Richard Jones
Summary USD/CAD is down for the sixth successive week, and for the eighth week in ten. The pair printed a new YTD low this week, where it currently trades. USD/CAD is approaching its 200-day moving average (DMA), very near 1.4000. Market Implications We think the 200-DMA should robustly support USD/CAD and with an RSI approaching […]
Richard Jones
Summary EUR/USD is up ~6% so far year-to-date (YTD). The pair hovers about one percentage point off its YTD high seen yesterday, having gained about 1.5% this week ahead of the US jobs report and Powell’s speech later today. Technicals show EUR/USD as overbought in the near-term, coinciding with CTAs ramping up EUR/USD long positioning. […]
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) is rising this week, for only the second week in seven. DXY technicals were oversold, but the Relative Strength Index (RSI) has partly unwound. Room exists for RSIs to unwind slightly higher in the coming days. Long and short USD exposures are not crowded. This clean positioning means chances of […]
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 President Donald Trump imposed 25% tariffs on all Canadian goods this week, although a one-month exemption has been granted for the auto industry. USD/CAD rose on the news but is now lower on the week. This is partly because of the prospect of the auto exemption, but also on broader USD weakness. The US-Canada […]
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 UK gilt yields have risen across the curve in the past two weeks. Bank of England (BoE) Governor Andrew Bailey downplayed any inflation rise, instead focusing on the UK’s weak growth environment and accelerating disinflation. Momentum players have increased UK gilts bearishness. Market Implications We think the rise in gilt yields presents an opportunity […]
Ben Ford
Summary The RBA cautiously lowered the cash rate by 25bps to 4.1% at its February meeting. Three factors drove the easing bias, one held it back. 1) Moderating underlying inflation saw price pressures below RBA forecast. Forward-looking data suggests continued easing, too. 2) Subdued private demand growth has worried the RBA. They have baked in […]
Richard Jones
Summary Roughly seven weeks into 2025, and the US treasury (UST) market has already established decent, tradable year-to-date (YTD) ranges. For 2-year, 10-year and 30-year UST yields, trade has been choppy but should now churn around within the YTD ranges into March. With tariffs set to start next month (or, for Canada and Mexico, additional […]
Henry Occleston
Summary The BoE cut 25bp, as expected. MPR forecasts were bearish, and comments still indicate more cuts ahead. I read little into the two 50bp votes. Upward revisions to MPR near-term inflation forecasts exceeded our expectations, with smaller impact from one-offs than we anticipate. Despite labour market loosening, medium-term inflation is below target but still […]
Richard Jones
Summary Over the past week, USD/CAD has been a roller coaster, rallying to a 20+-year intraday high near 1.4800, closing yesterday at a low just above 1.4300 (where it trades now). President Donald Trump’s removal of 25% tariffs on Canada this Monday caused the whipsaw CAD price action. The tariff question will be revisited early […]
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 […]
Viresh Kanabar
Summary The BoC cut 25bp as expected, while ending QT. The reduction in 2025 GDP growth forecast is not dovish as the BoC reduced its assumption for potential growth. Importantly, the bank’s estimate of the output gap narrowed to -0.75% from -1.25%. This implies there is less economic slack than previously thought. Despite stronger consumer […]
Viresh Kanabar
Summary We expect the BoC to cut its policy rate by 25 bps tomorrow. Despite a bearish consensus, we don’t see a further reduction in growth forecasts but appreciate the risks to the downside. That’s because we see green shoots in activity, hiring, and investment. Expect Gov Macklem to continue pushing the case for slower […]
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 […]
Richard Jones
Summary Beginning in Q4 2024, the US dollar index (DXY) ascent has impressively climbed over 9% since troughing in late September. DXY upside accelerated after Trump’s election victory, with roughly two-thirds of the gain from Q4 occurring since the US election. As Trump takes power next week, we think the USD could be topping out […]
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 […]
Henry Occleston
Summary We expect the ECB to cut 25bp on 12 December. It will also update macroeconomic projections, which are likely to see dovish revisions with inflation sustainably at target in H1 2025. We expect the ECB to avoid fully opening the way to 50bp cuts, but comments will likely add that they are flexible to […]
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