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- Greenback Consolidates Losses as Yields Stabilize
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- Holiday Market Watch
- New Fed Scenario and Market Impact
- What the FOMC Says may be More Important than What it Does
- USD, EUR, GBP, JPY and AUD on the Outcome of the Italian Referendum
- Consolidative Tone for the US Dollar
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- A Look at the Majors
- What to Take from September’s FOMC Meeting
- Why September Jobs Data will Likely Be Strong
- Market Reaction to FOMC Outcome
- Forex Watch
- Cable Beware - The US Fed Has Room To Be Hawkish
- USD/CAD – Big Sell-off, Little Sell-off?
- US Dollar Basket
- EUR/NOK - We’ll be Just Like Norway!
- Main Foreign Exchange Market Drivers
- EUR/AUD: An RBA Rate Cut to Usher Us Back to 1.54?
- GBP/USD – Because Everyone’s Talking About It…
- Fed Set Cautious Tone at June Meeting
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- GBP/CHF: All Else Aside
- Brexit Sends Shock Waves Through Global Capital Markets
- USD/MXN: Inseparable Economies
- AUD/USD: Irrational Numbers
- CHF/JPY: The World Turned Upside Down
- The Fed, The Yen and the Pound
- Markets Have to Adjust as Fed Alters Course
- EUR/HUF: Indirectly Speaking
- AUD/NZD: Eggs in Basket Effect
- Why did Draghi Need to Act Now?
- The Yuan, and China’s Growth Path to Internationalization
- US Interest Rate Hike:
- a Matter of When, not If
- Greece and the Eurozone: Scenario analysis
- Actions vs. Words
- Grexit Fears Back on the Agenda
- Psychology more Important than Data in the Week Ahead
- Interest Rate Strategy
- The Effect of Illiquidity
- EURUSD to Break a 50 Year Average
- Japan Overshadowed, but Important Developments
- The Euro: Its Beginning, Its End, and Its Future
- Market Implications of May’s UK General Election
- Six Key Issues for Investors
- Market Mistakes Balanced Fed for Dovish Fed
- Hike or no Hike
- Why the Euro Bear Market is Only Half Over
- ECB Bond Buying Program Accelerates Euro Losses
- Dollar Bulls Charge Ahead
- Dollar Rally Still in Early Days
- Swiss Surprise
- Dramatic Losses in Greek Bonds and Stocks
- Market Catches Breath after Yesterday's OPEC-Induced Moves
- Diverging Monetary Policy Supports Ongoing US Dollar Rally
- FX Markets Volatility Ahead of the Fed Meeting
- Dollar Bulls in the Driver Seat, but Consolidation Looms
- Greater China and the USD/CNY
- BOE Governor excites Sterling bulls
- Currency Wars and Big Moves
- Japan and a Weaker Yen
- Commodity Currencies Await Green Light from Beijing
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Greenback Consolidates Losses as Yields Stabilize
16 Mar 2017
The US dollar remained under pressure in Asia following the disappointment that the FOMC did not signal a more aggressive stance, even though its delivered the nearly universally expected 25 bp rate hike. News that the populist-nationalist Freedom Party did worse than expected in the Dutch elections also helped underpin the euro, which rose to nearly $1.0750 from a low close to $1.06 yesterday. European activity has seen the dollar recover a little, but the tone still seems fragile, even though US interest rates have stabilized and the 10-year Treasury yield is back above the 2.50% level.
The US premium over Germany on two-year money peaked a week ago near 2.23. After the US yield fell in response to the Fed's move, the spread finished near 2.12%, from which it has not moved far. Initial euro support has been found a little above $1.07. The first retracement target of the run-up is a little below there at $1.0690. The other retracement targets are seen near $1.0675 and $1.0655.
Few expected Wilders in the Netherlands to have a say in the next Dutch government. He drew about 13% of the vote and will hold about 20 seats, which is five more than currently. Prime Minister Rutte's party appears to have received the most votes and 33 seats, down from 41. The other coalition partners did worse. In particular, the disastrous showing of Labor means that Dijsselbloem, the current finance minister and head of the Eurogroup of finance ministers is unlikely to hold his post. Labor may have less than 10 seats in the new parliament, down from 38. The other coalition partner, Liberals, lost eight seats.
The new parliament will sit in a week and negotiations for a new government will begin. It will take some time. The last election (2012) toook 54 days to sort out, while in 1977 in took more than 200 day to form a new government.
The Fed hike and Dutch election were not very surprising. The surprise of the day was China. The PBOC announced a 10 bp increase in its medium lending facility loans and open market operation repos. Its statement did try to temper the surprise by noting that these increases were not the same as an increase in the benchmark rates. This seems to suggest that the increase in rates is unlikely to be passed on to households or business.
Three other central banks have met, and as expected, did not change policy. The Bank of Japan, the Swiss National Bank and Norway's Norges Bank stood pat. The focus shifts to the Bank of England. It too is widely expected to maintain its neutral stance.