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Market not ready for ECB or Yellen

Posted on November 27th, 2015

Markets have been reluctant to price-in firmly communicated central bank policy agendas at the ECB and Fed.  Notwithstanding expectations that both will act, there is still considerable scope for the ECB to overwhelm expectations next week.  The market is still not fully on-board even a gradual tightening cycle by the Fed, as such it will […]

A bigger wedge between commodities and the AUD needed to move the RBA

Posted on November 25th, 2015

The chilled-out RBA suggests that there needs to be a significantly bigger wedge driven between the AUD and commodity prices to bring rate cuts back onto the table.  With a considerable amount of domestic data, Chinese data and global policy developments, the outlook for the AUD is uncertain, but near term risk is leaning toward […]

Weak Taiwan orders reflect weaker Asian demand, a drag on regional currencies

Posted on November 24th, 2015

Weak Taiwan export orders and industrial production data suggest Chinese and Asian demand remain weak.  A steady depreciation in the Chinese currency over the last month may also be symptomatic of a weaker economic growth trend and steady private sector capital outflow; this may prove a persistent drag on Asian Pacific currencies, including the AUD.  […]

EUR/JPY downtrend likely to persist if BoJ leave policy unchanged

Posted on November 18th, 2015

The market appears to see some risk that the BoJ surprise at tomorrow’s meeting and ease policy.  This is not out of the question, but the timing would be very odd.  EUR/JPY downtrend appears likely to persist if the BoJ refrains from easing.  The market is relatively sure that the Fed will tighten in December […]

Dr Copper prognosis is negative

Posted on November 17th, 2015

US Equities recovered and the USD is generally firmer.  However, US retail sector equities recovered less than half of their sharp loss on Friday, and question-marks must remain over the strength of USA retail sales.  US rates are still off their peak on Wednesday last week.  EUR is weaker as prospects for ECB easing build, probably […]

US Retailer woes, downside risk for EUR/JPY

Posted on November 16th, 2015

The sharp fall in US retailer equities and softer US retail sales data in recent months suggests that the stronger USD may be a factor weakening performance in this sector and should temper the outlook for US rate hikes and the USD. Events in Paris may at the margin increase the case for more aggressive […]

CAD and AUD in the hot-seat

Posted on November 13th, 2015

Little changed to support the rebound in EUR and weakness in the USD on Thursday.  In fact dovish ECB comments and on-message statements from senior Fed members suggest the policy divergence is likely to intensify next month.  Eurozone industrial production showed a flat trend in recent quarters and US labour data were firm.  Eurozone GDP […]

AUD pulled harder in opposite directions

Posted on November 12th, 2015

The AUD is being pulled harder in opposite directions with the labour data suggesting the non-mining sector is coming to life, but weaker commodity demand in China and weak energy prices are dragging harder from below; best to stay on the side-lines for now.  Oil prices appear to be responding to concerns over too much […]

Australian employment data present upside risk for the AUD

Posted on November 11th, 2015

The Chinese trade and industrial activity data are consistent with weaker steel sector assets and commodity prices and this may contribute to further medium term weakness in the AUD.  However, the Australian employment data represents a short term upside risk for the currency with recent activity indicators solid and scope for this data to significantly […]

RBA more nervous over China outlook

Posted on November 9th, 2015

The US labour data were strong enough along with faster wage growth to generate discussion of rate hikes beyond the now very probable December hike.  This has pushed two-year US rates to a new cyclical high, widening the USD yield advantage in particular against the EUR and JPY to new cyclical wides.  The US economy […]