26/ 06/ 2019

Fed Curbs Dovish Stance & Dollar Rebounds back, while Focus Shifts to G20 Summit

The European majors saw red again on Tuesday. Pressure on the majors continued to come from rising tensions in the Middle East as Trump rolls out fresh sanctions on Iran. There were no material stats out of the Eurozone on Tuesday to provide direction. Out of the U.S economic data included new home sales and consumer confidence figures. While the market focus was on China and Iran, the weak numbers certainly didn’t help yesterday.

Dollar edged up from a three-month low yesterday late session, as investors dialed back expectations for aggressive U.S. rate cuts next month but broader conviction the Federal Reserve will need to ease policy soon capped greenback gains. Fed Chairman Jerome Powell stressed the central bank’s independence from U.S. President Donald Trump, who is pushing for aggressive rate cuts. While this hosed down expectations for a half percentage point cut at the Fed’s July meeting, investors are still expecting at least a quarter percentage point reduction while yen traded near its highest versus the dollar in more than five months and is likely to edge higher as military tensions between the United States and Iran boost demand for safe-haven currencies.

However, trading is likely to subdued as the focus shifts to a meeting between Trump and Chinese President Xi Jinping at a Group of 20 summit over the weekend with chatter from Iran to also influence.

25/ 06/ 2019

Trumponomics Stirs Dollar Once Again While Investors will be glued to Jerome Powell’s Speech Later Today

The dollar hit a multi-month low against the euro and the yen earlier today on the prospects of monetary easing by the Federal Reserve while the safe-haven Swiss franc and gold rose on Middle East tensions. The euro hit a three-month high of $1.14105, having gained 2.0% from a two-week low of $1.1181 touched a week ago as the dollar has lost steam. Selling in the dollar has accelerated after the U.S. Federal Reserve last week signaled it would cut interest rates before year-end on mounting worries about fallout from tariff wars President Donald Trump is waging against China and other trading partners.

Investors were watching for new developments in the Middle East, while looking ahead to a key meeting between U.S. President Trump and Chinese President Xi Jinping at this week’s G20 summit in Osaka, Japan. In between, traders have to deal with economic reports and a series of Fed speakers who could shed some light on the criteria central bank policymakers will be using to make their next interest rate decision in late July.

24/ 06/ 2019

Week Ahead | Euro Hits 3-week Peak after Fed Easing signs but Focus will be Trump vs XI Meeting

Major global central bankers sang a chorus of dovishness last week. Most importantly, both ECB and Fed signaled the possibility of rate cuts ahead. Comparatively, RBA’s indication of more rate cut was not much a surprise. In the background, it appeared US and China were back on track to restart trade negotiations. 

Euro rose to a three-month high against the dollar earlier today, as bearish bets on the U.S. currency remained solid on prospects of a near-term interest rate cut by the Federal Reserve. Dollar index versus a basket of six major currencies was a shade lower at 96.135, having struck 96.093 on Friday, its lowest since March 21, after the Fed last week opened the door for a potential rate cut as early as next month. That weighed on the dollar and in turn reinvigorated its counterparts like the euro, which has had troubles of its own including Italy’s debt problem and the possibility of the European Central Bank having to ease policy.

This week focus will be around Jerome Powell’s speech, Trump & Xi meeting taking place on Friday while on economic data from US & UK GDP figures to be released on the latter part of the week.

20/ 06/ 2019

US Federal Reserve Signals Readiness for Rate Cuts ahead, Focus shifts back to BOE Rates

The dollar was on the defensive earlier today after the Federal Reserve signaled it was ready to lower interest rates to combat growing global and domestic risks. The Fed on Wednesday left interest rates unchanged as widely expected but said the case for lower rates was building, suggesting it could ease monetary policy as early as next month as it took stock of rising trade tensions and growing concerns about weak inflation.

Further pressure after Bloomberg reported that U.S. President Donald Trump believes that he has the authority to replace Fed Chair Jerome Powell and demote him to be a board governor.

Looking ahead of the day,  immediate focus for the yen was on the Bank of Japan’s monetary policy decision due out later. The BOJ is expected to keep its ultra-loose monetary policy unchanged but interest in markets will be on whether the Fed’s dovish tilt would have any bearing on its Japanese counterpart. The main market mover will be the UK Bank of England Interest Rate Decisions & Meeting Minutes, will the BoE continue to talk of the need to hike rates at an aggressive pace or has the economic data and shift in policy elsewhere caused a reevaluation.