Category Archive: 4) FX Trends
What the Bank of Canada decision means for the Canadian dollar
Adam Button, chief currency analyst at ForexLive, reacts to the Bank of Canada decision on October 25, 2017. He spoke to BNN about the outlook for interest rates and the Canadian dollar in the moments after the headlines crossed. Adam says the BOC whipsawed the market and that the chances of another hike before year-end …
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FX Daily, October 25: Sterling and Aussie Interrupt the Waiting Game
Most participants seemed comfortable marking time ahead of tomorrow's ECB meeting, and an announcement President Trump's nominations to the Federal Reserve. However, softer than expected Australian Q3 CPI and a stronger than expected UK Q3 GDP injected fresh incentives. Australia reported headline CPI rose 0.6% in Q3.
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FX Daily, October 24: Dollar Treads Water as 10-year Yield Knocks on 2.40percent
The US dollar is narrowly mixed in mostly uneventful turnover in the foreign exchange market. There is a palpable sense of anticipation. Anticipation for the ECB meeting on Thursday, which is expected to see a six or nine-month extension of asset purchases at a pace half of the current 60 bln a month. Anticipation of the new Fed Chair, which President Trump says will be announced: "very, very soon."
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Canada: Monetary and Fiscal Updates This Week
Divergence between US and Canada's two-year rates is key for USD-CAD exchange rate. Canada's 2 hikes in Q3 were not part of a sustained tightening sequence. Policy mix considerations also favor the greenback if US policy becomes more stimulative.
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FX Daily, October 23: US Dollar Starts New Week on Firm Note
The US dollar is enjoying modest gains against most currencies as prospects of both tax reform and additional monetary tightening by the Fed carry over from last week. The strong showing of the Liberal Democrats in Japan, where the governing coalition has maintained its super-majority is seen as confirmation of continuity. This helped lift Japanese shares and weighed on the yen. The Nikkei advanced 1.1%, the most in a month, and extends the...
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FX Weekly Preview: Three on a Match: US Tax Reform, ECB and Bank of Canada Meetings
Busy week of economic data and central bank meetings, and reaction to Spanish developments and Japan and Czech elections. Focus below is on the Bank of Canada and ECB meetings and tax reform in the US. The biggest challenge to tax reform is unlikely on the committee level but on the floor votes, especially in the Senate, in a similar way the stymied health care reform. US and German 2-year rates are diverging the most since the late 1990s and...
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Abe’s Third Arrow
Abe's political gamble appears likely to pay off. The third arrow of structural reforms continues. The FSA is continuing to push for shareholder value. Foreign investors have gone on a three-week buying spree that appears to be the largest in years, and the Nikkei is leading G7 bourses higher this month.
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FX Daily, October 20:Tax Prospects Lift Rates and Dollar Ahead of Weekend
The US Senate approved a budget resolution that is a necessary step toward using a parliamentary maneuver that prevents the Democrats to block tax reform by filibuster. This has helped spur dollar gains against all the major currencies and nearly all the emerging market currencies.
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FX Daily, October 19: Kiwi Drop and Sterling Losses Punctuate Subdued FX Market
The 30th anniversary of the 1987 equity market crash the major US benchmarks at record highs. The drop in the market was at least partly a function of the lack of capacity, sufficient instruments, and regulatory regime. Each of these factors has been addressed to some extent. Circuit breakers have been introduced, and have evolved. The financial capacity has grown immensely.
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Great Graphic: The Euro’s Complicated Top
Euro looks like it is carving out a top. The importance also lies in identifying levels that the bearish view may be wrong. Widening rate differentials, a likely later peak in divergence than previously anticipated, and one-sided market positioning lend support to the bearish view.
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Central Bank Chiefs and Currencies
Market opinion on the next Fed chief is very fluid. BOE Governor Carney sticks to view, but short-sterling curve flattens. New Bank of Italy Governor sought. A second term for Kuroda may be more likely after this weekend election.
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NAFTA Worries Take Toll, Yellen’s Best Guess Supports Greenback
Risk that NAFTA collapses weighs on CAD and MXN. Yen is slightly firmer despite US yields edging higher and weekend polls suggesting LDP could nearly secure a 2/3 majority of its own. The sterling is consolidating after sharp moves at the end of last week.
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FX Weekly Preview: The Markets and the Long Shadow of Politics
Rise in paper asset prices, including so-called cyber currencies, reflects the abundance of capital. Have we forgotten what Minski taught again? Political considerations may dominate ahead of the ECB meeting later this month.
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Political Focus Shifting in Europe
There was a huge sigh of relief among investors when it became clear that the populist-nationalist wave that ostensibly led to Brexit and Trump's election was not going to sweep through Europe. The euro gapped higher on April 24, and it has not looked back. We have suggested that with the outcome of the German election, European politics shift from tailwind to headwind.
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Brief Thoughts on the Euro
Euro peaked a month ago. The reversal before the weekend marks the end of the leg lower. ECB meeting is next big focus. ECB may focus on gross rather than net purchases.
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Don’t dig yourself in a hole in your life or in your trading.
I recently did some hiking with some friends in the Grand Canyon. The experience reminded me of the parallel between life and trading. More specifically how we can dig ourselves in some pretty deep holes. The good news is we can avoid digging those holes that get us into so much trouble.
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FX Daily, October 13: Sterling Extends Yesterday’s Recovery; US Data Awaited
The EU's leading negotiator whipsawed sterling yesterday. The net effect was to ease fears that the UK would leave the EU without the agreement Initial concerns that the negotiations had stalled sent sterling to nearly $1.3120. The willingness to discuss a two-year transition period spurred sterling's recovery. After trading on both sides of Wednesdays, it closed on its highs was a bullish technical signal and there has been follow-through buying...
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Dollar Dropped like Hot Potato After Core CPI Disappointed
The dollar was bid before the US economic data. The market responded quickly upon seeing the disappointing 0.1% rise in core CPI. Given the base effect, the 0.1% increase kept the year-over-year rate at 1.7% for the fourth consecutive month. The dollar reversed lower.
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The one trading mantra I can’t stand
I love trading mantras, slogans and sayings. There is a bit of folksy, timeless wisdom for almost every forex trade but there is one trading mantra that drives me insane. It’s the kind of thing a forex trader says right before making a big mistake. It’s also the sign of a weakened mindset. LET’S CONNECT! … Continue...
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