We look for patterns in macroeconomic data and prices. We have a sense of deja vu. A period of trade calm, the United States uses tariffs to force China to do something. Stocks are going down. Interest rates fall like dollars. A ceasefire has been declared, leaving customs at higher levels and stocks recovering, dollar companies and interest rates stabilizing. We've seen this play out now for the third time.
We look for patterns in macroeconomic data and prices. We have a sense of deja vu. A period of trade calm, the United States uses tariffs to force China to do something. Stocks are going down. Interest rates fall like dollars. A ceasefire has been declared, leaving tariffs at higher levels and stocks recovering, companies and interest rates stabilizing. We've seen this play out now for the third time.
The dollar accelerated higher in response to Powell spinning as a mid-term adjustment, while investors wanted a clear signal of an extended easing cycle. Stocks were above their shock, and interest rates stabilized, and the speed of the greenback slowed before Trump unexpectedly broke the Customs Administration. This saw stocks, interest rates and dollars fall. Our reading of the technical condition warns that the features are not over.
Just before the Customs Weapons closed on August 1
The less-skilled Fed spun on first-rate cuts over the decade sent the scrap over $ 1,100 to new lows for more than two years. Subsequent sales of it saw it reach almost $ 1.1025. The $ 1.10 area was the technical target. The euro turned higher with the adjustment to US exchange rate expectations in response to the tweet tiff, and a bullish hammer candlestick may have been added. It closed the week just over $ 1,100. Slow Stochastics and RSI are swinging higher, but MACDs are lagging behind. A move over the $ 1.1165 range is needed to be of some importance. On the downside, a $ 1.10 breach would target $ 1.08. In the options market, the benchmark has increased three months of implied volatility, and conversations are trading the biggest discount to put in three months, which apparently reflects sales purchases.
The dollar mainly covered the range over the past two months in the last two trading sessions. The dollar passed through JPY109, which had appreciated it since late May. It looked at JPY109.30 before the cease-fire was declared. Tweets triggered a sharp reversal, and the dollar recorded a big day out, holding just over JPY107.00. Continued sales the next day saw the dollar trade at JPY106.50 and closed just over there. The move is extended as the greenback begins the new week under the lower Bollinger Band® (JPY107). The technical indicators reflect the strong disadvantage. The next important map area is near JPY105.
sales continued without power. It fell to around $ 1,2080, the lowest level since January 2017. Ir fell for the 13th consecutive week against the euro. The technical indicators suggest that a consolidating phase may be near. A return of $ 1.2250 – $ 1.2300 may be the Bears' first line of defense. The euro has already entered a consolidation phase of the GBP0.9100-GBP0.9200 series. Three-month implied volatility is near the peak of the year in February, close to 12%. It had dropped to around 6.3% in early July.
The US dollar's earnings against it also appear to be a possible narrative of a broader greenback correction. It exceeded the CAD1.3220 target and reached CAD1.3265 before the weekend and turned lower, leaving the apparently bearish hammer candlestick pattern behind. A break now in the CAD1.3165 area will confirm that a peak is in place. The technical indicators indicate that turning is coming. We are targeting the CAD1.30-CAD1.31 range initially. Healthy at the end of next week will remind participants why the Bank of Canada is one of the few central banks that do not consider.
Bloomberg tells us that 10-day sales were canceled before the weekend with the slightest gain. It fell to a six-month low of just under $ 0.6765. The technical indicators reflect the disadvantage, but are about to turn. A move back over $ 0.6830- $ 0.6850 will help improve the technical tone. The weaker decline in iron ore prices and the fall in prices combined with the escalation in US-China trade conflicts provide a poor backdrop for.
The US dollar will hold a six-month meeting of Mexican pesos at the start of next week. This corresponds to the long advance over the last five years. The Greenback traded short of the pitch as seen in response to the unexpected resignation of the finance minister a month ago. It reached its highest level since the US tariff threat was lifted in the first part of June. Risk-off sentiment and worries about world growth weighed almost all emerging market currencies last week. The dollar stopped at its 200-day moving average (~ MXN19.3765). News that Mexico avoided, albeit barely, another quarterly contraction in a row, failed to turn the pesos fortunes, as the year-over-year decline (0.7%) was more than double what was expected. We suspect that the strength of the Japanese yen may have triggered the winding-up of carriers that finance long peso positions with a short yen. After Ukraine, Mexico now appears to have the highest real interest rates and among the highest nominal exchange rates, which will continue to make it an attractive carrier candidate. The dollar closed over the upper Bollinger Band (~ MXN19.2655), but the other technical indicators we use are not stretched. Still, with the dollar under the lower Bollinger Band against the yen and over the upper band against the peso, new peso-yen trades may seem appealing. The cross is approaching a three-year flood line before the beginning of the June lows (~ JPY5.4350).
The US government can grit the news that the dollar rose to new highs for the year against the Chinese yuan and that the US bilateral trade deficit rose to a five-month high in June. Pundits may be talking about PBOC offsetting tariffs with a weaker yuan, but the move's fuel can be found in Washington. Between the Federal Reserve delivering what many saw as a hawkish cut and the new tariffs that Trump tweeted were the main driving force behind the yuan slide. Until these events, the dollar-yuan exchange rate was as stable as one could imagine, especially given the greenback's gains elsewhere. We argue that if the yuan were a truly free-floating currency, it would probably have been weakened more given macroeconomic developments and the dollar's results more broadly. (CNY) rose slightly through CNY6.95, and (CNH) rose to CNY6.98. It raises the question of the importance of CNY7.0 and how seriously China will defend it. There is still an inflection point that could spur more volatility, so officials will monitor it closely. The heavier dollar tone seen in North America despite the employment report being in line with expectations (although hourly weakness will keep Q3 GDP forecast dampened by NY Fed and Atlanta Fed trackers by 1.6%, respectively) and 1.9%), can trigger and reduce urgent speed to challenge CNY7.0. The forward rate (spot + interest rate differential) is not above CNY7.0 until about nine months of tenor at the guidance levels at the end of last week.
When all was said and done, delivery in September fell by just under one percent last week. But this is not a dog bite story. Trump's new tariffs coldly halted a five-day rough 5% meeting that had been partially encouraged by continued tightening of US oil stocks. The draw comes despite nearly record US production as imports, especially from Saudi Arabia, have slumped. Crude oil in September fell by almost 8% on August 1, one of the biggest falls in a day. It seemed like an exaggerated response, and prices rose over half the day before, ahead of the weekend. The 200-day moving average is $ 58, and it looks like this area needs to be overcome to lift the technical tone.
The US yield fell to 1.83% last week, the lowest level since the 2016 election, despite the growing deficit and debt level. The yield has fallen by 22 bp over the six-day fall. Powell said a mid-term adjustment, but the market didn't buy it fully. The new tariffs characterized investors. Over half of the decrease in returns occurred in the immediate response to tweets. The futures contract for September notes closed the last two sessions over the upper Bollinger Band, which could lead to some consolidation in the coming days. The 10-year return was down in 2012 (~ 1.38%) and 2016 (~ 1.38%). The market is fully convinced that the Fed will cut interest rates again next month and sees a slightly higher chance of a 50 bp move than it says. The futures contract with fed funds from January 2020 implies an effective effective interest rate of 1.62%, a decrease of about ten basis points per week. This is the lowest closing price since September 2017. This means that the market has reduced two cuts in the three FOMC meetings and slightly more.
The benchmark portfolio began the week at record highs, but momentum was lost. It was signaled by the lower opening gap on Tuesday which was quickly closed, and the lower opening gap on Friday which was also quickly closed before new lows were registered. The 3.1% loss is the biggest weekly decline this year. The decline met the (38.2%) retracement target for the rally that began in early June. The MACDs and the Slow Stochastics did not confirm the record holiday, and this may lead to the underlying technical tone being suspected. The five-day moving average has crossed below the 20-day moving average for the first time in nearly two months. If a deeper retreat, as we suspect, occurs, a 296-2970 cap is a bounce, and our goal is the mid-June gap (~ 2897.3-2909.5). That gap currently houses the 100-day moving average (~ 2900.50). The next retracement of two months of leg up (50%) is found a little lower around 2878.50.