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US-China tensions weaken CNY, EUR may offer more sustained strength over Asian currencies

Posted on July 23rd, 2020

The US-China tensions ratcheted higher in recent days with accusations by the US administration of China hacking to steal COVID research followed on Wednesday by the US forcing the China consulate in Houston to be closed in 72 hours.  China has threatened counter-measures. This is just the latest salvo across a long list of flashpoints […]

Dollar down-trend becoming entrenched

Posted on July 22nd, 2020

Weak dollar trend taking hold An important point to recognise is how broad-based the fall in the USD has been this week, extending across currencies and commodities priced in dollars.  A catalyst may have been the EU fiscal package, helping push the next most significant global currency (the EUR) higher, but it’s clear that the […]

Corrective price action after blow-off top, support should return soon, COVID cases rise, vaccine progress

Posted on June 12th, 2020

Global markets have the feel of corrective price action after a big run-up in recent months and blow-off top earlier this week. The market had been running up on news of re-openings from lockdowns around the world, and extreme monetary and fiscal policy easing. The market had drawn hope from reports on progress on vaccines […]

Fatigue in risk-on trades as Fed holds the line

Posted on June 11th, 2020

Fed commits to low rates and QE at the current pace US 2yr swap rates fell 3bp on Wednesday, about 2bp post-FOMC 10-year bond yields fell 10bp on Wednesday, about 5.5bp post-FOMC The USD was weaker into the FOMC and weakened further afterwards, although moves were volatile and perhaps lack conviction towards further dollar weakness. […]

USD decline continues into FOMC

Posted on June 9th, 2020

The market expects the Fed to stay the course on aggressive policy action JPY continues its confounding behaviour, one of the strongest currencies to start this week, even though equities continued their rise to fresh highs since the crisis lows. JPY was surprisingly weak last week and remains within well-worn ranges that should continue to […]

EUR lifts as its assets out-perform, AUD still looks cheap and has the trade surplus to prove it

Posted on June 5th, 2020

EUR spikes above a 2-year downtrend Volatility in the EUR has picked up around the COVID crisis.  It popped and dropped in March, breaking above its previous two-year downtrend, but then returned to that trend through April/May.  In the last week, it has again broken above the previous downtrend.  The context this time appears more […]

US equities lag, dollar pressured, JPY falls, upbeat RBA, NZ kills COVID, Korea boosts stimulus

Posted on June 3rd, 2020

JPY displays structural weakness The JPY is down by about 1% on Tuesday against an otherwise broadly weaker USD.  While some of this reflects a move against safe-haven assets, the JPY also underperformed during the heightened risk aversion around March and April.  It failed to benefit from the collapse in US yields this year. There […]

Commodity currency squeeze

Posted on June 2nd, 2020

The AUD popped on Monday (+2%), along with strong gains in several commodity currencies (CAD +1.5% and NZD +1.5%). Several higher-yielding EM currencies also led gains (IDR +1%), and for the most part, the USD was broadly weaker. AUD rose to a high since January, leading gains on Monday.  CNY continues to lag broader weakness […]

Big issues holding down AUD/NZD have flipped

Posted on July 9th, 2019

AUD/NZD is still languishing around record lows.  Pessimism over the AUD increased as the Australian economy stalled in the second half of last year, the Royal Commission into the financial sector unsettled confidence, the housing market downturn accelerated, political uncertainty peaked into the national election in May, and the RBA scurried to cut rates twice […]

RBA has been trying to hold the AUD beach ball under water; its time may be up

Posted on June 24th, 2019

It might be odd to suggest that the AUD will rise just at the point when the RBA has gone to max-dovishness.  But yet we are. RBA dovishness is matched by the Fed.  The global pivot to easier policy is boosting EM and commodity currencies, and the AUD has lagged its peers, suggesting upside risk.  […]