Category Archive: 4.) Marc to Market

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Dollar Unwinds More of Monday’s Surge

2025-05-14

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2025-05-14

Overview: The US dollar is extending yesterday's pullback after Monday's sharp rally. Monday's rally had met or approached several technical targets, but the momentum and news stream, including the downgrading of US recession forecasts, the pushing out of the next Fed rate cut into Q4 seemed to favor further dollar gains. Against many pairs, the …

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Bullish Consolidation for the Dollar

2025-05-13

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2025-05-13

Overview:  The capital markets are continuing to digest the implications of the US-China 90-day cooling off period. There were dramatic moves yesterday, and with a few exceptions, a consolidative tone has emerged today. The domestic US political focus is shifting to the budget, while the May CPI is due today, and it is expected to …

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US-China Strike 90-Day Cooling Off Period: Dollar and Equities Rally, Bonds Slump

2025-05-12

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2025-05-12

Overview:  The US and China struck an agreement that would lower tariffs for a 90-day cooling off period. The US tariff on China falls to 30% from 145%, while China's tariff on the US falls to 10% from 125%. A new forum was established to allow recurring discussions on economics and trade. The dollar spiked …

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Week Ahead: Reaction to Sino-American Trade Talks, US CPI, Japan and UK Q1 GDP, and Banxico to Cut 50 bp Featured

2025-05-10

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2025-05-10

Many seemed optimistic that the weekend trade talks between the US and China will de-escalate the tension. We are less sanguine. Even if the tariffs on both sides were halved, there would still be an effective bilateral embargo. In the larger picture we are concerned that blocking PRC's  exports and denying it a direct investment …

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China Replaced US Demand. Will the US Replace Chinese Supply? Investors Hopeful of Sino-American De-Escalation

2025-05-09

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2025-05-09

Overview: After recovering impressively yesterday, the US dollar saw some follow-through buying initially but has reversed lower and is paring yesterday's gains against the G10 and most emerging market currencies. East Asian emerging market currencies that had surged have now traded lower for the past three sessions. The main talking point today is tomorrow's trade …

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Trade Deal with the US Fails to Buoy Sterling Ahead of the Bank of England Rate Cut

2025-05-08

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2025-05-08

Overview: A couple days away from the US-China talks, the two are sitting disputing who sought out the talks. Given the egos, the risk is that the talks are downgraded if not canceled. Expectations ought to be low in any event. On the other hand, the first US trade agreement is expected to be announced …

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Allow Chinese Companies to Build Locally and Sell Locally or Face Dire Consequences

2025-05-07

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2025-05-07

If trade imbalances truly drive protectionist backlash, as many claim, we should have witnessed comparable anti-trade sentiment during the 1980s when America's deficit with Japan reached historic proportions. Yet history reveals a critical distinction: Japan was offered—and wisely seized—an economic escape valve that today's geopolitical climate threatens to deny China. This asymmetry not only betrays …

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US-China Trade Talks this Weekend Help Stabilize the Greenback ahead of FOMC

2025-05-07

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2025-05-07

Overview: There are five developments to note. First, the US and China will have initial trade talks this weekend in Switzerland. Second, the PBOC cut its key rate by 10 bp and cut reserve requirements by 0.5%. It also announced several other measures to boost lending/relending. Third, German factory orders were stronger than expected, perhaps …

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PBOC Returns and Helps Stabilize Local FX

2025-05-06

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2025-05-06

Overview: China's mainland markets re-opened after the extended holiday, and the by setting the dollar's reference rate little changed from its last fix helped inject a note of stability into the local Asian currencies. Indeed, most of them pulled back today, including the Taiwan dollar and the Malaysian ringgit. The yuan and yen are firmer. …

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US Dollar Remains Under Pressure, while Asia Pacific Currencies Lead the Charge

2025-05-05

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2025-05-05

Overview: The dollar has begun the new week under pressure, though many financial centers are closed today. The upside pressure on Asia Pacific currencies remains notable. The offshore yuan, the Taiwanese dollar, and Malaysian ringgit, the Japanese yen, and Australian dollar are among the strongest currencies today. The ostensible trigger is speculation of US semiconductor …

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Week Ahead: FOMC in No Hurry to Cut Rates while BOE Easing set to Accelerate

2025-05-03

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2025-05-03

President Trump says there are trade talks with China. Beijing denies it. Around the time the US reports that the world's largest economy contracted slightly in Q1 (0.3% annualized), US Treasury Secretary Bessent said that the effective embargo was shutting down the China's economy. The week ended with China's Commerce Ministry statement that it was …

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China’s Feint Weighs on the Greenback Ahead of Today’s Employment Report

2025-05-02

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2025-05-02

Overview: Ideas that the US economy is not doing as poorly as many feared after the Q1 GDP contraction was dissected helped the dollar appear to confirm a bottoming pattern yesterday. However, indications that China is considering the US request for trade talks have bolstered risk-appetites today, ahead of the US jobs report and dragged …

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May Day: Dovish Hold by BOJ and Broadly Firmer Dollar

2025-05-01

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2025-05-01

Overview: The US dollar is mostly firmer in thin May Day turnover. The Japanese yen is the weakest of the G10 currencies following what is seen as a dovish hold by the Bank of Japan, which cut growth forecasts, shaved inflation projections, and delayed reaching its inflation target on a sustained basis. The market downgraded …

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Weak US Survey Data to Begin being Evident in Real Sector Reports

2025-04-30

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2025-04-30

Overview: The foreign exchange market is quiet. The dollar is mostly little changed against the G10 currencies, mostly in the ranges that have been carved in recent days. The dollar-bloc currencies are mostly flat to firmer. The others are softer, led by the yen's almost 0.5% loss and sterling's 0.35% decline. Among emerging market currencies, …

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US Dollar Comes Back a Little Firmer

2025-04-29

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2025-04-29

Overview: The US dollar has come back better bid today. It is firmer against all the G10 currencies. The proximate cause has been reports that as early as today, the 100th day of President Trump's second-term, he will announce another retreat pivot:  imported auto parts for vehicles made in the US may be waived or … Continue reading...

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Calm before the Storm?

2025-04-28

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2025-04-28

Overview: The US dollar is trading quietly in a mixed fashion, mostly confined to the ranges seen at the end of last week. This could prove to be a pivotal week. The weakness in the US survey data may become evident in the real sector data, with a dismal Q1 GDP reading that may show … Continue reading »

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Markets Remain Unsettled Despite the US Postponement of the Reciprocal Tariffs

2025-04-10

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2025-04-10

Overview: A couple of hours before the US announced a postponement in the reciprocal tariffs on everyone but China, President Trump sent social media message encouraging people to buy stocks. And the postponement sent US equities soaring, but it does not set right with many observers. In fact, the US hiked the tariff on China further, and the net result is that the average effective tariff in the US is now 24% rather than 27% as it would have been...

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Fragile Calm in the Capital Markets

2025-04-08

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2025-04-08

(traveling; no commentary tomorrow)Overview: The dramatic price action in throughout the capital markets after last week's US tariff announcements, China's retaliation, and yesterday's US threat of another 50% tariff on China has calmed today, in a nervous way. Indeed, the calm could be shattered by one comment or social media post by the US President. Japan pushed back against some of "facts" the US cited, like the tariff Japan puts on...

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Shades of Smoot-Hawley: Depression Feared

2025-04-07

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2025-04-07

Overview:  At the end of last week, there was much talk about Black Monday and today it is here. Various circuit breakers kicked in as stocks plummeted. The Nikkei 225 fell 7.8%, and while China's CSI 300 fell 7.05%, the index of mainland shares that trading in Hong Kong dropped 13.75%. The Hang Seng itself was down 13.2%. Europe's Stoxx 600 fell 5.1% before the weekend and is off another 5.8% today. US index futures settled on their lows before...

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The Week Ahead: Trade War and Price Action are More Important than US and China’s CPI

2025-04-05

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2025-04-05

April 2, what President Trump called, "Liberation Day" will indeed go down in history. The markets quaked. A trade war with China escalated as Beijing took strong retaliatory measures, with not only a sharp rise in its tariff on US imports but imposed (more) restrictions on rare earth exports. Canada and Mexico were spared the "reciprocal tariffs,” but both made clear declarations of intent to diversify their trade and economic...

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