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Category Archive: 4.) Marc to Market

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Weekly Speculative Position Limited: Adjustment Warns USD Correction may not be Over

2015-12-12

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2015-12-12

1. Activity increased during the Commitment of Traders reporting week ending 8 December.  There were four significant (10k+ contracts) gross currency adjustments by speculators.  Given that this period covers the second largest gain in the euro's history, it is surprising that it did not meet the threshold.  It is astounding that only that speculators added only …

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Technical Condition of the Greenback on the Eve of Lift-Off

2015-12-12

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2015-12-12

The US dollar turned in a mixed performance in the week following the ECB's surprise and the healthy US jobs report.  In some ways, the greenback was like a fulcrum, not the driver.   The dollar-bloc currencies and the Norwegian krona were on ...

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Emerging Markets: What has Changed

2015-12-11

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2015-12-11

1) South African President Jacob Zuma fired Finance Minister Nene and replaced him with little-known ANZ lawmaker David Van Rooyen  2) S&P revised the outlook on South Africa’s BBB- rating from stable to negative  3) People’s Bank of Chi...

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Insight into the ECB

2015-12-11

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2015-12-11

Investors, fellow central bankers, and the media continue to try to make sense of last week's ECB surprise.    We had argued that given the market positioning, especially the dramatic accumulation of speculative short euro positions since the m...

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Commodity Weakness takes a Toll, Rand Fall Continues, US Retail Sales Awaited

2015-12-11

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2015-12-11

The US dollar is confined to narrow ranges against the euro and sterling after pushing higher yesterday.  The greenback is staging stronger upticks against the yen but is struggling to resurface above previous support in the JPY122.25 area.   Weak commodity prices and the loss of upside momentum has seen profit-taking in the Australian and New …

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Great Graphic: A Divergence that Gives China a Headache

2015-12-11

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2015-12-11

China was instructed by the IMF that as an operational requirement for joining the SDR that the gap between the onshore and offshore yuan (CNY and CNH respectively) needed to close.  This was important for central banks to hedge.  The opposite is taking place. That is what this Great Graphic, created on Bloomberg depicts. The …

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Morning Edge – SPECIAL – Interview with Marc Chandler along with Chris Bayer – 12/10/15

2015-12-10

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Note; Recording contains some sound drops due to unresolved internet problems. Blake (@PipCzar) interviews Marc Chandler. Marc Chandler has been covering the global capital markets in one fashion or another for more than 25 years, working at economic consulting firms and global investment banks. Chandler attended North Central College for undergraduate work, where he majored …

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Greenback Recovers, but Antipodeans Advance

2015-12-10

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2015-12-10

There are two broad themes among the major currencies today.  The first is the pullback in the euro and yen after yesterday's run-up.  Position adjustments with the help of stop losses seemed to be the key consideration.  Both the euro and yen extended the recovery seen in the second half of last week.  Year-end considerations, …

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France, Schengen and the Future of Europe

2015-12-09

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2015-12-09

The second round of French regional elections will be held this weekend.  The first round last weekend saw the National Front do best in terms of popular votes and led in six of the twelve regions.    The National Front is not simply anti-austerity, but it is anti-EMU.  In regions that NF garnered more than 40% … Continue reading »

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Dollar Bloc Remains Soft, but Euro, Sterling and Yen Firm

2015-12-09

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2015-12-09

The US dollar continues its mixed performance.  The fragile stability of commodity prices today is not lending much support to the Australian and New Zealand dollars though the Canadian dollar is flat after yesterday's slide.  The euro has pushe...

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Oil: WWJD–What would JD Rockefeller have Done?

2015-12-09

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2015-12-09

Many observers conclude OPEC is dead.  Oh, its demise has been claimed before, but after the oil cartel failed to provide a quota (output goal) in last week's statement, the claim has been given new life.  The problem is that OPEC's action under Saudi leadership may be perfectly rational for a cartel.  Suppose you were … Continue...

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Great Graphic: Divergence is Still the Euro Driver

2015-12-08

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2015-12-08

This remains one of my favorite Great Graphics that illustrate the divergence theme that I think is the main driver of the euro-dollar exchange rate.  Composed on Bloomberg, it shows two time series.  The first (white line) shows the German two-y...

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Dollar Mixed, Equities Head South, Oil Stabilizing

2015-12-08

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2015-12-08

The US dollar is firm against the dollar-bloc currencies, and sterling, but is heavier against the euro and yen.   The 13th consecutive year-over-year decline in China's imports helped keep the pressure on the commodity producers.  Despite New ...

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Emerging Market Preview: Week Ahead

2015-12-07

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2015-12-07

Taiwan reports November CPI Tuesday, and is expected to rise 0.36% y/y vs. 0.31% in October.  The central bank does not have an explicit inflation target, but low price pressures should allow the easing cycle to continue at the December meeting.  Nov...

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Why China’s Reserves Fell $87.2 bln in November

2015-12-07

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2015-12-07

Economists expected China's reserves to fall by around $33 bln in November.  Instead, they fell by a little more than $87 bln.   This is the third largest decline it has recorded, and a little below the $94 bln drop reported in |August. China's reserves peaked in June 2014 near $3.993 trillion.  At the end of … Continue...

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Dollar Continues to Recover

2015-12-07

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2015-12-07

The exaggerated response to last week's ECB meeting continues to unwind.   Draghi's dovish comments and the strength of US employment data have helped keep the divergence meme front and center.   The euro traded quietly in Asia before breaking...

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After Gorging On News, Time To Digest

2015-12-06

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2015-12-06

Last week lived up to the hype. It was indeed a momentous week. China joined the SDR, with a weight that puts it in third place behind the dollar and euro.  The ECB did ease policy. It delivered a 10 bp cut in the deposit rate (now -30 bp), extended its asset purchase program for six … Continue reading »

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Observations from the Speculative Positioning in the Futures Market

2015-12-05

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2015-12-05

1.  Given the large moves in prices shortly after the CFTC reporting period ended on 1 December renders the latest Commitment of Traders report more dated than is usually the case. 2.  The Thanksgiving holiday that closed US markets reduced par...

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Once Unleashed, Corrective Forces Dominate

2015-12-05

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2015-12-05

The market's disappointment with the ECB unleashed pent-up corrective forces in the foreign exchange market.   This leg up in the dollar began in mid-October.  Through the day before the ECB, the euro was the weakest of the major currencies, losing 7.5% against the dollar.  The yen and sterling shed a little less than half as …

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Emerging Markets: What has Changed

2015-12-05

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2015-12-05

(from my colleague Ilan Solot) 1) The Chinese yuan will be in the SDR.  2) Brazil had one of the most important weeks of the year, and possibly of its history.  3) Russia enacted sanctions against Turkey, while Turkey got a deal from the EU.  4) Moody’s raised Russia’s credit-rating outlook to stable from negative.  … Continue reading...

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