Is China "Reopening"? The Forex Impact

China’s covid policy hasn’t led to a nationwide lockdown, so it’s more of a metaphor to talk about “reopening”. However, the economic impact from a shift in the current zero-covid policy could be seen as a parallel to when other countries “reopened” in 2021 (and then were subject to renewed restrictions with the omicron variant). […]

Weekly Focus

Whereas last week ended on the note that we may be approaching the point of peak hiking pace, this week brought a reality check. The Federal Reserve hiked rates by 75bp on Wednesday and the widely expected hike was accompanied by Powell’s hawkish message that financial conditions need to be tightened further. In contrast to […]

Week Ahead – Brace for US Midterm Elections and Inflation Data

There are only a handful of events next week but they will be crucial for markets. A divided Congress is the most likely outcome when Americans go to the ballots, setting the stage for two years of political deadlock. Meanwhile, the latest US inflation data will decide the pace of future Fed rate increases and […]

Week Ahead – Control of Congress

US This week will be massive for markets as investors closely watch to see how inflation moderates. In addition to watching to see if inflation comes down from a 40-year high, Wall Street will pay close attention to the midterm elections. Right now polls are suggesting Republicans have a good chance to take over both […]

U.S. Inflation Data to Foreshadow Further Interest Rate Hikes

The next inflation reading from the U.S. will still be way too high to prevent another round of interest rate hikes. Year-over-year consumer price growth is expected to edge lower, to 8.0% in October from 8.2% in September. But that is despite an expected large 0.7% month-over-month increase. The price of gasoline rose 4% from […]

Sunset Market Commentary

Markets And it’s back to the drawing board for the ECB. Less than 24 hours after their “dovish” 75 bps rate hike, they faced runaway inflation numbers in Germany (1.2% M/M & 11.6% Y/Y), France (1.3% M/M & 7.1% Y/Y), Italy (4% M/M & 12.8% Y/Y) and Belgium (2.37% M/M & 12.27% Y/Y) for the […]

Is Swiss Franc Headed to Parity?

The Swiss franc is in negative territory for a second straight day. In the European session, USD/CHF is trading at 0.9975, up an impressive 0.69% on the day. Swissie weakens on KOF barometer The KOF Economic Barometer decreased in October to 90.9, down from 92.3 in September. This marked the sixth successive month that the […]

Weekly Focus

We saw flatter yield curves this week on a string of weaker than expected US data releases. Particularly the housing market is increasingly getting attention as the surge in mortgage rates weighs heavily, with new home sales down 10.9% in September, and also prices trending lower, which could soon be reflected in consumer demand. This […]

Fed Preview: Too Early for a Pivot

Fed Preview: Too Early for a Pivot We expect Fed to hike by 75bp next week, which is fully priced in by the markets. The recent soft macro data and the WSJ article suggesting that moderation in hiking pace could be near have sparked a ‘pivot’ rally in the markets – we think it is […]

Week Ahead – Fed and BoE to Raise Rates ahead of US Payrolls

Another extraordinary week is coming up. The Fed is almost certain to raise rates, putting the spotlight on Chairman Powell, who needs to open the door for a smaller rate hike in December without giving the impression of a pivot. Meanwhile, central bank decisions in the UK and Australia will be crucial for those currencies, […]