An easing in Chinese financial stress indicators, a recovery in Chinese metals and coal futures prices, and generally upbeat Australian economic reports in recent weeks suggests that the AUD may perform relatively well in the near term at least. Upside against the USD may be limited, but it may have room to rebound from near […]
The North Korean tensions include a bigger tail risk than usual. NK is firmly focused on developing its capacity to deliver a nuclear warhead to the USA, and the USA is set on preventing this happening. The most obvious next step is for the USA to intensify pressure on China and other nations to stop […]
RBA play it cool this time, probably to keep a lid on the AUD and to monitor recent rises in interest-only mortgage loan rates. But recent economic indicators have strengthened (labour, retailing, and non-residential building). News of the death of the Australian housing market are greatly exaggerated. Inflation has firmed since last year, and a […]
The Bank of Canada has essentially made the case to remove the 50bp of policy accommodation it handed out in 2015 to deal with the oil price shock. Rates in Canada have jumped in the last month to price in about three-quarters of this normalization, but there may be some room for the CAD to […]
The EUR is on the fly Tuesday after a month or more of consolidation. The catalyst is a speech from Draghi. Coming on the back of a number of more optimistic central bank noises in recent weeks, the market may feel there is something coordinated about these events. As we discussed in our report yesterday, […]
US economic reports have significantly underwhelmed expectations in recent months. Confidence indicators may be ebbing, and the rebound in Q2 appears quite modest following a weak Q1. Inflation indicators have slumped in recent months. The Fed policy tightening stance now appears to rely almost solely on the labor market; if this were to lose momentum, […]
We are a bit surprised to see the NZD/USD test new highs in light of some correction in emerging market currencies and equities in recent weeks. However, in a broad context, the steady narrowing in global risk premiums in the last two years and renewed fall in US government bond yields this year appears to […]
At its 11 May policy meeting, the RBNZ was surprisingly dovish, tending to dismiss the rise in Q1 inflation as largely temporary, and forecasting only a very gradual return in underlying inflation to its 2% target towards the end of its three-year horizon. It forecast rates on hold until the second half of 2019. This […]
The USD was in crucial danger of being slammed last week after weak CPI inflation data, but has been saved by the Fed sticking to its guns. The USD may be in the process of a technically inspired bounce, but the USA economy lacks oomph, inflation indicators have weakened, including market and surveyed expectations, and […]
The USD has been undermined by doubts over the strength of the economy and intensifying political uncertainty. There has been strength in EUR and JPY, however, both have been dampened by negative interest rates. The GBP is looking increasingly shaky as its economy begins to show evidence of slowing in response to the Brexit fallout, […]