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.

FX Daily, April 6: Glimmer of Hope Lifts Markets

Overview:  Reports suggesting that some of the hot spots for the virus contagion appear to be leveling off, and this is helping underpin risk appetites today.  The curve seems to be flattening in Italy, Spain, and France.  In the US, there are some early signs of leveling off in NY, and now, the number of states with infection rates above 20% is less than 10 from over 40 last week.

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FX Daily, April 03: Oil Firm, Greenback Extends Gains

Overview:  Global equities are finishing the week on a soggy tone despite the 2%+ gains seen in the US yesterday. The extension of shutdowns, rising contagion and fatality rate, and imploding economies weigh on prices. In Asia, Korea and Indonesia bucked the trend to most minor gains.  Europe is giving back yesterday's gains, and the Dow Jones Stoxx 600 is nearly flat on the week.

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April Monthly

In March,  the G10 and many emerging market countries, governments, and central banks unveiled large emergency measures.  The motivation is to blunt the economic impact of the novel coronavirus that has seen more than two billion people around the world have their movement restricted. Large swathes of the world's economy have shut down. 

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FX Daily, April 2: Optimism on Oil Deal Steadies Risk Appetites…for the Moment

Overview: After US stocks dropped more than 4% yesterday, investor sentiment has improved, apparently sparked by ideas that the pain will force oil producers to find a way to reduce supply. Oil prices have surged, with the May WTI contract rallying around 7%. Asia Pacific equities were mostly higher, with Japan and Australia the notable exceptions.

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FX Daily, April 1: Hemorrhaging Resumes

Overview: There is no reprieve for investors. Equities are falling sharply. Nearly all the Asia Pacific markets slumped but Australia. Chinese markets fared better than most, but the Nikkei was off 4.5%, and India was down almost as much in late dealings. Europe's Dow Jones Stoxx 600 is off more than 3% near midday, led by a sell-off in banks that are suspending dividends and share buybacks.

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FX Daily, March 31: March Ends like a Lion, No Lamb in Sight

Overview: The coronavirus plague upended the world in March. Equities are finishing the month on a firm note. Strong gains in the US yesterday and an unexpectedly strong Chinese PMI (yes, to be taken with the proverbial grain of salt) helped lift most Asia Pacific and European markets today. Japan and Australia are exceptions to the generalization.

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FX Daily, March 30: Monday Blues

Overview: Risk appetites remain in check as the spread of the coronavirus is leading to more and longer shutdowns.  Asia Pacific equities fell with Australia, the notable exception.  Its benchmark rallied a record 7%, encouraged by additional stimulus measures.

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FX Daily, March 27: Nervousness Ahead of the Weekend

Overview: Officials appear to have persuaded investors that they have put into place measures that will cushion the economic blow and ensure that the financial system continues to function. After seemingly goading officials into action, investors are choosing not to resist. Moreover, there is a recognition that many programs are scalable.

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FX Daily, March 26: Rumor Bought, Fact Sold

Overview: Speculation that the US Senate would pass the large stimulus bill worth around 10% of US GDP is thought to have fueled a bounce in equities in recent days. The bill was approved and will now go to the House, where a vote is expected tomorrow. If the rumor was bought, the fact has been sold. The first to crack was the Asia Pacific region.

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SNB sets up refinancing facility and deactivates counter-cyclical buffer

There is no upper limit for virus fund. Drawdowns can be made at any time. Says interest rates to correspond to the SNB policy rate (-0.50%). Will be available from tomorrow.

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FX Daily, March 25: Relief, but…

Overview: Global equities are marching higher. While the Dow Jones Industrials posted its biggest advance since 1933, the US is lagging behind other leading benchmarks. The MSCI Asia Pacific advanced, led by Japan's Nikkei's 8% gain. It was third consecutive gain, during which time the Nikkei has rallied 17%. Europe's Dow Jones Stoxx 600 is up about 3.5% after bouncing 8.4% yesterday.

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FX Daily, March 24: Relief Bounce On Tuesday, but Turn Around not Secure

Overview: Bottom-picking, after officials step up efforts and some optimism creeps in, is helping lift spirits today. As one looks at the equity bounces, it is important to remember that among the biggest rallies take place in bear markets. Nearly all the bourses in Asia-Pacific rallied, led by a 7% advance by Japan's Nikkei and an 8%+ surge in South Korea's Kospi. Most other markets were up 2%-5%.

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Conference Call Replay

Here is the link for the replay of the conference call I hosted earlier today.  I shared two ways in which this crisis is different from what we have seen in the last generation.  Unlike the Great Financial Crisis, the tech bubble, and the S&L Crisis, the current crisis did not begin in the financial sector, but the real economy.   

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FX Daily, March 23: Greenback Demand Not Satisfied by Swap Lines

Overview: In HG Wells' "War of the Worlds," the common cold repelled a Martian invasion. Now, a novel coronavirus is disrupting everything and everywhere. Global equities continue to get hammered, though the apparent relative resilience of Japan may have spurred some buying of Japanese equities.

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Can central banks keep plugging leaks in the dam?

Adam Button from ForexLive talks about the coronavirus crisis in markets and how it's affected the Canadian dollar. "What’s happened is a US dollar funding crunch. The world runs on US dollars and there have been no other safe havens so everyone has been piling into the dollar. The relative stability of the loonie – as tough as that is to believe – is a good sign for the Canadian financial system. We’re not seeing the level of panic moves...

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Can central banks keep plugging leaks in the dam?

Adam Button from ForexLive talks about the coronavirus crisis in markets and how it’s affected the Canadian dollar. “What’s happened is a US dollar funding crunch. The world runs on US dollars and there have been no other safe havens so everyone has been piling into the dollar. The relative stability of the loonie – …

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FX Daily, March 19: ECB’s Bazooka Support Bonds but not the Euro

Overview: It is not just that the dollar soared while stocks and bonds continued to plunge. The dollar's strength is, in effect, a powerful short-covering rally. It was used to fund a great part of the global circuit of capital. The circuit of capital is in reverse now, and the funding currency is being bought back. The dollar's strength is a function of the sell-off of other assets.

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FX Daily, March 18: Bonds Join Equities in the Carnage

Overview: A new phase of the market turmoil is at hand. Bonds are no longer proving to be the safe haven for investors fleeing stocks. The tremendous fiscal and monetary efforts, with more likely to come, have sparked a dramatic rise in yields. Meanwhile, equities are getting crushed again.

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FX Daily, March 17: Even Turn Around Tuesday is Flat

Overview:  While the markets are not as disorderly as they have been, the tone is fragile, and the animal spirits have been crushed.  Australian stocks fell more than 10% last week and dropped another 9.7% yesterday before rebounding by almost 6% today to be one of the few Asia Pacific equity markets to rise.  The Nikkei eked out a small gain, but the broader Topix rose 2.6%.

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