Friday, July 14, 2023

"After Dramatic Week, Capital Markets are Stabilizing"

From Marc Chandler at Bannockburn Global Forex:

Overview: After tumbling headlong this week, the dollar appears to be broadly consolidating ahead of the weekend Among the G10 currencies, the Canadian dollar's 1.2% gain is the least and it made new 10-month highs earlier today The beleaguered Scandis soared The Norwegian krone's 6.6% advance followed by the Swedish krona's 5.8% surge led the major currencies The Dollar Index is off about 2.4% this week ahead of the North American session It is the largest loss since last November. Among emerging market currencies, the Hungarian forint (~5%) and South African rand (~4.5%) led the way. Only the Chilean peso, Turkish lira, and Argentine peso fell. The lower dollar and softer rates helped lift gold to $1963 today. It settled near $1925 last week. As the greenback stabilized today, the yellow metal slipped back to around $1955.

Most Asia Pacific bourses but Tokyo advanced today
Taiwan and South Korea led today's advance, but Hong Kong's 5.7% advance leads the week's surge Europe's Stoxx 600 is stalling after rallying for the past five sessions The slippage today leaves it up a little more than 3% to nearly offset last week's decline. Several large US banks report earnings today. The index futures are sporting minor losses today. After a sharp drop in yields in recent days, European and US benchmark 10-year yield are mostly a little firmer (1-3 bp) The 10-year Treasury yield is up 2.5 bp to 3.79% and the two-year yield is 3.5 bp higher to 4.66% Broadly speaking, the moves this week have been statistically quite large and we suspect a bit exaggerated. The consolidative tone with some back-and-filling may be needed.

Asia Pacific
Even after the surge in lending last month, Beijing seems to recognize the need for additional measures to support the economy. Officials are suggesting more, targeted measures for the property market will be forthcoming....