Category Archive: 4.) Marc to Market

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FX Daily Rates, October 17: Dollar Starts Week Narrowly Mixed, while Bonds and Stocks Retreat

2016-10-17

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2016-10-17

FX Performance, October 17 2016 Movers and Shakers
The US dollar is consolidating in relatively narrow trading ranges. Participants appear to be waiting for fresh incentives, while the recent rise yields continue and equities have begun the new week on a soft note. Yellen spoke before the weekend, and her explicit willingness to tolerate higher inflation pushed yields higher, while not deterring expectations for a hike in December.

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A Few Thoughts on Canada

2016-10-17

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2016-10-17

Bank of Canada meets Wed. Look for a dovish hold. Foreigners continue to buy Canadian bonds and stocks. The EU-Canadian free-trade deal is facing challenges, with the most pressing one coming from Belgium.

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FX Weekly Preview: Four Key Events in the Week Ahead

2016-10-17

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2016-10-17

Escher Esque
Of the forces driving prices in the week ahead, events appear more important than economic reports.There are four such events that investors must navigate.The Bank of Canada and the European Central Bank meet. The UK High Court will deliver its ruling on the role of Parliament in Brexit.The rating agency DBRS updates its credit rating for Portugal.

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Weekly Speculative Positions: More Bearish Euros and CHF, Less Bullish the Yen

2016-10-16

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2016-10-16

Speculators turned more bearish the euro and Swiss Franc and less bullish the Japanese yen in the Commitment of Traders week ending October 11.  

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FX Daily, October 14: Firm Dollar Consolidating, Awaiting US Retail Sales

2016-10-14

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2016-10-14

FX Performance, October 14 2016 Movers and Shakers
The US dollar is firm against most of the major currencies, but within yesterday's ranges, which seems somewhat fitting amid the light new stream. The high-yielding Australian and New Zealand dollars are resisting the stronger greenback, while on the week the Aussie and the Canadian dollar are the only majors to gain.

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Great Graphic: China’s PPI and Commodities

2016-10-14

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2016-10-14

China Producer Price Inflation
China's PPI rose for the first time in four years. It is related to the rise in commodities. Yet there are good reasons there is not a perfect fit between China's PPI and commodity prices. US and UK CPI to be reported next week, risk is on the upside.

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FX Daily, October 13: Dollar Edges Higher, though US Rates Soften

2016-10-13

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2016-10-13

FX Performance, October 13 2016 Movers and Shakers
The EUR/CHF remains in the range of 1.0815 to 1.0980. The SNB usually intervenes below 1.0850. I am expecting that speculators are reducing their CHF short positions. More tomorrow.

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IMF’s Reserve Data: Dollar Share Little Changed, Yen Share Jumps, Helped By Valuation

2016-10-13

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2016-10-13

The increase in the yen's share of reserves was flattered by the yen's 9% appreciation. The dollar and euro's share of reserves were stable. Chinese integration has seen the share of unallocated reserves fall. Starting with Q3 data, (available end of March 2017) will break out the yuan's share of reserves.

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High Court Hears UK Constitutional Challenge

2016-10-13

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2016-10-13

Judge and Queen
Regardless of outcome early next week, the High Court's decision will likely be appealed. The issue is the role of parliament. The greater the role, the greater the risk of a delay, but also a better chance to minimize a hard Brexit.

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FX Daily, October 12: May Concedes to Parliament, Sterling Rises after Pounding

2016-10-12

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2016-10-12

FX Performance, October 12 2016 Movers and Shakers
News that UK Prime Minister May has accepted that Parliament should vote on her plan for exiting the EU stopped sterling's headlong slide. Sterling had been pounded for roughly 8.5 cents since the start of the month including the last four sessions. The idea that parliament, where the Conservatives enjoy a slim majority, is less enthusiastic about Brexit may mean a less acrimonious divorce.

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Sterling: Has the Breaking Point been Reached?

2016-10-12

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2016-10-12

10-year Gilt yield
Sterling's decline is not longer coinciding with lower rates. Sterling's decline is boosting inflation expectations. If the inflation expectations are realized (Sept CPI next week), it will quickly erode what ever competitive gains there may have been.

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Great Graphic: Euro is Approaching Year-Long Uptrend

2016-10-11

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2016-10-11

The year-long euro uptrend comes in near $1.1035, just below the August lows. The technical are fragile, but the euro is below its lower Bollinger Band. The fundamental driver seems to be the backing up of US rates, and widening premium over Germany.

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FX Weekly Preview: The Week Ahead: It’s Not about the Data

2016-10-09

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2016-10-09

High frequency economic reports will be not be among the key drivers of the capital markets in the week ahead.The light schedule, consisting mostly of industrial production in Europe, inflation for Scandinavia, and US retail sales, will have minimal impact on rate expectations.

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Great Graphic: US-German 2-Yr Differential and the Euro

2016-10-09

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2016-10-09

The US premium over Germany is at its widest since 2006. This is despite a small reduction in odds of a hike in December. There are many forces are work, but over time, the widening differential will likely give the dollar better traction.

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Swiss Franc Net Shorts Getting Reduced

2016-10-08

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2016-10-08

Last week SNB Q3 window cleaning that led to a big CHF net short position. This week this changed again. Both longs and shorts on CHF increased, but the net short position fell.

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FX Daily, October 07: Sterling Stabilizes After Harrowing Drop, Now Jobs

2016-10-07

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2016-10-07

FX Performance, September 7, 2016
Sterling again steals the limelight. In early Asia, sterling inexplicably dropped nearly eight cents in minutes (to ~$1840), and on some platforms, may have traded below $1.1380. It almost immediately rebounded but has not resurfaced above $1.2480.

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US and Canada Jobs: Sill Strong Enough for a Rate Hike

2016-10-07

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2016-10-07

The US grew 156k jobs in August, missing the median estimate by about 16k. The July series was revised up by 16k. The unemployment and participate rate ticked up 0.1% to 5.0% and 62.9% respectively. Hourly earnings rose 0.2% to lift the year-over-year rate to 2.6% from 2.4%. The average work week increased to 34.4 hours from 34.3.

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FX Daily, October 06: The Dollar is Firm in Quiet Market

2016-10-06

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2016-10-06

FX Performance, October 06 2016 Movers and Shakers
The US dollar is advancing against the major and most emerging market currencies. Activity is subdued and ranges are narrow. We share four observations about the price action. First, the euro has been unable to sustain upticks even after Germany reported a jump in industrial orders three-times more than the median estimate (1.0% vs. 0.3%).

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