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rssGerman 10-year bund yields fall below ECB deposit facility rate of -0.40%
German bonds continue to rally as yields sink to fresh lows
Suddenly, a fixed deposit placement doesn’t sound like a bad idea given how things are going in Europe’s bond market.
Eurozone June final services PMI 53.6 vs 53.4 prelim
Latest data released by Markit – 3 July 2019
- Final composite PMI 52.2 vs 52.1 prelim
Preliminary figures can be found here. The final print sees the composite reading recovers to its highest level since November but it doesn’t take away from the fact that factory/manufacturing activity remains weak overall. The services sector may be sparing the blushes of the euro area for now but economic conditions continue to point towards a softer outlook unless things on the other side start to rebound.
EUR/USD holds at 1.1281 currently after having dipped to a low of 1.1269 on the session earlier. Price is still nearly unchanged on the session, holding in a narrow range.
Hong Kong protests are just another bearish factor for China’s currencies.
On top of: -Banking and housing bubbles -Interest rate imbalances -Shrinking current accounts
-Declining excess FX reserves -Communist corruption and oppression -Capital flight $USDHKD $USDCNY
GBP/USD falls to nine-day low after Carney’s comments. What’s next
Fresh lows on the day for the struggling pound
Mark Carney seemed to back away from his upbeat stance as he warned about increasing global trade risks in a speech in Bournemouth. The comment send the pound 25 pips lower to 1.2601 — the worst level since June 18.
The four-hour chart shows how cable is eating into the mid-June gains as it bleeds away support.
There isn’t much standing between it and a return to the lows. The fall today takes it below the 61.8% retracement of the June rally. On the USD side, the market is increasingly concerned that the Fed won’t cut as deeply as what’s priced into the market.
Hong Kong dollar surging still, USD/HKD under 7.8
The HK dollar is dropping into the lower half of its trading band:
Mutterings heard around the corridors of the Hong Kong Monetary Authority:
- “SNB … amateurs. LOL”
US proposes adding more tariffs to $4bn of EU goods
EUR losing a few pips on this
Some flows into yen also.
Add them together and EUR/JPY… sad:
Further on the proposed tariffs:
- dairy, certain metals proposed to be added to list of goods to have tariffs levied further
Yen crosses still adding to the ‘truce gap’
USD/JPY is heading to approach 108.50 following its gap higher this Mnday morning:
In response to this over the weekend:
USD/JPY getting another leg on:
Crucial Update :US Dollar Index ,Euro ,Yen ,GBP ,INR ,CAD ,AUD ,PESO -Anirudh Sethi
The US dollar was little changed in the first half of June but fell out of favor in the second half as the market became convinced the Federal Reserve will begin cutting rates in late July and follow it up with two more cuts in H2. Given then the world’s largest economy continues to expand above trend, with unemployment at a historic low, and financial conditions supportive, it is difficult to envision the market discounting a more aggressive Fed than it has. According to a recent Wall Street Journal survey, most economists expect two rather than the three rates that are discounted in the fed funds futures and OIS market.
If peak dovishness has passed, with the dollar regain better footing? What is the dollar’s technical condition as the second half begins? We seek to shed light on these issues below.
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CFTC Commitments of Traders: Loonie shorts rush to the exits
Forex futures positioning data among non-commercial traders for the week ending June 25, 2019:
- EUR short 56K vs 52K short last week. Shorts increased by 4K
- GBP short 59K vs 53K short last week. Shorts increased by 6K
- JPY short 10K vs 17K short last week. Short trimmed by 7K
- CHF short 16k vs 15k short last week. Shorts increased by 1K
- AUD short 66k vs 65k short last week. Shorts increased by 1K
- NZD short 24K vs 24K short last week. Shorts unchanged
- CAD short 15K vs 38K short last week. Shorts decreased by 23K
That’s the second week in a row of GBP selling as the market sours on whatever might come from the Conservative change in leadership.
There was a big flight out of euro shorts a week ago but some waded back in this week. In the yen, however, they continued to get out of shorts, even with USD/JPY rebounding (although that came later in the week).
The big move was in the Canadian dollar where all the good news on Canadian data finally sank in and the shorts got out. That shift put the net at the narrowest since late December. I expect we will see more of the same when next week’s numbers are released.
