ATF Trading Room

Dec. 12, 2019 ( – As expected, in its last meeting for the year the ECB announced that rates will remain unchanged, while the ECB President Christine Lagarde committed to review existing monetary policies and strategies.

Policy makers kept their projections for inflation and economic growth in the Euro-area and reiterated that QE will stay in place at least until inflation starts approaching the 2% level.

The ECB managed to shave the momentum off the EUR rally fueled by the Fed’s meeting yesterday, with the single currency retreating toward $1.11 from a session high around $1.1150.



Dec. 11, 2019 ( – Pressure mounted on the USD today after the Fed decided to keep the benchmark rate in its current 1.50% to 1.75% target range and hinted that it might hold rates steady through 2020.

The EUR managed to climb back above $1.11 and tested resistance at $1.1116. A bullish breakout here would open the door to a move targeting the recent double top around $1.1185.

Below is the FOMC Statement in its entirety as released by the Federal Reserve earlier today.

“Information received since the Federal Open Market Committee met in October indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports remain weak. On a 12‑month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1‑1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective. The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren.”


Sept. 5, 2019 (Western Union Business Solutions)  – Easing global political worries shift market to risk on mode

-             USD down 3% versus GBP in 48 hours

-             Big data day ahead for the US

-             Rising oil prices give welcome boost for the Canadian Dollar

Easing global political worries see safe haven sell off, including the US Dollar!

Market sentiment has improved as US-China trade talks look set to resume next month. In addition, easing global political worries from Hong Kong, Italy and the UK helped boost risk appetite. Global equities rallied along with riskier assets, emerging market currencies and oil prices.

Reports that Hong Kong withdrew the extradition bill, that has triggered months of protests and unrest, was cheered by investors. In Italy, a new coalition government was formed which gave a welcome boost to the Euro. While in the UK, MPs successfully passed a draft law to stop a potentially chaotic no-deal Brexit in October. China’s yuan and the closely linked Australian and New Zealand dollars appreciated on the news. The Japanese Yen and Swiss Franc, which draw in safe-haven demand in times of geopolitical stress, depreciated, as traders unwound these safer positions and sought out riskier high yielding assets.

The US Dollar index, which measure the strength of the dollar against a basket of currencies, slid for a second straight session, experiencing its biggest daily fall in two weeks.


In the last 48 hours, Sterling has recovered almost 3% against the Dollar. This rally occurred after law makers voted to force the Prime Minister to seek a three-month delay to Brexit if, he fails to secure a transition agreement with the EU.

Although a no-deal Brexit is still on the table, the likelihood of that has reduced dramatically. Combined with USD weakness, the British Pound has managed to record its biggest 1-day gain since March. A delay to Brexit until 2020 and a subsequent October 19 election could see more gains for GBP although further upside past 1.30 could be limited given the uncertainty that elections can create.

Big U.S. Data Day Ahead

We have a multitude of data out tomorrow for the US. Starting with Jobs data at 8:30am (EST) the market will be keeping a close eye these for any hint towards Friday’s official jobs report. Later this morning we then have non-manufacturing PMI.

US stocks recovered over night thanks to the fact US China talks are now set to resume in October. As mentioned earlier this has seen a sell off safe haven assets including the US Dollar and subsequently the Dollar begins the day from behind. Any surprise to the downside for todays data releases could accelerate losses for the day, especially against the emerging market currencies.

Aug. 2, 2019 (Western Union Business Solutions)  – The U.S. dollar kept below multiyear peaks as solid jobs data wasn’t enough to allay concerns about the amped up trade war. Making good on the Fed chairman’s generally rosy outlook for U.S. growth, America’s jobs report met forecasts with a gain of 164,000 in July, a healthy amount that kept unemployment at a low 3.7%. Wages surprised to the upside with a 3.2% annual increase. If not for the trade troubles, a print like today’s would be consistent with a stronger dollar and only minor interest rate adjustments by the Fed.


The euro stabilized above 26-month lows thanks to the dollar’s trade war-induced decline. It also helped at the margin that euro zone retail sales surprised to the upside with a 1.1% jump in June, which easily cleared forecasts of a modest uptick. Still, the data shouldn’t offer meaningful support to the euro, particularly after the previous number got downgraded, underscoring the bloc’s poor prospects.


Safer bets like the yen and Swiss franc were the initial winners of the surprise escalation in the U.S.-China trade war. The yen turned the tables on the dollar, as USDJPY plunged by 2 ½ yen to late June lows. The ongoing trade feud has been credited with slowing global growth and the latest round only increases the headwinds. Treasury yields collapsed, weighing on the dollar and suggesting a higher likelihood of the Fed cutting rates again in September.


The Aussie dollar crashed to seven-month lows after the latest salvo in the U.S.-China trade war added to the dim outlook for Australian growth, a scenario that suggests a low bar for the Reserve Bank to lower lending rates from 1%. The RBA could take action as soon as its Aug. 6 meeting.


The loonie lurched to new six-week lows despite good news on the Canadian economy. Canada logged a surprise trade surplus of C$136 million in June, its second surplus in as many months. However, the size of the surplus moderated from a downwardly revised C$556 million in May. Sustaining a trade surplus appears tougher for Canada after the latest intensification of the U.S.-China trade war. The loonie also appears a bit hungover after oil’s biggest single-day swan dive in more than four years, when it shed more than $4 and closed Thursday below $54.





Aug 1, 2019 (Econoday) – The August BoE MPC meeting again lived up to market expectations and left policy on hold. Bank Rate remains pegged at 0.75 percent and the ceiling on QE at £445 billion (of which gilts, £435 billion). The vote was another unanimous 9-0.

Sterling resumed a slide against the greenback that knocked it to 2 ½ year lows.

The MPC also opted to retain a tightening bias under which the Bank believes that ‘‘..increases in interest rates, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2 percent target..”. However, compared with June, the bias has been modified slightly and higher rates now require both a smooth Brexit and some recovery in the global economy. In line with the Fed and a number of other central banks, the UK monetary authority would seem to be attaching increasing weight on international developments.

Under its central case scenario (smooth Brexit), CPI inflation is expected to climb on the back of excess demand and stand at 2.4 percent at the end of the 3-year forecast horizon. In other words, the current stance of policy and market pricing for borrowing costs in the future remain too accommodative to meet the medium-term inflation target. Interestingly, the Bank still sees excess demand even in the event of sterling appreciating by as much as 10 percent.

Brexit uncertainty again ruled out any policy shift today but the new Quarterly Inflation Report (QIR) still shows no quantitative analysis of what a no-deal outcome might mean for GDP and consumer prices. In line with previous meetings, the August minutes adhere to the official line that any monetary policy response to whatever shape Brexit finally takes will not be automatic and could be in either direction.

Apart from the amendment to the policy bias, there is little here for financial markets to chew on. The next move in official rates could be up or down but, in either eventuality, the chances are that it will not be for some time.

June 28, 2019 (Western Union Business Solutions)  –  The greenback was subdued ahead of data that could cement an imminent reduction in U.S. interest rates. The euro, yen and the quarter’s best performer – the Canadian dollar – all ticked higher. Sterling also firmed while emerging markets softened, a reflection of a cautious mood ahead of tomorrow’s trade talks between the U.S. and Chinese presidents. Ahead of the Trump-Xi meeting Saturday at 11:30 a.m. local time (Friday 10:30 p.m. ET), all eyes will be on U.S. personal income and spending and the Fed’s main inflation yardstick. Both incomes and spending are expected to rise but underlying inflation is forecast to steady at a low 1.6%, below the Fed’s 2% goal. Tame inflation would allow cover for the Fed to cut rates as soon as its next meeting in late July. The dollar steadied above multimonth lows this week after Fed officials tempered expectations of bold rate cuts in the months ahead.


Up about 2% in June, EURUSD was on pace for its best month in nearly 1 ½ years against the greenback. The euro firmed thanks to data showing a bigger than expected rise in euro zone core inflation which moved to 1.2% from 1%. While higher, underlying inflation continued to run well below the ECB’s near 2% goal. The weak outlook for inflation and growth keeps pressure on the ECB to deliver stronger stimulus in the months ahead, policies that would put a headwind on the single currency.


Canada’s dollar extended its stellar run after better than expected data. Canada’s economy grew at a 0.3% rate in April, above forecasts of 0.1% from a 0.5% in March. The data added to evidence of Canada’s economy turning the corner after a recent slowdown. Canada’s resilient economy suggests a lower chance of the Bank of Canada cutting interest rates. By contrast, the market expects America’s central bank to cut rates next month. Canada’s dollar was poised to finish the month in first place with a 3% rise against the greenback.

Apr. 3, 2019 (Western Union Business Solutions)  – A mostly weaker U.S. dollar retreated from three-week highs. The buck pushed higher against the yen, reaching a two-week peak, but it slid versus counterparts from Europe, Canada and Australia. Emerging markets like the South African rand and Mexico’s peso also strengthened. A tentative uptick in optimism on the trade, global growth and Brexit fronts is conspiring to pressure the safer greenback. The buck’s bullish glow tends to fade when global risks abate. That’s what’s happening today as Europe released reassuring services data and Theresa May sought bipartisan Brexit talks with the Labour Party to find a compromise deal that avoids a messy break from the EU. Meanwhile, the U.S. and China today hold another round of trade talks in Washington. In a hole, the dollar will look for a direction from U.S. numbers today on private sector hiring and services growth.

Euro rescued by stronger services growth


The euro rebounded from three-week lows after a double shot of good news on the bloc’s economy. Euro zone services sector growth got revised higher while the 0.4% jump in February retail spending was two times stronger than forecasts of a 0.2% rise. While encouraging, today’s data may only offer a momentary boost to the single currency given the still fragile shape of the bloc’s fundamental health.


Brexit winds shift, boost sterling


Brexit news continues to hold significant sway over sterling as it bolted higher on hopes that Britain might avoid a nasty, economy-damaging split from the EU. Prime Minister Theresa May vowed to hold cross-party talks with her Labour rivals to try to find a compromise deal. May’s potential teaming with Jeremy Corbyn, the head of the Labour Party, suggests a greater likelihood of Britain pursuing a softer Brexit, the scenario that could be least disruptive to growth compared to no deal exit. Sterling remains vulnerable to two-way volatility until some form of Brexit clarity takes shape.


Loonie nears 2-week peak


Canada’s dollar flirted with two-week highs, boosted by oiling nearing $63, a new five-month high. Market optimism is in greater supply today on easing concerns over trade, global growth and Brexit. The loonie is also taking advantage of the weaker U.S. dollar whose otherwise rosy complexion tends to fade when global risks abate and investors wade into riskier waters. The loonie’s main sights are set on Friday data on Canada’s job market. Hiring is forecast to slow after big gains over recent months. Forecasts call for a net increase of 1K jobs in March, down from more than 50K in February. Unemployment is expected to remain at a low 5.8%.


Disappointing data keeps dollar on back foot


The greenback moved from three-week highs to its lowest in nearly a week amid mounting evidence of a moderating American economy. ADP’s report on March hiring underwhelmed with an increase of 129,000, the fewest in 1 ½ years. By coming in below forecasts of 170,000, it suggested a higher chance that the more important nonfarm payrolls on Friday might also print below expectations of a gain of 180,000.



Jan. 24, 2019 (Western Union Business Solutions)  – The year’s first ECB Day got off to a soggy start for the euro which slipped to three-week lows against its U.S. rival. By contrast, the greenback enjoyed broad gains with Europe’s weak economy dominating the spotlight. Across the board gains lifted the U.S. dollar versus counterparts from Japan, Britain and Canada. Emerging markets were generally lower amid persistent concerns about a slowing world economy. As expected, the ECB left its benchmark interest rate unchanged at zero with markets now waiting on an 8:30 a.m. ET press conference by the central bank president, Mario Draghi. Ahead of the ECB’s first announcement of the year, Germany reported that its influential manufacturing sector unexpectedly contracted in January, which pointed to the bloc’s slowdown stretching into the new year. Also in focus today will be weekly data on U.S. jobless claims which are forecast to increase, albeit from historically low levels.




The Aussie dollar sank to three-week lows despite bullish jobs data from Down Under. Instead, the Aussie took its main cue from a move by one of Australia’s top banks to raise mortgage rates as it contends with rising funding costs. With the nation’s housing market cooling, higher mortgage rates could hasten a local interest rate cut from 1.50%, an already record low level. With borrowing rates dominating the Aussie conversation, it overshadowed jobs data that showed employers added 21,600 jobs in December, a larger than expected amount that pushed unemployment down by a notch to 5%.




The euro fell to 2019 lows after the ECB left interest rates unchanged and acknowledged that risks facing the 19-nation economy had intensified. ECB President Mario Draghi reiterated that the central bank expected to keep interest rate low through the summer, maybe long if necessary. The fact that Mr. Draghi expressed greater concern over the bloc’s economic health suggested a later rather than sooner rate hike. The prospects of lower rates for longer is negative for the euro but perhaps somewhat less so with the Fed not expected to boost borrowing rates any time soon.




Sterling’s weekslong run ran into resistance which coaxed the U.K. unit lower. The pound scaled 10-week highs this week as growing expectations that Britain might delay its departure from the EU or perhaps put the Brexit impasse up to a second referendum. While the market appears less fearful of a dreaded no deal, hard Brexit, such a dire scenario hasn’t been removed from the table and could quickly return to undercut the pound.




The dollar maintained a gain after spectacular news on America’s job market. Weekly jobless claims unexpectedly fell by 13,000 to 199,000, the lowest in nearly 50 years. The data may have been skewed by a holiday, however. Still, the underlying trend was consistent with the labor market retaining broad strength which bodes well for future hiring and wage growth. America’s record-long government shutdown could restrain the dollar by clouding the economy’s true health since several data releases have been delayed.




Lower oil prices and a stronger U.S. dollar kept Canada’s so-called loonie pinned near two-week lows. Crude, a top driver of Canada’s commodity influenced currency, fell by 0.5% to below $53. The price of oil could see surprise volatility over the short run given the political crisis in Venezuela. Loonie fundamentals suffered a setback this week in data showing a bigger than expected retreat in Canadian consumer spending, a potential harbinger of weaker growth over the final quarter of 2018.

Oct. 24, 2018 (Western Union Business Solutions) –  For the first time ever, the European Commission has requested a euro area country to revise its draft budget plans. Italy is not backing down though, and the far-right Deputy Prime Minister Matteo Salvini believes the new measures are necessary to restore economic growth. The proposed budget deficit of 2.4% of GDP is triple the amount forecast by the previous government. Despite being below the 3% deficit limit under eurozone rules, the Commission has given Italy three weeks to present a new plan or face possible fines.   A Reuters report suggested Brexit will be completely overshadowed if the Italian budget crisis escalates.  Italy’s debt to the European Central Bank (ECB) is vast and it is unlikely the central bank will want to buy more Italian bonds than planned. The ECB is expected to end its quantitative easing programme by year-end, making its policy meeting an important event tomorrow.




The Bank of Canada is expected to increase interest rates from 1.5% to 1.75% today at 10am EST. A rate hike today could help the Canadian dollar strengthen having been under heavy selling pressure due to a run of poor economic data and the recent fall in oil prices.



Economic growth fears in the Eurozone have caused the euro to continue to slide against a basket of currencies. During European trading PMI surveys across the Eurozone showed growth had slowed much faster than originally anticipated, German private sector growth reported slowing to the lowest level in over three years while manufacturing in France hit a two year low. Unsurprisingly market reaction has been unfavourable for the euro, causing it to slide 0.8% against the dollar.



Prime Minister Theresa May will meet with conservative lawmakers at a private meeting in parliament as she seeks to calm growing tensions over her Brexit strategy. Ms May will address the “1922 Committee” of backbenchers in her conservative party and attempt to convince them agree to with her proposal. A vote of no-confidence against the PM would be triggered if 48 conservative lawmakers submit letters to the chairman of the 1922 committee to demand such a vote. The Sunday Times said 46 have already been sent. If the PM is unable to convince the Tory backbenchers to support her, this could become a huge risk to the PM’s job and to Sterling.

Oct. 18, 2018 (Western Union Business Solutions) –  The U.S. dollar steadied after a Fed-inspired surge overnight to one-week peaks. The greenback was mostly flat against rivals from Europe, Japan and Canada after pushing to its strongest levels since at least Oct. 11. The Aussie dollar was an outlier with gains of its own that came on the back of bullish domestic jobs data. America’s currency got a lift from the latest Fed minutes that showed policymaking mulling how high to boost borrowing rates with the economy in strong shape. The positive for the buck was that the minutes toyed with the notion of increasing rates so high that it restrains growth to ensue the lid stays on inflation. The dollar succumbed to some profit-taking ahead of a slew of U.S. data Thursday on weekly jobless claims, the Philly Fed index and leading indicators.




Sterling descended to one-week lows after a high stakes Brexit summit came and went with little to no progress. Adding salt to the pound wounds: U.K. retail sales disappointed with a bigger than expected fall by 0.8% in September, the weakest in 6 months. The data came on the heels of British inflation slowing toward the Bank of England’s 2% goal which fit with the outlook of area borrowing rates staying put over the foreseeable future, a dovish view compared to the hawkish Fed that’s on track to raise rates again this year. The prospect of prolonged uncertainty over Brexit bodes negatively for sterling’s coming prospects.




A sharp slide in oil knocked Canada’s commodity-driven currency to one-week lows. Oil moved below $69 a barrel Thursday, a day after staging a 3% plunge. A lack of meaningful Canadian data until tomorrow has led the loonie to take its main cue from oil markets. Come Friday, underlying Canadian inflation is forecast to remain around 2%, the Bank of Canada’s sweet spot, while retail sales are expected to rise by a solid 0.3% for a second straight month. Outcomes near or better than expectations would help to green light a rate hike to 1.75% from 1.50% on Oct. 24 when the central bank issues its next policy decision.




The yen tracked major currencies lower against the greenback which clocked one-week peaks versus its Japanese rival. The yen tested the weaker end of its range after the latest Fed minutes showed widespread conviction in policymakers boosting borrowing costs at a continued gradual pace over the coming year which differs from the outlook for Japan where interest rates are expected to remain below zero for the foreseeable future to support the world’s tepidly growing No. 3 economy. Still, downside for the yen has been capped by volatile stock markets, suggesting USDJPY strength may come in dribs and drabs.




Better than expected U.S. data kept the dollar near one-week peaks. The decline in weekly jobless claims to 210,000 from a revised 215,000 was better than forecasts of a print of 212,000. The Philly Fed index of Mid-Atlantic factory growth slowed less than expected to 22.2 for October, above forecasts of 20.5. The data fit with the thesis of a strong economy and the Fed pushing rates higher over coming quarters.