery outside of hospitality industry  

Sterling sits under renewed pressure as UK growth data for May undershot expectations. GDP grew just 0.8% MoM, almost half what was expected at 1.5%, while April’s GDP was also revised down from 2.3% MoM to 2.0%. Lees Meer

ECB raises the bar for normalisation in the short-run, flexibility is the key for policy

Thursday's announcement by the European Central Bank can be perceived as net dovish in the short-term by markets, as the shift from an asymmetric target to a new symmetric 2% inflation target gives the central bank ample room to run accommodative monetary policy for longer without having to fight markets.  Lees Meer

All eyes on the ECB’s as it concludes its policy review 

The European Central Bank came out with an announcement last night that they will release a press statement and hold a press conference regarding the strategic review today, suggesting all governing council members found a consensus on key issues and the review has been concluded. Markets will be all over this today to find out how the bank will measure inflation. Lees Meer

Dollar enjoys risk-off market mood ahead of FOMC meeting minutes

Markets now await tonight’s meeting minutes from the Federal Reserve, which will be in greater focus than usual after June’s hawkish twist to the Fed meeting and the market response to last month’s dot plot. The dot plot, which projects interest rate expectations by individual fed members, signalled two rate hikes in 2023. Lees Meer

Improved risk appetite weighs on dollar, Antipodean currencies lead gains within G10

Focus remains on economic recovery stories outside of the US as markets gauge the risks of different virus variants delaying further reopening. With the dollar being gently offered ahead of tomorrow’s Federal Reserve meeting minutes, this trend may continue over the course of the day. Lees Meer

US holiday keeps markets quiet after Friday’s mixed US jobs report

EURUSD opened steady in light trading due to the US independence day holiday this morning. The US dollar is in limbo after Friday’s mixed bag of US labour market data allayed investor fears about a speedy introduction of policy normalisation. Lees Meer

Monetary policy in scope with FOMC minutes and ECB strategy review

This week (5th - 9th July), the meeting minutes from the Fed’s June meeting will be scoured by market participants as they try to gain a clearer view on future US interest rates, and the ECB’s Governing Council is set to also meet next week in Frankfurt to discuss the ongoing policy review. Lees Meer

Higher unemployment rate mitigates impact of elevated job gains

The lack of movement in the unemployment figures stifled the impact the net employment data had, as it doesn’t map over into emboldening calls for earlier rate hikes and higher US yields. The June employment data thus resulted in a weakening of the US dollar and a moderation in front-end Treasury yields.  Lees Meer

Dollar continues to firm ahead of key payrolls report

Any signs of sharp improvement in today’s data are likely to stoke expectations of earlier lift-off by the Fed and raise calls for announcing the QE tapering timeline in Q3. Expectations currently sit at 720,000 for today’s Nonfarm Payrolls data, which is released at 13:30 BST.  Lees Meer

Monex Europe July 2021 FX Forecasts

The dollar defied our expectations in June after the Federal Reserve surprised with a hawkish outlook on the US economy, signalling two rate hikes as early as 2023. We have adjusted our July forecasts to account for the more sensitive Fed reaction function, but broadly we expect the trend of mild dollar depreciation to continue. Lees Meer

Broad dollar continues to remain in focus as tensions over Taiwan begin to simmer

It was all eyes on the US dollar yesterday as it climbed higher yet again on month-end and quarter-end flows. The greenback surged across the G10 currency board, with the DXY index closing out Q2 well above the 92 handle at 92.448 - its highest level since the 8th of April. Lees Meer

Monex Europe’s Vaccine Distribution Chartbook | June 2021

The risks presented to the European outlook are similar to those in early 2021, when a surge of infections due to the alpha variant called for a new round of restrictions on activity. With that in mind, the balance of risks, remains heavily tilted to the downside. Lees Meer

Monex Europe’s Vaccine Distribution Chartbook | June 2021

The risks presented to the European outlook are similar to those in early 2021, when a surge of infections due to the alpha variant called for a new round of restrictions on activity. With that in mind, the balance of risks, remains heavily tilted to the downside. Lees Meer

Quarter-end flows to dominate price action amid quiet data backdrop

While the US dollar has been supported by haven bids over the past few days, generated by fresh concerns Covid-19 variants pose to the global economic recovery, it is expected to slump today on quarter-end and month-end flows. Lees Meer

Dollar bounces back as markets are hit by fresh Delta variant concerns

With concerns centered around the spread of the Delta variant and its resulting impact in parts of Asia, the dollar is likely to remain bid as US Treasuries also receive high demand from risk-off flows. Lees Meer

Sterling leads gains in G10 as Javid signals optimism over easing final restrictions

. This week for the pound the focus will predominantly rest with June’s flash manufacturing Purchasing Managers Index. With the manufacturing PMI released 4 days before the services and composite index, the data should give some indication as to how strong the UK’s economic recovery is heading into June after much of the economy reopened. Lees Meer

First Nonfarm Payrolls since Fed may cause significant volatility

Last week, volatility in FX markets was largely driven by the hawkish shift by the FOMC, as broad dollar moves drove price action in G10 currency pairs. This week, the focus remains largely on the US, with the release of the first Nonfarm Payrolls report since last week’s Fed meeting. Lees Meer

Dollar remains main driver in G10, but Bank of England weighed on sterling

The pound led losses against the dollar in the G10 space after the Bank of England cast a more dovish tone than markets were previously expecting. While the dollar traded mixed within the G10 space, taking losses against high beta currencies like NOK and SEK, it traded stronger against the likes of CAD and GBP. Lees Meer

A more dovish Bank of England reaction function weighs on sterling 

On the whole, the market reaction is telling of today's Bank of England meeting. The FTSE 100 enjoyed the Bank’s more optimistic outlook on the near-term recovery along with the commitment to keep policy accommodative, however, the same can’t be said about the pound. Lees Meer

Dovish Bank of England trekt Britse pond omlaag

In de aanloop naar de beleidsvergadering van de Bank of England (BoE) waren  markten al niet enthousiast aangezien er geen nieuwe macro-economische projecties en geen persconferentie zouden volgen na het rentebesluit - twee factoren die normaal gesproken de valutamarkten van enige volatiliteit voorzien. Lees Meer

Fed’s Bostic claims rate hike in 2022 with hawkish commentary lifting USD

Yesterday proved to be another indecisive day for the dollar as it broadly weakened prior to the afternoon of the European session before the latest bout of strength. Comments by Atlanta Fed President Raphael Bostic helped take the dollar higher. The focus will continue to be on Fed speakers today as more clarity around the shifting consensus is forthcoming. Lees Meer

USD pending further cues from FOMC members

Powell’s testimony sent the dollar higher on Tuesday night when he admitted that the spikes in prices were higher than the central bank had anticipated. The tip of the hat by Powell to higher price growth reminded markets that the Fed has incrementally shifted more hawkish, as seen in the last meeting’s economic projections. Lees Meer

GBP trims gains as services PMIs undershoot expectations 

While the manufacturing index moderated from 65.6 to 64.2, which was naturally expected as the manufacturing-led recovery eases globally, the services PMI undershot expectations substantially. Lees Meer

Fed commentary continues to dictate FX price action

While the dollar strengthened ahead of Fed Chair Jerome Powell’s long-awaited testimony before the House of Committee, the DXY index traded weaker overnight and this morning again. The moderation of the dollar strength comes after Powell admitted that although spikes in inflation have been larger than expected. Lees Meer

Powell’s testimony eyed after hawkish tones cast by Fed members on Monday

Comments from Fed Chair Powell ahead of today’s testimony to Congress also seek to temper expectations that the economy is running too hot and stimulus needs to be removed. Today, the dollar is firming once again as markets continue to be uncomfortable with how to trade the latest move by the US central bank. Lees Meer

Focus shifts to Fed speakers as markets gauge FOMC consensus towards normalisation

Markets this morning continue to trade in the wake of last week’s Fed decision, with the dollar sitting at much higher levels compared to this time a week ago. Meanwhile, US Treasury yields sit higher, especially at the front-end of the curve, and US equity indices all trade lower before the cash open later today. Lees Meer

Markets to tune into FOMC speakers after the Fed’s hawkish shift

The focus next week will now be on US data and whether that can live up to the expectations set by the Federal Reserve, while a few FOMC speakers will provide markets with a bit more clarity on their position on the economic outlook.  Lees Meer

UK retail sales decline from April’s reopening surge

Retail sales data continues to print in a volatile manner as reopening effects distort both April and May’s data, while base effects render the year-on-year figure redundant. After surging 9.2% MoM in April after the reopening of non-essential retail stores on April 12th, headline retail sales contracted by 1.4% MoM in May. Lees Meer

GBP leads losses in the G10 space as London enters to weaker retail sales 

Sterling continues to sit under substantial pressure against the dollar today as it trades at lows last seen on May 6th. The pound's 0.4% slump against the dollar today compounds bearish momentum that has been in play since Wednesday’s Fed meeting, with GBPUSD falling 0.45% in yesterday’s session too. Lees Meer

CBRT refrains from laying the groundwork for a rate cut in July or August

The Central Bank of the Republic of Turkey was widely expected to keep rates on hold at 19% today, however, the question was whether the press statement would include language that sets the tone for a rate cut in one of the subsequent two meetings. This wasn’t the case despite the fact that President Erdogan publicly announced his preference for lower rates in either July or August, Lees Meer

Fed eyes exiting stimulus measures via the fire escape as inflation pressure heats up

Very little forward guidance on the Fed’s normalisation cycle was given by the head of the FOMC, which was again another attempt to temper the reaction in financial markets to avoid another “taper tantrum”. The Fed’s slow and well signalled approach to the announcement of QE tapering continues. Lees Meer

Hawkish Fed adjustment sparks life into placid summer trading as the dollar bounces back

Yesterday’s trading session was all about the US dollar after the Federal Reserve’s interest rate projections (dot plot) signalled preferences for two rate hikes in 2023. The indicative graph, which should be taken with a “pinch of salt” according to Fed chair Powell, highlighted the growing confidence among monetary policymakers. Lees Meer

Markets position for Fed decision tonight with DXY firmly above 90.0 handle 

The DXY index is trading near one-month highs as markets await the Federal Reserve policy decision tonight at 19:00 BST, which may enlighten investors with a clearer timeline for the tapering of asset purchases. Lees Meer

Markets position for Fed decision tonight with DXY firmly above 90.0 handle 

The DXY index is trading near one-month highs as markets await the Federal Reserve policy decision tonight at 19:00 BST, which may enlighten investors with a clearer timeline for the tapering of asset purchases. Lees Meer

Busy US data calendar in focus ahead of FOMC decision 

In today’s session, markets will focus on the release of retail sales, Empire manufacturing and producer price index data at 13:30 BST just before the industrial production figure comes out at 14:15 BST, all ahead of tomorrow’s FOMC decision.  Lees Meer

Currencies struggle to pare back losses against USD as traders weigh Fed decision 

This morning, G10 peers are struggling to pair back losses against the dollar as traders wager that rising inflation will prove temporary and won’t move the needle for the Fed to act on Wednesday evening at the FOMC monetary policy decision. Lees Meer

Currencies struggle to pare back losses against USD as traders weigh Fed decision 

This morning, G10 peers are struggling to pair back losses against the dollar as traders wager that rising inflation will prove temporary and won’t move the needle for the Fed to act on Wednesday evening at the FOMC monetary policy decision. Lees Meer

A week of central bank decisions but the Fed will draw most of the focus

The Federal Reserve, Central Bank of the Republic of Turkey, and the Central Bank of Brazil are likely to be the most exciting on this week's agenda. Over the weekend, events in the UK will focussed on the government’s decision to stick to its June 21st reopening plan as cases of the delta variant rise.  Lees Meer

A week of central bank decisions but the Fed will draw most of the focus

The Federal Reserve, Central Bank of the Republic of Turkey, and the Central Bank of Brazil are likely to be the most exciting on this week's agenda. Over the weekend, events in the UK will focussed on the government’s decision to stick to its June 21st reopening plan as cases of the delta variant rise.  Lees Meer

Dollar stumbles with US yields despite historically high inflation

The US dollar is trading on the back foot this morning after yesterday’s US CPI release initially caused a bout of dollar strength across the G10 currency board. The greenback failed to hold onto gains despite prices rising by more than forecast in May. Lees Meer

ECB strikes balance between growth upgrade and dovish rhetoric

Today’s ECB meeting was always a question of how the central bank could communicate an improvement in economic growth forecasts in a fashion that doesn’t move market expectations of policy tightening preemptively. Lees Meer

ECB strikes balance between growth upgrade and dovish rhetoric

Today’s ECB meeting was always a question of how the central bank could communicate an improvement in economic growth forecasts in a fashion that doesn’t move market expectations of policy tightening preemptively. Lees Meer

ECB moet balanceeract uitvoeren

Analist Ima Sammani van Monex Europe blikt voor de camera van ABM Financial News vooruit op het ECB-rentebesluit dat voor donderdag geagendeerd staat. Lees Meer

US CPI Inflation and ECB decision to take centre stage in FX markets

Today’s FX session will be all about the European Central Bank for the euro after the currency’s wait-and-see approach in the days building up to the event. The dollar remains in the spotlight in today’s session after yields on the US 10-year moderated below 1.5% late in yesterday’s session. Lees Meer

Bank of Canada maintains message in line with expectations

Wednesday's Bank of Canada policy decision fell broadly in line with both our own and consensus expectations. That is, the Bank balanced a slip in near-term economic data with an improving external backdrop and growth outlook in order to hold policy and maintain the projections generated in April's Monetary Policy Report. Lees Meer

Bank of Canada maintains message in line with expectations

Wednesday's Bank of Canada policy decision fell broadly in line with both our own and consensus expectations. That is, the Bank balanced a slip in near-term economic data with an improving external backdrop and growth outlook in order to hold policy and maintain the projections generated in April's Monetary Policy Report. Lees Meer

Volatility subsides ahead of pivotal US CPI release and ECB rate decision

The dollar stole the show again in markets yesterday as little economic data elsewhere placed emphasis on the NFIB Small Business report and the JOLTS job openings data. Volatility remains muted as traders position themselves ahead of tomorrow’s US CPI data for May and the European Central Bank's monetary policy decision. Lees Meer

Patience is the aim of the game

The Bank of Canada are set to announce their latest policy decision at 15:00 BST/ 10:00 ET on Wednesday June 9th, with Deputy Governor Timothy Lane scheduled to give an economic progress report on Thursday 10th. Lees Meer

Riksbank stands firm with dovish tone

The Swedish krona has hovered in narrower ranges in Q2 compared to Q1 2021 as much of the positive incoming data was offset by a clear message from the Riksbank that it will maintain loose monetary policy over the 3-year horizon. Sweden’s resilience to the recent Covid-19 measures and quick recovery prospects should support the Swedish krona going forward. Lees Meer

Riksbank stands firm with dovish tone

The Swedish krona has hovered in narrower ranges in Q2 compared to Q1 2021 as much of the positive incoming data was offset by a clear message from the Riksbank that it will maintain loose monetary policy over the 3-year horizon. Sweden’s resilience to the recent Covid-19 measures and quick recovery prospects should support the Swedish krona going forward. Lees Meer

The rand’s return back to 2019 highs

The improvement in South Africa's economic fundamentals over the course of the last month means we now expect a continuation in the ZAR rally over the 12-month horizon, as opposed to our previous view of mean reversion. We expect USDZAR to continue trading at the current 13.5 levels this month before driving down to levels not seen since January 2019 over the one-year horizon. Lees Meer

Dollar bounces back after DXY closes below 90, job openings eyed after payrolls slip

After failing to hold onto ground made early in yesterday’s session, the broad dollar starts today’s European trading day on the front foot again. There was no major catalyst behind yesterday’s dollar reversal, but the greenback slumped as US investors entered the fray with the DXY index closing 0.22% lower. Lees Meer

It is all about PEPP

Looking ahead, central banks will come back to the fore next week with the European Central Bank, the Bank of Canada, and the Bank of Russia releasing their latest policy decisions. The ECB is likely to steal the show as speculation over the next PEPP decision rises. Lees Meer

Dollar dynamics remain in scope with key inflation data ahead of next week’s FOMC meeting

After a choppy end to last week’s session following an underwhelming Nonfarm Payrolls report, the US dollar continues to sit front and centre for market participants. This week, the Federal Reserve enters a media blackout before next week’s FOMC decision. Lees Meer

Both Canada and US labour market reports underwhelm expectations 

After the data print, USDCAD dropped over a tenth of a percentage to reverse gains on the day. This is largely because of yesterday's price action in markets and the higher expectations attached to the US economic recovery in response to the performance of the latest data. Lees Meer

Both Canada and US labour market reports underwhelm expectations 

After the data print, USDCAD dropped over a tenth of a percentage to reverse gains on the day. This is largely because of yesterday's price action in markets and the higher expectations attached to the US economic recovery in response to the performance of the latest data. Lees Meer

Brazilian real leads the EM race against USD

The Brazilian real has seen a significant rally against the US dollar in Q2, with gains over 13% recorded since the March bottom. The real's surge has taken place despite a grim backdrop of Covid infections throughout the country and a slow pace of vaccinations. Lees Meer

Brazilian real leads the EM race against USD

The Brazilian real has seen a significant rally against the US dollar in Q2, with gains over 13% recorded since the March bottom. The real's surge has taken place despite a grim backdrop of Covid infections throughout the country and a slow pace of vaccinations. Lees Meer

Dollar tears through G10 currency board ahead of pivotal NFP release

Initial jobless claims data continued to improve while the ADP employment measure showed the US economy added nearly a million private sector jobs. The employment data paved the way for expectations of a strong Nonfarm Payrolls print today at 13:30 BST. Lees Meer

Slowing inflation takes weight off Erdogan’s rate cut comment

The reaction was mild in currency markets, with the lira only falling around half a percentage point against the dollar and 0.4% against the euro. With Turkey now curtailing credit growth to improve the current account balance, one major downside risk to the lira subsides. Lees Meer

Slowing inflation takes weight off Erdogan’s rate cut comment

The reaction was mild in currency markets, with the lira only falling around half a percentage point against the dollar and 0.4% against the euro. With Turkey now curtailing credit growth to improve the current account balance, one major downside risk to the lira subsides. Lees Meer

Oil drives divergence in G10 price action in muted session yesterday 

Oil markets sprung into life in Wednesday's session, with WTI rising to fresh highs of $69 per barrel. This resulted in oil-linked currencies taking a chunk out of the dollar ahead of the release of the Fed’s beige book. The economic conditions report saw the recovery pick up somewhat in the past two months Lees Meer

Monex Europe June 2021 FX Forecasts

Over the course of May, the dollar downturn exceeded our expectations, while for certain currencies, market participants preemptively priced in the economic reopening as vaccine optimism picked up. Looking ahead, June is likely to prove pivotal for major currency pairs. Lees Meer

Monex Europe June 2021 FX Forecasts

Over the course of May, the dollar downturn exceeded our expectations, while for certain currencies, market participants preemptively priced in the economic reopening as vaccine optimism picked up. Looking ahead, June is likely to prove pivotal for major currency pairs. Lees Meer

Dollar swings across the G10 space on muted start to the week 

The US dollar traded mixed across the G10 currency space yesterday but regained ground at the start of the European session as it trades in the green against all majors. During yesterday’s session, the dollar swung around as the DXY index centred around the 90.0 handle. Lees Meer

Canadian GDP for March fails to excite loonie

Today's March GDP data from Canada came in broadly as expected, with the economy expanding 1.1% month-on-month vs expectations of 1%  as lockdown conditions continued to ease, while the Q1 annualised data undershot market expectations by 1.2% after printing at 5.6%.  Lees Meer

Fading stimulus suggests fading rally, USDCNY to hit inflection point over medium-term

We anticipate the yuan to continue rallying, albeit at a slower pace than before, over the short run as the broad dollar continues to weaken. However, over the 6-to-12-month horizon, we expect USDCNY to reach an inflection point in which the yuan starts to weaken again due to narrowing yield differentials. Lees Meer

Canadian GDP for March fails to excite loonie

Today's March GDP data from Canada came in broadly as expected, with the economy expanding 1.1% month-on-month vs expectations of 1%  as lockdown conditions continued to ease, while the Q1 annualised data undershot market expectations by 1.2% after printing at 5.6%.  Lees Meer

Fading stimulus suggests fading rally, USDCNY to hit inflection point over medium-term

We anticipate the yuan to continue rallying, albeit at a slower pace than before, over the short run as the broad dollar continues to weaken. However, over the 6-to-12-month horizon, we expect USDCNY to reach an inflection point in which the yuan starts to weaken again due to narrowing yield differentials. Lees Meer

Cable hits fresh 3-year high as house prices continue to grow amid stamp duty break

Yesterday’s month-end flows saw the dollar broadly sell off against G10 currencies. This sell-off nudged the pound higher and with today’s continuation of the dollar decline, GBPUSD now sits at a three-year high. Lees Meer

All eyes on US and Canada labour market data after underwhelming April reports

Next week (31st - 4th June), the focus turns to labour market data from the US and Canada after April’s underwhelming reports. Also on the agenda are policy decisions from the RBA and Reserve Bank of India and China’s official manufacturing PMI. Lees Meer

All eyes on US and Canada labour market data after underwhelming April reports

Next week (31st - 4th June), the focus turns to labour market data from the US and Canada after April’s underwhelming reports. Also on the agenda are policy decisions from the RBA and Reserve Bank of India and China’s official manufacturing PMI. Lees Meer

Recovery Fund key for eurozone recovery but risks remain

The ECB’s response to the 2020 pandemic was largely similar to the response rolled out in 2008 during the onset of the global financial crisis. In this analysis piece, we dive into the policy differences between the two crises and take a look at the composition of the recovery fund. Lees Meer

Recovery Fund key for eurozone recovery but risks remain

The ECB’s response to the 2020 pandemic was largely similar to the response rolled out in 2008 during the onset of the global financial crisis. In this analysis piece, we dive into the policy differences between the two crises and take a look at the composition of the recovery fund. Lees Meer

All eyes on Biden’s spending plans as USD firms with month-end rebalancing eyed

The US dollar is firming against major peers this morning as it hits a seven-week high against the Japanese yen as talks around US President Joe Biden’s budget proposal take focus ahead of core PCE inflation figures. Lees Meer

Monex Europe’s Vaccine Distribution Chartbook | May 2021

May has been a decisive month in the global vaccination campaign, as an accelerated delivery in some advanced economies has led to comprehensive reopening plans and brighter economic prospects. Lees Meer

Monex Europe’s Vaccine Distribution Chartbook | May 2021

May has been a decisive month in the global vaccination campaign, as an accelerated delivery in some advanced economies has led to comprehensive reopening plans and brighter economic prospects. Lees Meer

Social spending underwhelms in latest CHAPS data due to hesitant consumer mobility

Taken on the whole, the release bodes well for May’s GDP rebound as consumption remains robust, however, the real-time data continues to underperform as consumers remain hesitant to take public transport in order to spend. Lees Meer

Social spending underwhelms in latest CHAPS data due to hesitant consumer mobility

Taken on the whole, the release bodes well for May’s GDP rebound as consumption remains robust, however, the real-time data continues to underperform as consumers remain hesitant to take public transport in order to spend. Lees Meer

Dollar bounces back as Fed Quarles joins the hawkish calls 

Yesterday marked the dollar’s largest intraday rally in a week, with the DXY index ripping over half a percentage point higher fueled by Federal Reserve commentary. This morning, the dollar is slightly lower across the G10 currency board. Lees Meer

Dollar stabilises after DXY hit January lows 

The US dollar is slowly edging back in the green this morning against several of the G10 currencies after its downfall in yesterday’s session, where the DXY index fell by a modest 0.17% to touch its lowest level since January. Lees Meer

Fed officials remind markets of FOMC’s dovishness amid a light calendar

Yesterday Fed officials reminded markets that the Federal Reserve will steer clear of QE tapering. Given how light today’s session is on economic events, developments in risk sentiment will likely determine intraday flow. Lees Meer

Limited top-tier economic data puts USD dynamics further into focus

Next week (24th - 28th May), the economic calendar is light on major market-moving events. US PCE inflation stands out as the most high profile data point on the calendar along with the latest RBNZ rate decision, while the focus will remain on central bank speakers. Lees Meer

DXY sinks back below the 90 handle with little economic data scheduled in the G10 space

This week is fairly light for headline US data, with durable goods data released on Thursday at 13:30 BST and April’s PCE inflation data out on Friday at the same time. Lees Meer

Swiss National Bank to relax with EURCHF upside narrative

The Swiss franc depreciation against the euro in the pandemic aftermath has been primarily due to strong efforts by the Swiss National bank to water down upside pressures on the currency amid a rapid capital inflow. Lees Meer

Swiss National Bank to relax with EURCHF upside narrative

The Swiss franc depreciation against the euro in the pandemic aftermath has been primarily due to strong efforts by the Swiss National bank to water down upside pressures on the currency amid a rapid capital inflow. Lees Meer

UK flash services PMI underperforms expectations but only due to the survey window 

Sterling shrugged off this morning’s strong retail sales data, suggesting there is a high bar for UK economic data to clear before it adds any further upside to the pound. Much of the initial rebound due to lockdown measures easing has been priced into UK financial assets over the course of the last month. Lees Meer

UK flash services PMI underperforms expectations but only due to the survey window 

Sterling shrugged off this morning’s strong retail sales data, suggesting there is a high bar for UK economic data to clear before it adds any further upside to the pound. Much of the initial rebound due to lockdown measures easing has been priced into UK financial assets over the course of the last month. Lees Meer

UK retail sales beats expectations, placing recovery on a firm footing

Today’s UK retail sales data gives markets the first piece of hard economic data that pertains to how the consumer reacted to the April 12th reopening. The data print didn’t disappoint, with retail sales climbing above expectations by 4.7 percentage points to 9.2% month-on-month in April, while sales excluding auto fuel climbed 9%. Lees Meer

UK retail sales beats expectations, placing recovery on a firm footing

Today’s UK retail sales data gives markets the first piece of hard economic data that pertains to how the consumer reacted to the April 12th reopening. The data print didn’t disappoint, with retail sales climbing above expectations by 4.7 percentage points to 9.2% month-on-month in April, while sales excluding auto fuel climbed 9%. Lees Meer

Dollar declines after strong session yesterday that was driven by signs of tapering in the minutes

Last evening at 19:00 BST sharp, the greenback enjoyed a decent boost after the FOMC minutes suggested that some policy makers were ready to start the debate around the tapering of bond purchases if rapid progress in the economic recovery continues. Moves across currency, fixed income and equity markets were visible on the back of this, with Treasuries and stocks moving lower and stocks although it should not be a huge surprise. Lees Meer

PLN well-positioned to continue rallying despite divergences in CEE monetary policy

Our view on PLN remains bullish for the remainder of the year, however, we have adjusted our forecasts since the last outlook to reflect the recent divergence in central bank policies in the CEE region and Poland’s recovery from the third Covid-19 peak. Lees Meer

PLN well-positioned to continue rallying despite divergences in CEE monetary policy

Our view on PLN remains bullish for the remainder of the year, however, we have adjusted our forecasts since the last outlook to reflect the recent divergence in central bank policies in the CEE region and Poland’s recovery from the third Covid-19 peak. Lees Meer

Headline inflation overshoots, but not a concern yet for the BoC

Today’s CPI release saw headline inflation rise from 2.2% in March to 3.4% YoY in April. The print was marginally higher than expectations, which sat at 3.2%, but despite the figure exceeding the Bank of Canada’s 2% target, it won’t cause concern among the Governing Council just yet. Lees Meer

Headline inflation overshoots, but not a concern yet for the BoC

Today’s CPI release saw headline inflation rise from 2.2% in March to 3.4% YoY in April. The print was marginally higher than expectations, which sat at 3.2%, but despite the figure exceeding the Bank of Canada’s 2% target, it won’t cause concern among the Governing Council just yet. This is because base effects had a […] Lees Meer

Petro-currencies roll back gains as commodities drop while USD fails to recover

GBPUSD is trading just below yesterday’s highs this morning while EURUSD has broken through to fresh highs as the dollar trades mixed in today’s morning session. For the remainder of the day, the US dollar is at the mercy of any changes in risk sentiment and commodity prices. Lees Meer

Dollar declines to near four-month low with commodity currencies soaring

Broad-based USD selling has extended into this morning's session amid a more supported risk-on tone. While there are no fresh catalysts this morning to support the improved risk environment, it likely follows on from reopening plans in Europe and a push for further reopening in the US yesterday. Lees Meer

A hot US economy props up the greenback as inflation fears mount

Inflation was the word on everyone's lips this week, with underlying indicators flashing warning signs while US inflation data printed well above expectations. Next week (17th -21st May), the focus will be on the latest FOMC meeting minutes, central bank speakers, eurozone and Canadian CPI and preliminary PMI data for May.  Lees Meer

Dollar bounces back as China’s data underperforms expectations

China’s industrial output growth slowed in April relative to March and retail sales significantly missed expectations. Retail sales rose 17.7% YoY while growth in industrial production eased to 9.8% YoY, both dramatically undershooting expectations that had already adjusted for a slowdown in growth as base effects became less favourable. Lees Meer

A hot US economy props up the greenback as inflation fears mount

Inflation was the word on everyone's lips this week, with underlying indicators flashing warning signs while US inflation data printed well above expectations. Next week (17th -21st May), the focus will be on the latest FOMC meeting minutes, central bank speakers, eurozone and Canadian CPI and preliminary PMI data for May.  Lees Meer

All eyes on the dollar as retail sales could double down on inflation concerns 

Today’s data dock is centred around the US, with retail sales and industrial output scheduled for release at 13:30 BST. With policy expectations now stable, a large upward surprise is likely needed for the dollar to regain its strength from yesterday.  Lees Meer

INR to rely on RBI’s support while uncontrolled second wave of pandemic unfolds

The chaotic health situation puts the country in a horrendous position while also threatening the pace of the global economic recovery as a whole. Looking forward, we believe the INR outlook is poised to remain stable with a slight appreciation bias against the US dollar, but risks to this view remain strongly tilted to the downside. Lees Meer

All eyes on the dollar as retail sales could double down on inflation concerns 

Today’s data dock is centred around the US, with retail sales and industrial output scheduled for release at 13:30 BST. With policy expectations now stable, a large upward surprise is likely needed for the dollar to regain its strength from yesterday.  Lees Meer

Hawkish Czech National Bank to support CZK rally

We anticipate the recovery in the Czech koruna to extend below the 25.00 handle against the euro over the coming twelve months as the Czech National Bank begins its hiking cycle with inflation above target. Lees Meer

Hawkish Czech National Bank to support CZK rally

We anticipate the recovery in the Czech koruna to extend below the 25.00 handle against the euro over the coming twelve months as the Czech National Bank begins its hiking cycle with inflation above target. Lees Meer

Reopening reignites sterling’s rally

Following the Bank of England's latest projections, which we are inclined to agree with, we anticipate GBPUSD to rally to 1.46 in the coming twelve months, although the level of uncertainty around our medium-term forecasts remains high. Lees Meer

Whopping CPI release from the US brings a wave of volatility in the G10 FX space

The US dollar stole the show in yesterday’s market as a whopping headline inflation print brought a substantial wave of volatility into FX markets. April’s CPI inflation data from the US printed at 4.2% YoY, up from March’s 2.6% and 0.6 percentage points above expectations. Lees Meer

US CPI brings volatility to FX markets as real yields yo-yo

April’s US Consumer Price Index figure was set to be the first large inflation print significantly above 2% as a low base from last year and surging commodity prices this year set a high bar. The 4.2% YoY increase in the headline print did not disappoint and comfortably exceeded market expectations which were set at 3.6%. Lees Meer

US CPI brings volatility to FX markets as real yields yo-yo

April’s US Consumer Price Index figure was set to be the first large inflation print significantly above 2% as a low base from last year and surging commodity prices this year set a high bar. The 4.2% YoY increase in the headline print did not disappoint and comfortably exceeded market expectations which were set at 3.6%. Lees Meer

Inflation is on everyone’s lips ahead of US CPI data from April 

Yesterday’s session saw the dollar trend sideways vs major peers with markets sitting on the fence ahead of today’s US CPI inflation release from April. The print has become more pivotal after last week’s data dock included a huge miss in April’s payroll gains, further justifying the Federal Reserve standing their ground regarding loose policy. Lees Meer

GBP and CAD sit near multi-year highs as payrolls data still lingers over the dollar 

Sterling rallied 0.99% open-to-close in yesterday’s session, its largest intraday rally since April. The pound now sits at its highest level since February as traders unwound Scottish election risk and priced in the next phase of economic reopening, which is set to occur on May 17th. Lees Meer

Central bank speakers are key as speculation on policy normalisation rises

Next week (10th - 14th May), the focus remains on central bank policymakers as market speculation regarding policy normalisation remains elevated. In the week ahead, we take a look at Banxico's upcoming policy decision as well as recent Fed commentary and the upcoming data calendar.  Lees Meer

Sterling advances above 1.40 on UK election polls results amid empty data dock

Sterling is the best performing G10 currency this morning as events over the weekend reduced the risk of a second independence vote in Scotland, while this morning saw Boris Johnson confirm the next stage of reopening will go ahead on May 17th. Lees Meer

Nonfarm Payrolls undershoot expectations, prompting USD weakness and a flattening in the Treasuries curve

The bar was set high for today's Nonfarm payrolls figure after March saw the economy add nearly a million jobs and the gradual economic reopening appeared to be pulling people back to work, especially in the hospitality sector. Lees Meer

Canada labour market recovery unwinds due to restrictions being tightened

Canada's net employment gain today was always going to be negative after public health measures tightened in key provinces. The loonie retraced early losses to trade closer to yesterday's multi-year highs upon the release, but arguably this was more to do with the slip in US jobs data than Canada's own release. Lees Meer

Nonfarm Payrolls undershoot expectations, prompting USD weakness and a flattening in the Treasuries curve

The bar was set high for today's Nonfarm payrolls figure after March saw the economy add nearly a million jobs and the gradual economic reopening appeared to be pulling people back to work, especially in the hospitality sector. Lees Meer

Non-farm payrolls to please USD bears unless print exceeds high expectations

Treasury yields and the dollar will react to data surprises to a higher extent. Today’s Non-farm payrolls at 13:30 BST may be too early to put that to the test, offering room for a mild risk-on move and sell-off in the US dollar if the figures surprise to the upside. Lees Meer

Non-farm payrolls to please USD bears unless print exceeds high expectations

Treasury yields and the dollar will react to data surprises to a higher extent. Today’s Non-farm payrolls at 13:30 BST may be too early to put that to the test, offering room for a mild risk-on move and sell-off in the US dollar if the figures surprise to the upside. Lees Meer

Bank of England reactive: Signs of optimism not enough to talk about normalisation

The Bank of England not only upgraded its economic projections but also decided to taper their QE programme from £4.4bn to £3.4bn until August. However, while this would be seen as a hawkish development, BoE members stressed how their QE programme differed from the likes of the Bank of Canada and the Federal Reserve. Lees Meer

Bank of England reactive: Signs of optimism not enough to talk about normalisation

The Bank of England not only upgraded its economic projections but also decided to taper their QE programme from £4.4bn to £3.4bn until August. However, while this would be seen as a hawkish development, BoE members stressed how their QE programme differed from the likes of the Bank of Canada and the Federal Reserve. Lees Meer

CBRT statement and lira price action nothing to write home about

The Turkish lira practically shrugged its shoulders at today’s rate decision by the central bank to leave policy unchanged, as this was widely expected by markets. Meanwhile, the accompanying press statement did little to provide market participants with new information Lees Meer

Norges Bank meeting fails to excite markets as hawk position was already secured

Today’s policy decision by the Norges Bank has done little to change the krone’s course, as the press statement mostly echoed the March meeting: much of the adult population is expected to be vaccinated by the end of the summer, suggesting economic activity picks up through the year and further justifying the rate hike in the latter half of 2021. Lees Meer

CBRT statement and lira price action nothing to write home about

The Turkish lira practically shrugged its shoulders at today’s rate decision by the central bank to leave policy unchanged, as this was widely expected by markets. Meanwhile, the accompanying press statement did little to provide market participants with new information Lees Meer

NBP leaves policy on hold while turning a blind eye to April’s inflation print

USDPLN rose by just under 1% from low-to-high to touch a three-week high yesterday as the zloty weakened in the buildup to the National bank of Poland’s policy decision, with markets anticipating no policy expectations and continued dovish communications by the NBP. The decision perfectly fulfilled the expectations of a placeholder meeting, making markets wonder why it took the central bank longer than usual to come out with their decision. Lees Meer

NBP leaves policy on hold while turning a blind eye to April’s inflation print

USDPLN rose by just under 1% from low-to-high to touch a three-week high yesterday as the zloty weakened in the buildup to the National bank of Poland’s policy decision, with markets anticipating no policy expectations and continued dovish communications by the NBP. The decision perfectly fulfilled the expectations of a placeholder meeting, making markets wonder why it took the central bank longer than usual to come out with their decision. Lees Meer

Dollar back in limelight with Yellen emboldening FOMC hawks 

The dollar index briefly touched a 1.5 week high during yesterday’s trading session amid a deterioration in optimism in markets, while reports also showed US Treasury Secretary Janet Yellen warned that interest rates may need to rise overtime to keep the US economy from overheating. Lees Meer

Monex Europe May 2021 FX Forecasts

The anticipated US dollar downturn materialised over the course of April, with the greenback sustaining losses across the board. Looking ahead, we expect the dollar downturn to continue over the course of Q2, although we argue that most major catalysts over the next month have now been baked into current pricing, meaning a stabilisation in the US dollar could occur in the near-term. Lees Meer

Aanhoudende dollarzwakte in verschiet

De Amerikaanse dollar was in april een stuk zwakker dan in het eerste kwartaal van 2021. Valuta-analist Ima Sammani van Monex Europe geeft voor de camera van ABM Financial News antwoord op de vraag hoe dit komt en of de dollarzwakte in de komende maanden zal aanhouden. Lees Meer

Monex Europe May 2021 FX Forecasts

The anticipated US dollar downturn materialised over the course of April, with the greenback sustaining losses across the board. Looking ahead, we expect the dollar downturn to continue over the course of Q2, although we argue that most major catalysts over the next month have now been baked into current pricing, meaning a stabilisation in the US dollar could occur in the near-term. Lees Meer

Dollar price action back in the limelight after broad decline in April, focus back on the 10-year Treasury

The US dollar traded weaker across the G10 yesterday, offsetting Friday’s price action that was likely set in motion after the month-end portfolio rebalancing. This morning, the greenback pared back some of yesterday’s losses, leading broader gains across the entire G10 currency board, with NZDUSD and EURUSD close to breaking key levels. Lees Meer

Central banks to keep cards close to their chest ahead of broader reopening in DM space

Next week (3rd - 7th May), central banks will continue to take centre stage with policy decisions by the CBRT, Norges Bank and the RBA. However, it's the Bank of England who is poised to line up among the more hawkish central banks next week, when revised economic projections firm expectations of “ QE tapering later in the year. Lees Meer

Central banks to keep cards close to their chest ahead of broader reopening in DM space

Next week (3rd - 7th May), central banks will continue to take centre stage with policy decisions by the CBRT, Norges Bank and the RBA. However, it's the Bank of England who is poised to line up among the more hawkish central banks next week, when revised economic projections firm expectations of “ QE tapering later in the year. Lees Meer

Eurozone GDP prints set to reveal the damage from Q1 restrictions

The euro reached an over two-month high vs the US dollar yesterday morning after crossing through the early-March resistance level but still closed down on the day as the US dollar reversed earlier losses and Treasury yields rose. This morning, the pair continued to trade in the middle of yesterday’s range ahead of the eurozone GDP print releases. Lees Meer

Dollar takes a tumble as Chair Powell pushes it lower 

Despite markets largely anticipating a dull Federal Reserve meeting last night, FX market volatility spiked around the event as the dollar DXY index fell to its lowest level in over a month as Chair Powell signalled an optimistic tone, but not so optimistic that it hinted at monetary policy normalisation anytime soon. Lees Meer

European vaccine rollout takes centre stage while developing countries struggle with a dire Covid situation

We continue to track the evolution of the vaccine rollout in major economies, as a timely gauge of potential reopening and global economic recovery. In this edition, we highlight the European efforts to catch up with front-runners like the UK and US, while stressing the dire picture in some emerging markets. Lees Meer

8-year high in US inflation expectations unlikely to move the needle for the FOMC tonight

The US dollar traded within narrow ranges over the course of yesterday with the DXY index remaining in the middle of the weekly range, but this morning’s session saw the index rise above this week’s highs ahead of what is likely to be a non-event from the Federal Reserve. Lees Meer

Recovery fund in focus as Germany and France set to outline spending plans

GBP Sterling continues to trade with little distinct direction as it awaits confirmation of the strength of the UK economic reopening and an indication that the next steps of reopening the service sector on May 17th are feasible. In the interim, the pound continues to tread water in a 1.4% range as it awaits the […] Lees Meer

Dollar resumes downturn despite analysts divided on outlook 

After what has been a poor month for the broad US dollar, the greenback found some sense of stability last week with the DXY index trading just above the 90.00 handle. This morning, however, the general decline in the dollar continues despite investment banks being split over their USD calls. Lees Meer

FOMC and BoJ to stay on hold after significant March meetings, EU recovery fund in focus

Next week (26th - 30th April), policy decisions by the Federal Reserve and Bank of Japan are due, but few surprises are expected. Meanwhile, the soft deadline for the EU recovery fund could see politics drive EURUSD towards the back-end of the week.  Lees Meer

Sterling retraces yesterday’s bizarre losses as it continues to float in the 1.38-1.40 range

Sterling’s price action yesterday had no significant idiosyncratic drivers and caused some speculation across the market. The pound posted a 0.63% drop against the dollar as it led losses in the G10 space, although the broad USD strength wasn’t anything to write home about. Lees Meer

ECB fails to excite markets with placeholder meeting

As expected, Lagarde left everyone in the dark as to when the ECB will scale back PEPP purchase as she wants to make that decision based on updated projections that are coming in June. Instead, she made it clear that any phasing out of PEPP would be premature as of now. Lees Meer

ECB may acknowledge rosier outlook, but fireworks remain unlikely

Markets have been trying to gauge what the ECB’s bond-buying timeline will look like over the course of the next year, but after a very clear signal from the March meeting that the central bank will “significantly” increase the purchase pace in their Pandemic Emergency Purchase Programme in Q2, the ECB is unlikely to provide markets with much more clarity today. Lees Meer

Bank of Canada tapers QE and casts hawkish tone for markets to digest

This hawkish message from the BoC was coupled with the fact that their estimate of potential growth was lifted from an average of 1.4% over 2021-2023 to 1.6%, which in usual times would have been taken as a dovish twist. Lees Meer

German politics catch markets by surprise, but euro takes wait-and-see approach ahead of ECB

Just hours after Christian Democratic Union leader Armin Laschet secured his position as the party’s nomination for September’s elections, the Greens surged ahead to become the most popular party in Germany, taking a seven-point lead over Chancellor Angela Merkel’s conservative bloc. Lees Meer

Sterling tipples above 1.40 as positive sentiment returns after reopening

Sterling rose over a percentage point in yesterday’s session as the dollar substantially weakened across the board. Despite the backdrop of broad USD weakness in G10 FX, sterling’s rally mustn’t be understated. The pound led gains against the dollar in the G10 space as sentiment around UK assets improved. Lees Meer

US Russia tensions watched by markets as Navalny’s condition deteriorates

The US dollar opened the week on a stronger footing as geopolitical tensions between the US and Russia and the US and China fuelled safe-haven bids, allowing the DXY index to strengthen by nearly a quarter percentage point overnight. However, gains were pared back mid-way through the Asian session as risk appetite became better supported and the US Treasury curve began to bull flatten yet again. Lees Meer

Dollar defies strong data print as it weakens with moderating treasury yields

The dollar is set to close out another week with broad losses as its upside is losing steam despite good data points, indicating that US inflation and growth narratives are already priced in by markets, although this morning the dollar index managed to resist further depreciation. Lees Meer

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

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

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

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%

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

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

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

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

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

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

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

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

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

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

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

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

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

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%

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

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

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 

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 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

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

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 

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

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 

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

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

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

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

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

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

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

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

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

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

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

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%

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

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

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

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

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

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

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

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

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

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

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

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

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 

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

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 

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 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 

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

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

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 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

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

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 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 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 

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 

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

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

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

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

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

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

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

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 

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 

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

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

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

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 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 

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

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

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

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

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

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

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

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

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

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

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

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 

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

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 

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

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

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

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 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

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

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

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

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 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 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 

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

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

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

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

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

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 

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

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

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

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

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 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

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

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

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

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 

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? 

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

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 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

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

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

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

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

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 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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 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 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

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

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

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

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

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

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

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

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 

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

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

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

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

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

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

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

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 

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

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

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

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 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

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

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

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

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

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

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

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

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 

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

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

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

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

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

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

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 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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?

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

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

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

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

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

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

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

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

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

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

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

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 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… 

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

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

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

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

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

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

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

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

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

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 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

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

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

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

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

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

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

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

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 

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

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

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

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

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

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

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

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'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

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

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

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? 

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

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

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

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

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

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

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

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

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

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”

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

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

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

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

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”

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

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

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

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

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

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

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

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

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?

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

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  

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

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

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

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%

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

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

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 

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

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”

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

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 

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

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

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

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 

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

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

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

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

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

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

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

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

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 

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

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

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 

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

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

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

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

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 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 

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

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 

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

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

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

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 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

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

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

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 

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

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

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

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 

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

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