The people who believe that the inversion of the yield curve is a signal of recession have it wrong this time.
Unless the Bush administration is capable of cutting the current account deficit in half, the dollar's decline is destined to continue.
This was a report that was made to order for dollar bulls. The market was predisposed to buy dollars and the report added gasoline to the fire.
This was a report that was made to order for dollar bulls.
But the tape will not be as important to the market as new data.
Given recent Fed warnings over high levels of capacity utilization and low levels of unemployment, today's report increases the probability that the Fed will raise rates above 5.0% later this year. Last Friday's release of March unemployment further buttresses this view.
I don't think it is possible for Iran to take money out of both the United States and Europe. There are just not sufficiently deep or liquid markets to place these sums of money.
Given the recent spate of positive January data, CPI and durable goods are unlikely to disappoint. The USD is positioned to make new gains ... as favorable U.S. growth and interest rate differentials weigh on market sentiment.
If the Bank of Canadian continues to hike rates after the Federal Reserve pauses, it will narrow the rate differential between the two. This will make the Canadian dollar more favorable.
There are strong economic fundamentals backing not only the U.S. economy but the U.S. dollar right now. We are likely to get two more rate hikes.
Our Fed watchers say there's a consistent story that the Fed is one and done. Today's data doesn't change this story.
Market players don't want to be caught the wrong way here going into a very heavy data week in the U.S..
Whereas Asian demand for US bonds is unlikely to end any time soon as a conscious policy decision, the reversal of petrodollars from the US bond market remains the greatest threat to the dollar in 2006.
We would have to say there is a confluence of events conspiring against the dollar.
We won't see the dollar embarking on any new trend until the markets get a better sense of where the Fed is headed.
This report is nothing short of remarkable. The formula for a strong dollar is strong growth, tight monetary policy and loose fiscal policy. The U.S. happens to have all three. Private investors are comfortable investing in a country like the U.S.
The reason why an inverted yield curve need not foreshadow recession this time is that it is foreign investors and not domestic investors who are increasingly buyers of U.S. bonds.
We knew that there were going to be some hurricane-related distortions in the September data, but this really exceeded our worst fears. This was a turn for the worst.
Unemployment has drifted further below 5 percent, and at those levels you have to start being concerned about bidding up of wages. There's a compelling reason to hike interest rates at the next meeting.
We see that elevated oil prices and a continued Asian central bank intervention ensures that foreign demand for U.S. treasuries remains strong during January.
Were this trend in new home sales to continue, the Fed will be less likely to increase interest rates, which would be a dollar negative.
While the US trade deficit showed an unexpected improvement in February, any lasting market enthusiasm was firmly misplaced. Energy prices continue to rise while China remains resistant to further currency flexibility.
While the monthly December data was not itself a negative surprise, the aggregate 2005 total was a rude reminder.
This was undeniably a positive report. Today's report could very well tip off a strong, albeit short, week for U.S. economic data.
What we are concerned about is that going forward they may decide to remove petrodollars and redirect them elsewhere. If they do, it is negative for the bond market and ultimately for the U.S. dollar.
Benign inflation has weakened the Canadian dollar a little bit.
Anecdotal evidence on the trading floor indicates things have been lighter than at any other point in the week. You are seeing some one-off flows that are making a greater impact in the market due to this lower level of liquidity and volume.
February's data support the view that the U.S. labor market remains strong, particularly on the services side, with unemployment solidly below the 5% level. The Fed is likely to continue raising rates for the foreseeable future.
(The survey) was a big surprise this morning, but some of the market is saying that Detroit, because of loss of auto jobs, does not reflect the rest of the nation.
Oil prices have risen so dramatically that the view now is that this could choke off U.S. growth and prevent any recovery in the stock market.
The monthly GDP report fed into underlying CAD strength. With political risk subsiding, rising interest rates and fundamental economic strength are prompting CAD buying, which is expected to continue through year-end as USD/CAD heads for the 1.10 mark.
Despite some base-effect distortions caused by surges in building supplies and clothing sales in the previous month, December retail sales reflected broad-based domestic demand that should support a strong GDP figure for the fourth quarter.
The weekend 'No' vote was deemed to be negative for the euro and has sent the euro/dollar into a new trading range. It is quite possible that in the coming weeks we could get as low as $1.20 before the market decides that it has bought enough dollars for the time being.
The United States is very dependent on Asian bank buying and petrodollars.
This certain beats even the most optimistic forecasts,
This morning's announcement by the Bank of Japan to end quantitative easing is being viewed as an indication that the Japanese economy is returning to health, but appears insufficient to prompt any consistent yen buying as of yet.
There was quite a sell-off on Friday and it may have been overblown.
There was yen strength on the anticipation the Bank of Japan could be changing its monetary policy. Those expectations have been curbed.
There's a compelling reason to hike interest rates at the next meeting.
The removal of the word 'measured' ... would be positive for the dollar as it suggests that the Fed is giving itself room to raise rates at a faster pace later this year.
There's a very positive economic story of investors being more willing to take risks and buy equities and less willing to take low rates on bonds.
Consumers are out there spending and keeping the economy alive. We see dollar strength heading into next year.
The Bank of Japan is not going to be changing its monetary policy before the fiscal year end on March 31. As corporations close down their books, they don't want any pronounced movements in the dollar-yen rate.
Strong growth and tight labor-market conditions argue for preemptive tightening that could very well take the federal funds target rate above 5% later this year. This is viewed as a dollar positive.
The US dollar's ability to rally strongly off a better-than-expected trade deficit is a strong indication that the market hasn't yet given up on the dollar.
The U.S. dollar's ability to rally strongly off a better-than-expected trade deficit is a strong indication that the market hasn't yet given up on the dollar.
If unemployment dips any lower, that may indicate some wage inflation and the Fed will likely continue to raise rates.
Investors are attempting to square up their positions before the long weekend.
Interest rate differentials are supporting the U.S. dollar for the time being. Until the Fed pauses, it looks that's going to provide support for dollar bulls.
These are ideal conditions for speculators to push spot prices around. The dollar appears to be testing new lows against the yen. The price movements are not supported by fundamentals.
This has had a psychological effect on the markets. For those of us left in the office, we're just watching to see just how high the 10-year will go today.
The hike in March is fully priced in. The hike in May is over 80% priced in. There is already talk of continued hikes after that. Interest rate differentials globally are increasingly favoring the U.S. and it's positive for the dollar.
The dollar will remain supported for the time being so long as central banks overseas continue to intervene to keep their currencies weak against the U.S. dollar.
The dollar rally after the non-farm payrolls report underscores the continued importance of labor market tightness with respect to interest rate expectations.
The door will be left open for future rate hikes but the Fed will be increasingly data-dependent. That's positive for the U.S. dollar.
The current account deficit has grown to a point where it arguably cannot be corrected by US action alone.
The market took this to mean that there is a 100 percent chance that interest rates will be increased at the next meeting and a 75 percent chance at the meeting after that.
The market is happy with the number as it shows strength in Canada's economic growth. Investors are willing to buy the Canadian dollar.
