Forex Forecast

Subtle BoE Changes The pound gained ground against the euro and dollar after the April BoE minutes revealed that the MPC voted 8-1 to keep QE unchanged and 9-0 for unchanged policy rate. Adam Posen , the staunch dove, changed his vote and voted inline with the majority.

USDJPY Marches Higher The yen weakened overnight despite a press report indicating that the Bank of Japan’s inflation forecasts may be raised. It seems some FX investors are already positioning themselves for USDJPY upside ahead of next week’s FOMC and BoJ meetings – both of which are likely to push the pair higher towards our […]

CAD Bulls Push Ahead Our bullish call on the Canadian dollar was supported by the more hawkish posture of the Bank of Canada, which warned that “in light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving […]

Focus Shifts to BoC After a shaky start in Asia, risk assets squeezed higher in Europe, though we view this as more a function of low trading volumes, and established market correlations which tend to provide modest dollar selling in that environment.

Dollar Recovers Poise Asian equity markets slipped into negative territory overnight, helping set the scene for a modest dollar recovery after Monday’s weakness. The minutes from the RBA’s April 3 policy meeting sounded slightly more dovish than the policy statement itself, and more overtly signaled the possibility of a future rate cut – inflationary pressures […]

Dollar On The Defensive US dollar bulls did not glean much encouragement from the latest batch of US data, with the effect of the stronger than expected March retail sales print (+0.8% m/m) diluted by a more modest gain in the ‘control series’ that feeds into GDP (+0.4% m/m), not to mention the declines in […]

US Data To Guide Risk Appetite Risk assets had a soft start to the week in Asia, though some consolidation in the European session saw equity markets turn around. The Wall Street Journal reminded investors that Moody’s has the ratings of 114 European banks on review for a possible downgrade.

Rating Fears Return Risk appetite suffered overnight after the Wall Street Journal reminded investors that Moody’s has the ratings of 114 European banks on review for a possible downgrade. We note that this review was announced in mid-February and that the article contained little new information.

Widening the CNY Band The spotlight remains on China, where the PBoC announced a widening of the USDCNY trading band from ±0.5% to ±1%, effective today, the first widening since 2007. The move was largely expected and should not be viewed as a game changer.

US Data Eyed After a surprisingly weak Chinese Q1 GDP print, markets stabilized in Europe, with few major data surprises or notable comments on the news wires. The disappointing Q1 GDP print from China triggered a 50 pip selloff in AUD.