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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Dollar Drivers in the Week Ahead

2016-05-08

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2016-05-08

The key issue facing the foreign exchange market is whether the modicum of strength the US dollar demonstrated last week is the beginning of a sustainable move.  It is possible that the market is again at a juncture in which the price action will...

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Weekly Speculative Positions: Cutting Longs in Yen and Swiss Franc

2016-05-07

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2016-05-07

Speculators in the futures market continued to pare short foreign currency positions but were cautious about expanding long positions in the CFTC reporting week ending May 3.  In fact, two of the three largest adjustments were the cutting of gross long Japanese yen and Australian dollar positions. Yen Speculators took profits on 11.8k contracts of …

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Key Dollar Developments Include Bottoming against the Dollar-Bloc

2016-05-07

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2016-05-07

The US dollar rose against all the major currencies last week. The importance of the price action does not lie with the magnitude or the breadth of the advance. Instead, the two takeaway technical observations are 1) the seemingly one-way market for euro and yen ended and 2) the dollar-bloc currencies appear to have put … Continue reading...

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Great Graphic: Non-Consensus Thinking on Trade

2016-05-05

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2016-05-05

Low-skilled workers abroad do compete with low-skilled workers at domestic affiliates. However, employment of high-skilled workers abroad compliments (as in leads to more) high skilled domestic employment.

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FX Daily, May 5: Dollar Performance Turns More Nuanced

2016-05-05

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2016-05-05

The US dollar is firm, near the best levels of the week against the euro, yen, and sterling. However, against the dollar-bloc and several actively traded emerging market currencies, including the Turkish lira and South African rand, the greenbac...

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Cool Video: Trump and the Dollar–Bloomberg TV

2016-05-05

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2016-05-05

I was invited to discuss the potential impact of a Trump presidency on the US dollar with Bloomberg's with Joe Weisenthal, Oliver Renick, and Alix Steel on "What'd You Miss" show yesterday afternoon, Of course the topic lends itself to all sorts of partisanship.  However, I put aside my own political axes and focused on two potential …

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Political Crisis in Turkey is Not Good for Europe

2016-05-05

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2016-05-05

It has been long recognized by the investment community that power in Turkey was concentrated in Erdogan’s hands.  He enjoys incredible power in the ceremonial presidential post and brooks no rivals. Common among authoritarian leaders they habitually turn on hand-picked successors as they grow fearful of competitors.   This is precisely what has played out …

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EM FX Technical Picture

2016-05-04

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2016-05-04

Note that MSCI EM fell 21% from November 4 to January 21.  It then rallied 25% to challenge the November highs, but it has since fallen back.  MSCI EM has now retraced about a quarter of this year's rally.  Major retracement objectives come in near 7...

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Great Graphic: CAD Takes out Trendline

2016-05-04

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2016-05-04

CAD BGN Curncy It has been painful trying to pick a bottom of the US dollar against the Canadian dollar.  But now a 4-5 point downtrend from the secondary high in late-January is being violated today.    It is found near CAD1.2785 today.  Intraday penetration is one thing, but some models may take the signal on … Continue reading...

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Great Graphic: Odds of President Trump Rise (Predictit)

2016-05-04

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2016-05-04

TRUMP . USPREZ16 This Great Graphic is a 90-day history of the “betting” at PredictIt that Trump becomes the new US President.  With Cruz suspending his campaign, the odds of Trump have risen just above 40%. The US national interests and challenges to those interests do not change much from year-to-year, and this may help …

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Greenback Firmer, but has it Turned?

2016-05-04

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2016-05-04

There is one question many investors are asking after noting that with Cruz dropping out of the Republican primary, Trump has secured the nomination, and that is whether the dollar has turned. The greenback has extended yesterday’s reversal higher. The euro had briefly poked through $1.16 and closed on its lows a little below $1.15. …

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Two Decisions from Europe

2016-05-03

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2016-05-03

It might not be on investors' calendars, but European officials will take steps toward addressing two issues tomorrow.  First, the EC will make a preliminary recommendation of visa-free travel in the Schengen area for Turkish passport holders.  S...

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Dollar Continues to Push Lower

2016-05-03

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2016-05-03

The US dollar’s downtrend is extending.  The euro traded above $1.16 for the first time since last August. With Japanese markets closed for the second half of the Golden Week holidays, perhaps participants felt less hampered by the risk of intervention and pushed the dollar to almost JPY105.50.  Despite an unexpectedly large fall in the …

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Great Graphic:US Rents and Core Inflation

2016-05-02

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2016-05-02

Shelter inflation in the U.S. is at 3.2% per year, but only 1% in Europe. It is 33% of the US CPI basket, but only 6.4% of the euro zone. This leads to massive distortions in CPI inflation, and to wrong bets of investors and FX traders.

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China: Services Companies Benefit on Lower Tax with VAT introduction

2016-05-02

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2016-05-02

Yesterday, China announced one of the most important tax reforms of the past twenty years.  It is replacing a business tax on gross revenue for non-manufacturing companies with a VAT.   Manufacturing companies have been subject to a VAT approach subject

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FX Daily, May 02: New Month, Same Heavy Dollar

2016-05-02

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2016-05-02

In quiet turnover, with China, Hong Kong, Singapore and London markets closed, the US dollar is trading with a heavier bias against all the major currencies.  Lower commodity prices, including oil and copper, appears to be taking a toll on some emerging market currencies, including the South African rand. Japanese markets were closed last Friday …

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Another Strong Jobs Report may Not be Sufficient to Reignite Dollar Rally

2016-05-01

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2016-05-01

The die is cast.  The Federal Reserve is on an extended pause after the rate hike last December. The market remains convinced that the risk of a June hike are negligible (~ less than 12% chance).   The ECB has yet to implement the TLTRO and cor...

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Weekly Speculative Postions: Euro and Yen Exposure Trimmed ahead of FOMC and BOJ

2016-04-30

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2016-04-30

Speculators in the futures market made mostly small position adjustments in the sessions leading up to the FOMC and BOJ meetings.   During the Commitment of Traders reporting week ending April 26, the largest adjustment of speculative position in the currency futures was the 12.5 k build of gross long Australian dollar contracts. The accumulation …

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Will the Dollar Bloom like May Flowers after April Showers?

2016-04-30

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2016-04-30

April was a cruel month for the US dollar.  It fell against all the major currencies; even those whose central banks have negative yields.  The greenback also fell against nearly all the emerging market currencies, but the Philippine peso and the Polish zloty. Through the first four months of the year, the dollar is lower …

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Do You Believe Six Impossible Things before Breakfast?

2016-04-29

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2016-04-29

The White Queen in Alice in Wonderland (Through the Looking Glass) confesses that when she was younger, she could believe six impossible things before breakfast.  She encourages Alice to do the same.    It appears many in the market are taking ...

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