Dollar Higher, Stocks Challenged

• Nearly all the major currencies have risen at least two percent against the US dollar this week

• Headline UK retail sales rose 0.1%

• The US has a several economic reports on tap today, but none have the heft to change market sentiment

• Czech Q4 GDP grew 5.1% y/y vs. 5.2% expected

The dollar is mixed against the majors as the week winds down.  The Antipodeans are outperforming, while sterling and euro are underperforming.  EM currencies are broadly softer.  TRY and THB are outperforming, while INR and ZAR are underperforming. 

MSCI Asia Pacific was up 0.6%, with the Nikkei declining 1.2%. 

MSCI EM is up 0.2% on the day, with Chinese markets closed until next Thursday.  Euro Stoxx 600 is up 0.7% near midday, while futures are pointing to a higher open for US markets. 

The 10-year US yield is down 2 bp at 2.89%. 

Commodity prices are mostly higher, with oil up 0.2%, copper up 0.2%, and gold up 0.3%.

Nearly all the major currencies have risen at least two percent against the US dollar this week.  The Canadian dollar is an exception.  It has risen one percent this week ahead of today’s local session.  Sterling is becoming another exception after disappointing retail sales.  It is up just shy of two percent.

The Dollar Index is off 2.3% on the week, which would be the biggest weekly loss since 2015.  The dollar has firmed a bit on the European morning, but look for North American operators to see the upticks as a selling opportunity.

The greenback slumped to nearly JPY105.50 in Tokyo, which appears to have led this week’s decline.  It is the biggest weekly loss since July 2016.

Japanese officials are becoming more concerned.  Reports suggest a high-level meeting was held today between the BOJ, MOF and FSA on the yen’s strength.  Although Finance Minister had said earlier this week that the yen’s movement did not require intervention, the MOF’s point man on FX, Asakawa, expressed greater concern for “one-sided” move that was “not in line with fundamentals.”

Leave a Reply