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Category Archive: 4) FX Trends

Main Author 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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The new neutral for central banks

2018-09-14

You’ve heard of the neutral rate but the Fed is now talking about the long-term neutral rate and the short-term neutral rate. The implication is that the FOMC (and likely others) are going to hike more in 2019 than we thought and the US dollar will benefit. Adam Button from Forexlive.com talks about neutral rates, … Continue...

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FX Daily, September 14: Dollar Losses Extended

2018-09-14

by Marc Chandler

2018-09-14

The US dollar remains on the defensive after retreating yesterday. Its losses against the most of the major and emerging market currencies are being extended today. The combination of softer US inflation coupled with a less dovish than expected ECB, a Bank of England lifting growth forecasts, while warning that a Brexit without an agreement could spur higher mortgage rates, and a more aggressive rate hike by Turkey conspired to force the dollar...

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FX Daily, September 13: Vulnerable To Disappointment

2018-09-13

by Marc Chandler

2018-09-13

There is an eerie calm in the markets ahead of the highlight for the day and week. The central banks of the eurozone, UK, and Turkey hold policy meetings, and the US reports August CPI. The greenback is a mostly firmer, with the Australian dollar as the notable exception. On the one hand, we would note that is it higher for the fourth consecutive sessions, after finding some support near $0.7100 earlier in the week.

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FX Daily, September 12: Dollar Chops in Narrow Ranges

2018-09-12

by Marc Chandler

2018-09-12

Eurostat confirmed that EMU industrial output fell for a second consecutive month in July. The 0.8% decline was larger than expected and is the third decline of such a magnitude in four months and weighed on the euro. German and Spanish industrial output had surprised on the downside last week, and Italy matched suit today with a report showing a 1.8% contraction, much larger than expected, and bringing the year-over-year rate to -1.3% (workday...

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Great Graphic: Did the CRB Bottom?

2018-09-12

by Marc Chandler

2018-09-12

The CRB index has been trending lower since late May. It fell nearly 10% to retrace 50% of the rally come June 2017. This Great Graphic shows the 4 1/2 month trendline. It had been violated in late August but fell back under it at the end of last week.

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FX Daily, September 11: Dollar May Prove Resilient if it is Turn Around Tuesday

2018-09-11

by Marc Chandler

2018-09-11

The euro and sterling extended their recovery from the US hourly earnings lows seen before the weekend. However, the move stalled in the European morning, after the UK reported better than expected earnings itself. Sterling approached the 61.8% retracement of the decline from the July high (~$1.3365) found just below $1.31. It has been correcting higher since reaching almost $1.2660 on August 15.

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FX Daily, September 10: Initial Extension of Euro and Sterling Losses Stall

2018-09-10

by Marc Chandler

2018-09-10

The US dollar's pre-weekend gains were extended against most the major currencies, but the euro, sterling, and Australian dollar have recovered in the European morning. Emerging markets currencies are mixed. The Indian rupee is the weakest(of the emerging market currencies (~-0.8%) following the widening of the Q2 current account deficit at the end of last week and ahead of the August trade deficit which is expected to show the impact of rising...

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Great Graphic: Is that a Head and Shoulders Bottom in the Euro?

2018-09-08

by Marc Chandler

2018-09-08

EUR Curncy, 6 month chart

The euro recorded the low for the year so far on August 15 near $1.13. We had been anticipating a corrective phase for a couple days before the low was recorded. Recall that the previous Friday, August 10, all the major currencies, but the Japanese yen and Canadian dollar were beyond their Bollinger Bands. The euro recovered toward $1.1735 on August 28, stopping shy of our initial objective of $1.1750.

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Jump in Hourly Earnings is Key to US Jobs, while Canada adds 40k Full-Time Positions

2018-09-07

by Marc Chandler

2018-09-07

The 201k rise in US non-farm payrolls edged above the median forecasts, but the 50k downward revision to the past two-months removes the gloss. It is the first August report in seven years that the initial estimate was above the Bloomberg median. The most important part of the report was the 0.4% jump in hourly earnings, lifting the year-over-year rate to a new cyclical high of 2.9%.

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FX Daily, September 7: Emerging Markets Stabilize While Euro Shrugs Off Disappointing Data

2018-09-07

by Marc Chandler

2018-09-07

The global capital markets are finishing the week on a more stable note than it began. Indeed, since the middle of the week, many of the besieged emerging market currencies, like the South African rand, Turkish lira, and Argentine peso have posted some corrective upticks. Today, the MSCI Emerging Market Index is snapping a seven-day slide register a modest gain, ahead of the Latam session.

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It’s All About Anticipation

2018-09-07

In many things in life, you can often find ways to anticipate what might happen next. In essence, you see the future. Athletes do it all the time. Animators also make cartoons come more alive, by using cues that anticipate what will happen next. Trading is no exception. If you want to become a better … Continue reading »

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FX Daily, September 6: Fragile Calm Weighs on Greenback

2018-09-06

by Marc Chandler

2018-09-06

The global capital markets are calmer today. This is not preventing the MSCI Emerging Market Index from extending its drop into the seventh consecutive session, but there has been a respite in the sell-off of emerging market currencies, where the Mexican peso, South African rand, Turkish lira, and Indonesian rupiah are modest, modest gains. At the same time, the Philippine peso, Korean won, and Indian rupee continued to weaken.

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FX Daily, September 05: Continuing EM Pain Helps the Dollar, but does Little for Yen

2018-09-05

by Marc Chandler

2018-09-05

The dollar is posting gains against most of the emerging market and major currencies. The MSCI Emerging Markets Index is off 1.6% and extending the drop to a sixth consecutive session. Indonesia's bourse saw the largest decline (~3.75%) in the region. In part, it reflects concern that the rupiah's weakness (falling now nine of the past 10 sessions) will boost corporate debt servicing costs.

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Cool Video: Emerging Markets Continue to Sell-Off

2018-09-05

by Marc Chandler

2018-09-05

Marc Chandler

I had the privilege of being on the Bloomberg set with Tom Keene and Francine Lacqua earlier today. Lakshman Achuthan, co-founder of ECRI also joined us for the discussion. This 6.5 min video clip captures the essence of the discussion. The US dollar was rallying against all the major and most EM currencies.

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Chandler Sees Ongoing EM Woes While Fed Still Tightening

2018-09-04

by Marc Chandler

Sep.04 — Marc Chandler, global head of currency strategy at Brown Brothers Harriman, and Lakshman Achuthan, co-founder of Ecri, discuss the outlook for emerging markets amid the Federal Reserve’s tightening cycle. They talk with Tom Keene and Francine Lacqua on “Bloomberg Surveillance.”

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FX Daily, September 04: Dollar Gains Broadly

2018-09-04

by Marc Chandler

2018-09-04

The US dollar is rising against all the major and emerging market currencies today. The signals from the White House suggest strong pressure will be exerted on Canada to sign on to NAFTA 2.0 or risk losing part of its auto sector, which of course is primarily the production of US brands. At the same time, the US is in no mood to negotiate with Europe or China.

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FX Weekly Preview: Trade Trumps US Jobs and Rising Stress in Spain and Italy is More Important than the PMI

2018-09-03

by Marc Chandler

2018-09-03

The first week of a new month features the US jobs data. It is the most important economic report of a new month. It sets the broad tone for much of the economic data over the next several weeks, including consumption, industrial production, and construction spending. However, there are two reasons why it may not pack the punch it has in the past.

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The Big Picture 18-24-Month Outlook: Some Preliminary Projections

2018-09-01

by Marc Chandler

2018-09-01

The winding down of the North's summer provides a suitable time to consider not the near-term outlook, which many investors do on a daily basis, but to reflect on where we are heading down the road a bit. What will the next 18-24 months hold? Of course, we harbor no illusions of prescient vision and accept the hazards of the assignment and so should the reader.

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FX Daily, August 31: Month-End Adjustments and Tentative Stabilization in Emerging Markets Ease Demand for Dollars but Not Yen

2018-08-31

by Marc Chandler

2018-08-31

The dramatic price action seen yesterday among several emerging market currencies is eased today, but here at month-end, demand for risk-assets is tentative at best. The macro backdrop, including the increase in US core inflation, expectations for continued hikes by the Federal Reserve, and unambiguous signals that trade tensions will increase in the coming weeks dampens the risk appetite.

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