Currency Market Mean Reversion Continues, Weakening Dollar
08 November, 2024
The “Trump trade” that animated currency markets after Tuesday’s presidential election continues to dissipate this morning. The dollar’s post-election rally is now almost fully unwound, the Mexican peso and its emerging market brethren are broadly higher, and most major currencies – including the euro, British pound, and Japanese yen – are either above, or just a few basis points below...
Trump 2.0 & the AUD
07 November, 2024
The decisive victory by former President Trump in the 2024 US election and elevated odds the Republicans also sweep Congress has generated bursts of market volatility over the past few sessions. This might be a taste of things to come. The election result shouldn’t be viewed as a ‘shock’ as it was 8 years ago. The outcome was in line with the signal various opinion polls and probability gauges had...
Cool your jets
07 November, 2024
• Market swings. US equities powered ahead, while bond yields & the USD gave back some of their post US election gains. AUD & NZD rose.• Central banks. BoE & US Fed cut rates. Fed still on a path towards ‘neutral’. In time Trump policies may constrain its ability to lower rates as far as it thinks.• China measures. AUD & other cyclical assets also boosted by expectations...
Fed Delivers Quarter-Point Cut, Arguably Adopts Less-Dovish Tone
07 November, 2024
As had been widely anticipated, the Federal Reserve cut its benchmark borrowing rate by a quarter percentage point this afternoon, and cautious language in the statement points to a more gradual pace of easing ahead.
The Federal Open Market Committee voted unanimously to lower the target range for the federal funds rate to 4.5 to 4.75 percent, with Governor Bowman moving back into line with the consensus...
Trump Trade Eases, Dollar Retreats
07 November, 2024
Market momentum is fading this morning after investors speed-ran the “Trump trade” in yesterday’s session. The trade-weighted dollar is retreating after recording its best day in more than two years, with the Canadian dollar, euro, pound, and yen all up roughly half a percentage point while the Mexican peso – widely considered a proxy for US isolationism risks – trades above pre-election...
Trump 2.0
06 November, 2024
• US election. Trump’s decisive win has seen markets reprice the outlook. US equities outperformed, bond yields rose, & the USD strengthened.• Fed outlook. US Fed & BoE expected to deliver cuts tonight. But Trump’s agenda points to fewer Fed rate reductions over 2025.• AUD vol. AUD whipped around by US election results. Prospect for higher US rates suggests the AUD may linger in...
Trump Emerges Victorious, Sending Markets Reeling
06 November, 2024
Republican Donald Trump has defeated Democrat Kamala Harris to secure a second term as US president. His triumph, called just after 5:45 eastern time this morning by news outlets including the Associated Press, ABC, CNN, and the New York Times, could usher in a new wave of US protectionism, mark a shift toward an “America First” foreign policy stance, and end a period of relative calm in foreign exchange...
The race is on
05 November, 2024
• Getting set. Risk assets outperformed overnight & the USD lost ground. A paring back of ‘Trump trades’ continued ahead of the big event.• US election. Voting progressively closes later today. The battleground states are key. Bursts of market volatility look likely as results flow out.• RBA holds. No change in rates or guidance. The RBA is standing out from the pack. Gradual/modest...
Markets Enter Risk-Aversion Mode Ahead of Election
05 November, 2024
The dollar is holding steady, Treasury yields are inching higher, and equity indices are setting up for a positive open as the world’s worst reality show enters its final act. Elements of the ‘Trump trade’ are recovering after yesterday’s selloff, with many investors back to betting on the former president after the weekend’s polls suggested that markets were underestimating Kamala Harris’ electoral...
US election day
04 November, 2024
• Election jitters. A quiet start to the week with traders paring back some ‘Trump trades’. US equities eased & yields declined. USD a bit softer.• US politics. Polls & probability gauges suggest the result is a toss-up. Binary reaction to the outcome likely with volatility also on the horizon.• RBA today. No RBA policy changes expected. It may tweak its macro forecasts. We still...