Category Archive: 4) FX Trends

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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Fed Tightening Seen Extending into Q3

2023-02-23

by Marc Chandler

2023-02-23

Overview: The prospect that the Federal Reserve tightening cycle continues into early Q3 is underpinning the greenback today against most of the G10 currencies. The dollar bloc is the notable exception, and they are posting minor gains, perhaps encouraged by the firmer equity markets. The minutes of this month’s FOMC meeting appear to show wide support for quarter point hikes going forward and there did not seem to be much discussion of the...

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Investors Shaken by Rising Rates

2023-02-22

by Marc Chandler

2023-02-22

Overview: The surge in US interest rates and sharp losses in US stocks sent the dollar broadly higher in North America yesterday. The $42 bln of two-year notes auctioned by the US Treasury saw the highest yield in more than a quarter-of-a-century (4.67%) and it still produced a small tail. Sterling, helped by its own surprisingly strong data, was the only G10 currency to have gained against the surging dollar. Still, no important technical levels...

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Upside Surprise in UK’s Flash PMI and Better-than-Expected January Public Finances Lift Sterling

2023-02-21

by Marc Chandler

2023-02-21

Overview: Rising interest rates are weighing on risk appetites and the dollar is broadly stronger. Sterling is a notable exception after a stronger than expected flash PMI and better than expected public finances. The correlation between higher US rates and a weaker yen is increasing and the greenback looks poised to rechallenge the JPY135 area. A slightly better than expected preliminary PMI and hawkish minutes from the recent RBA meeting has done...

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Monday: A Short Note while US is on Holiday

2023-02-20

by Marc Chandler

2023-02-20

The dollar is mostly softer, but turnover is mostly quiet. The Swedish krona leads the move after higher-than-expected underlying inflation. It is a mild risk-on day with equities moving higher too. In the Asia Pacific region, China stood with the CSI 300 up almost 2.5%. Europe’s Stoxx 600 is up fractionally to recoup most of the pre-weekend decline. US equity futures are narrowly mixed. European bond yields are little changed, with a couple...

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Week Ahead: Market Seeks Proper Balance after Exaggerating in Both Directions

2023-02-18

by Marc Chandler

2023-02-18

The pendulum of market sentiment swung from fear of a synchronized recession in the US and Europe to optimism that a recession can be avoid. The perceived reduction of downside risks had driven the upside performance of equities and bonds. Just as the data seems to confirm it, the rally in in stocks and bonds faltered. The MSCI Emerging Markets equity index gained 7.8% last month but is off almost 3.8% this month, and has fallen for three...

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Dramatic Swing in Sentiment Extends the Greenback’s Rally

2023-02-17

by Marc Chandler

2023-02-17

Overview: A series of strong US high-frequency data points after a poor finish to last year has spurred a dramatic shift in market expectations. And talk among a couple of (non-voting) FOMC members of a 50 bp hike has provided added fodder. The greenback is extending its recovery today against all the major currencies, with the Australian and New Zealand dollars hit the hardest. Emerging market currencies have also been knocked back. This is part...

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Markets Catch Collective Breath

2023-02-16

by Marc Chandler

2023-02-16

Overview: On the heels of a dramatic jump in US job creation and firmer than expected year-over-year CPI, the US reported a larger than expected jump in retail sales and a strong recovery in manufacturing output. Few think that economic momentum that the recent data implies can be repeated, the "no landing" camp has gained adherents. We suspect that says more about psychology than the economy. The US two-year note is threatening to snap...

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US Dollar Comes Back Better Bid

2023-02-15

by Marc Chandler

2023-02-15

Overview: Although the US January CPI was in line with expectations, the year-over-year rate was a little firmer than expected. Still, the measure that Fed Chair Powell has underscored, core services, excluding shelter, moderated with a 0.3% month-over-month gain. US rates shot up and this lent the dollar support, while weighing on equities and risk sentiment. The US two-year note yield rose to almost 4.64% yesterday, the highest in three months....

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Dollar and Rates Soften a Little Ahead of US CPI

2023-02-14

by Marc Chandler

2023-02-14

The focus is on the US CPI report today, but the price action is anything but intuitive. Although the revisions of the basket and methodological changes reinforce expectations for the largest rise in three months, the US dollar continues to trade heavily after rallying last week. The dollar-bloc currencies are underperforming today. And US rates are softer. The US 2- and 10-year yields are 1-2 bp lower.

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Yen Retreats Ahead of Formal BOJ Announcement Tomorrow and US CPI

2023-02-13

by Marc Chandler

2023-02-13

Overview: A consolidative tone is mostly the theme of the day. The revisions to the US CPI announced before the weekend add to the uncertainty and focus on tomorrow's report. At the same time, investors watch ongoing air space activity that has led to a few objects being shot down over the US and Canadian airspace.

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