22/04/2024 09:10

Currencies

The Greenback tested a fresh 2024 high on Friday, aided by its “safe haven” status, but there was no follow-through, and if anything, it looked tired. The short-term gyrations of the US dollar are still likely to be determined by ongoing news flow out of the Middle East, and it's likely to take a while before markets return to normal. As we said last week, volatility is likely to persist this FY.

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28/03/2024 09:39

Global Markets

US stocks experienced a mixed session overnight, with the small-cap Russell 2000 index the standout performer, closing up +1.8% as a degree of performance rotation continues. The much-lauded “Magnificent Seven” struggled into Easter as it felt like some profit-taking was in the air, e.g. Nvidia (NVDA US) -2.5%, Netflix (NFLX US) -2.7%, and Meta Platforms (META US) -0.4%. Conversely, Merk & Co (MRK US) gave the old-fashioned index its biggest boost, gaining ~5% after the regulator approved its therapy for adults suffering from a rare lung condition. The blue-chip index is close to breaking 40,000 for the first time, and with the likes of Apple, Intel and Caterpillar also pushing ahead, it feels like a matter of time.

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25/03/2024 08:41

Currencies

The Greenback found some support last week following the FOMC, and it surprisingly moved in the opposite direction to US bond yields. It appears the FX market focused on the pushback of rate cuts through 2025/6 as the US economic data remains strong. In a similar fashion to several other financial markets, the US dollar has consolidated over the last 18-months as it searches for direction, with a couple of false moves in both directions already under its belt.

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18/03/2024 09:07

Currencies

The $US found some support last week following the solid economic releases, but at this stage, we believe it's just a case of the “interest rate cut can” being kicked down the road as opposed to taken off the table, e.g. swap traders have moved from June to July with their call for the first cut by the Fed. We wouldn’t be surprised to see this pushed back a little further, but ultimately, we believe the $US will face a headwind from rising bonds and falling rates.

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29/01/2024 08:26

Currencies

The $US continues moving in tandem with bond yields hence, if we are correct in 1Q, it’s a buy around 100 and sell nearer to 105. We remain ultimately bearish about the $US, but it has already fallen over 13% from its late 2022 high, and a few more months of consolidation is our preferred scenario.

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08/12/2023 09:20

Global Markets

US stocks were led higher by Google, as most of us call it after they released Gemini, the “largest and most-capable AI model” it has ever built. Advanced Micro Devices (AMD US) surged ~10% after pledging its new accelerator chips will run AI software faster than rival products. On the sector level, Energy was the only noticeable pocket of weakness, falling ~0.6% on an otherwise strong day for stocks.

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04/12/2023 09:04

Currencies

The $US closed unchanged last week even as bond yields dropped sharply on Friday, suggesting traders believe the Greenback has reached a new level of equilibrium, which is the mean (average price) of 2023. Over the last year, the trend has been choppy rotation between the 100 and 107 areas. We wouldn’t be surprised to see more of the same in 2024, i.e., trends have lasted longer than most people expected this year.

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18/09/2023 09:06

Currencies

The $US edged towards its 2023 high last week, and a mildly hawkish FOMC this week will likely see a test of 106. Similarly to US bond yields, it’s hard to comprehend any meaningful downside until US inflation drops back to 2% - in August, the CPI rose to 3.7% with gasoline prices the most attributable factor in the increase.

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14/08/2023 09:01

Currencies

The $US ended on its highs on Friday after another solid US Jobs Report pointed to higher interest rates will remain for longer than many hoped, this is weighing on the likes of gold which is now over $US150/oz below its May high i.e. with short term US bonds yielding almost 5% gold needs to advance close to $US100/oz from current levels to simply match the returns from the safety of fixed interest.

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26/06/2023 09:04

Currencies

The $US has been trading sideways between 100 and 106 for over 6 months and we see no reason at this stage to anticipate a breakout from this period of consolidation. If we do see weakness in equities over the next few months it will be interesting to see if the Greenback again attracts a “safety bid”.

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