Trade Tensions Weigh on Equities, Lift Yen

new staircase

Rising trade tensions are taking a toll on equity markets.  No relief is in sight, though some still are hoping that a breakthrough is possible before the US-Chinese sanctions are implemented on July 6.   Merkel’s work is cut out this week after a push-back against the Berlin-Paris agreement and strong opposition to the current immigration stance.  The US dollar is mostly firmer, though the yen is the strongest.  

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EM Preview for the Week Ahead

blog-icons-empreview emerging markets previewEM FX ended Friday mixed, and capped off a mixed week overall as the dollar’s broad-based rally was sidetracked.  EM may start the week on an upbeat after PBOC cut reserve requirements over the weekend.  Best EM performers last week were ARS, MXN, and TRY while the worst were THB, IDR, and BRL.  Continue reading

What Has Changed in EM

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  • Nor Shamsiah Mohd Yunus was named the new Governor of Malaysia’s central bank
  • Moody’s cut the outlook on Pakistan’s B3 rating to negative from stable
  • National Bank of Hungary tiled more hawkish
  • Israeli Prime Minister Benjamin Netanyahu’s wife was charged with misusing public funds
  • MSCI added Saudi Arabia and Argentina to its Emerging Markets index
  • Brazil’s government is split on the inflation target for 2021.
  • Ivan Duque will be the next president of Colombia Continue reading

BOE Spurs Dollar Pullback

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  • The BOE’s hawkish hold yesterday changed the near-term dynamics in the FX market
  • A modest recovery in the euro area flash PMI helped provide some fuel for the move that was already underway
  • Japan reported its All-Industries Index, which rose 1.0%in April after a flat reading in March
  • OPEC appears to be moving toward a formal hike of as much as a million barrels
  • Mexico mid-June CPI is expected to rise 4.57% y/y vs. 4.46% in mid-May
  • Brazil auctioned another $2 bln in FX swaps yesterday  Continue reading

A Change Under Foot in Europe

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Europe remains a work in progress and it grows through crisis.  The political crisis in Europe is spurring new reforms and institutional capacity building.  Monetary union was the driven by one overreaching challenge, what do with a reunified Germany.  Forgetting the roots of EMU leads to misguided assessments.  

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Dollar Driven Higher

Money of the world . Close up .

  • The half-hearted and shallow attempts by the currencies to recover appear to be emboldening the dollar bulls today
  • Swiss National Bank left policy unchanged and repeated its refrain about the franc being overvalued
  • Norway’s Norges Bank left rates steady as well, but it signaled a rate hike in September
  • The Bank of England could help steady sterling today.
  • Saudi Arabia and Argentina are moving into the EM Index
  • Brazil COPOM kept rates steady at 6.50%; Taiwan central bank kept rates steady at 1.375%
  • Banco de Mexico is expected to hike rates 25 bp to 7.75%

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