Category Archive: 4) FX Trends
Plan the trade: A technical look at the EURUSD for the trading week ahead
Non- trending transitions to trending The EURUSD traded in a 117 pip range in the last week. That represents the most narrow trading week going back to December 21, 2014. When ranges are narrow, the market is unsure of the direction it wants to go. That will logjam is eventually broken – one way or …
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The Grand Strategy: Fixed Spheres of Influence or Variable Shares?
The US has a direct investment strategy for historical reasons. It competes against export-oriented strategies. The FDI strategy does make low-skilled domestic labor compete with low-skilled foreign worker, but skilled workers abroad complement the skilled domestic worker.
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FX Daily, January 27: Week Ending on Mixed Note as Year of Rooster Begins
The Lunar New Year celebration thinned participation in Asia, where several centers are closed. Although the MSCI Asia Pacific Index slipped slightly, it rose 1.5% on the week, the fourth weekly gain in the past five weeks. The Nikkei advanced 0.35%, the third rise in a row. The 1.75% gain for the week snaps a two-week decline.
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US GDP Misses, but Final Domestic Sales Accelerate
Net exports was a large drag on growth. Inventories flattered growth. Underlying signal, final domestic demand, increased 2.5% after 2.1% in Q3.
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Are Interest Rates No Longer Driving the Dollar?
Many are concerned that the dollar and interest rates have become decoupled. We are not convinced. Correlations, not to be eyeballed, are still robust.
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FX Daily, January 26: EUR/CHF collapses to 1.670
The US dollar is mostly firmer against the major currencies but is confined to narrow ranges, and well-worn ranges at that, but the focus has shifted to the strong advance in equities. Yesterday, the Dow Jones Industrials finally rose through the psychologically-important 20k level, and the S&P 500 gapped higher to new record levels.
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Cool Video: Bloomberg’s Daybreak–Trump and Rates
On what Trump's first working day as POTUS, I had the privilege to be on Bloomberg's Daybreak to talk about the wagers on US interest rates in the futures market. In the most recent CFTC reporting week, which ended on January 17, speculators in the 10-year note futures market reduced the record net short position. It is only the second week reduction since the end of November.
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Forex Technical Analysis: 5 currencies in 5 minutes
Some key levels in the major currency pairs are broken today There were some key levels broken (or held) in some of the major currencies pairs in trading today. Knowing what they are and why they are important is helpful for your trading as they help define bullish or bearish bias as well as risk. … Continue reading...
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FX Daily, January 25: Dollar is on the Defensive Despite Firmer Rates
The US dollar is softer against nearly all the major currencies. Participants appear to be growing increasingly frustrated with emerging priorities of the new US Administration. They want to hear more details and discussion of the tax reform, deregulation, and infrastructure plans.
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Great Graphic: How a Strong Dollar Weighs on Net Exports
Investors appreciate that a strong dollar can impact US growth through the net export component of GDP. The dollar's appreciation can push up the price of exports and lower the cost of imports. The St. Louis Fed took a look at how the strong dollar from 2014 to the beginning of 2016 impacted the net export function of GDP.
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Forex trading video: The alternative facts in your forex trading
…and how to sift through them The phrase “alternative facts” are the latest and greatest buzz words thanks to Pres. Trumps counselor, Kellyanne Conway. The phrase is misleading in certain situations. How can there be alternative facts with regard to crowd size or something that is fairly obvious from a visual observation (or even factual …
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FX Daily, January 24: UK Supreme Court Requires May to Submit Bill on Brexit to Parliament
As widely expected, the UK Supreme Court ruled that Parliament approval is needed to trigger Article 50 start the divorce proceedings with the EU. The Court decided by an 8-3 majority that a bill needs to be submitted to both chambers, but that the approval of the regional assemblies (e.g. Scotland, Northern Ireland) is not necessary.
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The US Dollar Is Now Overvalued Against Almost Every Currency In The World
In September 1986, The Economist weekly newspaper published its first-ever “Big Mac Index”. It was a light-hearted way for the paper to gauge whether foreign currencies are over- or under-valued by comparing the prices of Big Macs around the world. In theory, the price of a Big Mac in Rio de Janeiro should be the same as a Big Mac in Cairo or Toronto.
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UK Supreme Court Decision: Anti-Climactic?
Sterling retreats on court ruling but key supports hold and it recoups initial loss. The US dollar is recovering with the help of firming US yields. Investors are still anxious for details of new US government's tax, deregulation, and infrastructure investment plans.
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FX Daily, January 23: Dollar’s Pre-Weekend Retreat Extended in Asia Before Stabilizing in Europe
The US dollar had a poor close in the North American session before the weekend as investors appear increasing anxious about the new US Administration's economic policies and priorities.With no fresh details emerging over the weekend, some stale dollar longs exited. The dollar stabilized in the European morning, but broader risk appetites were not rekindled, and the Dow Jones Stoxx 600, led by financials, was sold to its lowest level this month.
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Weekly Speculative Position: CHF getting stronger, net shorts stable
Speculators are net short CHF with 13.7K contracts against USD. This is nearly unchanged. On the other side, the USD/CHF is falling.
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FX Weekly Preview: The Challenging Week Ahead
Investors will finally be able to focus on what the new US President does rather than what he says. The UK Supreme Court decision is expected, but it may not be the driver than it may have previously seemed likely. The dollar-yen rate does not appear to be driven by domestic variable as much as US yields and equities. Prices not real sector data may be the key for the euro.
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FX Weekly Review, January 16 – 21: Dollar Still Appears to Carving out a Bottom
The US dollar turned in a mixed performance over the past week. The technical indicators continue to support our expectation that after correcting since mid-December, following the Fed's hike, the dollar is basing.
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Cool Video: Bloomberg’s Daybreak – Dollar Correction
I was on Bloomberg's Daybreak: Americas today. The issue at hand was about the dollar's losses since the start of the year. I suggest that the correction actually began a day or so after the Federal Reserve hiked rates in mid-December. I noted that the correction was not just about the dollar but also interest rates.
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