Category Archive: 4.) Marc to Market

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Dollar Edges Higher Ahead of Month-End and Key Events

2015-11-30

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2015-11-30

The US dollar remains firm against most of the major currencies to start what promises to be a critical week for investors.  There are two main considerations.  The first is the last minute position adjustments ahead the key events that begin with the IMF's SDR decision later today, running through the start-of the month data …

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Seven Events Next Week that will Shape the Investment Climate

2015-11-29

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2015-11-29

The week ahead is among the most important of the year.  Rarely is there such a confluence of events in a short period that will have far-reaching implications for investors that are known ahead of time and have been discussed so extensively. ?...

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How Dangerous are Technical Conditions for Dollar Bulls?

2015-11-28

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2015-11-28

Anticipating a yawning divergence of monetary policy between the world's largest central banks, market participants continued to drive the dollar higher over the past week.  In fact, the greenback appreciated against all the major and emerging market currencies except the Malaysian ringgit and South Korean won.     Next week is one of the most eventful …

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France’s Revival or Politics Trumps Economics

2015-11-27

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2015-11-27

With the ECB poised to take additional steps down the unorthodox monetary policy route, financial and economic forces are as potent as ever.  However,  there is a subtle shift taking place that few seem to recognize.  It is the re-emergence of...

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Dollar Rides High into Month-End

2015-11-27

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2015-11-27

The US dollar is firm against the major currencies and nearly all the emerging market currencies as well to close out the week (and month) Participants are clearly focused on next week's events, and in particular, the prospect of additional easi...

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Table is Set, Dollar Consolidates

2015-11-26

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2015-11-26

The US dollar remains firm, even if it has eased from its seven-month high against the euro and five-year high against the Swiss franc recorded yesterday.  The US October personal consumption expenditure was disappointing, and prompted some downward revision to Q4 GDP forecasts. The Atlanta Fed estimates that Q4 GDP is tracking 1.8% rather than …

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Great Graphic: US 2-Year Premium over Japan and Germany

2015-11-25

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2015-11-25

This Great Graphic was composed on Bloomberg.  It shows two time series.  The yellow line shows the premium the US pays over Germany for two-year money.  The white line shows the premium the US pays over Japan for two-year money.   The premiums have risen sharply since mid-October and today are at new multi-year highs. … Continue...

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Discount Rate Follow-Up: And Then There were Nine

2015-11-25

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2015-11-25

On Monday, the Federal Reserve met to discuss the discount rate.   There has been a steady increase in the number of regional Federal Reserve presidents requesting an increase in the discount rate.  The minutes of the October 26 meeting were reported yesterday. The meeting was held before the FOMC met on October 27-28.  At that meeting, … Continue...

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Euro Bears Aren’t Hibernating

2015-11-25

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2015-11-25

The divergence of monetary policy is discounted, they argued. Ahead of next week's big events, which include the IMF's SDR decision, the ECB meeting, OPEC meeting, and the US jobs data, the euro, against which speculators have amassed a large sh...

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Dollar Recoups January Loss Against the Swiss Franc

2015-11-24

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2015-11-24

The US dollar recorded its high for the year against the Swiss franc on January 14 near CHF1.0240.  It closed that day a little below CHF1.0190.  The next day the Swiss National Bank surprised the world by lifting its cap against the euro.  The ...

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Why Portuguese Politics Matter

2015-11-24

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2015-11-24

A NATO country has shot down a Russian plane.  The refugee influx is threatening to unravel the Schengen Treaty of free movement.    Germany's Merkel celebrated her tenth anniversary as Chancellor this past weekend, but she faces one of the most serious challenges of her tenure.    Portugal accounts for less than 2% of the eurozone GDP.  …

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Dollar Softens, Consolidation Phase Continues

2015-11-24

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2015-11-24

The US dollar is trading choppily but with a distinct softer bias.  The economic news has been limited, and the apparent downing of a Russian plane by Turkey caused a flurry of activity, with Turkish assets coming under initial pressure which has abated somewhat.   The euro briefly dipped below $1.06 yesterday for new seven-month lows, …

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Great Graphic: Canadian Dollar and the Two-Year Rate Differential

2015-11-23

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2015-11-23

The Canadian dollar is more than a petro currency.    It is also subject to the same forces of divergence that have lifted the US dollar more broadly.  Since the beginning of the year, the US two-year yield has risen 26 bp while Canada's two-year yield has fallen almost 39 bp. This Great Graphic, created on …

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Parsing Gradually

2015-11-23

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2015-11-23

With the vast majority of economists and primary dealers expecting the Federal Reserve to lift rates next month, the subject of discussion has shifted toward the pace of the hikes and the peak or terminal rate.   The Federal Reserve has used various word cues to help guide market expectations.  There was, for example, going to … Continue reading...

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Emerging Markets: Preview of the Week Ahead

2015-11-23

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2015-11-23

(from my colleagues Dr. Win Thin and Ilan Solot)EM starts the week on an uncertain footing. Commodity prices were off sharply until comments by Saudi Arabia lifted them, reversing the trend in commodity-sensitive assets. The dollar is also back ...

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Dollar-Boc Slumps with Commodities, Greenback Remains Bid

2015-11-23

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2015-11-23

The dollar-bloc currencies and the Norwegian krone were the strongest major currencies last week but are leading the downside today.  The slump in commodity prices is taking a toll.  WTI is off by nearly 3%.  Copper is off about half as much, an...

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Anticipating December in November: When Cause Follows Effect

2015-11-23

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2015-11-23

Surveys show that around 90% of primary dealers and economists expect the Fed to raise interest rates in the middle of December. Over the past month, the two-year US note yield has risen by nearly 37 bp to 91 bp.   The implied yield of the Dece...

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Could the Fed Hike the Discount Rate on Monday?

2015-11-22

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2015-11-22

(Correction: The analysis first presented here was based on voting at the August discount rate meeting, not the September meeting.  Here is the link to the Fed statement following the August and September.   At the September meeting, eight of the 12 Federal Reserve banks advocated a hike in the discount rate.  Note that despite … Continue...

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Weekly Speculative Positions: Observations

2015-11-22

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2015-11-22

1.  The continued build of short currency futures positions characterizes the changes in the speculative positioning.  All the currency futures we track saw an increase in gross short positions. This is what drove the large net short positions.  One thing this means is that late shorts are in weak hands, and as we have seen …

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Chop City, but Dollar Express Still on Track, Even if Slowly

2015-11-22

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2015-11-22

The US dollar tended to broadly consolidate its recent gains over the past week.  Data and officials mostly confirmed what most investors had already anticipated.  The Federal Reserve is most likely to hike rates in the middle of December. The ECB will most likely ease policy further just shy of two weeks before the Fed meets. … Continue reading...

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