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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Great Graphic: US and Japan Five-Year Credit Default Swaps

2017-02-21

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2017-02-21

Japan and US 5-year credit default swap (CDS)
For the first time since the financial crisis, the 5-year CDS on JGBs is dipping below the 5-year US CDS. It appears to be more a function of a decline in Japan's CDS than a rise in the US CDS. We are reluctant to read too much into the small price changes in the mostly illiquid instruments.

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FX Daily, February 20: Marking Time on Monday

2017-02-20

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2017-02-20

FX Performance February 20 2017 Movers and Shakers
US markets are closed for the Presidents' Day holiday, but it hasn't prevented its pre-weekend gains giving a bullish tone to global equities. The S&P 500 and NASDAQ recovered from early weakness to close at new record levels before the weekend. Global equity markets are following suit today.

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Weekly Speculative Position: Rising EUR shorts and falling CHF shorts point to weaker EUR/CHF

2017-02-20

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2017-02-20

Speculative Positions Commitments of traders Swiss Franc - 20.02
Speculators increased their EUR net short position against the dollar, but lowered their CHF net shorts (vs. USD). This tendency confirms our view that EUR/CHF will move towards parity.

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FX Weekly Preview: Number One Rule of the Game is Stay in the Game

2017-02-20

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2017-02-20

Light economic calendar in the week ahead, but anticipation of US tax reform may underpin dollar and equities. European politics are in flux (France, Italy, Greece) and this may see spreads widen over Germany. Russia's outlook was upgraded by Moody's before the weekend, and China has announced no coal imports this year from North Korea. Brazil is expected to cut Selic by 75 bps.

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Up and down markets, what they imply and how to best trade them

2017-02-19

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Trading up and down forex markets can be one of the more difficult kind to trade. Traders tend to want to know the story line that tells them which way to trade, but in reality there may be multiple stories that are equally as believable. That creates the potential to get traders out of sync … Continue...

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FX Weekly Review, February 13 – 18: Why still long the dollar?

2017-02-19

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2017-02-19

Swiss Franc Index Trade-weighted index Swiss Franc
Arguments for being long the dollar: FX investors because of the difference in monetary policy (e.g. higher US rates), Bond investors long US Bonds because higher bond yields, On the other side, European and Swiss equities are not so much overvalued as U.S. stocks are.

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The Consensus Narrative does not Appreciate the Resilience of the System

2017-02-18

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2017-02-18

resilience
The system of checks and balances is working. Populism-nationalism is not sweeping across the world. Even in US and UK, populist agenda was appropriated by the main-center right party. The attack on the body politics is activating the immune system in ways that the consensus narrative does not recognize.

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FX Daily, February 16: Corrective Forces Emerge, Tempering the Dollar’s Rally

2017-02-16

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2017-02-16

FX Performance, February 16 2017 Movers and Shakers
The Dollar Index had moved higher for ten consecutive sessions before reversing yesterday's gains to close lower. Yesterday and today's losses have seen the Dollar Index retrace 38.2% of the advance since February 2. That retracement objective was near 100.80. The 50% retracement is found near 100.50 and the 61.8% retracement by 100.20.

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FX Daily, February 15: Yellen Helps the Dollar Extend Streak

2017-02-15

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2017-02-15

The Dollar Index's ten-day rally was at risk yesterday, but Yellen's reiteration of the commitment to continue to lift rates gradually helped extend the streak to eleven sessions.This surpassed the streak around the election (November 7-November 18). With today's gains, it may draw closer to what appears to be the long streak, 14 sessions between April 30, 2012 and May 17.

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Lies, Damn Lies, and Taxes

2017-02-15

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2017-02-15

taxes
President Trump hinted at the end of last week that the Administration's tax proposals would be aired in the next two or three weeks. This seems to be a signal of its inclusion in his address to both houses of Congress on February 28. This is not quite a State of the Union speech, but similar and precisely what Obama did in February 2009.

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Greece and the Return of the Repressed

2017-02-15

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2017-02-15

Don't expect a deal between Greece and its official creditors until late spring or early summer. Grexit is still not a particularly likely scenario. It was the European governments not Greece which put other taxpayers' skin in the game.

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FX Daily, February 14: Markets Showing Little Love on Valentines

2017-02-14

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2017-02-14

EUR/CHF - Euro Swiss Franc, February 14
Corrective pressures are gripping the major capital markets today.The Dollar Index's nine-day advancing streak is being threatened by the position adjustment ahead of Yellen's testimony later today. Despite record high closes in the main US equity markets yesterday, Asia could not follow suit. It tried to initially, and recorded new highs since July 2015, but sellers emerged and the MSCI Asia Pacific Index closed marginally lower on the lows of the...

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What is Good for the Dollar is Bad for Gold

2017-02-14

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2017-02-14

The Dollar Index is powering ahead, moving higher for the eighth consecutive session. Over the past 100 sessions, gold and the Dollar Index move in the opposite direction more than 90% of the time. The technical condition of gold is deteriorating.

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FX Daily, February 13: Quiet Start of Busy Week

2017-02-13

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2017-02-13

With inflation and growth reports due out this week and Federal Reserve Chair Yellen's testimony before Congress, it promises to be a busy week for investors. However, the week has begun off fairly quietly, while the recent rally in equities continues.

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New Book: Political Economy of Tomorrow

2017-02-13

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2017-02-13

My new book,Political Economy of Tomorrowhas just been published, and it is available onAmazon. The book is not so much of a sequel to my first book,Making Sense of the Dollar. There is very little about the foreign exchange market in the new book. However, it is not wholly new cloth either.

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Weekly Speculative Position: Speculators are long all currencies of the dollar bloc

2017-02-13

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2017-02-13

Speculators are net short CHF with 14.6K contracts against USD. This is less than the 17K last week.

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FX Weekly Preview: Yellen’s Path Cleared by Trump’s Moderation

2017-02-13

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2017-02-13

Trump has moderated in several areas, he is being checked in others, and less impactful in others. This will underscore the focus on Yellen's testimony this week. At same time, many will be reluctant to short the dollar ahead of the tax reform plans that may be unveiled in Trump's upcoming speech to Congress.

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FX Weekly Review, February 06 – 11: Further Dollar and CHF Strength versus Euro weakness ahead?

2017-02-12

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2017-02-12

Swiss Franc Index Trade-weighted index Swiss Franc
We are expecting a further strengthening of both dollar and Swiss Franc against the euro over the next 3 months. Reason is the rising Swiss demand the continued dovishness of the ECB, despite rising inflation.

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Fake News. Fake Breaks. What do they have in common? How to deal with them?

2017-02-12

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When I hear the word “fake:, I cannot help but think of “fake news”. Fake news has become so pervasive, I combat it by waiting for the dust to settle, fact checking and making logical judgments. In trading there are a number of times when you will get a fake break. Coincidentally, I deal with …

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