10/ 07/ 2019

Fed Powell did not crumble Under Pressure, Markets Embrace for FOMC and ECB Meeting

Dollar remains the strongest one for the week even though upside momentum is diminishing today. The single most important factor for Dollar’s next move is whether Fed would cut interest rate at this month’s meeting. A 50bps cut is basically priced out by the markets, but futures still indicate 100% chance of a 25bps cut. Hopefully, markets would finally get a clue from Fed Chair Jerome Powell’s semi-annual Congressional testimony. The greenback could be given a strong boost should Powell suggest that a July cut is far from certain.

Euro dropped to a three-week low against a broadly stronger dollar on Tuesday, as investors re-assessed their expectations of how much the Federal Reserve may cut interest rates this month. British pound feel towards its lowest levels in more than two years against dollar, as worsening economic outlook and rising fears about a no-deal Brexit under a new Prime Minister weight on Pound.

Most of the talk lately has been about the Federal Reserve, Treasury yields and the U.S. Dollar, but equal weight should be on the Euro especially since the European Central Bank (ECB) meets on July 25, six days before the U.S. Federal Reserve’s interest rate decision.

09/ 07/ 2019

Euro Loses Ground Against Dollar, Focus Shifts to Jerome Powell Speech

Euro declined against the U.S. dollar on Monday, as dollar continued its march after news of a stronger-than-expected increase in U.S. jobs in June scaled back traders' expectations of a sharp Federal Reserve rate cut at the end of July. Traders await Fed Chairman Jerome Powell's two-day testimony before Congress, which starts on Tuesday for clues about a rate decrease.

While sterling pound hovered near a six-month low against the dollar yesterday, as investors continued to bet on lower British interest rates and added to their short positions on the currency. As major central banks around the world including the Fed shift towards monetary policy easing, investors are betting that the Bank of England will follow suit. Last week it fueled investors’ expectations of a 25 basis point cut over the next 12 months, hurting the pound. Uncertainty over Britain’s departure from the European Union, as well as over who will become the new British prime minister and lead the country out of the bloc.

Trading in the currency markets are generally muted as focus remain on Fed Chair Jerome Powell’s testimony, which starts today. His comments with Trump’s bad judgement about US Federal Reserve’s stance on interest rates, will, hopefully, clear the picture on whether Fed will cut interest rates this month.

08/ 07/ 2019

Dollar outshines Rivals on Strong NFP Figures last week, Jerome Powell's speech will be key this week

Markets last week very quiet due to US Holidays & scarce macroeconomic calendar exacerbating the lack of action. Such picture changed Friday with the release of the US Nonfarm Payroll report. Ahead of it, the market was convinced that the global economic slowdown would mean easy money coming. Stocks soared, with Wall Street flirting with record highs, while safe-haven assets benefited from those fears, and government bond yields fell to multi-year lows.

The NFP changed it all. The US economy added 224K new jobs in June, largely surpassing the 160K expected. The unemployment rate ticked up to 3.7%, but the increase in the participation rate partially offset its negative by raising to 62.9%.

Sterling declined against the dollar on Friday, as poor economic data and a rise in expectations that the Bank of England will cut interest rates weighed on sterling.

This week, investors decided the Bank of England will not be immune from the pressure to ease and are now pricing in a rate cut over the next 12 months relatively dovish comments from Governor Mark Carney during the week heightened such expectations.

But major highlight will begin from Tuesday till Thursday with two appearances of Jerome Powell Fed Chairperson, US FOMC Minutes & ECB Non-monetary policy meeting minutes.

04/ 07/ 2019

Eyes on Eurozone Retails Sales Amid Light Trading

The forex markets are generally steady in Asian session today. Trading is rather subdued with US markets on holiday. But volatility will definitely come back with job data tomorrow. 

The euro was little changed against the U.S. dollar yesterday, as initial enthusiasm over the latest U.S.-China trade truce was overtaken by fresh concerns over Washington’s threat of tariffs on additional European goods kept investors cautious. Sterling declined against the dollar, after the release of data that showed the UK's services sector struggled in June. Britain’s economy appears to have shrunk for the first time since late 2012 between April and June as worries about Brexit were compounded by global trade tensions, a closely watched survey showed on Wednesday.

The Greenback was on the backfoot in the early part of the day as the markets reacted to weak numbers out of the U.S. It’s a quiet day ahead on calendar.