Richard Jones
Summary On 14 February, the US Treasury (UST) 2-year, 10-year, and the 30-year yields were at ~4.30%, ~4.5% and 4.70%, respectively. Back then, we thought UST yields would trade within the YTD ranges established at that time. UST yields then plummeted to new YTD lows and have now bounced. Market Implications We think that there […]
Richard Jones
Summary The USD Index (DXY) traded 3.5% lower last week – its worst week since November 2022. DXY is trading slightly higher this week, with the index down for six of the past nine weeks. A key DXY technical indicator, the RSI, is turning from being oversold. Market Implications With the technicals turning, we think […]
Richard Jones
Summary USD/CAD has been on a roller coaster ride so far this month, peaking just below 1.4800 on 3 February, and troughing at 1.4150 on 14 February (both intraday). The pair now trades at ~1.4440, near the middle of its year-to-date (YTD) range. After a one-month deferral on 4 February, President Donald Trump says 25% […]
Richard Jones
Summary Since the US election on 5 November, USD/CAD has rallied about 4.75%, and closed 2024 at the highest level since Q1 2003 (quarterly). President Donald Trump’s threatened 25% tariffs on Canada, with tomorrow (1 February) as a likely imposition date, has partly driven CAD weakness. However, the tariffs might not include oil, which should […]
Richard Jones
Summary The USD Index (DXY) is about 0.75% lower over the past week, dropping with US yields after slightly softer US core CPI. The DXY is about 1.5% off its recent closing peak (which printed on 13 January). Amid a flurry of executive orders from President Donald Trump, the USD has this week closed at […]
Ben Ford
Summary Having passed the federal government’s long-delayed amendments to the Reserve Bank Act back in November, Treasurer Chalmers has delivered the composition of the two new RBA boards. Two new members will join the Monetary Policy Board: Renée Fry-McKibbin and Marnie Baker. Four current board members will transition to the board. The new MPB will […]
Richard Jones
Summary Next week sees a flurry of event risk, with the Fed, Bank of Japan (BoJ) and the Bank of England (BoE) rate decisions standing out. Price action has been largely sideways the past month for the US dollar index (DXY) and US yields, with rangebound trading predominant. Expect markets to remain within the November/December […]
Richard Jones
Summary The UK 2-year yield hovers near last week’s six-month high. The Bank of England (BoE) Monetary Policy Review (MPR), following last week’s 25bps cut, broadly aligned with our expectations, without overly hawkish messaging. However, hawkish Fed pricing is feeding into BoE pricing, which challenges fading elevated UK short-end yields. Market Implications Despite the risks, […]
Richard Jones
Summary The US election triggered very choppy price action across all asset classes, with the USD especially volatile this week. USD/JPY, after spiking initially following the Trump victory, has pulled back considerably. USD/JPY price action makes us think further upside will not come easily, although volatility is likely to persist. Market Implications More USD/JPY downside, […]
Richard Jones
Summary Last week’s Japanese election saw the current ruling coalition lose its majority, starting a rare period of political uncertainty in Japan. Following very choppy price action, USD/JPY initially moved higher this week on this uncertainty, but now trades back near pre-election levels. The Bank of Japan (BoJ) kept rates on hold today but reaffirmed […]
Richard Jones
Summary USD/JPY has traded above 150 all week, closing above 152 for the first time since 30 July. Since troughing near 140 in mid-September, USD/JPY has rallied roughly 9%, with rising US yields as well as Japanese and US political the drivers. This has caught the Japanese Ministry of Finance (MoF)’s attention, whose top currency […]
Viresh Kanabar
Summary The BoC wants strong growth to absorb labour market slack. However, Q3 GDP growth could be nearer 1.6%, while core inflation may also undershoot in both Q3 and Q4 by 10bps. The BoC will likely look through October’s unemployment report given the hiring outlook remains weak. Market Implications We expect the BoC to cut […]
Richard Jones
Summary Since the Federal Reserve (Fed) cut 50bp on 18 September, yields across the US treasury (UST) curve have risen. Post-FOMC, overbought technical indicators have unwound as yields have risen. We remain cautious of a further rise in yields after tomorrow’s US non-farm payrolls (NFP) report. Market Implications Our bias remains to buy USTs on […]
Richard Jones
Summary The Swiss National Bank (SNB) cut 25bp yesterday, less than the 35bp the market priced. The SNB significantly lowered its Swiss inflation forecasts from June, citing the strong CHF as a key driver of weaker inflation. The SNB was very clear it is ready to intervene in currency markets and says further interest rate […]
Richard Jones
Summary Switzerland’s August inflation data came in weaker-than-expected across the board. This would normally lead to CHF weakness, but softer global risk sentiment this week resulted in the currency tracking sideways, with CHF haven demand offsetting weaker Swiss data. As we wrote last month, we think the Swiss National Bank (SNB) will intervene in the […]
Richard Jones
Summary As we wrote last week, August seasonality has seen reduced market liquidity and rendered trading conditions suboptimal. This is especially true in USD/JPY, having a ~6% high/low range in the three trading days between 1 and 5 August. Expect another week of choppy, illiquid markets, with new direction in USD/JPY emerging only next month. […]
Richard Jones
Summary Amid the market turmoil this week, on Monday EUR/CHF traded at its lowest level since 2015 (~0.9211). That day, the Swiss National Bank (SNB) abandoned the EUR/CHF ‘floor’ at 1.2000. Since then, although the pair has traded choppily, EUR/CHF has bounced decisively off this week’s low to now trade over 2.5% higher at 0.9460. […]
Richard Jones
Summary Since the Japanese Ministry of Finance (MoF) bought JPY on 11 July, USD/JPY has declined ~5.75%, its biggest two-week drop since late last year. USD/JPY is now trading at its lowest level since early May (~152.50). Much event risk exists for USD/JPY in the next week. The Bank of Japan (BoJ) updates monetary policy […]
Richard Jones
Summary After weaker-than-expected US CPI last week, the 2-year US Treasury yield broke below the ~4.6% floor in place since early April. The yield remains below this level, having touched ~4.4% this week. Similarly, the UK 2-year yield has traded lower over the past couple months. The yield gained momentum over the past week, printing […]
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