Category Archive: 4) FX Trends

Main Author Marc Chandler
Marc Chandler
He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.

When it Rains, It Pours

There are three developments today, which while not driving the market, are important for many investors.  The first are comments from German Finance Minister Schaeuble and EC President Juncker.  The second is an important development in Poland.   The third are growing problems in Greece. Schaeuble is formally acknowledging what investors have known for some time. The …

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A Bloody Friday

The recovery of US shares and oil yesterday provided short-lived.  Asian shares were dragged lower with the help of Chinese equities.  The 3.5% fall in the Shanghai Composite today brings the year-to-date decline to a little more than 18%. Taiw...

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Great Graphic: S&P and Oil–Conjoined Twins or Distant Cousins that Sometimes Look Alike?

The US stock market and the oil market appear joined at the hip. The Great Graphic here, created on Bloomberg, shows the correlation of the two markets.  It is near 0.77, which is the highest since September 2013.   The correlation was condu...

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When Loons Cry: Will the Bank of Canada Cut Rates Next Week?

Speculation is mounting that the Bank of Canada will be the first major central bank to cut rates this year.  It meets on January 20.  The combination of the drop in oil prices (40% since mid-October) and the erosion of the business outlook has boosted the risk of a cut next week.   The bitumen from … Continue reading »

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Market Turmoil Continues, Risk Shunned

Investors still have not found solid footing this year.  Equity markets have continued to sink, even though China's equities advanced.  Bond markets are mostly firmer, with the US 10-year yield seemingly being drawn back toward 2.0%.  Oil prices are little changed, after Brent slipped to marginal new lows.   There is much talk about the Iranian …

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Is Sterling almost Done Being Pounded?

Sterling fell 4.25% from the high on December 28 to yesterday.  It has been confined to yesterday's range today.   After finishing below the lower Bollinger Band yesterday, it has moved back into the band today.  The Bank of England meets tomo...

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Fishing for a Bottom to Dollar-Yen

While the euro often carves out a bottom, the dollar's lows against the yen are frequently characterized by spikes.  That was the case, for example in the middle of October and late-August and the low (~JPY115.60) in December 2014.  Such a spike may ...

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Hump Day’s Bump

Many of the capital markets are enjoying reversals today.  Equity markets are mostly higher. The MSCI Emerging Market equity index is up more than 1%. Several key commodities, like oil and copper, are firmer.  Bond markets, outside the US, are firmer, with the Japan's 10-year yield slipping to new record lows slightly below 20 bp.   … Continue reading...

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The S.H.O.E. Crisis

The weak growth, large output gap, low return on capital, and a host of other economic malaise are widely recognized.  There seem to be two main schools.   One is associated with Reinhart and Rogoff.    They argue that "this time is not diffe...

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Sterling’s Slide Extended on Dismal Industrial Output Figures

A subdued Chinese session, with the yuan, little changed and local equities securing minor gains, let market participants look elsewhere for directional cues.   The new lows in oil, near $30 a barrel, and the bankruptcy filing of Glencore's US subsidiary Sherwin Alumina seemed to weigh on the dollar-bloc currencies. However, it is sterling today that …

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Great Graphic: Shanghai Composite and the S&P 500

I was canoeing recently.  When I looked that oar in the water, it looked bent.  It wasn't my equipment, and I am a novice.  I cursed to myself and quickly pulled the oar from the water.  I smiled.  It was not bent.  It was an optical illusion. ...

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Pavlov’s Dogs Spot New Currency War

The broad measures of the US dollar are trending higher, and former Fed Chair Bernanke recently refuted claims the US was engaged in a currency war. Many observers had thought that with its unprecedented asset-purchase program, the BOJ was engage...

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Emerging Markets: Preview of the Week Ahead

***From my colleague Dr. Win Thin

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Put on Your Red Shoes and Dance the Blues

Chinese shares continued last week's plunge, with the Shanghai Composite off 5.3% and the Shenzhen Composite falling 6.6%.  Both indices closed on their lows.  With the apparenthelp of officials, the onshore yuan strengthened, though the real squeeze was in the offshore yuan, which strengthened by nearly 1%, the most in four months. Excluding the Japanese …

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Last Week’s Drivers Still with the Whip Hand.

Developments in China seemed to overshadow other considerations as investors returned from the New Year.  The offices were open and desks manned, yet many did not appear to be prepared to re-deploy resources.  The lack of participation helps ...

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Weekly Speculative Positions: First Net Long Yen in 3 Years

Due to the holidays, the CFTC has been releasing its Commitment of Traders report late.  With this week's  report, the normal Friday release schedule resumes.   The latest report covers the shortened week through January 5.  It is not surpr...

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Nuanced Dollar Performance Likely in the Week Ahead

A tumultuous start of the year saw the US dollar turn in a mixed performance.   Emerging market currencies and the dollar-bloc softened.  Sterling was in this camp, losing about 1.2% against the dollar.  On the other hand, the euro, Swiss franc...

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Emerging Markets: What has Changed

In the EM equity space, Qatar (+2.7%), Hungary (+1.3%), and Turkey (+1.1%) have outperformed this week, while Poland (-4.6%), Hong Kong (-4.1%), and the Philippines (-3.8%) have underperformed.  To put this in better context, MSCI EM fell -3.6% this ...

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Great Graphic: Euro Flirting with Downtrend Against Sterling

Tactically, there seems to be two broad ways a short-term participant can trade this.  The first is to buy the euro on a break out.  The second way is to fade the patter.  This entails selling the euro as it approaches  the GBP0.7500 level.     Which...

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US Growth Accelerates, Dollar Advances

US grew nearly 300k jobs in December.  The October and November jobs growth were revised up by 50k.  The unemployment rate was unchanged at 5.0%, even though the participation rate ticked up. If there was  a disappointment it was that hourly earnings did not rise as much as expected.  The 2.5% year-over-year growth from 2.3% …

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