Category Archive: 4.) Marc to Market

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FX Daily, August 13: Turkey Drives Risk-Off, but Pressure Abating

2018-08-13

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2018-08-13

The failure of Turkey to grab the bull by the horns, so to speak, and come to grips with the situation saw the dollar soar above TRY7.23(from TRY6.43 at the end of last week) and to ZAR15.55 (from ZAR14.09). The Mexican peso, the strongest currency this year, and which has been partially protected by prospects of a new NAFTA agreement has suffered as well.

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FX Weekly Preview: Testing the Dollar’s Breakout

2018-08-13

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2018-08-13

The US dollar surged last week, with the Dollar Index rising 1.25%, the most since April. The dollar is being boosted by two drivers. The first is the policy mix and interest rate divergence. The other is the intensification of pressure on emerging market. Turkey has a disastrous combination of more fundamentals, large short-term foreign currency debt obligations, unorthodox policies, and the lack of credibility.

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The Yin and Yang of the US-China Relationship

2018-08-11

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2018-08-11

Chimerica always seemed like an oversimplification of a complex and dialectic relationship between the US and China.  However, it did express an underlying truth, that China's rise over the last 40 years has been predicated on Deng Xiaoping's political and economic reforms and, importantly, the world of free-trade (a reduction in tariff barriers to trade) promoted by the United States.  

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FX Daily, August 10: The Dollar Muscles Higher as Turkey Melts Down

2018-08-10

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2018-08-10

The US dollar has surged. The main impetus comes from the dramatic slide in the Turkish lira. After moving above TRY5.0 yesterday, it reached TRY6.30 today before stabilizing a little below TRY6.0 as the European morning progressed. The trigger seemed to be the lack of credibility of the government's response as investors await officials to elaborate on the outline of the "new economic model" provided yesterday.

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FX Daily, August 09: Sterling Remains Under Pressure, while the Greenback Firms Broadly

2018-08-09

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2018-08-09

The global capital markets are mostly quiet. US sanctions on Turkey and Russia are pressuring their respective currencies, and the New Zealand dollar has slumped nearly 1.5% on the back of a dovish hold by the central bank. The Kiwi is at 2.5-year lows near $0.6650.

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US-Japan Trade Talks

2018-08-09

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2018-08-09

The withdrawal of the US from the Trans-Pacific Partnership trade agreement lift it exposed on two fronts. First, the TPP was going to modernize the NAFTA. Without, the US remains locked in protracted negotiations. A breakthrough in talks with Mexico has been reportedly imminent for weeks.

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FX Daily, August 08: Sterling Can’t Get Out of Its Own Way, While Dollar and Yen Catch a Bid

2018-08-08

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2018-08-08

Fears that the UK could leave the EU in a little over six months without an agreement continues to drag sterling lower. Recall that over the weekend, the UK's International Trade Minister Fox suggested there was a 60% chance of a no-deal Brexit.

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Some Initial Consequences of Trade Tensions

2018-08-08

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2018-08-08

The Trump Administration argues that other countries have been taking unfair advantage of the US on trade for years, and what many are calling a trade war is really only the US finally saying enough. The US has taken many several countries, including China, to the WTO for trade violations and wins the vast majority of cases it has brought.

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FX Daily, August 07: Turn Around Tuesday for the Greenback

2018-08-07

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2018-08-07

The US dollar is pulling back today after yesterday's advance. All the major currencies are higher and even the Turkish lira, which plunged nearly 5% yesterday to cap a six-day slide, is trading firmer today ([email protected]). The dollar's losses are modest and appear corrective in nature.

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FX Daily, August 06: Sterling’s Drop Paces Dollar Gains

2018-08-06

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2018-08-06

The US dollar edged higher against most of the major currencies, and emerging market currencies are heavier. Sterling's quarter percent drop makes it the weakest of the majors in slow turnover and it was sufficient to record a new 11-month low.

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FX Weekly Preview: Dog Days of August Begin

2018-08-06

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2018-08-06

With most of the major central bank meetings and important economic data out of the way, the dog days of August are upon us. In terms of drivers, it means that players will have to look elsewhere for inspiration and it means that market liquidy is likely not at its best.

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Great Graphic: Is Something Important Happening to Oil Prices?

2018-08-04

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2018-08-04

Oil prices are weaker for the third straight day and are off in four of the past five sessions, the poorest run in two months. Supply considerations may threaten a year-old trend line. OPEC and non-OPEC, essentially Saudi Arabia and Russia are making good on their commitment to boost output, and US oil inventories unexpectedly rose.

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FX Daily, August 03: Greenback Remains Firm Ahead of Jobs, JGBs Stabilize, Italian Debt Moves into Spotlight

2018-08-03

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2018-08-03

The US dollar is trading at the upper end of its recent ranges against the euro and sterling. The euro finished below $1.16 yesterday for the first time since the end of June and has not been able to resurface that level so far today.

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Fed Looks to September

2018-08-03

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2018-08-03

There was little doubt in the market's collective mind that the Federal Reserve, which hiked rates in July, would stand pat today. It did not disappoint. The statement itself was almost identical. Growth was said to be "strong" instead of "solid," for example, a nuance to be lost on most observers. It recognized that the unemployment rate stabilized after falling.

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FX Daily, August 02: BOJ Surprises, BOE on Tap, Trade Worries Weigh on Stocks

2018-08-02

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2018-08-02

The Bank of England meeting concludes a run of major central bank meetings over the past fortnight. The BOE is widely expected to join the Bank of Canada in raising rates. The Federal Reserve and the ECB were content to do and say nothing new.

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FX Daily, August 01: Trade and Japan Drive Markets Ahead of Stand Pat Fed

2018-08-01

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2018-08-01

Investors recognize the risks to growth posed by the tariffs and counter-tariffs being imposed, but the way the US is going about it is also disconcerting. Within a few hours of signals that the US and China were looking to re-engage in high-level talks, which have not taken place for two months according to reports, the US signaled that the 10% tariff on $200 bln of Chinese goods could now face a 25% tariff instead.

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Tensions Beyond Trade

2018-08-01

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2018-08-01

Chinese officials do not seem to appreciate the extent of its isolation. The disruption from the US as Trump positions the US as a revisionist power-one that wants to alter the world order, which it was instrumental in constructing, may have obscured the fact that China's practices are a source of frustration and animosity broadly and widely.

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FX Daily, July 31: BOJ Prepares for QE Infinity

2018-07-31

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2018-07-31

The Japanese yen has been sold following the adjustments to policy and outlook by the BOJ that will allow the unconventional policies continue for an "extended period of time." Cross rate pressure and month-end demand have lifted the euro and sterling through yesterday's highs.

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Great Graphic: USD Pushes Below CAD1.30

2018-07-31

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2018-07-31

For the first time since mid-June, the US dollar has traded below CAD1.30. The greenback is weaker against all the major currencies. However, for the most part, it is still in well-worn ranges, which makes the breakdown against the Canadian dollar even more notable. It is not clear that today's break will be sustained. Indeed, we lean against it.

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FX Daily, July 30: Equities, Bonds, and the Dollar Start Week Softer

2018-07-30

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2018-07-30

The week's big events lie ahead. It is seen as the last important week before the dog days of summer when many participants will take holidays. The BOJ's two-day meeting concludes tomorrow. Speculation that the BOJ is looking for ways to tweak its program continues to spur a small taper-lite tantrum in Tokyo.

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