Weekly Market Update

We just closed an unusually quiet two weeks in markets. There were few headlines, macroeconomic news or policy announcements that would change market perceptions on economic or monetary policy, and the quiet in foreign exchange markets reflected that. There was more action in bond markets, as traders continue to push back their timing for interest […]

Weekly Market Update

The January CPI inflation report out of the US contained everything the Federal Reserve did not want to see. Upward surprises in both the headline and core indices, and a clear sense that the disinflation trend we saw throughout most of 2023 has hit a wall, with price increases running again comfortably north of 4%. […]

Weekly Market Update

Markets continue to celebrate the apparent defeat of inflation by sending stock markets worldwide to fresh all-time highs. Last week, commodity and emerging market currencies joined the party, and traditional safe-havens like the Japanese yen, the Swiss franc and (this time) the dollar suffered, while the New Zealand dollar topped the table of world currencies. […]

Weekly Market Update

The dominant theme in currency markets in 2024 has been US economic strength, which is forcing markets to push back the timing of Federal Reserve rate cuts and is helping the dollar unwound most of the losses it suffered in late-2023. Last week did not buck the trend. While the Fed January meeting did not […]

Weekly Market Update

The ECB left its options open last week. This one will test our view that central banks in the US and the UK need more time before embarking on a rate-cut journey. In spite of the ECB meeting and a flurry of economic activity data, the volatility in the FX market was relatively muted last […]

Weekly Market Update

It has been our view for some time now that traders were getting ahead of themselves pricing in central bank cuts generally, and particularly so in the case of the Federal Reserve. Last week we saw further vindication of this view, as the strength of US economic data continues to surprise markets, notably the latest […]

Weekly Market Update

Last week was remarkable in how little major currencies moved. Nearly all of the major ones ended the week within 0.5% of where they had started, an unusual level of quiescence. The hotter-than-expected consumer inflation report out of the US initially made some waves, and helped the dollar rally modestly. By the end of the […]

Weekly Market Update

Currency markets have executed a 180 degree turn so far in 2024, as have financial markets generally. The furious bond rally in the last few weeks in 2023 has stopped in its tracks and reversed, as markets pare back expectations of Federal Reserve interest rate cuts in 2024. Markets dutifully followed the leads from interest […]

Weekly Market Update

We said that last week would be a volatile one, with three key central bank meetings in quick succession, and currency markets did not disappoint. The Federal Reserve executed a clear pivot towards rate cuts, both in terms of rhetoric and its actual forecasts for rates in the “dot plot”. By contrast, the ECB and […]

Weekly Market Update

The undisputed winner in currency markets last week was the Japanese yen, which soared as the Bank of Japan finally hinted that it is ready to start normalising monetary policy. The other theme in FX was the rebound in the dollar, as US interest rates rose on the back of a very strong labour report, […]