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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FX Daily, July 30: Equities, Bonds, and the Dollar Start Week Softer

2018-07-30

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2018-07-30

The week's big events lie ahead. It is seen as the last important week before the dog days of summer when many participants will take holidays. The BOJ's two-day meeting concludes tomorrow. Speculation that the BOJ is looking for ways to tweak its program continues to spur a small taper-lite tantrum in Tokyo.

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FX Weekly Preview: Three Central Bank Meetings and US Jobs data

2018-07-30

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2018-07-30

The week ahead sees three major central bank meetings and the US employment report. It will likely be the most important work before a hiatus that runs through the end of August. Of course, and perhaps more than ever, market participants are well aware that the US President's communication and penchant for disruption is a bit of a wild card.

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FX Daily, July 27: Greenback Remains Firm Ahead of Q2 GDP

2018-07-27

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2018-07-27

The US dollar is trading firmly in Europe after consolidating yesterday's gains during the Asian session and ahead of the first look at Q2 GDP. Yesterday's economic reports, including durable goods orders and inventory data, saw the Atlanta Fed's GDPNow tracker lower its forecast to 3.8% from 4.5%.

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FX Daily, July 26: Equities like EU-US Trade Truce more than the Euro

2018-07-26

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2018-07-26

The markets generated a collective sigh when Juncker and Trump announced that there would be no new tariffs while new trade negotiations took place.  This was particularly important because Trump reportedly wanted to press ahead with a 25% tariff on car imports.  It was also announced that the EU would buy more soy and liquid natural gas from the US. 

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Great Graphic: US 2-year Premium Grows and Outlook for G3 Central Banks

2018-07-26

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2018-07-26

Two-year differential between the US and Japan
A cry was heard last week when President Trump expressed displeasure with the Fed's rate hikes. Some, like former Treasury Secretary Lawrence Summers, claimed that this was another step toward becoming a "banana republic." Jeffrey Sachs, another noted economist, claimed that "American democracy is probably one more war away from collapsing into tyranny."

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FX Daily, July 25: Narrow Ranges Prevail

2018-07-25

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2018-07-25

The US dollar is trapped in narrow trading ranges. That itself is news. At the end of last week ago, the US President seemed to have opened another front in his campaign to re-orient US relationships by appearing to talk the dollar down. Contrary to fears, and media headlines of a currency war, the dollar is fairly stable.

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Great Graphic: Is the Euro’s Consolidation a Base?

2018-07-25

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2018-07-25

EUR/BGN, daily
Speculators in the futures market are still net long the euro. They have not been net short since May 2017. In the spot market, the euro approached $1.15 in late-May and again in mid-June. Last week's it dipped below $1.16 for the first time in July and Trump's criticism of Fed policy saw it recover. Yesterday it reached $1.1750 before retreating. On the pullback, it held the 61.8% retracement of the recovery (~$1.1640).

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FX Daily, July 24: China Turns To Domestic Stimulus, Weighs on Yuan but Lifts Stocks

2018-07-24

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2018-07-24

Following a record injection via the medium-term lending facility yesterday, China's officials unveiled a set of policies designed to support the weakening economy that soon could face a substantial drag from US tariffs. The effort focuses on boosting domestic demand. Measures include targetted tax cuts and accelerating new infrastructure.

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Cool Video: Bloomberg Television–Dollar Outlook

2018-07-24

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2018-07-24

The issue is the dollar's outlook. The greenback had looked to be on the verge of breaking out higher before the US President expressed disapproval with the Fed rate hikes and, then the following day, aggressively accused the EU and China of manipulating their currencies.

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FX Daily, July 23: Dollar Consolidates Trump-Inspired Losses, BOJ Resolve Tested

2018-07-23

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2018-07-23

US Treasury Secretary Mnuchin told G20 finance ministers and central bankers that President Trump was not trying to interfere in the foreign exchange market or encroach upon the Federal Reserve's independence. Trump's comments and tweets last Thursday and Friday effectively capped the dollar as it was looking to break out to the upside.

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FX Weekly Preview: It was Supposed to be a Quiet Week

2018-07-23

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2018-07-23

It was supposed to be a quiet week. The economic data and event calendar was light. There were three features, and none would likely disrupt the markets much. The first two are in Europe. The eurozone flash PMI for July, the first insight into how Q3 has begun. The PMI is expected to paint a mostly steady economic activity.

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Euro, Yen, and Equities: Reviewed

2018-07-21

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2018-07-21

US equities and the dollar appear to be moving higher together.  The greenback is near its best level this year against most of the major and emerging market currencies.  The Chinese yuan is not an exception to this generalization.  At the same time, the S&P 500 is at its best levels since the downdraft February, and the NASDAQ set a new record high earlier in the week. 

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One big risk to the Canadian economy has faded

2018-07-20

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If the housing bubble was going to pop, it would have imploded by now. Adam Button from ForexLive talks about the Canadian economy and why it’s in better shape than the headlines suggest. LET’S CONNECT! Facebook ► http://facebook.com/forexlive Twitter ► https://twitter.com/ForexLive Google+ ► https://plus.google.com/+Forexlive Homepage ► http://www.forexlive.com/

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FX Daily, July 20: Dollar Consolidates after Trump Wades In

2018-07-20

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2018-07-20

The US dollar is little changed but mostly softer as the week draws to a close. The market is digesting the implications of yesterday's comments by President Trump about interest rates and foreign exchange, and without fresh economic data, are content to go into the weekend. Since Trump's comments yesterday, the euro has not been below $1.1625 nor above $1.1680.

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FX Daily, July 19: Greenback Extends Gains

2018-07-19

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2018-07-19

The US dollar is extending its recent gains against most of the world's currencies.   We continue to see the most compelling case for the macro driver being the diverging policy mixes.  There are also more immediate factors too.  The surprisingly poor UK retail sales report, for example, managed to do what the Brexit chaos and softer than expected CPI fail to do. 

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FX Daily, July 18: Greenback Extends Gains-For Now

2018-07-18

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2018-07-18

After softening in Europe yesterday, the dollar recovered in the North American session with the help of assurances by Fed Chair Powell who reaffirmed the path gradual path despite clear recognition that tariffs threaten wages and growth.  The greenback has extended those gains today and is higher against all the emerging market currencies, expected the Turkish lira, which is slightly firmer.

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Great Graphic: Fed Raising Rates, but Yields Still Negative

2018-07-18

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2018-07-18

3-month US Treasury
The yield on the 3-month US Treasury bill is pushing above 2% today for the first time since 2008. The yield had briefly dipped below zero as recently as late 2015. Although today's yield seems high, this Great Graphic shows the nominal generic three-month yield going back to 1990. Then the three-month bill yielded 8%. The peak in the last cycle (2006-2007) was a little above 5%.

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FX Daily, July 17: Dollar on Back Foot Ahead of Powell

2018-07-17

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2018-07-17

The US dollar eased in Asia session and the European morning. The greenback had appeared technically vulnerable, and the economic news stream is light. Sterling, unlike most of the other major currencies, remains within yesterday's range. Yesterday's high, a little above $1.3290, maybe reinforced a little today by the GBP245 mln $1.33 option that is expiring. Brexit concerns may also be acting as a drag.

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Great Graphic: Two-year Rate Differentials

2018-07-17

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2018-07-17

Two-year interest rate differential between the US and four countries
Given that some of the retail sales that were expected in June were actually booked in May is unlikely to lead to a large revision of expectations for Q2 US GDP, the first estimate of which is due in 11 days.  Before the data, the Atlanta Fed's GDPNow projects the world's biggest economy expanded at an annualized pace of 3.9% in Q2. 

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FX Daily, July 16: Dollar Softens a Little as Market Awaits Developments

2018-07-16

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2018-07-16

The US dollar is slightly softer against most of the major currencies but is in narrow ranges ahead of today's key events, which include US retail sales and the debate in the UK parliament over Brexit.  The yen is the main exception.  The local markets are closed for a public holiday, and the yen did initially strengthen (the dollar eased to ~JPY112.10) but surrendered those gains and consolidating its biggest loss last week in 10 months.

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