Kathy Lien - BK Asset Management

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Last quote by Kathy Lien

If they remain cautious, the currency pair could slip back down towards 0.7450.feedback
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May 01 2017
Kathy Lien has been quoted 85 times. The one recent article where Kathy Lien has been quoted is Asia markets lose ground, with resources, financial shares under pressure. Most recently, Kathy Lien was quoted as having said, “The Beige Book is scheduled for release on Wednesday and while the U.S. economy in general continues to recover, if Fed districts report a slowdown, the dollar could extend its losses quickly.”.
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Kathy Lien quotes

The problem that the greenback is having right now is two fold - first Trump has been talking down the currency and second, his policies make foreign investors nervous. Until the market comes to terms with the risk/benefits of Trump policy, the dollar may have a tough time mimicking the one way moves in stocks and bonds.feedback

Over the past few months we have seen strong correlations between the U.S. dollar, U.S. yields and U.S. stocks but today, as the Dow Jones Industrial Average climbed above 20,000 for the first time, the greenback barely budged.feedback

With less than 24 hours to go before Donald Trump becomes the President of the United States, investors are dumping dollars ahead of the inauguration as they worry about the new President's trade and currency policies.feedback

Unless Donald Trump attacks the dollar again on Friday, we have seen the end to a month of losses in the greenback.feedback

The dollar is marking time before U.S. President-elect Donald Trump's press conference on Wednesday. Trump will most likely repeat everything that he previously vowed to achieve while giving little details on specific policy actions. The question then becomes how the markets will react - will they be disappointed by the lack of specificity or encouraged by his pledge to spend.feedback

Until data starts to turn negative or the headlines suggest that (U.S. president-elect) Trump's stimulus program could fall short of expectations, the dips in the dollar will be shallow with the currency aiming for new highs. But at the first sign of bad news there could be massive correction in what is quickly becoming a crowded long dollar trade.feedback

The prospect of Fed tightening next year is keeping bonds under pressure, yields up and the dollar bid, and obviously the Case-Shiller data is helping that.feedback

What I'm immediately worried about is those earnings. We always see earnings miss as a result of a strong currency, regardless of how much hedging a lot of these companies are supposed to do, regardless of how many times this happens, and I think that that could really start to pull back stocks.feedback

January always brings us significant volatility, and I think it really depends upon the presidency and how quickly they come out guns blazing with the stimulus package. I think in the start of the year there definitely could be some profit-taking.feedback

We won't get a lot of that stimulus until the second half of the year at the earliest, and I think at the onset, it's really going to be more pain than gain. We still have six months to go before we get any real boost, in my opinion.feedback

Emerging market countries have been hit the hardest by capital leaving in search of higher yields and return along with the growing cost of paying back dollar denominated debt.feedback

The big question is whether there will be an ECB surprise that triggers the same 4-cent (400 basis point) move in euro/dollar that we saw in December 2015.feedback

These improvements confirm that a rate hike is coming on December 14th. They also boost the chance of further tightening in 2017 but with Fed fund futures only pricing in a 30 percent chance of another hike by May, investors see a hike followed by a long pause from the Fed, which is the biggest problem for the dollar.feedback

Don't be mistaken by the mixed performance of the U.S. dollar today because dollar bulls remain in control.feedback

(Investors) unwound positions immediately after his victory and laid on fresh long dollar, long stock trades.feedback

It would her last decision before President Trump can pressure the central bank and the move would show that she isn't buckling on future political pressure.feedback

Instead of mourning, investors cheered a Trump victory as they hoped he will be positive for the economy. He ran on a campaign of aggressive spending and this is the first time in eight years that there's prospect of a sizable fiscal stimulus package.feedback

Based on the strength of the U.S. dollar and the rally in U.S. stocks, investors are banking on a Clinton victory.feedback

Taking a look at the leading indicators for non-farm payrolls, the service sector reported slower job growth, jobless claims rose to a three-month high, driving the four-week average up to 257,000. ADP reported a smaller increase in corporate payroll growth and confidence is down all around.feedback

These reports are not expected to have a dramatic impact on the dollar but with USD/JPY eyeing 105, stronger reports could give the pair the push that it needs to make a run for this key level.feedback

Hotter inflation does not equal a hotter dollar.feedback

We're still looking at the dollar remaining strong.feedback

It's a low liquidity sell-off. Typically when we see this, the reversal is violent but with fundamental support, the pound could find a new range between 1.22 and 1.25 per dollar.feedback

The U.S. dollar should continue to outperform but after six straight days of gains, traders should beware of a correction in USD/JPY ahead of Friday's non-farm payrolls report.feedback

With profits being squeezed the battle for market share can't go on and this deal ushers in a new period of cooperation between OPEC nations and specifically between Saudi Arabia and Iran. While we wouldn't be surprised by some back-pedalling between now and November, this is a historic moment and one that should have a lasting impact on the Canadian dollar.feedback

So I do fear that we could see a deeper correction in stocks.feedback

While investors are biding time ahead of Wednesday's Federal Reserve announcement, they are also weary of holding dollars given the unlikely chance of a rate hike this week.feedback

These disappointing reports should have driven the U.S. dollar sharply lower, but instead the greenback ended the day higher versus the British pound and unchanged against the euro and the Japanese yen.feedback

The main takeaway from all of these comments is that despite slower job growth and weaker manufacturing and service sector activity, U.S. policymakers still believe rates should rise and this consistent message has not been lost on investors.feedback

Investors took profits on their long dollar positions ahead of Friday's nonfarm payrolls report.feedback

While the latest string of Japanese data has been decent with the jobless rate improving and retail sales rising strongly in July, Japanese officials are clearly still frustrated with the weak growth in the economy.feedback

When we did not receive the unambiguous hawkishness from the FOMC minutes, that kind of opened up the door to additional (dollar) selling.feedback

Dollar traders were not impressed. Given the recent weakness of U.S. data and the strong downtrend in dollar/yen ... dollar traders were looking for unquestionable hawkishness. They received no additional clarity on whether rates will rise by December and were simply told that the Fed is still in wait-and-see mode.feedback

Investors dumped U.S. dollars today, pushing the greenback lower against all of the major currencies. Fed Presidents [William] Dudley and [Dennis] Lockhart warned that the market is underpricing tightening and rates could rise this year ... yet based on the price action of the dollar, investors are not buying what [they] are saying. The market was looking instead at soft U.S.feedback

The strong housing market is one of the main factors preventing a more aggressive move from the RBNZ.feedback

If the RBNZ wants to be proactive, they could send a strong message to the market with a 50 basis points (bps) cut, but we believe they will go for a 25bps move to avoid invigorating the housing market, with a warning of more [easing] to come.feedback

The U.S. dollar traded higher against most of the major currencies ... dollar/yen appears to be finding a bottom above 101.feedback

The majority of economists surveyed expect the RBA to cut interest rates by 25 basis points but we feel that a rate cut is not a done deal.feedback

The weakness of the euro provides automatic stimulus to the economy, which means the ECB can afford to wait. So the potential for an initial short squeeze is high if the central bank stands pat and the outlook thereafter will depend on how strong of a message the ECB sends.feedback

The sell-off in the euro ahead of monetary policy meeting tells us that some traders are hoping for immediate action in the form of support for Italian banks or an extension of the end date for bond purchases.feedback

Sterling's reaction today to BOE is a classic example of misplaced expectations. Economists were calling for a cut, investors believed them and when the BoE kept policy unchanged, sterling jumped from 1.3250 to 1.3475. The rally faded as the day progressed because the main takeaway from BoE is simple - rates will be lowered in three weeks and [Gertjan] Vlieghe [a member of the BoE's monetary policy committee] wanted the move to happen today.feedback

We saw investors flock into the safety of U.S. dollars as the liquidation spread to stocks, commodities, the euro, Australian and Canadian dollars.feedback

Carney has always been nervous about how Brexit would impact the U.K. economy and now that it is a reality, he is preparing for the worst, agrees with the doom and gloom scenario and wants to assure the market that the BoE will be proactive.feedback

Sterling dropped like a hard rock after Bank of England (BOE) Governor Carney said another rate cut is coming this summer. Carney also warned that the BOE can react more rapidly than other institutions and the central bank will have its first full projections in August - which means we'll be looking for a move around that time.feedback

It was your typical turnaround Tuesday in the financial markets. Currencies and equities traded higher across the board at the start of the North American trading session, but as the day progressed, the move lost momentum when investors realized that the fundamental story hasn't changed.feedback

The odds may be against them but investors are hoping that the worse is over for currencies and equities and the gaps on Friday will be filled.feedback

In the near term, risk aversion and market uncertainty makes the euro less attractive to investors. In the long run, Brexit also raises questions about the Eurozone' s viability because if major countries like Britain start dropping out the EU, nationalism could drive smaller Eurozone nations to exit out of the euro. Expects the euro to "make another run" for the $1.0900 level.feedback

Britain needs to invoke Article 50 to redefine its relationship with the EU but leaders of the leave campaign refuse to act quickly. The longer they wait, the worse it will be for sterling.feedback

I don't think the sterling has completely priced in the damage that this will have on the economy, in the short term.feedback

Central banks around the world, especially the Japanese, are sitting on their hands waiting to see how global developments over the next week or two are going to unfold.feedback

The smaller-than-expected increase in U.S. jobless claims helped [the turnaround in the dollar], but it has been a while since this report had any meaningful impact on the greenback. So the question now is whether today's reversals will turn into a ... bottom for the dollar.feedback

The shift in market expectations for Fed tightening and the confirmation from Fed presidents is a significant development that has shifted the market's appetite for dollars. The dollar lost some of its momentum towards at the end of the week and with a relatively light U.S. calendar next week devoid of major market moving economic releases, we could see choppy trading.feedback

If one of the most dovish members of the central bank thinks that a rate hike is imminent, then perhaps investors really need to re-think and re-price their expectations for tightening this year.feedback

The strongest increase in retail sales in more than a year drove the U.S. dollar sharply higher against all of the major currencies, but the gains did not last.feedback

Growth is expected to turn positive after a negative quarter and given the market's focus on the timing of BOJ easing, stronger or weaker growth could have an unusually significant impact on the yen.feedback

Short covering is the primary reason for the strong gains in dollar/yen. With everyone from the Bank of Japan governor to the finance minister and prime minister of Japan threatening to intervene if foreign exchange moves become too rapid, speculators are finding fewer reason to be remain short dollar/yen.feedback

Don't underestimate the power of short covering.feedback

Global troubles no longer worry the Fed, putting them one step closer to raising interest rates.feedback

This reversal caught many investors by surprise because the main takeaway from today's meeting is the ECB has no immediate plans to add stimulus nor did they feel that the currency was high enough to renew concerns about its impact on the economy. The ECB is still dovish, they see euro area outlook risks tilted to the downside and expect rates to remain at present or lower levels for an extended period of time.feedback

Investors were relieved that oil did not fall 10 percent on the back of the Doha meeting and they were quick to reward risk currencies like the Australian and New Zealand dollars with gains.feedback

At 113, the BoJ has leeway to wait but at 110-111 with the risk of further losses, they may not be able to forestall easing for much longer.feedback

If USD/JPY drifts lower again, we expect more aggressive action from the Bank of Japan.feedback

In a matter of minutes right around lunchtime in the U.K., USD/JPY jumped nearly 100 pips from its low of 110.67. This is the third time in two months that the BOJ stepped in to buy USD/JPY below 111 as they clearly don't want to see the currency pair trading on the 110 handle.feedback

The general effects of the RRR reduction are questionable but China's government would not have taken this move if they were not concerned about the economy. Chinese data is notoriously difficult to handicap but this gives us reasons to believe that manufacturing and service sector activity slowed in the month of February.feedback

While there has been some confusion as to whether 'support' equals action, oil traders are simply relieved that the world's fourth largest holder of oil reserves is willing to cooperate.feedback

The main reason why investors are selling dollars is because they no longer believe that the Federal Reserve will raise interest rates in 2016, What's interesting is that (Janet) Yellen did not say anything in her testimony over the past two days to suggest that would be the case. Nonetheless, Fed fund futures are no longer pricing in a rate hike this year, validating the decline in the dollar.feedback

By the end of her testimony, sentiment completely shifted.feedback

For the most part, dovish undertones of (Yellen's) testimony were enough to reinforce what the market had been thinking all along, which is that the Fed is probably not going to go through with a rate increase next month.feedback

Many economists believed he would avoid making specific comments about more policy action but as we pointed out, the 3-cent rise in the euro and decline in oil prices since December encourages the ECB head to be characteristically dovish.feedback

It is important to remember that if Chinese stocks continue to fall, the Chinese government will not hesitate to step in to turn the tide around. There's no question that the People's Bank of China (PBOC) will increase stimulus this year especially given recent developments.feedback

It is too soon to tell whether the selloff will turn into a deeper correction because on one hand, part of the breakdown can be blamed on panic selling after circuit breakers kicked in and on the other China is experiencing a real slowdown.feedback

The retail sales and consumer price reports give the Federal Reserve very little reason to doubt their decision to increase monetary stimulus.feedback

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