Category Archive: 4.) Marc to Market

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Draghi Says Nothing to Undermine Expectations of New Action in December

2016-10-20

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2016-10-20

Euro storm
Extending or tapering QE was not discussed, but means little in terms of what the ECB decides in Sept. Draghi said growth risks are on the downside and inflation has yet to enter a meaningful uptrend. Reiterates that abrupt end of purchases is unlikely.

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FX Daily, October 19: FX After China GDP

2016-10-19

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2016-10-19

FX Performance, October 19 2016 Movers and Shakers
The Swiss Franc has strengthened against the pound as global uncertainty persists in the form of the UK’s Brexit vote and the US Presidential Election. Looking ahead it seems the CHF may soften a little as we learn of the new President, I found it very interesting that yesterday Paddy Power paid out on any bets for Hilary Clinton to become President in the United States.

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ECB: Dovish Hold

2016-10-19

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2016-10-19

Draghi will like emphasis inflation is the key to policy and ECB is committed using allow for its technical tools to achieve its legal mandate. Key decisions will be made in December. The more the euro rises against sterling, the greater the pressure for the euro to fall against the dollar.

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FX Daily, October 18: Dollar Slips Broadly but not Deeply

2016-10-18

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2016-10-18

FX Performance, October 18 2016 Movers and Shakers
According to Bank of England deputy governor Ben Broadbent the drop in the value of Sterling has helped to stop the UK economy from falling further since the shock of the Brexit vote. He went on to say ‘in the shape of the referendum, we’ve had exactly one of those shocks’ and added that the Bank of England would not interfere with monetary policy to boost the Pound’s value.

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Great Graphic: Consumer Inflation: US, UK, EMU

2016-10-18

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2016-10-18

CPI UK CPI US, CPI Eurozone
Price pressures appear to have bottomed for the US, UK, and to a lesser extent, EMU. Rise in prices cannot be reduced solely to the increase of oil. Core prices are also rising.

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Is Oil about to Rollover?

2016-10-18

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2016-10-18

Oil has rallied 20% since mid-September. Market may be getting ahead of itself. US rig count has risen by more than 100 in less than 4-months and inventories, seasonally adjusted are at record highs.

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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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