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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Re-Emergence of Divergence Helps Stabilize Markets

2016-02-21

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2016-02-21

The main driver of the investment climate is not so much the incremental economic data as the capital markets themselves. The market turmoil contributed to the tightening of financial conditions, which in turn heightened risks, which monetary of...

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Weekly Speculative Position: Dollar Bullish Speculators Still Hesitant

2016-02-21

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2016-02-21

The CFTC Commitment of Traders reporting week ending February 16 was short due to the US holiday.  This may have contributed to the small adjustments to speculative positioning in the currency futures.  It also may reflect the lack of convictio...

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Investor: Heal Thyself

2016-02-21

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2016-02-21

After a terrible first several weeks of the year, global capital markets stabilized in the past week.  Chinese markets re-opened after the extended Lunar New Year holiday and proved not to be disruptive.   Chinese equities did not decline to catch-up to the performance of global markets in its absence and instead gained 3% on … Continue...

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The World is not Ending (Yet), Panic To Subside

2016-02-14

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2016-02-14

Investors have become unhinged. The increased volatility and dramatic market moves challenge even the most robust investment strategies. This sets off a chain reaction of money and risk management that further amplifies the price action, like an...

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Weekly Speculative Positions: Speculators Continue to Press

2016-02-13

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2016-02-13

There are two broad developments in speculative positioning in the Commitment of Traders report in the week ending February 9.  First, the market turbulence saw speculators reduce exposure.  Of the 16 gross positions we track, 11 were reducing ...

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Daily FX, 02/13: Market Chaos Subsiding? Dollar Correction Over?

2016-02-13

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2016-02-13

The outlook for the dollar in the week ahead is not about economic data or the FOMC and ECB minutes.  It is about the stability of the global capital markets.  Many are looking for an event or official action that will stop the rout that is of historic proportions to start the year.   We too … Continue reading...

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Don’t Forget the Golden Rule: He with the Gold Makes the Rules

2016-02-12

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2016-02-12

In response to the global crisis, central banks have adopted unorthodox policies.  They expanded their balance sheets and broken the zero bound of interest rates.  Many investors have been critical of the central bank action on principle, but what has changed recently is that market developments have provided fodder for the ineffectiveness in practice. Asset …

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Weekly Emerging Markets: What has Changed?

2016-02-12

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2016-02-12

In the EM equity space, Colombia (+0.3%), Chile (+0.2%), and Poland (-0.6%) have outperformed this week, while India (-6.6%), Czech Republic (-5.5%), and Hong Kong (-5.0%) have underperformed.  To put this in better context, MSCI EM fell -3.9% this w...

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A Bit of a Pre-Weekend Reprieve in Europe, but Return of China on Monday is Worrisome

2016-02-12

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2016-02-12

After another difficult Asian session that saw the Nikkei fell 4.8% (12.3% on the week), the capital markets against have stabilized in Europe.  Equity markets are mostly higher, with the Dow Jones Stoxx 600 up nearly 2% led by energy and financials. Oil prices are up a bit more than $1 a barrel though it … Continue...

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Seeing the Forest for the Trees

2016-02-11

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2016-02-11

The conundrum that everyone is wrestling with is the euro and yen's strength given their negative interest rates and prospect for even lower interest rates.   The divergence of monetary policy, even if the Fed is on hold for the rest of this year and next, should be dollar-positive. We have tried making sense of what … Continue reading...

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Daily FX, 02/11: Stocks Crater, Yen Soars

2016-02-11

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2016-02-11

The continued sell-off in global equities is the main driver of the capital markets.  It, along with the push lower in oil prices, are pushing core bond yields sharply lower. The US 10-year yield is nearing 160 bp having begun the year above 225 bp.    The 10-year gilt yield is at a new record low … Continue reading »

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Stealing Steel: A Microcosm of Macro-Forces

2016-02-10

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2016-02-10

There are few industries that offer a picture glass window to see numerous macroeconomic forces as steel does.   Excess capacity, trade policy, and the yuan all intersect when looking at the steel industry.   Moreover, it also shed light on why the drop of energy and other commodity prices, such as iron ore, have not …

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Listen Carefully, She’s Yellen

2016-02-10

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2016-02-10

After another soggy Asian session, European markets have begun on a firm note, and US shares are trading broadly higher in Europe as well.  Led by the beleaguered financial shares, and healthcare, the Dow Jones Stoxx 600 is up 2%.  Similarly, the peripheral bonds, including Portugal (though not Greece) are seeing a reprieve from the … Continue...

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Why Portugal is Important Even If You have No Direct Exposure

2016-02-09

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2016-02-09

Portugal's 10-year bond yield has risen almost 120 bp this year.  It is one of the few eurozone members that still pay to borrow two-year money.   There are two set of drivers.  One set is country specific.  These may matter only to current or prospective investors.  The other set of considerations may have broader applicability.  …

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Great Graphic: Dollar May Be Less Important for Fed

2016-02-09

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2016-02-09

Investors and policymakers continue to wrestle with the economic impact of the dollar's rise.  The Federal Reserve has argued that the dollar's appreciation acts as a headwind on exports and dampens imported inflation.  At the same time, despite the dollar's appreciation and the fall in oil prices, core inflation rose steadily last year. Core CPI …

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Europe Stabilizes After Asia Melts

2016-02-09

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2016-02-09

After a meltdown in Asia, the global capital markets are stabilizing in Europe.   The US S&P managed to recoup about half of its losses before the close yesterday, but this gave not comfort to Japanese investors.  The yen's strength and ongo...

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Bizarro World of Negative Interest Rates and Central Banks Pushing for Wage Increases

2016-02-08

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2016-02-08

In many ways, the world has turned upside down.   It is not just central banks that have set policy rates below zero, but the entire German curve out through eight years have negative yields.  Japan, which has the largest debt burden relative to GDP,  has negative yields out through nine years.   The Swiss curve is …

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Germany–A Hegemonic Challenge for the Heartland

2016-02-08

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2016-02-08

[unable to retrieve full-text content](co-authored with Matt Dabrowski) The great British geographer Halford Mackinder invented the term “geopolitics” over 100 years ago. He painted a grand vision of international relations that revolved around one f...

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Emerging Markets: Preview of the Week Ahead

2016-02-08

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2016-02-08

Czech Republic reported disappointing December industrial (0.7 vs 5.9% y/y consensus).  It reported a small trade surplus rather than the expected deficit.  It will report January CPI on Friday, and is expected to rise 0.5% y/y vs. 0.1% in December. ...

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Falling Stocks and Yields Drag Dollar Lower

2016-02-08

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2016-02-08

Many markets are closed in Asia, and although Tokyo managed posted equity gain, most other markets in the region that were open fell.  And the selling pace picked up in Europe.  The Dow Jones Stoxx 600 is off 2.3%, led by information technology, industrials, and consumer discretionary.     It is trading at new lows … Continue...

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