We’d Be Cautious to Bet on a Dollar Reversal Now

Markets US December CPI was bang in line, coming in at 6.5% y/y (-0.1% m/m) in terms of headline and 5.7% (0.3% m/m) in the core gauge. Markets cheered as inflation momentum continued to slow even though the underlying, sticky price trend remains strong (services inflation at 0.6% m/m to 7.5% y/y, housing costs inflated […]

GBP/USD Edges Higher as GDP Outperforms

The British pound is slightly higher on Friday. GBP/USD is trading at 1.2234, up 0.24%. The pound has enjoyed a solid week, with gains of 1.2%. US inflation drops again US inflation continues to decline and slowed for a sixth straight month in December. Headline CPI fell to 6.5%, down from 7.1% and matching the […]

Canadian Dollar Showing Strength

The Canadian dollar has edged higher on Friday. In the European session, USD/CAD is trading at 1.3341, down 0.20%. The Canadian dollar is showing some strength lately, having posted only one losing session since January 5th and gaining over 200 points during that time. US dollar retreats after inflation slows US inflation declined in December […]

Weak Chinese Trade Data – Low Base for Subsequent Growth

China’s foreign trade data for December was another demonstration of why the government went for a loosening of covid restrictions. Exports last month were 9.9% below levels a year earlier, accelerating the decline from November’s -8.7%. Imports lost 7.5% to the same month a year earlier. The foreign trade surplus was $78.0bn, compared to $70bn […]

Earnings to Spoil the Party?

It’s been another lively week in financial markets and one in which investors have become increasingly hopeful that 2023 won’t be as bad as feared. In a way, the week started with the jobs report the Friday before as it was this that enabled the enthusiasm to build. The labour market has been a major […]

GBPUSD Pullbacks Despite Surprise in GDP Data

Britain, as previously with mainland Europe, is showing better than expected GDP performance, tempering expectations on the depth and duration of the looming recession. Monthly GDP estimates showed an unexpected growth of 0.1% in November after 0.5% in October, markedly better than the 0.2% contraction that had been expected. This was driven by a better-than-expected […]

Sunset Market Commentary

Markets The recent downleg in core yields finally came to a standstill. Markets yesterday further reduced expectations both on the pace of Fed hiking and on the end-point of the rate cycle after US inflation eased further in December (albeit in line with expectations). There we no really high profile eco data today. A first […]

Weekly Focus

Year 2023 has delivered for risk lovers thus far. Early signs of moderating core price pressures in the US, Chinese reopening and a mild winter in Europe are altogether positive signals for risky assets in short term. The problem is that a premature easing in financial conditions risks upholding underlying price pressures, and central banks […]

Week Ahead – Will the Bank of Japan Roll Out Another Surprise?

A volatile week awaits FX traders, featuring the first Bank of Japan decision of the year. It’s a close call whether policymakers will adjust their yield strategy once again, although even if they don’t, it’s probably only a matter of time. There’s also a deluge of data releases from the major economies.  Tough decision for […]

Fed Nears a Hiking Pause – History Points to Recession and Possible October 2023 Rate Cut

The Federal Reserve Bank has been on an aggressive tightening path since March 2022. A total of 425 bps of rate hikes have pushed the Fed Funds Rate to 4.25%, the highest level since December 2007. The market is pricing in an extra 58 bps of rate hikes by June 2023, but numerous forecasters have […]