Intraday Market Thoughts

3% Pulls Dollar Higher

Apr 24, 2018 0:51 | by Adam Button

Bonds remained the dominant driver on Monday as US 10-year yields close in on 3%. The US dollar led the way while the yen lagged. Australian CPI is due up next. Below is the video for Premium subscribers clarifying Ashraf's take on USD in terms of price and time.

إلى أين قمم الدولار ؟ (فيديو للمشتركين)

The US 10-year on-the-run note rose as high as 2.9957% on Monday in a 2 basis point rise. It's a fresh high this year but all the focus is on 3%, which may spark some worries about borrowing costs. It's an arbitrary number but the underlying theme is a Fed that's increasingly confident about hikes. Another level to watch is 3.22% in 30-year bonds. That level was the top in 2016, 2017 and earlier this year.

The dollar was helped along by several economic releases. The Markit services PMI was at 54.4 vs 54.1. The manufacturing PMI was at 56.5 vs 55.2 expected and existing home sales rose to 5.60m vs 5.55m expected.

Cable fell back below 1.40 in the fifth day of sharp declines on a BOE re-think. Adding to the woes is Theresa May's sudden inability to get legislation through the House of Lords. 

Looking ahead, the focus will shift to the Australian dollar with Q1 CPI data due at 0130 GMT. It's a critical report that's expected to show inflation rise by 0.5% in the quarter, a slight deceleration from 0.6% in Q1. That's in contrast to the trimmed mean, which is forecast to accelerate to 0.5% from 0.4% q/q.

Act Exp Prev GMT
CPI (q/q)
0.5% 0.6% Apr 24 1:30
Flash Manufacturing PMI
56.5 55.2 55.6 Apr 23 13:45
Existing Home Sales
5.60M 5.55M 5.54M Apr 23 14:00

Treasuries Bite, Euro Longs Hit Record

Apr 23, 2018 11:24 | by Adam Button

The positive USD-Yields narrative makes a noisy comeback as US 10-year yields touches 2.99% on a combination of eroding risks on the geopolitical and trade front. CFTC positioning showed euro longs at a record. The USDJPY Premium trade was stopped out, while the risk parameters on the GBPUSD trade were adjusted. Below is the performance table indicating our the outcome of the last 7 Premium trades in USDJPY, with 5 trades closed at a profit & 2 stopped out.

Oil, N. Korea & US-China

Rising oil prices combined with reports that North Korea will suspend its nuclear testing activity and continued negotiations between the US and China with regards to trade and tariffs helped to elevate bond yields across the board. Unlike the February episode of surging bond yields, this one does not include evidence/fear of high inflation.

The US dollar also began to get a lift from the bond market as the spread over German equivalents rises to long-term extremes at various points on the curve. Add in the extremely crowded positioning in euro longs (see below) and there is an elixir for a near-term move.

Another development on Friday was disappointment for Canadian dollar bulls. Poloz put the focus squarely on data and numbers on CPI and retail sales were soft, sending USD/CAD up to 1.2760 – more than a cent higher on the day.

In the UK, the confusion about what the BOE will do next continued to undercut cable and the pair fell below 1.40 to start the week. On Thursday, Carney will get a chance to massage the message.

CFTC Commitments of TradersSpeculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR +151K vs +147K prior GBP +48K vs +43K prior JPY +3K vs -4K prior CAD -30K vs -32K prior CHF -11K vs -11K prior AUD -10K vs -3K prior NZD +27K vs +22K prior

The slight rise in the euro net position pushed it to an all-time record. Given the recent string of poor data, that is a precarious position.

Act Exp Prev GMT
CPI (q/q)
0.5% 0.6% Apr 24 1:30

Carney Cuts Cable

Apr 20, 2018 14:18 | by Ashraf Laidi

The British pound sustains its biggest weekly decline in over four months after BoE governor Carney sparked a rethink of interest rate hike expectations for next month's meeting. Is the BoE the latest central bank to panic over the rapid appreciation in its currency, or is there more to Carney's comments? Full analysis

كارني يهز الجنيه الإسترليني

Apr 20, 2018 14:16 | by Ashraf Laidi

سجل الجنيه الإسترليني أكبر انخفاض أسبوعي له خلال أربعة أشهر بعد أن أثار محافظ بنك إنجلترا إعادة التفكير في توقعات رفع أسعار الفائدة خلال اجتماع الشهر المقبل. هل بنك انجلترا من بين أحدث البنوك المركزية التي تشعر بالهلع بسبب الارتفاع السريع في عملتها ، أم أن هناك المزيد من التعليقات وراء تصريحات كارني؟ (التحليل الكامل)

الدولار الكندي: بين التوقعات والواقع

Apr 19, 2018 17:13 | by Ashraf Laidi

يجب أن تتساءل عن سبب استمراري في تحليل الدولار الكندي. ارتفع الدولار الكندي بنسبة 8 ٪ مقابل الدولار الأمريكي. والكندي العملة الأقوى بين العملات العشرة الكبرى خلال الأسابيع الأربعة الماضية. ما الذي حدث للعملة بعد إعلان الأمس من بنك كندا وإلى أين من هنا؟ التحليل الكامل