Category Archive: 4) FX Trends
FX Daily, August 02: Greenback Slides Despite RBA Rate Cut and 7-year Low in UK Construction PMI
The US dollar is offered against the major currencies, but appreciating against many emerging market currencies, include the South African rand and Turkish lira. Oil prices are trying to stabilize with Brent near $42 and WTI near $40, but the recent losses continue to weigh on the Malaysian ringgit and the Mexican peso.
Read More »
Read More »
Great Graphic: The Decline in Durable Goods Prices
This economic graph is maybe the most important in the last decade. Service prices are rising, while goods prices have steadily fallen. The main reason for us is the possibility to outsource big parts of the durables supply-chain to China and East Asia. This is where productivity growth happens. Prices of services, however, are ever increasing. …
Read More »
Read More »
Abe’s Fiscal Policy: More of the Same
Japan's fiscal stimulus if smaller than it appear and is unlikely to boost the economy as much as officials may think. The problem in Japan is not that interest rates are too high or that pubic investment is too weak. The risk is that the yen strengthens further, and we suggest the dollar may fall toward JPY94.60.
Read More »
Read More »
FX Daily, August 01: Dog Days of August Begin
The US dollar is trading with a small upside bias in narrow trading ranges. The main news has consisted of PMI reports, while investors continue to digest last week's developments. In particular the BOJ's underwhelming response to poor economic data and a missed opportunity to reinforce the fiscal stimulus, and the dismal US GDP.
Read More »
Read More »
Great Graphic: Real Broad Trade-Weighted Dollar
The real broad trade-weighted dollar index rose in July for the third month. It peaked in January above trendline drawn through the Reagan and Clinton dollar rallies. Expect the trendline to be violated again before the end of the year.
Read More »
Read More »
No Big Thoughts, but Several Smaller Observations
Notable that as the CRB Index moves lower, MSCI emerging market equities have done well. European banks are retreating after the stress test results. Tokyo elected its first women governor as this seem to be in part a sign of protest against Abe.
Read More »
Read More »
FX Weekly Preview: After this Week, Does August Matter?
RBA meeting is a close call. BOE meeting consensus on rate cut, maybe new QE and lending-for-funding. More details of Japan's fiscal policy. U.S. jobs data. After this week, and outside of RBNZ rate cut, August may be uneventful.
Read More »
Read More »
FX Weekly Review, July 25 – July 29: Dollar Hobbled; Technicals Warn of More Losses
The US dollar advance was stopped in its tracks by the
disappointingly weak Q2 GDP figures. The 1.2% annualized growth rate was
roughly half of the pace expected. The FOMC statement earlier in the week did not leave the impression that a September hike was likely, and with the poor growth numbers, the odds were downgraded
further.
Read More »
Read More »
Weekly Speculative Postions: Speculators Sell European Currency Futures
The euro bears added another 10.3k contracts to their gross short position, which brought it to 221.8k contracts., This is this is the largest grossshort position since early January.
Read More »
Read More »
Emerging Markets: What has Changed
Indonesian President Widodo shuffled his cabinet
Egypt has requested a three-year $12 bln loan from the IMF
Johannesburg Stock Exchange data on investment flows into South Africa was wrong
Fitch downgraded South Africa’s local currency rating by one notch to BBB- with a stable outlook
Fitch cut its outlook on Colombia's BBB rating from stable to negative
Read More »
Read More »
Great Graphic: Relative Performance of Bank Stocks–US, Europe, and Japan
MSCI US Bank Index, MSCI European Bank Index and the Japan Topix Bank Index compared. Divergence in the health of the financial sector.
Read More »
Read More »
FX Daily, July 28: Dollar Pulls Back Further Post-FOMC
After reversing lower yesterday after the FOMC statement, the US dollar has continued to move lower against the major currencies, save sterling. While the market is not fully confident of a rate cut by the Reserve Bank of Australia, indicative pricing in the derivative markets suggest a UK rate cut has been fully discounted (and a new asset purchase plan may also be announced).
Read More »
Read More »
Fasten Your Seat Belts: Tomorrow Promises to be Tumultuous
Japan reports on labor, consumption, inflation and industrial output before the BOJ meeting. ECB reports inflation and Q2 GDP and the results of the stress test on banks. US reports first look at Q2 GDP.
Read More »
Read More »
FOMC says What it Had To, No More or Less
Fed upgraded its assessment of the economy. Added that the downside risks to the economy have diminished. Only George dissents.
Read More »
Read More »
FX Daily, July 27: Yen Falls on Fiscal Stimulus, while Sterling and Aussie Can’t Sustain Upticks
Swiss Franc: The Euro kept on climbing, after yesterday's rapid rise. The Swiss consumption indicator by UBS shows improvements. The indicator is still distant from the highs in 2012. At the time stronger growth in Emerging Markets and the weaker franc helped the Swiss economy.
Read More »
Read More »
Oil and Economy Pull the Canadian Dollar Lower
The decline in oil prices is a factor weighing on the Canadian dollar. US premium over Canada is rising, and may continue as the economies diverge. The general risk appetite is supportive for the Canadian dollar.
Read More »
Read More »
Great Graphic: How the US Recovery Stacks Up
The US recovery may have surpassed the 2001 recovery in Q2. Though disappointing, the recovery has been faster than average from a balance sheet crisis. Although slow, it is hard to see the secular stagnation in the data.
Read More »
Read More »
FX Daily, July 26: Strange Day: Yen Soars , Swissie Falls
The Swiss Franc strangely depreciated on a day, when the other safe-haven, the yen strongly improved. The euro went up to 1.0899 by 0.54%. The reason seems to be technical.
Read More »
Read More »
Fed to Stand Pat, but Statement may be More Constructive
The Fed's nervousness in June has likely largely eased on the back of better economic data and stable international climate. The Fed may reintroduce its risk assessment. Who are the possible dissents?
Read More »
Read More »