Category Archive: 4.) Marc to Market

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FX Daily, July 09: Possibility of a Soft Brexit Excites Sterling (too Early?)

2018-07-09

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2018-07-09

After a little wobble, sterling has responded favorably to the resignation of the UK Brexit team led by David Davis. The idea is that a path to a softer Brexit is good for sterling.  In fairness, it is a bit early to reach this conclusion, and the softer dollar tone puts wind in sterling's sale. There is a GBP244 mln sterling option at $1.3375 that expires today. The June highs were set in the $1.3450-$1.3470 area.  

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FX Weekly Preview: Macro Considerations for the Capital Markets

2018-07-09

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2018-07-09

The triumphalism that followed the fall of the Berlin Wall nearly three decades ago has evaporated.  The Great Financial Crisis and inexorable widening of income and wealth inequalities within countries undermined claims of moral and economic superiority.  Liberal democracies are fighting a rearguard action and the rise of illiberal regimes. 

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FX Daily, July 06: Dollar Slips After Tariffs and Before Jobs Data

2018-07-06

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2018-07-06

The first set of US tariffs aims specifically at China were implemented, and the retaliatory actions were also launched. The tariffs cover hundreds of goods, though the initial amount of trade covered is relatively small at $34 bln. Tariffs on another $16 bln are in the pipeline and could be put into effect in a few weeks. The US is threatening to ramp up its response by imposing a tariff on another $200 bln of Chinese goods, though the details...

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FX Daily, July 05: Dollar is Mixed on Eve of US Jobs and Tariffs

2018-07-05

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2018-07-05

The US dollar is softer against most of the major currencies and mixed against the emerging market currencies.  European currencies firmer, with the continued recovery of the Swedish krona on the back of a more hawkish central bank, and the euro poking through $1.17 for the first time in over a week with the help of strong factory orders report from Germany.  Central and East European currencies are leading among emerging markets.  Asian equities...

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FX Daily, July 03: Markets Trying to Stabilize

2018-07-03

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2018-07-03

The global capital markets are trying to stabilize. US equities recovered from early losses yesterday but this was not enough to stop Asian equities from extending recent losses. The MSCI Asia Pacific Index slipped 0.2% for the sixth decline in the past seven sessions, However, several local markets, including China, Australia, and Korea advanced.

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FX Daily, July 02: Third Quarter Begins With a Thump

2018-07-02

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2018-07-02

The window dressing ahead of the end of Q2 failed to signal a turn in sentiment. Equity markets have taken back those gains and more. The US dollar is broadly firmer, though it was coming off its best levels near midday in Europe, and the three-basis-point slippage puts the US 10-year yield at 2.83%, its lowest in more than a month.

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FX Weekly Preview: Trade and Data Driving Markets

2018-07-02

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2018-07-02

US President Trump is intent on disrupting the post-WWII arrangement that prioritized and ideological conflict over economic rivalries. Last week, it was reported that Trump told his counterparts at the G7 summit that NATO was as bad as NAFTA. NATO's annual meeting is July 12.

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FX Daily, June 28: US Dollar Remains Firm, Sends Yuan, Rupee, Sterling and Kiwi to New 2018 Lows

2018-06-28

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2018-06-28

The US dollar is consolidating its gains against most of the major currencies, but the underlying strength remains evident. Several major and emerging market currencies are at new lows for the year, including sterling and the New Zealand dollar, but also the yuan, rupee, and the rupiah.

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FX Daily, June 27: Renminbi Slide Continues and Oil Extends Surge

2018-06-27

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2018-06-27

The US dollar is mostly firmer today, though has slipped back below the JPY110 level, as lower yields and equities support the Japanese yen. The main story in the foreign exchange market today is the continued slide in the Chinese renminbi. The decline is the sharpest since the 2015 devaluation.

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FX Daily, June 26: Trade Tensions and Approaching Quarter-End Cast Pall Over Markets

2018-06-26

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2018-06-26

The global capital markets have stabilized today after yesterday's rout in equities, softer yields, and US dollar. The implementation of US tariffs on China and China's retaliatory tariffs on the US is still ten days off. The immediate focus is on actions expected to curb the technology transfer.

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FX Weekly Preview: Trade Tensions and EU Summit Highlight Q2’s Last Week

2018-06-25

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2018-06-25

We argue there are three major disruptive forces that are shaping the investment climate: the US policy mix in relative and absolute terms, the escalation of trade tensions, and immigration. In the week ahead, trade issues may eclipse the US policy mix, and immigration will compete with the economic and financial agenda at the European heads of state summit at the end of the week.

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FX Daily, June 22: BOE Spurs Dollar Pullback

2018-06-22

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2018-06-22

The Bank of England's hawkish hold yesterday, spurred by three dissents in favor of an immediate hike, changed the near-term dynamics in the foreign exchange market.  Both the euro and sterling fell to new lows for the year before reversing higher.  Yesterday's gains are being extended today. 

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FX Daily, June 21: Dollar Driven Higher

2018-06-21

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2018-06-21

The half-hearted and shallow attempts by the currencies to recover appear to be emboldening the dollar bulls today,  The greenback is higher against all major and emerging market currencies today.  Demand for dollars is strong enough to offset the broader risk-off environment that is pulling stocks and core yields lower that is usually supportive of the yen. 

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FX Daily, June 20: Fragile Stability

2018-06-20

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2018-06-20

The day began out with equity losses in Asia before a sharp recovery, perhaps initiated in China. The MSCI Asia Pacific Index was up a little more than 0.5%. The Shanghai Composite fell more than 1% before closing 0.25% better.

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FX Daily, June 19: America First Clashes With Made in China 2025

2018-06-19

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2018-06-19

The escalation of trade tensions between the world's two largest economies is scaring investors, who are liquidating equities and buying core bonds.  The dollar and yen are the strongest of the major currencies.  The Swiss franc is mostly steady as it too is benefiting from the unwinding of risk trades.

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FX Daily, June 18: Politics and Economics Weigh on European Currencies

2018-06-18

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2018-06-18

The US dollar is rising against most of the major and emerging market currencies. The prospects of escalating trade tensions and the divergence of policy that was confirmed by the major central banks are disrupting the markets. Norway's central bank meets later this week.

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FX Weekly Preview Warning: Treacherous Week Ahead

2018-06-18

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2018-06-18

All three of the major central banks met last week and confirmed that monetary policy would continue to diverge for at least another year. The clarity of the trajectory of monetary policy reduces the impact of high-frequency economic data.

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FX Daily, June 15: Dollar Slips While Escalating Trade Tensions may Roil Markets

2018-06-15

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2018-06-15

The Dollar Index edged higher to its best level this year before turning down as market attention shifts from central banks to trade tensions. Reports confirm that the US will go ahead with the 25% tariff on $50 bln of Chinese goods and provide some specificity today. The final list is expected to be similar to the goods that had been identified in the preliminary list, with an emphasis on electronic goods, apparently on ideas that they may have...

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FX Daily, June 14: Dollar Punished Ahead of ECB

2018-06-14

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2018-06-14

The US dollar is slumping against all the major currencies in the aftermath of the hawkish Federal Reserve. In fact, the inability of the greenback to hold on to the gains scored in the initial reaction to the Fed's hike, optimism on the economy, and the signal of hikes in September and December, foretold today's push lower.

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FX Daily, June 13: Dollar Edges Higher Ahead of FOMC

2018-06-13

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2018-06-13

The US dollar is trading firmly as the FOMC decision looms. In many ways, the actionable outcome of this meeting has hardly been in doubt this year. By all accounts, the Fed will deliver its second hike of the year today.

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