Weekly Chartbook

A nascent recovery in the dollar is stalling out this morning as geopolitical risks in the Middle East, Japan, and the euro area show signs of easing. The greenback is down -0.2 percent against a basket of its major counterparts, Treasury yields are edging lower, and US equity indices are setting up for a modestly-positive open. Oil prices are slipping as markets remain oversupplied and risk premia...

Currencies outside the US are in consolidation mode. The Japanese yen is holding near the 153 threshold as traders turn more sceptical on the Takaichi administration’s capacity for delivering fiscal and monetary stimulus, the euro is treading water in line with an ebbing in French political headlines, and the British pound is inching higher amid a lack of domestic rate catalysts. The Canadian dollar—stuck...

The dollar is steamrolling over its major counterparts again this morning as investors unwind exposures in other jurisdictions and pile into bets on continued gains in American equity markets. The trade-weighted greenback is up around a quarter-percent from yesterday’s North American close, Treasury yields are slipping across the front end of the curve, and stock market futures are pointing to another...

The “Go Big or Go Home” mentality was on display once again in NZ today after the RBNZ delivered an outsized 50bp interest rate cut as it attempts to jolt the stuttering economy back to life. The decision lowers the RBNZ’s official cash rate to 2.5%. This is ~300bps below the peak reached in 2023/24 when the world was fighting the post COVID inflation surge. As our chart shows, outside of the Global...

Investors are making up for a lack of actual intelligence on the state of the economy by betting on artificial intelligence instead. The dollar is attracting inflows, mid-curve Treasury yields are pushing higher, and equity futures are pointing to further gains at the open after OpenAI and Advanced Micro Devices yesterday announced they would collaborate to build AI data centres, with the ChatGPT maker...

• Push-pull forces. US shutdown still in place. Geopolitics outside US generates some vol. EUR & JPY lose ground. AUD & NZD edge up a little.• Japan politics. Shock leadership selection jolted Japanese markets. Nikkei surged & JPY weakened on prospect of fewer rate hikes & fiscal stimulus.• RBNZ meeting. RBNZ expected to cut rates tomorrow. Debate is on the size with markets split between...

The dollar is again winning the cleanest-dirty-shirt contest this morning as mounting political turmoil in Japan and the euro area casts a pall over currency markets. The yen is down almost 2 percent and Japanese equity markets are soaring after Sanae Takaichi unexpectedly triumphed in the Liberal Democratic Party’s leadership race, defying polls that had put her rival, Shinjiro Koizumi, ahead among...

Rumours of the dollar’s shutdown-inflicted death have been greatly exaggerated. The greenback is holding firm against its major rivals this morning despite confirmation that the US government will remain crippled into a second week, indicating that traders don’t expect the political impasse to result in any meaningful diminishment in the global appetite for American financial assets. On a week-to-date...

• Holding on. Markets take the latest US shutdown in stride. US equities edged up while bond yields slipped back. USD & AUD tread water.• US shutdown. No real sense of urgency to strike a deal quickly. US shutdown could drag out. This might be a negative for US growth & the USD.• Data void. US government shutdown also means US economic data, such as Friday’s non-farm payrolls report,...

• Holding firm. US equities ticked up overnight, while bond yields consolidated & USD weakened. AUD rose with AUD also outperforming on the crosses.• RBA holds. No change by RBA. Comments leant more ‘hawkish’. Sticky inflation & improving growth means another rate cut isn’t guaranteed.• US shutdown. Without a last minute deal another US government shutdown will kick off today...