The MUFG Global Markets Podcast

Lee Hardman, Senior Currency Analyst, and Andrea Hayward, Vice President of the Japanese Client Sales Group for EMEA in London, discuss the fallout from a volatile week for USD/JPY. What have been the main drivers behind the sharp correction lower for USD/JPY? Disclaimer: www.mufgresearch.com (PDF)

EU parliamentary elections in June are fast approaching and the decibels of debate surrounding the Green Deal legislation are rising. Certain investors have suggested that a shift in political attention away from the Green Deal and that recent pushback and watering down of some regulation is negative for climate action in Europe. Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), discusses this shift in focus and whether this is a reflection of a broader ESG pushback, or whether a shift in narrative mindset is warranted to ensure a successful implementation post June’s EU parliamentary elections. Disclaimer: www.mufgresearch.com (PDF)

This week George Goncalves, MUFG Head of U.S. Macro Strategy, walks through what to expect at the May FOMC meeting. We believe that QT will be tapered while the Fed will start to acknowledge that real rates are too restrictive. Our base case is that Chair Powell will say tightening is working, but they are being mindful of the long and variable lags. Also, on the slightly more hawkish side, Chair Powell will likely reiterate that the FOMC lacks confidence on future inflation path and is not ready to commit to the timing on rate cuts. Lastly, George briefly highlights why we are still focused on and worried about the ongoing macro divergences in U.S. economic data and that the economy looks stronger due to fiscal policy.

After today’s BoJ policy meeting and the heavy yen selling, Derek Halpenny, Head of Research Global Markets EMEA & International Securities, talks to Chris Jakubowski, Director – Institutional FX Sales, about the BoJ policy outlook ahead following the meeting and the fallout in the FX market with the yen hitting new lows. Why has the MoF not yet intervened to halt yen selling? Tune in to listen to Chris and Derek’s discussion. Disclaimer: www.mufgresearch.com (PDF)

Heightened geopolitical risks in the Middle East have been an important driver of the FX market over the past week. Lee Hardman, Senior Currency Analyst talks to Michael Owen, Head of Global Client Desk EMEA, about how geopolitical risks are impacting MUFG’s outlook for the FX market and how the BoJ’s upcoming policy meeting could impact JPY performance in the week ahead.

It has been a tense week in the Middle East following the attack on Israel by Iran in the early hours of 14 April. Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), contextualises the current level of geopolitical risk premium that is currently priced into global markets, and how this could evolve with the various scenarios that may transpire from the crisis. Disclaimer: www.mufgresearch.com (PDF)

This week saw the FX markets come back to life after a long period of lull with a sharp appreciation of the US dollar. Derek Halpenny, Head of Research, Global Markets EMEA & International Securities talks to Simon Mayes, Head of UK, Ireland and Switzerland Corporate Sales about the implications for the US dollar outlook following the US inflation data and the ECB policy announcement. Derek also discusses the JPY intervention prospects next week and beyond and provides an update on MUFG FX Research trading views.

Lee Hardman, Senior Currency Analyst, and Abdul-Ahad Lockhart, Currency Analyst, discuss the recent performance of the USD which has benefitted from the paring back of Fed rate cut expectations. Will the release of the latest US inflation data for March encourage the Fed to delay rate cuts until 2H of this year?

This week George Goncalves, MUFG Head of U.S. Macro Strategy, walks through the ever evolving reaction function from the Fed, where George isn’t terribly concerned about the recent Fed hawkish comments. George feels that this has been standard operating procedure, where the Fed tries to calibrate their message after a FOMC meeting. What we learned at the March FOMC is still important, the Fed is increasingly focused on their dual-mandate and will react to labor market weakness just as it would to changes for the path for inflation. George also walked through a special topic theme from the latest Macro2Markets Monthly report, the topic being how healthy is the consumer and are there signs of the wealth effect at work post the recent large rally in financial assets. Lastly George gave a mini-NFP preview.

At the end of an event-filled week for the financial markets Derek Halpenny, Head of Research Global Markets EMEA & International Securities runs through with Shan Husain, Vice President Institutional Investors FX Sales EMEA, the key takeaways for the US dollar and other FX pairs. Derek also looks ahead to what will be in focus for the markets going forward. Derek also provides an update on MUFG Research trade views. Disclaimer: www.mufgresearch.com (PDF)

CERAWeek is arguably one of the most important annual events in the energy calendar. Under the theme of a “multidimensional energy transition”, the energy community is deliberating how best to navigate the “energy trilemma” of (i) affordability; (ii) security; and (iii) sustainability, in harnessing a just-and-orderly transition to net zero. Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), contextualises the key messages of what transpired behind the scenes in Houston which mattered just as much as what got said on stage. Disclaimer: www.mufgresearch.com (PDF)

This week George Goncalves, MUFG Head of U.S. Macro Strategy, gives us an update on his latest view since his last podcast and highlights what is driving market sentiment and views lately. George then walks us through the March FOMC preview report, focused on what is our base-case and risks around our views into and out of the Fed meeting. George believes Chair Powell will aim to sound neutral as the market has already priced-out a lot of the recent cut expectations and the data trends remain mixed.

Lee Hardman, Senior Currency Analyst, and Abdul-Ahad Lockhart, Currency Analyst, discuss how higher US inflation and stronger wage negotiation results in Japan have impacted the FX market over the past week. Will the BoJ and Fed policy updates in the week ahead prove to be an important turning point for USD/JPY?

Lee Hardman, Senior Currency Analyst, and Elizabeth Foster, Research Analyst from the Economic Research Office, discuss what has driven the sharp move lower in USD/JPY over the past week. Will downward momentum for the pair continue ahead of the BoJ’s upcoming policy meeting?

FX volatility has fallen sharply – for some currency pairs to levels not seen since before the Global Financial Crisis. Derek Halpenny, Head of Research Global Markets EMEA & International Securities talks to Seiko Kataoka-Fisher in Japanese Client Sales about events in the week ahead that might shake the FX market out of this volatility lull, including the semi-annual testimony to Congress by Fed Chair Powell and the ECB policy meeting. Today MUFG Research also releases its monthly Foreign Exchange Outlook and Derek outlines some key highlights, including the prospects of a BoJ rate hike in March. Disclaimer: www.mufgresearch.com (PDF)

Whilst US exceptionalism and sticky inflation may delay Fed easing into mid-year (and limit its scope), Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), believes that the current set up is increasingly reminiscent of the soft landing Fed easing cycle of 1995 – a period when commodities surged more than 20% within the first nine months. Yet not all commodities outperform and Ehsan breaks down which sub-commodities are best positioned to experience the strongest gains as the Fed eventually cuts rates. Disclaimer: www.mufgresearch.com (PDF)

Lee Hardman, Senior Currency Analyst, and Abdul-Ahad Lockhart, Currency Analyst, discuss the performance of G10 FX carry trades at the start of this year. What are the main downside risks for carry trade performance in the near-term? Disclaimer: www.mufgresearch.com (PDF)

Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), examines the potential implications of this year’s most important elections and contextualises as to whether 2024 may turn out to be a “preparation year” until crucial election outcomes are known for ESG policy direction. Disclaimer: www.mufgresearch.com (PDF)

The US dollar hit its highest level of the year this week and Derek Halpenny, Head of Research, Global Markets EMEA & International Securities talks to Jack Greenslade in FX Corporate Sales about the FX implications following the US inflation data and GDP data from Europe and Japan. Derek also discusses the return of USD/JPY to the “intervention zone” above the 150-level and whether these levels are sustainable.

The European Commission published its communication on the EU climate target, proposing a 90% cut in emissions by 2040, and a separate communication on its Industrial Carbon Management strategy. Ehsan Khoman, Head of Research – Commodities, ESG and Emerging Markets (EMEA), examines whether the plans provide a clear and stable investment signal necessary to drive forward net zero aspirations. Disclaimer: www.mufgresearch.com (PDF)