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.
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FX Weekly Preview: Six Thumbnail Sketches of This Week’s Dollar Drivers

2016-10-30

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2016-10-30

Thumbnail
Four central banks meet, but expectations for fresh action are low. The US latest election news does not appear to be altering the projected electoral college outcome. UK press are speculating about Carney possibly resigning. We are skeptical.

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FX Weekly Review, October 24-28: October Surprise Pushes Open Door

2016-10-30

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2016-10-30

Swiss Franc Currency Index, October 22 2016
The Swiss Franc Index could recover some of the losses as compared to the US dollar index. Still the USD/CHF remains above 0.99. The US dollar rose against most of the major currencies last week, but the upside momentum appeared to be dissipating, even before the FBI's announcement about new Clinton emails. There are a few exceptions like the greenback's performance against the Japanese yen, Canadian dollar, and Swedish krona. The dollar made new...

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Weekly Speculative Positions: Bottom-Picking Sterling, Swiss Franc Even More Net Short

2016-10-29

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2016-10-29

weekly
Speculators increased their Short Swiss Francs to Net 18K contracts. While they started to bottom-pick Sterling. Not everyone is convinced that sterling will bounce.  The bears extended their gross short sterling position by 3.4k contracts to 147.6k.  On the eve of the UK referendum, the gross short position was around 94k contracts.   Again speculators, both bulls and bears have rapidly expanded their exposure in recent weeks.  In the most...

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Riksbank and Norges Bank Policy Meetings

2016-10-29

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2016-10-29

Six major central banks meeting over the next six sessions. Sweden's Riksbank is the most likely ease policy of these central banks, but it is not particularly likely. Norway is decisively on hold, as fiscal policy does some of the heavy lifting.

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Canada Renews Inflation Target, but Tweaks Core Measures

2016-10-29

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2016-10-29

Canada maintains inflation target of the middle of a 1-3% band. Adopts a trimmed and median core measure like Australia. Market seems to be under-estimating the risk of a BoC rate cut next year.

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FX Daily, October 28: Dollar Sidelined, Krona Stabilizes, Rates Firm

2016-10-28

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2016-10-28

FX Performance, October 28
The main development here in the last full week of October is the sharp rise in bond yields. US 10-year yields rose nine bp this week coming into today's session, which features the first look at Q3 GDP. The two-year yield is up four bp. European 10-year benchmark yields mostly rose 11-17 bp. UK Gilts were are the upper end of that range. Two-year yields are 3-5 bp higher.

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Yellen and Fischer Still Singing from the Same Song Book

2016-10-28

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2016-10-28

Many see Yellen and Fischer at odds over benefits of high pressure economy. However, this fails to put the comments in the proper context--same message different styles. They are arguing against the doves who don't want to hike this year.

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FX Daily, October 27: Rising Yields Continue to be the Main Driver

2016-10-27

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2016-10-27

FX Performance, October 27 2016 Movers and Shakers
The euro remains pinned near the seven-month low it recorded two days ago near $1.0850. It approached $1.0950 yesterday and has been confined to about a 15-tick range on either side of $1.0905 today. Against the yen, the dollar remains near the three-month high (~JPY104.85) also seen two days ago. New dollar buying emerged yesterday near JPY104.

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Great Graphic: CRB Index Revisited

2016-10-27

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2016-10-27

CRB Index
Interest rates and 10-year break-evens are rising. Some think the CRB Index is tracing out a head and shoulders bottom. We look for inflation in non-tradable goods' prices (think services).

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FX Daily, October 26: Euro and Yen Extend Recovery

2016-10-26

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2016-10-26

FX Performance, October 26, Movers and Shakers
After touching 1.08, which apparently the "new floor", the SNB moved the EUR/CHF upwards yesterday and Monday. Today's EUR recovery against USD, let also the EUR/CHF rise. The US dollar's upside momentum reversed in North America yesterday and has been sold in Asia and Europe. This seems like mostly position adjustments ahead of next week's FOMC, BOE and RBA meetings, in an otherwise subdued news period. The euro has at three-day highs. It has...

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FX Daily, October 25: Germany IFO, Dollar Going Nowhere

2016-10-25

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2016-10-25

FX Performance, October 25 2016 Movers and Shakers
The US dollar has been confined to extremely narrow ranges against the euro, yen, and sterling. To the extent that there is much action in the foreign exchange market, it is with the dollar-bloc and emerging market currencies.The Canadian dollar was whipsawed by comments from the Bank of Canada.

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Seven Things I Learned while Looking for Other Things

2016-10-25

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2016-10-25

Ideas
Mainland demand for HK shares has dried up this month. EMU growth may accelerate in Q4, while the collective deficit continues to fall. German fertility rate increased last year.

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Yuan Not

2016-10-25

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2016-10-25

There were two dogs that did not bark this year. There are the Japanese yen, which despite negative interest rates and an unprecedented expansion of the central bank's balance sheet, the yen has strengthened 15% against the dollar. The yen has been the strongest major currency, and the third strongest currency in the world behind the high-yielding Brazilian real, recovering from last year's drop, and the Russian rouble, aided by a rebound in oil.

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FX Daily, October 24: Dollar Begins Mostly Slightly Lower, and Risk is On to Start the Week

2016-10-24

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2016-10-24

FX Performance, October 24 2016 Movers and Shakers
Sterling vs the Swiss Franc has remained close to its lowest level in history caused by the aftermath of the Brexit vote back in June and more recently the announcement that Article 50 will be triggered by March 2017. Confidence in Sterling exchange rates has plummeted recently and until we get some form of assurances as to how the talks may go with the European Union we could see Sterling fall even further against the Swiss Franc than its current...

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FX Weekly Preview: Forces of Movement in the Week Ahead

2016-10-24

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2016-10-24

opticalillusion
Fitch cut Italy's rating outlook to negative from stable, while DBRS left Portugal's rating and outlook unchanged. Europe and Canada's free trade negotiations broke down, but many seem to be making exaggerating the significance of the drama. Japan and Australia report inflation figures, and both are exceptions to the generalization that price pressures are rising in (most) high income countries.

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Weekly Speculative Positions: Net Short CHF Position is Increasing

2016-10-23

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2016-10-23

1022-commitment-of-traders
The net short Swiss Franc position against the dollar has risen to the levels seen before the breakdown of the EUR/CHF floor. It has increased from short 9.4 K contracts to 16.4 K contracts. In the last week, speculators raised their short positions by 15% for both the euro and CHF. Euro longs against USD were up slightly, while CHF longs were reduced.

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FX Weekly Review, October 17-21: Golden Cross in Dollar Index and Deadman’s Cross in the Euro

2016-10-23

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2016-10-23

Swiss Franc Currency Index, October 22 2016
The Swiss Franc index had once again a bad stance against the dollar index. The CHF index was down 1%. The dollar index, however, improved. The US dollar rose against the major currencies last week, except the Australian and Canadian dollars.

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Demographics and a New Old Paradigm

2016-10-23

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2016-10-23

paradigm
The hangover from the debt crisis and secular stagnation are the two main explanatory models for the low growth and low interest rates. Anew Fed paper brings the focus back to demographics. If true, warns of a protracted period of slow growth, low interest rates.

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FX Daily, October 21: Greenback Ending Week on Firm Note

2016-10-21

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2016-10-21

FX Performance, October 21 2016 Movers and Shakers
The US dollar is firm especially against the European complex and emerging market currencies. The yen continues to be resilient, and exporters are thought be capping the dollar above JPY104. The dollar is lower against the yen for the fourth consecutive session and set to snap a three-week advancing streak.

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Great Graphic: Italian Banks and a German Bank

2016-10-21

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2016-10-21

DB and Italian bank stocks have been moving in tandem. They suffer from fundamentally different problems. The euro has been selling off as the bank shares rebound.

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