Dollar ends week on back foot as Fed expected to pause
06/09/2023

Dollar ends week on back foot as Fed expected to pause

The dollar was softer on Friday afternoon in London, as a looming interest rate decision from the US Federal Reserve next week put pressure on the currency - particularly as that decision is expected to be a pause in rate hikes.

T Team UCapital 24
​Markets are getting used to see unflattering Chinese indicators
06/09/2023

​Markets are getting used to see unflattering Chinese indicators

The market is becoming accustomed to seeing unflattering Chinese economic indicators, and the latest inflation readings were no exception. CPI and PPI numbers missed the mark, which again brings into question whether a strong Chinese recovery will materialise before the year is out.

T Team UCapital 24
Late cycle dollar strength continues
06/08/2023

Late cycle dollar strength continues

Yesterday's surprise rate hike by the Bank of Canada (BoC) triggered quite a clean reaction in FX markets. Of course, the Canadian dollar rallied on the view that the BoC had unfinished business when it came to tightening. But the broader reaction was for short-dated yields to rise around the world, for yield curves to invert further, and for the dollar to strengthen.

T Team UCapital 24
Eurozone already in recession, outlook still poor
06/08/2023

Eurozone already in recession, outlook still poor

News that GDP contracted in Q1 after all means that the euro-zone has already fallen into a technical recession. We suspect that the economy will contract further over the rest of this year.

T Team UCapital 24
Dollar softens as recession worries in US mount
06/06/2023

Dollar softens as recession worries in US mount

The dollar was largely weaker on Tuesday afternoon after a disappointing reading for the US service sector fuelled fears of a recession in the world's largest economy.

T Team UCapital 24
Volatility on EUR sinks
06/06/2023

Volatility on EUR sinks

Both traded and realised volatility levels in EUR/USD are dipping back to pre-invasion levels in February 2022. Despite tight liquidity conditions, FX markets are taking their cue from the rates market. Here, measures like the MOVE index – a yield curve weighted index of 1-month US Treasury implied volatility –- have fallen to the lowest levels of the year, presumably on the view that the Federal Reserve will not be doing a lot with the policy rate over the coming months.

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Lagarde's rhetoric facing a test
06/05/2023

Lagarde's rhetoric facing a test

The main highlight of the day in the eurozone is the testimony by European Central Bank President Christine Lagarde before the Committee on Economic and Monetary Affairs of the European Parliament.

T Team UCapital 24
Eurozone figures affect EUR/USD
05/31/2023

Eurozone figures affect EUR/USD

EUR/USD has today sunk to its lowest levels since mid-March as demand for USDs coincides with a less positive story for the EUR. In our view, positioning can help explain the move lower, with the market keen to build long dollar positions at a time when investors are likely having second thoughts about the recent build-up of EUR longs. The currency pair is comfortably on course for hitting our H2 target of EUR/USD1.06.

T Team UCapital 24
Hard to push ECB rate expectations much higher
05/31/2023

Hard to push ECB rate expectations much higher

Grim data out of China are not helping EUR/USD get out of its bearish trap, and the pair is back below 1.0700 after a very short-lived rebound. Domestically, inflation figures in the eurozone are very important to watch from an ECB perspective.

T Team UCapital 24
A spotlight on the FX market
05/30/2023

A spotlight on the FX market

Net USD long positions crept higher having edged down to their lowest level since July 2021 the previous week. The dollar has been performing well in the spot market. Safe-haven demand linked with US debt ceiling concerns may have contributed, but the market is also starting to fear another Fed rate hike in June or July. We expect Fed rate cuts to be priced out for this year.

T Team UCapital 24
Fed hawks give support to USD
05/30/2023

Fed hawks give support to USD

Rising US yields continue giving a decent support to the US dollar; the US dollar index is now pushing above the minor 23.6% retracement on September to April retreat.

T Team UCapital 24
Done deal on US debt
05/29/2023

Done deal on US debt

So, a debt deal is done, and now all that remains is for it to be articulated in a bill that can pass through Congress and be signed off by the President. This is by no means a fait accompli, but there should be sufficient support from both Republicans and Democrats to get it over the line before Janet Yellen’s revised X-date of next Monday.

T Team UCapital 24
Sterling's last hurrah?
05/26/2023

Sterling's last hurrah?

Mounting hope of a US debt ceiling deal has improved the market mood overnight, propping up equities, commodities, and most currencies relative to the US dollar, with the notable exception of the Lira. If the talked-about 2-year deal is done, we can talk about something else until after the next Presidential election. The result will be relief, and some fiscal tightening.

T Team UCapital 24
May FOMC meeting minutes stress uncertainty and divisions among members
05/25/2023

May FOMC meeting minutes stress uncertainty and divisions among members

The May FOMC meeting minutes suggest the increasingly uncertain economic outlook, along with concerns over a potential credit crunch and risk of a contentious debate over the debt ceiling, pushed the Fed to adopt a more measured approach to further potential rate hikes with “participants generally express[ing] uncertainty about how much more policy tightening may be appropriate.”

T Team UCapital 24
UK inflation slows but more hikes by BoE are expected
05/24/2023

UK inflation slows but more hikes by BoE are expected

This morning’s CPI data show headline inflation falling to 8.7% in April from 10.1% in March as energy price hikes last year fell out of the annual comparison. However, the out-turn for CPI inflation is well ahead of market expectations for 8.2%.

T Team UCapital 24
Oil edges higher
05/24/2023

Oil edges higher

The oil market managed to edge higher yesterday despite there still being little progress in US debt ceiling talks as well as some hawkish comments from Fed officials.

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US debt is still the hottest topic
05/23/2023

US debt is still the hottest topic

Yesterday was just another day with the same topics. The US debt ceiling talks continued; US President Joe Biden expressed optimism about reaching a deal. US Treasury Secretary Janet Yellen said that the Treasury will soon be running out of money and won’t be able to service its debt.

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