This Morning's Risk Vibe is Related to Looser Chinese Covid-rules

Market The reaction to Friday’s strong payrolls report is telling. Net job growth beat consensus at 263k with average hourly earnings growth accelerating to 0.6% M/M and 5.1% Y/Y. The unemployment rate stabilized at 3.7%, though a lower participation rate helped. The payrolls confirm the still red hot US labour market and seemed to serve […]

Can the BoC Meeting Deliver Any Surprises?

The Bank of Canada is about to announce another rate hike on December 7. The market expects a 25bps rate increase despite the upside surprise in the Q3 GDP and the tight labour market. Chances of a bigger rate hike appear slim, but such an announcement could have a sizable impact on the loonie. BoC defied market pricing at […]

Australian Dollar Calm ahead of RBA

The Australian dollar has posted slight gains at the start of the trading week. AUD/USD is trading at 0.6801, up 0.10%. RBA likely to deliver 25-bp hike The Reserve Bank of Australia meets on Tuesday and is expected to hike by 25 bp for a third straight time. This would bring the cash rate to […]

A Nervy Start to the Week

What could have been a really positive week for equity markets is off to a much more nervy start, with stocks in Europe treading water and US futures slightly lower. The inflation report on Friday was red hot once more, extinguishing any hope that investors could hop aboard the Fed pivot train and ride stock […]

How Far Can Gold Rally?

For over a month now, gold prices have been trending higher, gaining over 10% since the start of November. Naturally this poses the question of whether a new peak is coming, or will the precious metal keep moving up through next year. The prospect of inflation in the early part of 2023 might keep investors […]

Sunset Market Commentary

Markets When the Fed wants to make some last-minute changes to market positioning going into a Fed policy meeting, they often make use of their favorite news media, the Wall Street Journal, to dot the I’s and cross the T’s. It didn’t surprise us to read exactly that today. “Brisk wage growth could lead officials […]

FX Year Ahead 2023: Recessions and Trend Reversals

The US dollar steamrolled every other major currency this year, capitalizing on a perfect storm of widening interest rate differentials, safe-haven flows, and an absence of attractive alternatives. This ferocious rally could extend into next year, as most economies will likely fall into recession long before the US does. Nonetheless, the second half of the […]

Strong US Data Stokes 'Rate Fears' and Curbs Risk Appetite

Market movers today Today, Germany releases factory orders for October where consensus expects a stabilisation after two consecutive months of steep contraction. The regional network survey is out from Norway. The September edition pointed to a fairly significant slowdown ahead with firms expecting profitability to deteriorate over the coming year. There has been a number […]

Fed Hawks Are, Of Course, Back

Stocks fell and the US dollar strengthened on Monday. One of the reasons that could have triggered the move was a stronger-than-expected ISM services read in the US, which came in above expectations, and hinted that the economic activity, at least in the US services sector continues growing, and growing un-ideally faster-than-expected despite the Federal […]

RBA Board Raises the Cash Rate by 0.25%

Contrary to widespread expectations RBA Board retains strong tightening bias. The Reserve Bank Board lifted the cash rate by 0.25%. While that decision was strongly promoted by Westpac there was real uncertainty in markets with only around an 80% probability attached to it. Markets were even more convinced that the Governor would soften his guidance […]