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EUR

Currency Market Sub-Plots Lift Greenback

The dollar is creeping upward as conflicting cross-currents in the foreign exchange markets contrive to keep most majors tightly rangebound. Yields are broadly flat, and equity futures are setting up for a slightly weaker open. Mexico’s Banxico yesterday became the second central bank—after the Reserve Bank of Australia—to defy increasingly-dovish policy expectations, sending the peso soaring by raising rates by half a percentage point in a move that surprised virtually every observer. In a statement accompanying the decision, policymakers said “Given the dynamics of core inflation, on this occasion it is necessary to continue with the magnitude of the reference...

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Sentiment Improves as Fed Rhetoric Remains Balanced

The dollar is softer and Treasury yields are subsiding after the chair of the Federal Reserve avoided walking back last week’s observation that signs of “disinflation” were beginning to appear – something that many saw as a communications error at the time.  Jerome Powell essentially repeated last week’s message in a question and answer session at the Economic Club in Washington yesterday. Speaking with David Rubenstein, Powell noted that Friday’s jobs data was “certainly strong – stronger than anyone I know expected,” warning that the process involved in getting inflation down to target would be “bumpy”. “The reality is we’re...

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Trend Reversal Rumbles Across Currency Markets

The dollar is continuing its ascent and global markets are in risk-off mode as traders unwind bets on easier monetary policy in the aftermath of Friday’s juggernaut jobs report. Futures are down sharply, Treasury yields are up, the greenback is trading near a three week high, and currencies elsewhere are on the defensive after the Bureau of Labor Statistics reported that employers added 517,000 jobs to payrolls in January, while revising previous months up. Friday’s data looks too good to be true, with seasonal adjustment issues likely playing a role – but it nonetheless showed that underlying momentum in the...

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Volatility Falls Ahead of Central Bank-Packed Trading Week

Trading activity in global financial markets remains muted ahead of the last US inflation print to land before next week’s central bank meetings. With equity futures inching down and Treasury yields holding flat, the dollar is effectively unchanged against its significant counterparts, with the inflation-propelled Australian dollar looking like the only major to eke out serious gains over the week. The US economy grew substantially faster than forecast in the final quarter of 2022, but odds on a smaller rate increase at next week’s Federal Reserve meeting remained unchanged, and markets continued to brace for a recession later this year....

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Risk Appetite Improves as Markets Ignore Signs of Slowing Economic Momentum

Hopes for a soft landing in the US economy are slowly fading, but strong corporate earnings are keeping asset prices elevated for now. North American equity futures are pointing to a modestly stronger open after a series of better-than-expected earnings releases, and the trade-weighted greenback is up slightly as flows into US markets offset concerns about the longer-term outlook. We’re reminded of the old joke about the optimist who jumped off the Empire State Building – as he was falling, someone asked, “How’s it going?”, and he responded:“So far, so good!” Yields on both sides of the 49th Parallel remain...

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