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Category Archive: 4.) Marc to Market

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FX Weekly Preview: The Challenging Week Ahead

2017-01-23

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2017-01-23

thought
Investors will finally be able to focus on what the new US President does rather than what he says. The UK Supreme Court decision is expected, but it may not be the driver than it may have previously seemed likely. The dollar-yen rate does not appear to be driven by domestic variable as much as US yields and equities. Prices not real sector data may be the key for the euro.

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Cool Video: Bloomberg’s Daybreak – Dollar Correction

2017-01-21

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2017-01-21

Bloomberg Marc Chandler
I was on Bloomberg's Daybreak: Americas today. The issue at hand was about the dollar's losses since the start of the year. I suggest that the correction actually began a day or so after the Federal Reserve hiked rates in mid-December. I noted that the correction was not just about the dollar but also interest rates.

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FX Daily, January 20: Trump Day

2017-01-20

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2017-01-20

inauguration
The dollar peaked against the yuan two days after the Federal Reserve hiked interest rates in the middle of last month. We argue that that is when the market correction began, not at the turn of the calendar. Despite claims that China's currency is dropping like a rock, it has actually risen for the fifth consecutive week. That is the longest rising streak for the yuan since early 2016.

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Great Graphic: Trade and Tariffs-End of an Era?

2017-01-20

by

2017-01-20

Trade-weighted average global tariff rate and trade
This Great Graphic was tweeted by the Financial Time's John Authers, who got it from @fathomcomment. The green line is the inversion of global trade (right-hand scale). The blue line is a trade-weighted average global tariff rate. What the chart shows is that since 1990, the decline in the average tariff coincided with an increase in trade (remember green line is inverted).

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Draghi Lets Steam out of Euro

2017-01-19

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2017-01-19

eurodeflate
US reported stronger than expected series of data, including a large drop in weekly jobless claims for the week of the next NFP survey. Draghi remained dovish, with key phrases retained. Euro needs to break $1.0575 now to confirm a top is in place. Markets still uncertain ahead of the start of the new Administration.

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FX Daily, January 19: Dollar Gives Back Most of Yellen-Inspired Gains

2017-01-19

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2017-01-19

FX Performance, January 19 2017 Movers and Shakers
While the US 10-year yield is unchanged, the dollar is consolidating its gains against the yen in a relatively narrow range of about half a big figure below JPY115.00. It has seen its gains pared more against the euro and sterling, where most of Yellen-inspired gains have been unwound. Sterling found support near $1.2250 and was bid up to $1.2335 by early in the European sessions.

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FX Daily, January 18: Markets Stabilize, Awaiting Fresh Cues

2017-01-18

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2017-01-18

FX Performance, January 18, 2017 Movers & Shakers
The US dollar has stabilized after yesterday's bruising. From a fundamental perspective, little has changed. After hard exit signals from the UK government sent sterling down from $1.2430 on January 5 and 6, to below $1.20 at the start of the week, the pound rallied back to almost $1.2430 yesterday amid "sell the rumor buy the fact" activity.

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Great Graphic: Is the Pound Sterling?

2017-01-18

by

2017-01-18

Sterling's 2.75% rally today is the biggest advance in more than eight years. The UK government has done a good job of managing expectations. Over the last week or so, Prime Minister May and Chancellor of the Exchequer Hammond has made it clear that the intention was a "clean break" from the EU.

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FX Daily, January 17: Trump’s Comments Send the Dollar Reeling

2017-01-17

by

2017-01-17

The Pound has been subjected to a heavy amount of pressure as we progress further into 2017, with GBP/CHF rates being one of the heaviest losers. The pairing is now trading at a similar level to GBP/USD levels below the 1.22 mark. Their is an enjoyable symmetry between the two from an analysts point of view. Both are well regarded as safe-haven currencies, and in this time of increased uncertainty, both have almost the exact same value in the...

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FX Daily, January 16: Hard Exit Talk Sent Sterling Below $1.20

2017-01-16

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2017-01-16

FX Performance, January 16 2017 Movers and Shakers
The euro has been sold to $1.0580 in the European morning, a cent lower from the pre-weekend high. In addition to the drag from sterling, the euro appears to have been sold in response to the interview in two European papers of the next US President. Among other things, Trump reported claimed that NATO was obsolete and that other countries will leave the European Union, which is largely a German project.

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FX Weekly Preview: Five Events that Will Drive the Capital Markets in the Week Ahead

2017-01-16

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2017-01-16

fox in hen house
Bank of Canada may be more upbeat following strong jobs and trade figures. China's President Xi will speak at Davos and likely defend globalization and free trade, which some think the US is abandoning. UK PM May's speech on Brexit may be blunted by few surprises, collapse of the government in Northern Ireland, and the pending Supreme Court ruling. ECB will leave rates on hold and look for Draghi to push back against ideas that rise in CPI means QE...

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FX Weekly Review, January 09 – 14: Dollar Correction may be Over or Nearly So

2017-01-15

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2017-01-15

US Dollar/Swiss Franc FX Spot Rate, December 30
For the first week since the election of Trump, the Swiss Franc index had a clearly better performance than the dollar index. It improved by 1.5% in the last ten days.

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The Difference of an A and BBB for Italy

2017-01-14

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2017-01-14

Italian Bank Stocks
DBRS cut Italy's rating to BBB from A. It will increase the haircut on Italy's sovereign bonds used for collateral by Italian banks. It is not a mortal blow or a significant hit, but is not helpful, except to add pressure on Italy and further reduce its ability to respond to another shock.

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FX Daily, January 13: Corrective Forces Persist

2017-01-13

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2017-01-13

FX Performance, January 13 2017 Movers and Shakers
The Supreme Court Judgement on whether parliament will have to O.K the triggering of article 50 is ongoing and when the ruling is announced expect big swings on GBP/CHF. I think the likely outcome will be that parliament will get the vote, most broad sheet papers have indicated the majority of the judges are in favour of the parliamentary vote.

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Saudis Cut More than Commitment, Lifts Prices

2017-01-13

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2017-01-13

Oil
US refinery demand for oil is near a 30-year high. Demand growth will help catch up to supply. Saudi Arabia (and Kuwait) appear to have cut more output than promised.

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FX Daily, January 12: Dollar and Yields Ease Further, but Look for Recovery

2017-01-12

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2017-01-12

breakdown
After a choppy North American session yesterday, the dollar and US yields remain under pressure. The dollar is lower against all the major currencies and most emerging market currencies, including the recently shellacked Turkish lira and Mexican peso.

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China Capital Flight: When $4 trillion is Too Much and $3 trillion is not Enough

2017-01-12

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2017-01-12

yuan
All of China's capital outflows are not capital flight fleeing. Capital controls limiting outflows can be tightened. Paying down dollar loans, a major source of capital outflows, is not an infinite process.

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FX Daily, January 11: Dollar Comes Back Bid

2017-01-11

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2017-01-11

FX Performance, January 11 2017 Movers and Shakers
The pound has seen a sharp fall following the interview that Theresa May gave with Sky news on Sunday although there has been a small rebound this afternoon. GBP CHF exchange rates are hovering around 1.2350 for this pair.

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Great Graphic: Real Rates in US are Elevated

2017-01-11

by

2017-01-11

The US 10-year yield fell briefly below 1.32% last July. The yield slowly rose to reach 1.80% in mid-October. The day after the election, the yield initially slipped to almost 1.71%. This was a bit of a miscue, and the yield rose sharply to hit almost 2.64% the day after the FOMC hiked rates for the second time in the cycle on December 14. The yield backed off to hit 2.33% at the end of last week.

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FX Daily, January 10: Positioning more than Fundamentals Give Traders Pause

2017-01-10

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2017-01-10

FX Performance, January 10 2017 Movers and Shakers
After strong moves to start the year, the capital markets continue to consolidate. Many observers are suggesting a fundamental narrative behind the loss of momentum, but in discussions with clients and other market participants, it seems as if the main source of caution is coming from an understanding of market positioning rather than a reevaluation of the macro drivers.

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