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.

What’s really roiling markets in 2016

Adam Button from ForexLive talks about what’s really causing the turmoil in markets this year and how the lack of understanding at central banks and among market participants is presenting opportunities.

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

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?

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

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

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

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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Adam Button on how to trade in a volatile market

Adam Button from ForexLive speaks with Dale Pinkert at FXStreet about how to trade when markets become unhinged and volatile. He talks about selling the break of 115.50 in USDJPY and why technicals outweigh fundamentals at a time like this.

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Stealing Steel: A Microcosm of Macro-Forces

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

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

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

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

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

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

[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

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

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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Easing of US Recession Fears will Likely Lend Dollar Support

With many equity markets having fallen 20% from their peaks, meeting a common definition of a bear market, investors, analysts, and journalists understandably seek a narrative that gives it meaning.  At the very start of the year, the culprit singled out was drop in Chinese shares and the yuan.  However, the yuan has stabilized as the …

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Weekly Speculative Positions: Big Position Adjustment for Euro, Smaller for Yen

The latest Commitment of Traders report covers the week ending February 2 that included the FOMC meeting and the BOJ's surprise cut.  There was also speculation of a potential deal between Russia and OPEC to cut output.  Speculative position adjustment in the futures market was more limited than one might have expected. Speculators cut 10.5k gross …

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Dollar Beaten Back but Cynicism is Unwarranted

From a technical perspective, the dollar's pullback has been largely corrective in nature. Leaving aside the yen, against the other major currencies, the dollar is correcting a run-up that began in mid-October.  The chief exception is sterling, which...

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Brief Thoughts on Chinese Capital Flows Ahead of the Year of the Monkey

Chinese markets will be closed next week for the Lunar New Year celebration.  However, over the weekend, China will report its January reserve figures.  The market suspects that the PBOC burnt through another $120 bln of reserves. China's reserves stood at $3.81 trillion in January 2015.  They are expected to stand near $3.21 trillion as …

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