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EUR facing big test as Fed reaffirms guidance on December

Posted on November 5th, 2015

 EUR sits just above key supports (the lows in May and July) and may be setting itself for phase two of its big downswing that began in 2014.  The Fed has reaffirmed its guidance on December (conditional on the economy and financial conditions remaining relatively stable).  RBA Governor Stevens also reaffirmed his new easing bias, […]

Oil may be stabilizing, rate pressure on EUR

Posted on November 4th, 2015

As we head towards the US payrolls report, US rates have continued to drift up this week, building on the rise last week on a less dovish than expected FOMC. Provided the payrolls report is not too far from expected, the EUR may reassert its recent downtrend.  The spreads between EUR and USD interest rates […]

Strength in the AUD may be fleeting

Posted on November 3rd, 2015

The smart money has decided there will be no rate cut today by the RBA and the AUD has firmed ahead of the announcement. But there are reasons for the RBA to put a cut back on the agenda and renewed price falls in its key commodity markets may encourage the RBA to re-instate a […]

BoJ and ECB open door for lower EUR/JPY

Posted on November 2nd, 2015

In the last two weeks the ECB has taken steps towards more monetary easing and the BoJ has taken a step back. This has resulted in a further fall in the rates spread to a record low for the EUR/JPY.  The cross does not look cheap on a longer term perspective and we see a […]

A contentious RBA decision

Posted on October 30th, 2015

The BoJ may set the tone into next week in a contentious decision that has the market divided but somewhat favouring no change in policy.  How Kuroda characterises the forecasts on inflation, the reaction function to oil and potential for further policy moves will keep the market on its toes.  We are wary of a […]

Kuroda the inflator – framing the BoJ decision

Posted on October 29th, 2015

  Kuroda has expressed increased confidence in achieving his inflation target in about one-year based on a number of new measures and appears more willing to look through oil price falls than he was a year ago.  However, the current set of BoJ forecasts are only on the cusp of acceptable with respect to this […]

China is a boon for NZD a bane for AUD

Posted on October 28th, 2015

Energy sector weakness takes its toll on AUD and CAD.  Despite softer US data, EUR remains heavy with its rates sliding further to new lows. The Japanese press highlight the difficult choice the BoJ face this weekend, somewhat raising the odds they act. Low Australian inflation raises the odds the RBA cut next week.  The […]

Metals and energy in the dog house

Posted on October 27th, 2015

Softer UK and US data take some support away from their currencies.  The market does not appear to be preparing for any surprise easing by the BoJ on Friday, with little chance of a rate cut priced in. Energy and metals commodity prices and equites are languishing and the idea that China is rotating towards […]

BoJ may be charging up the defibrillator

Posted on October 26th, 2015

BoJ’s Kuroda has changed policy only twice since becoming governor in March 2013, both were designed to deliver shock and awe, the second with entirely no warning, exactly this time one year ago.  The ECB argued last week that further policy easing is likely to be required to get its forecasts for inflation over the […]

EUR and JPY at key technical supports

Posted on October 23rd, 2015

The ECB has shocked the market suggesting a large further expansion of its stimulus plan including a deeper dive into negative interest rates is likely at its next meeting in December.  This will put intense pressure on the BoJ to up its policy easing measures, intensifying the focus on its policy meeting next week, at […]