Aus dem Ukrainekrieg ist eine weltweite Konfrontation geworden. Putin hat Syrien verloren. Dazu kommen Sabotageakte in der Ostsee und Rüstungswettläufe in Asien: Alles hängt mit allem zusammen.Market moves:
The theme all week is that it’s been tough to tie market moves to economic news/data and today was no exception. The jobs report was dovish at the margin and that was backed up by Dec cut odds rising to 85% from 70% along with a 5 bps decline in 2-year yields. Initially the dollar slumped, which is what you would expect; USD/JPY fell to 149.50 from 150.50 and EUR/SUD rose to 1.0625 from 1.585 and there were similar moves elsewhere.
However about an hour after the release, the moves in FX began to retrace (while the moves in bonds didn’t) and the euro move was erased completely while the yen move was halved. Some might point to the UMich data or comments from Bowman but that’s a stretch.
Some of it could be flows into USD-denominated assets like megacap tech, which hit new highs but that’s a stretch. I struggle to offer any other insight aside from a reiteration that the US dollar remains the cleanest dirty shirt going into 2025.
The dirtier shirts on the day were the commodity currencies, and that’s not a good look for global growth. The Canadian dollar had a good excuse as everything below the surface of the jobs report was soft, including unemployment rising to the highest since 2016. It’s clear that high rates are biting and 50 bps next week is necessary, with the market now pricing it at 83%. The loonie is close to the four-year low set in November and will post the lowest weekly close since 2020.
What was less expected was the poor performance of the Australian and New Zealand dollars on Friday as they matched the loonie’s weakness tick-for-tick. There could be a sympathy trade at work but today’s weakness comes after a +1% gain in Chinese equities on optimism about stimulus at next week’s Work Conference, copper prices have also improved.
In any case, both AUD and NZD are near the lows of the year and with the RBA up first on Nov 10 (no cut expected) that’s worth watching.
Have a great weekend.
This article was written by Adam Button at www.forexlive.com.
On the week:
This week was all about the mega-cap tech names playing some catch-up. Amazon has been particularly strong lately.
This article was written by Adam Button at www.forexlive.com.
There is a risk of some kind of Fed leak next week’s CPI re-shapes the picture but that’s unlikely. Given that the market is now pricing in an 85% chance of a December cut, the FOMC doesn’t need to send any kind of signal if the plan is to cut.
Cutting to 4.25-4.50% is hardly going to stoke inflation so it’s an easy call for the Fed to cut and wait to see what happens next in the broader economy.
This article was written by Adam Button at www.forexlive.com.
Morgan Stanley shares a tactically bullish stance on the USD, citing strong US data and trade policy risks. The EUR faces headwinds from weak domestic growth and tariff-related risks, while the GBP benefits from fiscal-driven growth and high rate differentials.
Key Points:
EUR:
GBP:
Conclusion:
Morgan Stanley expects the USD to maintain its upward momentum due to robust data and trade policy repricing. The EUR faces challenges from growth and rate differentials, while the GBP is poised for gains supported by fiscal resilience and attractive rate differentials.
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This article was written by Adam Button at www.forexlive.com.
Oil is still within the range of the past month but is dangerously close to a test of the 2024 lows.
There are signs that OPEC’s discipline is spreading to the US. Yesterday Chevron announced that it would lower 2025 capex by $2 billion this year to a range of $14.5-15.5 billion as it said it would prioritize free cash flow over production growth.
US oil production just appear to be close to stalling at levels just above the 2019 peak in a sign the market is well-supplied and investors aren’t looking for growth. That said, production will be rising in Guyana and Canada next year, so demand will have to rise to keep the market balanced.
This article was written by Adam Button at www.forexlive.com.
Der Hype um die Dubai-Schokolade könnte bald auch die Gerichte beschäftigen. Ein deutscher Unternehmer wirft Lindt Verbrauchertäuschung vor – und zielt auch auf Lidl und Aldi.