reports
- Chris Turner
- Francesco Pesole
FX Daily: China isn't backing down
China has ramped up retaliation against the US trade investigation, and markets are again jittery about the prospects of a fully-fledged re-escalation. There are downside risks for the dollar, but mostly against other low-yielders, as markets prefer to dump higher-beta currencies for now. Today, watch for NFIB data and a Powell speech
- Adam Antoniak
- Chris Turner
- David Havrlant
- Deepali Bhargava
- Dmitry Dolgin
- Francesco Pesole
- Frantisek Taborsky
- Leszek Kasek
- Lynn Song
- Mateusz Sutowicz
- Min Joo Kang
- Muhammet Mercan
- Peter Virovacz
- Rafal Benecki
- Valentin Tataru
- Zoltán Homolya
FX Talking: No data, no bears
Depriving investors of US macro data, the government shutdown has brought a reprieve to the dollar. Bears have become discouraged by the lack of soft jobs evidence, and many have thrown in the towel. Dollar positioning looks more balanced now, but we see this as a temporary dollar bounce before two further Fed cuts and seasonal weakness into year-end.
- Chris Turner
- Francesco Pesole
FX Daily: Dollar shows its vulnerable side
The dollar revealed its vulnerability during Friday afternoon's FX trading. The fear remains that this year's hike in US tariffs will eventually show up in hard data and once again challenge the idea of US exceptionalism. In the ongoing absence of US data, this week will be dominated by central bankers at the IMF meetings and international politics
- Chris Turner
- Francesco Pesole
FX Daily: USD rally isn't a blip, but will struggle to accelerate
Markets are quite clearly rethinking popular short-USD trades, but further gains may prove harder to sustain unless markets start to price out Fed easing. With the US CPI report reportedly being published next week, we actually see a good chance an October cut will be greenlighted. Today, keep an eye on more French news and Canada's jobs numbers
- Chris Turner
- Francesco Pesole
FX Daily: French politics delivers some euro support
In the absence of US data, FX markets have largely focused on French and Japanese politics, plus surprise rate cuts in New Zealand and Poland. There is also the fallout from the First Brands bankruptcy in the US. But the risk environment remains well-supported and traders may increasingly switch from dollar to yen-funded carry trades
- Chris Turner
- Francesco Pesole
FX Daily: Fed minutes can throw cold water on USD rally
The dollar continues to rally, with political events in France and Japan weighing on the two largest components of DXY – EUR and JPY. Today's deadline to form another government in France bears downside risks for EUR, but the dollar run looks overdone and dovish-leaning Fed minutes could trigger a correction. Elsewhere, the RBNZ surprised with a 50bp cut
- Chris Turner
- Francesco Pesole
FX Daily: Yen under pressure, but this is no 2013
FX markets remain relatively quiet as the US government remains shut and Chinese Golden Week continues. The top story remains developments in Japan, where the election of Sanae Takaichi has knocked 6bp off the expected Bank of Japan tightening cycle and weakened the yen. We'll need to raise our USD/JPY forecasts, but this is no 2013 Abenomics story
- Benjamin Schroeder
- Charlotte de Montpellier
- Francesco Pesole
- Michiel Tukker
French PM resignation signals heightened budget risks
France is entering a new phase of political uncertainty following the resignation of Prime Minister Sebastien Lecornu, who stepped down less than a month after being appointed. New elections are becoming increasingly likely but will not solve the fiscal problems
- Chris Turner
- Francesco Pesole
FX Daily: Prepare for another abnormal week
There has been very little progress towards ending the US government shutdown. This means more data delays and an exacerbated focus on other market events this week, including the FOMC minutes and a slew of G10 central bank speakers. We don't expect any major breaks in the dollar, and we wouldn't chase USD/JPY much higher despite political events
- Chris Turner
- Francesco Pesole
FX Daily: Ain't nothing going on but AI
Financial market volatility is falling across the board, partly driven by the US government shutdown and the delay to key data releases such as the September jobs data. Instead, investors remain transfixed by the AI-driven rally in megacap tech shares, which shows no signs of slowing. Today, look out for US ISM services data, Fed speakers and Turkish CPI
- Francesco Pesole
Reserve Bank of New Zealand preview: Cutting in the dark
We expect the Reserve Bank of New Zealand to cut rates by 25bp on 8 October, in line with consensus and pricing. Markets are betting on two more cuts after October, which looks a bit premature having not yet seen third-quarter CPI data. Dovish bets suggest downside risks for NZD are reduced into year-end
- Chris Turner
- Francesco Pesole
FX Daily: Outsized tier-two data sensitivity
With many major US data releases withheld due to the government shutdown, alternative measures (yesterday's ADP, today's Challenger data) are set to have a longer-lasting impact on markets than usual. We still see the yen as in a better position to benefit from additional USD losses than the euro
- Chris Turner
- Francesco Pesole
FX Daily: Shutdown and slowdown weigh on the dollar
The dollar has turned a little softer today after the US Congress failed to reach a deal to avoid a government shutdown. Investors are fearful that this could be a longer shutdown, which will only weigh further on consumer confidence and job security. We continue to favour some modest further gains for the yen and the euro
- Deepali Bhargava
- Francesco Pesole
RBA holds rates steady as inflation heats up and growth outperforms
The Reserve Bank of Australia holds its cash rate steady at 3.6%, in line with expectations. The cautious stance reflects concern over rising headline CPI inflation. As it stands, we think the probability of a rate cut at the November meeting has meaningfully diminished. The Aussie dollar remains supported
- Chris Turner
- Francesco Pesole
FX Daily: US government shutdown to favour the yen
The yen could emerge as an outperformer as a hedge to the US entering a government shutdown tomorrow. Today, the focus is on data though, with the JOLTS report watched closely after last month's poor read, and also considering the chance payrolls figures will be delayed. Elsewhere, the RBA's hawkish hold reinforces our bullish view on AUD
- Chris Turner
- Francesco Pesole
FX Daily: Dollar bears to be stress-tested again this week
The dollar starts the new week on the softer side after solid gains last week. Following some much better activity data for the US, the question now is whether the jobs data is weak enough to justify further Fed rate cuts. That's why there's going to be extra scrutiny on data like JOLTS, weekly claims and Friday's payroll report. We favour a mildly softer dollar
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Dollar rebound shouldn't have long legs
A benign 0.2% MoM core PCE print today could be enough for the dollar to start giving back some of this week's gains, which in our calculations are a bit overdone. EUR/USD should make it back above 1.170 (even as early as today), although markets need to remain sanguine on geopolitical risks
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Swiss National Bank faces limited options to weaken franc
The dollar is a little stronger as investors reassess the immediacy of a US slowdown and what it means for interest rates. One early highlight for Europe is the Swiss National Bank meeting. Hardly anyone expects the policy rate to be cut into negative territory, but the franc remains strong and the SNB could try tweaking rates on excess reserves
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: European FX remains immune to geopolitical noise
Trump's change of tone on Ukrainian territory and suggestion to shoot down Russian planes violating NATO airspace have had no impact on European currencies, although they raise downside risks. Macro events look unlikely to steer volatility today. On central bank news, the Riksbank surprised with a cut yesterday, but should be done with easing
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Loonie to remain G10's black sheep
As the USD shed some post-Fed gains at the start of this week, the Canadian dollar again stood out as an underperformer. The worsening jobs market, trade uncertainty and possibility of more Bank of Canada rate cuts should keep weighing on CAD against the rest of G10, in our view. Today is PMI day, with central bank speakers (including Powell) still in focus
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