Overview:  The powerful yen short squeeze that has roiled the capital market this week has stalled today. It is the first day this week that the dollar has not fallen below the previous day's low and has risen, though slightly, above previous session's high. The Antipodeans and Scandis are trading with a firmer bias. The yen and Swiss franc are the only two G10 currencies that are not stronger today. The stability of the yen appears to have removed some of the pressure on some emerging market currencies. The Mexican peso is still heaviest currency this week, but on the day, it is the bes ..read more

Overview: The capital markets are in flux. The powerful short-covering rally of the yen and unwinding of carry trades continues. For the second time this week, the PBOC has surprised by cutting interest rates. The dramatic sell-off of equities continues. The unexpected contraction of South Korea's Q2 GSP (-0.2%) is seen as confirmation of broader economic weakness Speculation of a more aggressive Federal Reserve is gaining ground. It is not that the odds of a cut next week have improved much (~10%), but the derivative markets are pricing in about 25% chance of a 50 bp cut in September. The US ..read more

Overview: The dollar's gains have been extended today, but in the risk-off mode, and unwinding of carry positions, the Japanese yen and Swiss franc are firmer.  the dollar has stabilized in late European morning turnover. The Bank of Canada is widely expected to cut rates today and the greenback is pushing against CAD1.38, which it has not traded above for three-months. The US dollar gains, which we anticipated, are coming despite interest rates remaining soft. The US 10-year yield is a little lower around 4.23%, it remains within the range set on Monday. A disappointing Eurozone PMI and ..read more

Overview: The US dollar is firmer against all the G10 currencies but the Japanese yen. Local reports and the price action are consistent with short covering of the previously sold yen positions ostensibly ahead of next week's BOJ and FOMC meetings. Still, the greenback is holding above last week's low, slightly below JPY155.40. The Antipodeans and Scandis have extended their recent sharp losses. The euro eased to a seven-day low, a little below $1.0865, while sterling is holding above $1.29. Most emerging market currencies are lower. Of note, the offshore yuan as edged higher with the onshore ..read more

Overview: News that President Biden will not seek re-election has left investors unsure of the next step, but PredictIt.org still points to a Trump advantage of slightly better than 60-40. It is not clear yet whether Vice-President Harris will be challenged for the nomination. The dollar is mixed against the G10 currencies, with the dollar bloc and Norway weaker. The yen is up around 0.45% to lead the others higher. The Swiss franc, euro and sterling are slightly firmer. Most of the emerging market currencies are higher, led by the Mexican peso's 0.40% gain. China cuts its seven-day repo rate ..read more

The consolidative phase for the dollar, we anticipated last week, after its recent drop, is evolving into a proper upside correction. We expect the dollar to trade broadly firmer over the next week or so. It is also part of a larger picture, where US interest rates also look to have put in a near-term bottom and are set to recover. Ideas that next US administration may favor a weaker dollar has become a talking point. Yet, of all the forces that drive the $7.5 trillion a day foreign exchange market, official preferences are not among most salient. Nor is it simply a question of asymmetry, whe ..read more

Jury duty assignment prevents a more comprehensive note, but here is a snapshot.  Overview: The failure of computer systems has disrupted airlines, banks, media companies, and the London Stock Exchange, ostensibly stemming from an update from a third-party software update, according to Microsoft. The dollar is trading with a firmer bias. The consolidation, we anticipated, appears to be morphing into a correction. Weaker than expected retail sales has driven sterling to new lows for the week. On the week, among the G10 currencies, only the Swiss franc and Japanese yen gained on the greenb ..read more

Jury duty assignment prevents a more comprehensive note, but here is a snapshot.  Overview: The US dollar enjoys a firmer bias today, in mostly quiet turnover in narrow ranges. The Australian dollar is a noted exception, and the better than expected jobs growth may have lent it some resilience today. The greenback initially was sold to almost JPY155.35, a new low (since June 7) before recovering to nearly JPY156.60 in Europe. The UK's employment report saw the first payroll growth in three months and softer wage pressures. Sterling is hovering in a narrow range around $1.30. The big even ..read more

Jury duty assignment prevents a more comprehensive note, but here is a snapshot.  Overview: The dollar is broadly lower, and stocks are under pressure. Comments by a Japanese official, which did not appear to break new ground, coupled with Trump's interview in BusinessWeek, where he was critical that Japan was benefiting from a weak yen, despite having apparently spent some $80 bln this year trying to stop it from falling, may have been trigger. The dollar has fallen to its lowest level in a month against the Japanese yen (~JPY156.10). At the same time, slightly firmer than expected UK C ..read more

Jury duty assignment prevents a more comprehensive note, but here is a snapshot.  Overview: The US dollar is consolidating in narrow ranges against most of the G10 currencies. The Australian and New Zealand dollars, along with the Japanese yen are off by about 0.25%, but the others are +/- 0.10. The latest BOJ data appears to imply that officials intervened not only last Thursday, but Friday as well. Emerging market currencies are mixed but mostly quiet. The Turkish lira is the weakest, off about 0.25%, while the South African rand stabilizes (~+0.45%) after sliding 1.4% yesterday.  ..read more