Risk aversion on uncertain events from the US-China truce to Brexit and various other issues; including the OPEC meeting, and uncertainty over the global economy dominated markets on Tuesday. However, the Fed has softened its tone, the US and China have restarted negotiations, Pro-EU members of the UK parliament appear to have gained ascendancy, and […]
Last week we saw the first signs that the Fed might be softening its tone on the path for higher rates. Both the Fed’s Powell and Clarida suggested that they have to be more data-dependent and pay closer attention to a range of factors from global growth indicators, liaison with business, and financial market conditions. […]
A Fed pause, if not a peak, may be coming into view. Financial conditions in the US are tightening up, and the Fed Chair and Vice Chair expressed more caution last week. They suggested that rate hikes are no longer on auto-pilot, but are more dependent on data and financial market conditions. With the increased […]
The market appears to be taking a grimmer view of big global risk factors (Brexit, Italy, Chinese economy, and US trade policy). The relative certainty that the Fed will persist with rate hikes despite souring global growth confidence may by driving up the USD. Asian markets may be undermined by signs of weaker demand for […]
The G20 is scheduled for 26 November to 1 December in Argentina. The schedule starts with deputies and sherpas. The leaders’ summit is on 30 Nov and 1 Dec. Presumably, Trump will meet Xi on one of those two days. The meeting of the two leaders provides an opportunity for some kind of agreement on […]
Predictit.org betting odds give the Democrats a 70% chance of winning control of the House, and the Republicans a 35% chance. Fivethirtyeight.com analysis of the polls gives Democrats an 85% (6 in 7) probability of winning the House. On the other hand, Predictit.org gives the Democrats only a 13% chance of winning control of the […]
The failure of the USD to make clearer gains despite near record high yield advantages across a wide range of currencies suggests that there is a sizeable risk premium built into the USD. This risk premium may reflect the high-risk domestic and foreign policies adopted by the Trump administration, the polarisation of the US electorate […]
The CNY has developed a steady downtrend. While this is often discussed in the context of political relations between the US and China, it may just reflect the fundamental realities. These include policy easing in China to offset credit tightening related to increased regulatory scrutiny on shadow-finance. Risk metrics in the Eurozone have deteriorated further; […]
In the FX market, fundamentals are battling excessive positioning in several currencies, including the AUD and NZD where positioning data suggest that the market is near record net shorts. After around six months of exodus, funds may also be looking to rebuild positions in emerging markets. Asia has lagged other regions recently as the market […]
Time to step back and take a breath in the FX market. It lacks conviction, is displaying inconsistent correlations and being whipped around by competing news and views on uncertain events. The market can no longer rely on the US government to act as a source of stability for global markets. The rebound in Asian […]