FOREX NEWS & BLOG

The Bank of Japan left its JGB buying amounts the same as the previous operation

The Bank of Japan left its JGB buying amounts the same as the previous operation

May 17, 2024 3:24 am |

USD/JPY popping higher this time around. Bank of Japan buys:

  • JPY375bln 1-3 Year
  • JPY425bn 3-5 Year
  • JPY425bn 5-10 Year
  • JPY75bnln 25+ Year

Earlier from the Bank:

This pop on the news seems a bit of an over reaction this time around. yes, the BoJ bought JGBs. That’s what they do.

This article was written by Eamonn Sheridan at www.forexlive.com.

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PBOC sets USD/ CNY mid-point today at 7.1045 (vs. estimate at 7.2222)

PBOC sets USD/ CNY mid-point today at 7.1045 (vs. estimate at 7.2222)

May 17, 2024 2:46 am |

The People’s Bank of China set the onshore yuan (CNY) reference rate for the trading session ahead.

  • USD/CNY is the onshore yuan. Its permitted to trade plus or minus 2% from this daily reference rate.
  • CNH is the offshore yuan. USD /CNH has no restrictions on its trading range.
  • A significantly stronger or weaker rate than expected is typically considered a signal from the PBOC.

more to come

The previous close was 7.2199

–

PBOC injects 2bn via 7-day RR, sets rate at an unchanged 1.8%

  • 2bn mature today
  • thus neutral in OMOs today

This article was written by Eamonn Sheridan at www.forexlive.com.

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Goldman Sachs have shifted their forecasts for PCE inflation up by a tiny margin

Goldman Sachs have shifted their forecasts for PCE inflation up by a tiny margin

May 17, 2024 1:42 am |

Goldman Sachs have raised their forecast for April core and headline PCE estimates by 1bp each

  • 0.26% and 0.27% respectively

Prior was 0.3% for these.

Earlier this week we had the CPI report, a marginal improvement. It seems a bit early to be pondering the PCE report, which is the Fed’s preferred inflation measure, but GS is doing just that. I’m still just drawing squiggly lines on charts after the CPI, so I guess that’s why they earn the big $ there at GS.

GS cite import prices and import prices ex-petroleum increasing by more than expected in April.

ICYMI:

This article was written by Eamonn Sheridan at www.forexlive.com.

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Bank of America continue to expect the first Fed rate cut in December

Bank of America continue to expect the first Fed rate cut in December

May 17, 2024 1:35 am |

Via a note from Bank of America following the CPI report that got everyone expecting quicker rate cuts, again..

This in brief:

  • While the report was certainly a positive one relative to ugly reports to start the year, it is only one month and we think not a big enough step for the Fed to get overly excited.
  • Based on our read-through to PCE inflation, we expect core PCE to print at 023% m/m or 2.8% annualized.
  • Therefore, inflation in April is an improvement from 1Q but is still above the Fed’s 2% target.
  • As a result, we retain our call for the first cut to be in December

Not earlier says BoA:

  • Market pricing on the other hand thinks a cut in September and two cuts this year is very likely. Following the report. markets now price almost 2 full 25bps cuts by the end of the year and more than 85% probability of a cut by the September meeting. We think inflation data will have to slow much more or the labor market data needs to weaken to really bring a September cut into play.

Not gonna cut rates on a marginally improving CPI report. And, let’s face it folks, the improvement was only marginal.

This article was written by Eamonn Sheridan at www.forexlive.com.

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