Category Archive: 4.) Marc to Market
Short Summary on US Thanksgiving
Euro fell to new 20-month lows before steadying. The dollar extended its recovery against the yen. Emerging markets remained under pressure, and Turkey's central bank surprised with a 50 bp hike in the repo rate.
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FX Daily, November 23: Dollar Sees Flat Consolidation while the Equity Advance Fizzles in Europe
The US dollar is trading inside yesterday's ranges against the euro and yen. The dollar's tone matches the consolidation in the debt market ahead of today's slew of US data and tomorrow's holiday. Tokyo markets were on holiday.
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FX Daily, November 22: Bonds and Stocks Rally, Leaving Greenback to Meander
The US dollar entered a consolidative phase yesterday, and this carried into today's activity.While the foreign exchange market is sidelined as the two-week trend slows, the stocks and bonds are posting strong gains today. Equities are being led by energy and materials, as oil and industrial metals continue to advance. Bond are recovering from their recent slide.
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FX Daily, November 21: Flattish Consolidation Hides Dollar Strength
The news over the weekend is primarily political in nature. Sarkozy is going to retire (again) after taking a drubbing in the Republican Party primary in France. Fillon, the self-styled French Thatcher unexpected beat Juppe, but without 50% and therefore the results set up the run-off this coming weekend. It is as if, knowing their candidate will likely face Le Pen in the final round next spring, the Republican Party might as well chose the most...
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FX Weekly Preview: Shifting Paradigms and the Market Adjustment
Perceptions of two trends shape the investment climate: reflation and nationalism. Fed rate hike set for next month, barring significant surprise. Japan's trade surplus is growing even as imports and exports continue to contract.
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The Italian Job
Italy is the epicenter of the next potential populist "shock." A defeat of the referendum is seen as intensifying the political risk. Renzi has wavered again regarding his political future if the referendum loses.
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Weekly Speculative Positions: Dramatic Spot Currency Moves not Reflected
What is most noticeable about the CFTC Commitment of Traders report for the reporting week ending November 15 is what is not there: Activity. With the Australian dollar being the sole exception, we are struck by the apparent fact that dramatic spot price action and a what seemed like an impulsive trend move seemed not to be reflected in the futures position adjustments by speculators.
Given the strength of the US dollar after the election,...
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If TPP is Dead…
TPP may be dead, but China is spearheading an alternative regional free trade deal. It is not as ambitious as the US-led TPP. China and Russia are eager to re-establish spheres of influence.
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FX Daily, November 18: Revaluation of the Dollar Continues
Since the US election, the dollar has been on a tear. Pullbacks have been brief and shallow. There are powerful trends in place. The euro has fallen nearly five percent over the past ten sessions, during which it is not closed higher once. The dollar rose four days this week against the yen and four days last week.
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FX Daily, November 17: Consolidation Gives Dollar Heavier Tone
The US dollar is trading with a heavier bias today as its recent run is consolidated. The euro is trying to snap the eight-day slide that brought it to nearly $1.0665 yesterday, the lows for the year. It is almost as if participant saw the proximity of last year's lows ($1.0460-$1.0525) and decided to pause, perhaps to wait for additional developments, such a Fed Chief's Yellen's testimony before the Joint Economic Committee of Congress.
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FX Daily, November 16: The Greenback Remains Resilient
The US dollar remains bid. It is at its year high against the euro and five-month highs against the Japanese yen. Sterling, which has performed better recently, remains in the trough around 30-year lows. It surge since the election reflects three considerations. The first is December Fed hike. Prior to the election, the market was assessing around a two-thirds chance. Now both the CME and Bloomberg's WIRP estimate the odds above 90%....
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FX Daily, November 15: Investors Catch Breath, Markets Consolidate
After a dramatic run since the US election, the capital markets are consolidating today. It is a bit too restrained to such a Turn Around Tuesday is unfolding. The euro is struggling to sustain corrective upticks through $1.08, and after a pullback is, the greenback pushed back above the JPY108 level like a beach ball held under water.
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Great Graphic: Euro-the Big Picture
Most economists are focusing on either US monetary policy or US fiscal policy. We focus on the policy mix. After the policy mix, politics is also a weigh on the euro. Our long-term call is for the euro to revisit the lows from 2000.
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Cool Video: Reiterate Bullish Dollar Call on Bloomberg
I was on Bloomberg TV this morning to weigh in on the dollar's rally. The US Dollar Index is flirting with the 100 area that has blocked side since last year. In my work, after a big run-up form around 80 in mid 2014, the Dollar Index has been consolidating. I have long anticipated a spring board for another leg up.
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FX Daily, November 14: Dollar Steps Up to Start Week
The US dollar rally that moved into a higher gear in the second half of last week has begun the new week with a bang. It is up against nearly all the major and emerging market currencies. Even sterling, which last week, managed to eke out modest gains against the greenback is under pressure today.
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FX Weekly Preview: Forces of Movement
US election results accelerated forces that were already present. Interest rates have appeared to bottom, fiscal stimulus in Canada and Japan already evident, and divergence between US and EMU/Japan monetary policy. US stimuli may reach when the economy is already near trend.
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Great Graphic: Growth in Federal Spending
Federal spending growth under Obama is lower than under the previous four presidents. Subsequent to the chart, US federal spending has increased. It will likely increase more under the next President.
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An English Breakfast Causes Less Indigestion than the British Brexit
Prime Minister May is appealing the High Court decision and preparing to present broad guidelines of her strategy. An early election; even if it could be arranged, it is not clear which wing of the Tories would win. May missed the opportunity to provide strong leadership when it was most needed.
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Great Graphic: Shifting Trade-Weighted Exchange Rates
The dollar's trade-weighted index is firming and a couple percentage points from the year's high set in January. The yen's trade-weighted index is at several month lows, but remains dramatically higher ear-to-date. The euro's trade-weighted index has begun falling amid concerns that it is the next focus for the anti-globalization/nationalism movement. Sterling's trade-weighted index is extending its recovery as a softer Brexit is anticipated, the...
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FX Daily, November 11: Ramifications of Trump’s Election Continue to Drive Markets
The forces unleashed by the US election results continue to drive the capitals markets. The combination of nationalism, reflation and deregulation are seen as good for US equities and the US dollar. It has not been so kind to US Treasuries, where the 10- and 30-year yield has risen about 32 bp this week coming into today's federal holiday that closes the bond market, while the stock market is open.
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