Category Archive: 4) FX Trends

Main Author Marc Chandler
Marc Chandler
He is Global Head of Currency Strategy of Brown Brothers Harriman (BBH). He has been covering the global capital markets in one fashion or another for 25 years, working at economic consulting firms and global investment banks. He regularly appears on CNBC and has spoken for the Foreign Policy Association. In addition to being quoted in the financial press daily, Chandler has been published in the Financial Times, Foreign Affairs, and the Washington Post. BBH provides specialist services and innovative solutions to many Swiss asset managers that include a global custody network of close to 100 markets, accounting, administration, securities lending, foreign exchange, cash management and brokerage services. Feel free to contact the Zurich office of BBH

FX Daily, October 16: Semblance of Stability Returns

Overview:  Although the S&P 500 was unable to sustain early gains yesterday, the largely consolidative session was part of the stabilization of equities after last week's jump in volatility.  Asia and European stocks are also cautiously steadying.  Most Asia equity markets advanced with the Nikkei's 1.25% advance most bourses higher.  China was a notable exception, The Shanghai Composite recorded new lows for the year and finished uninspiringly...

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Macro Cheat Sheet

The dollar's recovery ahead of the weekend was aided by the stabilization of the stock market, where the S&P 500 managed to close back above the psychologically important 200-day moving average. Interpolating from prices, the market does not expect the President's criticism to alter the Fed's course.

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FX Daily, October 15: Monday Blues

Despite the pre-weekend gains that lifted the S&P 500 above its 200-day moving average, global equities are moving lower today. The main news over the weekend included the US renewing its threat to impose more tariffs on China and Saudi Arabia threatening retaliation for any sanctions relating to the disappearance of the journalist Khashoggi, and the lack of a breakthrough in UK-EU negotiations.

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FX Weekly Preview: Forces of Movement

There are three broad forces of movement in the week ahead: the equity market performance, political developments, and economic data. It was a tumultuous week for equities, and there was not clear or obvious trigger.  With US bond yields and equities trending higher this year, there does not seem to a reason why it ended last week. 

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FX Daily, October 12: Market Fever is Burning Itself Out Ahead of the Weekend

 Equity markets are stabilizing today as Asian and European markets shrug off the failure to get traction in the US yesterday.   As everything and nothing was behind the dramatic sell-off in recent days, the same could be said about today's recovery.  Most accounts seem to be emphasizing two developments:  a report indicating that despite the talk earlier in the week, there is a recognition by the US Treasury staff that China's actions do not reach...

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FX Daily, October 11: Equity Swoon Takes Spotlight, Pushes Dollar to Backfoot

There is one story today, and that is the sell-off in global equities. Although the narratives put the US at the center, the fact of the matter is that US equities have been among the best performers this year, despite the rise of interest rates and a President that is not above criticizing the central bank.

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Macro Cheat Sheet

Rising US rates in absolute terms and relative to other countries, coupled with the policy-mix and US tax reform are the main drivers. The market has nearly completely discounted three more Fed hikes by the end of next year, while the Fed has signaled that four hikes may be appropriate.

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FX Daily, October 10: US Dollar Pullback may Continue in North America

The euro bottomed yesterday near $1.1430 and reached $1.1515 in Asia. Support is seen near $1.1480 and should hold if the euro's upside correction is to continue. There are options struck $1.1500-$1.1510 for nearly 1.4 bln euros that expire today. For the third consecutive session, the dollar found bids a little below JPY113.00. There is a $1 bln JPY113 option that will be cut today.

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FX Daily, October 09: A (Short) Reprieve For China while the Dollar Stays Firm

The small gains in China's Shanghai Composite and the yuan is helping sentiment today. News that Italy's budget watchdog may reject the government's fiscal plans has helped stabilize Italian assets initially, but renewed pressure quickly materialized. Most Asian equities retreated while Europe's Dow Jones Stoxx 600 is struggling to snap a three-day slide. US shares are trading heavily in Europe.

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Cool Video: Clip from CNBC Squawk Box

The combination of divergence and the US policy mix is underpinning the dollar and I was invited to share my views on CNBC's Squawk Box earlier today. It dovetailed nicely Matthew Diczok (from Merrill Lynch) views on Fed policy and US interest rates.

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FX Daily, October 08: China and European Woes Weigh on Equities but Buoy the Dollar

Overview:  The markets are having a rough adjustment to the return of the Chinese markets are the week-long holiday.  The cut in the required reserves failed to lift investor sentiment.  The Shanghai and Shenzhen Composites fell almost 4%, and the yuan slid nearly 0.8%.  It is an unusually large decline for the closely managed currency.  The offshore yuan fell by a little more than 0.5%. 

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FX Weekly Preview: Has an Inflection Point been Reached for Investors?

Interest rates, led by the US, have accelerated to the upside. With price pressures generally rising and oil prices at four-year highs, it is understandable. Market participants need to see the breakout that has lifted US 10-year yields to their highest level in seven years is confirmed in subsequent price action.

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Great Graphic: The Dollar’s Role

This Great Graphic comes from Peter Coy and team's article in Business Week. It succinctly shows three metrics for the internationalization of domestic currencies: global payments, international bonds, and foreign exchange reserves. It does not strike me as surprising, and the role of the euro as a payments currency reflects its role in intra-European trade.

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FX Daily, October 05: US Jobs Data will Test Dollar Bulls and Bond Bears

The US dollar is firmer against most of the major and emerging market currencies. The yen and sterling are resisting the pressure, while the South African rand and Russian rouble are paring some of this week's declines. US equity losses yesterday weighed on Asian and European trading today.

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FX Daily, October 04: Dollar Consolidates Gains while Yields Continue to Rise

The US dollar is consolidating yesterday's gains against most of the major currencies, though the dollar bloc is underperforming. Bond yields are moving higher, and equities are lower. With a light data and events stream, the price action itself is the news.

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Cool Video: Bloomberg Clip from Discussion on Emerging Markets

In my first television appearance since joining Bannockburn Global Forex, I joined Tom Keene and Francine Lacqua on the Bloomberg set. In this nearly 2.5 min clip, we talk about the Indonesia rupiah and the dollar's move above the IDR15000 level for the first time since the 1997-1998 Asian financial crisis.

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FX Daily, October 02: Greenback Advances

The US dollar is rising against most of the major and emerging market currencies. The Swiss franc and the Japanese yen are the exceptions and are holding their own. Global equities are mixed. Asia, excluding Japan, was mostly lower, with 1.2% losses in Taiwan and South Korea and 2.5% drop in Hong Kong and in the H-shares that trade there.

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A Word About the Q2 COFER Report

The IMF reports the most authoritative currency allocation of global reserves at the end of every quarter with a quarter delay. Invariably, an economist, strategist, or journalist is inspired to write why some data nugget confirms the demise of the dollar as the dominant currency.

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FX Daily, October 01: NAFTA Deal Struck, Softer EMU Mfg PMI, and Firm Greenback Starts Week

The Canadian dollar and Mexican peso are extending its pre-weekend gains on news that a new NAFTA deal (US-Mexico-Canada Agreement USMCA) has been struck. Against most of the other major and emerging market currencies, the US dollar is firm. China's mainland and Hong Kong markets are closed for a national holiday.

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Fed Delivers, Market Yawns

The Federal Reserve did what it was widely to do. The fed funds target range was lifted 25 bp to 2.00-2.25%. Three-quarters of Fed officials anticipate a hike in December. The market had discounted around an 80% chance. The Fed sticks with the three rate hikes in 2019 and one in 2020. The year-end rate in 2021 is the same as in 2020.

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