reports
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: BRICS quietly leaving the Treasury market
This week's central bank meetings have not been explosive for FX markets, but have provided some support to sterling and weighed on the yen. We note in the overnight release of US Treasury TIC data for October that the BRICS nations' holdings of US Treasuries continue to edge lower. For today, the focus will be on how far USD/JPY has to rise
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Stretched positioning may be sterling's only friend
PIt is a very busy day for central bank policy meetings in Europe. There are probably some downside risks to the euro and sterling from these event risks, but stretched short positioning may prevent a larger sterling sell-off. We also see some downside risk to the CZK on today's local central bank meeting, where a lower inflation profile could be discussed
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Soft dollar trend remains intact
A soft-looking set of US jobs data yesterday took the DXY dollar index down to the lowest levels since early October. And the big drop in energy prices should prove a boon to the energy-importing currencies in Europe and Asia. For today, the German Ifo could disappoint in line with the local PMI releases, and a speech from the Fed's Waller could be influential
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: EMFX ending the year on a strong footing
EM currencies are generally ending the year on a strong footing – enjoying the benefits of lower core policy rates, a modestly weaker dollar and many offering high carry. There is a lot of focus on the renminbi at the moment and whether China's $1tr trade surplus will drive the renminbi much stronger. For today, the focus is on US jobs and eurozone PMIs
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Dollar stays soft ahead of a busy week
The dollar opens the week on the softish side ahead of a very busy schedule of data and central bank meetings in the G10 space. The data highlight will be tomorrow's release of November US payrolls, but we'll also see some key Fed speakers. The theme of which central bankers will be prepared to accept market pricing of 2026 rate hikes remains in focus, too
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Dollar stabilises as markets digest Fed signals
The US dollar stabilises after post-Fed selling, pressured by lower rate expectations and seasonality. Attention is moving to the ECB and German inflation to test the hawkish market switch. CEE markets remain calm ahead of key central bank meetings next week, while Turkey cut rates by 150bp amid easing inflation
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: It could have been worse for dollar bears
The Fed's 25bp rate cut was perhaps not as hawkish as some had feared. The dollar initially sold off on what could be seen as reflationary communication. Here, the Fed revised GDP forecasts higher but stuck with its call of a rate cut in both 2026 and 2027. Markets now move onto the next big inputs before year-end: namely, US jobs data and central bank meetings
- 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
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