Angus Campbell

Dollar stronger after nonfarm payroll

The dollar index has hit a new 11.5 year high following a much better than expected nonfarm payroll figure from the US. USDJPY in particular has benefited from this figure hitting 120.90, the highest level of 2015. With the unemployment figure falling to 5.5%, lower than expected and the explosive headline figure of 295k, it's little wonder the dollar and US Treasury yields are spiking higher. However, a look deeper and average earnings disappointed coming in lower than expected which has keep ...

Simon Smith

EUR back above 1.1100 as press conference starts

The EUR initially higher as the ECB press conference gets underway. The technical details of how the ECB is going to start buying government bonds next week. Projections for growth have been revised up, partly on the back of the impact of QE. Given that QE has never been undertaken before in the euro area, its impact is very uncertain.

Simon Smith

EUR making new lows for year

EURUSD made new lows for year (at 1.1081) after BoC keeps rate stead and US non-manuf ISM data slightly firmer than expected, giving USD a lift. There were only residual hopes for a further easing from the Canadian central bank. US dollar reaction suggesting a greater sensitivity to data.

Simon Smith

EUR drifting lower on PMIs

The euro drifting lower once again against the dollar, the latest push lower coming on the back of the latest PMI data in the Eurozone, the final releases for Italy coming in weaker than expected, together with data for Spain. Services data for Germany also weaker than expected at 54.7. EURUSD is now not that far from the post-Greece election low of 1.1098, which remains the key downside support level for the short-term. Nerves are likely to remain in place ahead of the ECB meeting tomorrow, ...

Simon Smith

Waiting on Greece

Dollar yen moving higher this morning, as Greece waits for the Eurozone Finance Minister to offer their judgement on the reform proposals put to them overnight. This reflects on some generalised dollar strength being seen, which has also pushed the Aussie below the 0.7750 level. This is all happening ahead of Yellen's testimony later today, where markets are going to be very sensitive to any change in tone or further indication on the timing of the first rate hike from the Fed.

Simon Smith

Dollar reversal

The minutes of the January FOMC meeting appears to show a committee looking to keep rates lower for longer. This took the market by surprise and put the dollar on the back-foot. This came in the wake of the latest labour market data, which also showed better data for earnings. The other thing that came from the minutes is that the Fed want to be convinced that the pace of activity is sustainable before raising rates. The final factor, less mentioned but cannot be ignored, is the fact that many ...

Simon Smith

UK CPI softer on headline rate

UK inflation falls to 0.3% YoY (from 0.5%), with core rate rising to 1.4% (from 1.3%). The fall in the headline rate was more than expected, Headline fall more than expected, but core rate in line. Sterling little changed. 1.5355. Not surprisingly, it was transport costs (fuel) that was pulling the headline rate lower. Food, together with Alcohol and tobacco were also contributing to the fall, with clothing and footwear offsetting. The fact that the headline rate was higher at the moment ...

Simon Smith

Sterling higher on Inflation Report

Sterling has pushed above 1.53 after the Inflation Report. The press conference has seen this move enhanced, with the Bank of England Governor underlining the view that the drop in headline inflation seen will be temporary, with upward revisions to growth vs. the November report also being seen. EURGBP has also moved below the 0.74 level for the first time since February 2008.

Simon Smith

Euro spiking higher but this is not the end

Having started off on a weaker footing, the single currency has spiked higher on the back of comments coming over the wires regarding the possibility of the EU allowing an extension to the bailout program. The fact that the euro had initially softened reflected the extent of the divide between Greece and Germany, not least because they cannot even agree on what the issue is. For this reason, the scope for a resolution this week looks distant and even though trading the euro on the basis of the ...

Simon Smith

Strong US payrolls leading to surging dollar

Strong employment report from the US resulting in a surging dollar, with headline rising 257k and the prior 2 months rising 147k. The rate was steady at 6.6%. USDJPY surging up above 118, with EURUSD down to 1.1360, down 1 big figure from levels prior to the release. The other factor helping the dollar was the strength in earnings, up 2.2% in YoY terms with upward revision to the prior month (from 1.7% to 1.9%).

Simon Smith

Another “surprise” rate cut

Depending who you read, the rate cut from the RBA overnight was expected or unexpected. The difference of opinion depends whether you take the polls of bank economists (where around 25% were looking for cut), vs. what was priced into markets. After the RBNZ change in tone from last week, the chances had certainly increased, with the 2Y bond in Australia trading below 2%, in other words 50bp below the cash rate. In normal times with no expectations of rate move, this would trade some 10-20bp ...

Simon Smith

Post-Fed central bank outlooks

On balance, the FOMC statement last night was taken as slightly hawkish given the upward assessments of both the economy and labour market in their respective descriptions. But the fall in market based measures of inflation expectations was noted in the statement as being substantial. Indeed, the Fed's favoured measure is now at levels last seen Feb-Mar 2009, which is when most central bank started QE with a vengeance. The shift in the RNBZ overnight cannot be overlooked, given that they moved ...

Simon Smith

Splicing the Fed

Markets are in a holding pattern ahead of the Fed meeting this evening, where once again the focus will be on the statement. Recall last time, the wording was changed, removing the commitment to keep rates low for a 'considerable' period, but then going on to say that it can be 'patient' towards normalizing monetary policy and that this was 'consistent with its previous statement'. This left markets somewhat confused and the dollar volatile and they may have this in mind when drafting this ...

Simon Smith

UK economy slowing but not stalling

The latest GDP data for Q4 in the UK showed that the economy grew at 0.5%, just a touch short of expectations for a 0.6% gain. This represents a slowdown from the pace seen in the previous quarter of 0.7% QoQ. Sterling has softened a touch, but not drastically so. EURGBP at 0.75000.

Simon Smith

Another Greek drama

The single currency has continued to recover during the morning, despite headlines that are coming out of Greece in the wake of the weekend election. EURUSD is above the 1.1250, from an overnight low just below 1.11. This probably has a lot to do with positioning, with lots of euro short positions already in place in the wake of the QE announcement from the ECB last week. We have a meeting of Eurozone finance ministers later today, so more headlines are likely to be seen. But what is clear is ...

Simon Smith

Euro breakdown

The single currency is wallowing in the aftermath of yesterday's ECB decision, having now broken below the 1.12 level, with the next key focus on the bigger picture charts being the September 2003 low of 1.0765.