reports
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Prepping for a hawkish Fed cut
After this week's 'rate ripple', the focus today switches to North America. Here we have policy meetings for both the Fed and the Bank of Canada. The Fed is widely expected to deliver a hawkish cut, which leaves the risk on short-dated US rates and the dollar skewed to the upside. For the BoC, there could be some pushback against rate hikes priced for 2026
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Rates market launch their own hostile takeover
Just like London buses, you wait ages for a hostile takeover and then two come along at the same time. That was the story yesterday with Paramount launching a hostile bid for Warner and short-term interest rates launching their own hostile takeover of global financial markets. A bearish re-pricing at the short-end of rate curves may keep the dollar bid
- Chris Turner
- David Havrlant
- Dmitry Dolgin
- Francesco Pesole
- Mateusz Sutowicz
- Muhammet Mercan
- Peter Virovacz
- Stefan Posea
- Valentin Tataru
FX Talking: We need to talk about Kevin
The DXY dollar index is ending the year around 9% lower, with the entirety of those losses coming in the first half. In retrospect, that dollar sell-off seems largely a function of the buyside adjusting their USD hedging ratios from levels that were too low. Importantly, there was no fire sale of US assets
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Markets start to price some hikes
Moving towards year-end, we're starting to see FX markets looking ahead into 2026 and pricing the first rate hikes amongst a broader range of countries. Beyond Japan, the market now prices hikes in Australia and Canada, and could perhaps even start to do so for the eurozone after today's comments from the ECB's Isabel Schnabel. This could weigh on the dollar
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Yen finally finds some support
In thinning December markets, the Japanese yen has finally found some support. A speech earlier this week by Bank of Japan Governor Kazuo Ueda seemed to firm up views that the Bank is ready to hike on 19 December. We're mildly bearish on USD/JPY in 2026, but it will be a slow grind
- Chris Turner
- Francesco Pesole
FX Daily: Negative USD seasonality starting to show
The dollar decline is trying to gather some pace with December's negative seasonality pairing up with poor US data and lingering USD overvaluation relative to short-term drivers. We could see some stabilisation today, but we retain a bearish bias on the dollar, and our EUR/USD target for year-end remains 1.180
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Markets firm up the Hassett trade
News overnight that the Trump administration had abruptly cancelled interviews with finalists for the Fed chair nomination has firmed up the view that Kevin Hassett will replace Jerome Powell next May. The market response to Hassett's dovish leaning is a weaker dollar, a steeper yield curve and a rally in risk assets
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Last chance for the hawks
This week's data will present the last chance for markets to reconsider a December Fed cut that is now fully priced in. While the market's dovish bets appear too high, we think the ISM, ADP and PCE figures will validate them. The dollar remains vulnerable this week, and the yen could extend gains as a BoJ hike this month is now suddenly much more likely
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Waiting for a peace deal breakthrough
Volatility should remain capped due to tight US volumes today. The main driver into next week is a potential build-up in expectations of a breakthrough in the Russia-Ukraine peace negotiations, which should weigh on the dollar and asymmetrically favour high-beta European currencies
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Reeves keeps sterling afloat
The pound has welcomed yesterday's UK Budget announcement, as improved fiscal headroom is seemingly not coming at a hefty price for growth. Still, a Bank of England cut in December is still on the table. Expect thinner liquidity into the weekend, with the dollar potentially stabilising after this week's correction
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Sterling faces dual risks on Budget day
The UK Budget announcement (12.30 GMT) will see markets weigh both fiscal and inflationary implications. Sterling faces moderate downside risks in a non-inflationary, fiscally tight scenario, and severe risks if fiscal sustainability is called into doubt. Elsewhere, the dollar has more potential to depreciate despite yesterday's correction
- Francesco Pesole
Treasury FX Report preview: Tighter scrutiny, no manipulator tags
The November FX Report has been delayed but should be released soon. We expect an emphasis on the changing approach towards a tighter scrutiny on US partners' FX practices, but we don't think we'll see any FX manipulator designation by Treasury. Thailand should, however, join the Monitoring List, and Switzerland will remain a focus point for markets
- Francesco Pesole
Treasury FX Report preview: Tighter scrutiny, no manipulator tags
The November FX Report has been delayed but should be released soon. We expect an emphasis on the changing approach towards a tighter scrutiny on US partners' FX practices, but we don't think we'll see any FX manipulator designation by Treasury. Thailand should, however, join the Monitoring List, and Switzerland will remain a focus point for markets
- Chris Turner
- Francesco Pesole
FX Daily: The dollar is due a correction
A December Fed cut is back as a baseline scenario for markets, but the dollar has remained relatively strong. Our short-term valuation metrics point to significant risks of a USD correction, unless data prompts a hawkish repricing. Geopolitics will remain in focus, both for European FX (Ukraine peace talks) and the yen (Japan-China tensions over Taiwan)
- Francesco Pesole
Reserve Bank of New Zealand preview: Last cut of the cycle
We expect the Reserve Bank of New Zealand to cut rates by 25bp to 2.25% on 26 November. However, upside risks to inflation and growth mean, in our view, that this will be the last cut of the cycle. With markets still speculating on further easing, there is room for NZD to benefit from a more hawkish RBNZ assessment this week
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Prospects of Ukraine peace starting to show
We've been here before, but prospects of a peace deal in Ukraine are starting to show in FX. CEE FX is holding last week's gains, and EUR/CHF is now also edging back above 0.93. Lower energy prices should be supportive for the euro. Further progress on peace discussions and potentially a softer Fed Beige Book on Wednesday could see EUR/USD hold 1.1500
- Chris Turner
- Francesco Pesole
FX Daily: EUR/USD hanging in there
It could have been a lot worse for EUR/USD this week. A set of FOMC minutes that poured cold water on a December rate cut and a strong headline rise in the US jobs report could have seen 1.1500 taken out again. But instead, investors seemed to have just delayed rather than abandoned pricing for Fed easing. And Europe may still being showing some signs of life
- Chris Turner
- Francesco Pesole
FX Daily: Dollar rally overdone despite December's cut in doubt
EUR/USD has dropped significantly more than what the swing in rate differentials can justify. So, while a December Fed cut has clearly decreased in probability, there are downside risks for the greenback ahead of today's payrolls. A bad payroll print could prompt FX intervention on USD/JPY, which has kept marching towards 160
- Chris Turner
- Francesco Pesole
FX Daily: Bracing for the tech shock
Global markets are trading in a slightly nervous fashion as they brace themselves for a potential correction in US tech stocks. So far, the correction has been modest compared to the 25% fall in bitcoin, but events over the next 24 hours will have a say in whether moves extend. We'll have FOMC minutes, Nvidia earnings and the September jobs report
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