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, October 13: Dollar Edges Higher, though US Rates Soften

2016-10-13

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2016-10-13

FX Performance, October 13 2016 Movers and Shakers
The EUR/CHF remains in the range of 1.0815 to 1.0980. The SNB usually intervenes below 1.0850. I am expecting that speculators are reducing their CHF short positions. More tomorrow.

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IMF’s Reserve Data: Dollar Share Little Changed, Yen Share Jumps, Helped By Valuation

2016-10-13

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2016-10-13

The increase in the yen's share of reserves was flattered by the yen's 9% appreciation. The dollar and euro's share of reserves were stable. Chinese integration has seen the share of unallocated reserves fall. Starting with Q3 data, (available end of March 2017) will break out the yuan's share of reserves.

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High Court Hears UK Constitutional Challenge

2016-10-13

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2016-10-13

Judge and Queen
Regardless of outcome early next week, the High Court's decision will likely be appealed. The issue is the role of parliament. The greater the role, the greater the risk of a delay, but also a better chance to minimize a hard Brexit.

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FX Daily, October 12: May Concedes to Parliament, Sterling Rises after Pounding

2016-10-12

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2016-10-12

FX Performance, October 12 2016 Movers and Shakers
News that UK Prime Minister May has accepted that Parliament should vote on her plan for exiting the EU stopped sterling's headlong slide. Sterling had been pounded for roughly 8.5 cents since the start of the month including the last four sessions. The idea that parliament, where the Conservatives enjoy a slim majority, is less enthusiastic about Brexit may mean a less acrimonious divorce.

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Sterling: Has the Breaking Point been Reached?

2016-10-12

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2016-10-12

10-year Gilt yield
Sterling's decline is not longer coinciding with lower rates. Sterling's decline is boosting inflation expectations. If the inflation expectations are realized (Sept CPI next week), it will quickly erode what ever competitive gains there may have been.

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Great Graphic: Euro is Approaching Year-Long Uptrend

2016-10-11

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2016-10-11

The year-long euro uptrend comes in near $1.1035, just below the August lows. The technical are fragile, but the euro is below its lower Bollinger Band. The fundamental driver seems to be the backing up of US rates, and widening premium over Germany.

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FX Weekly Preview: The Week Ahead: It’s Not about the Data

2016-10-09

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2016-10-09

High frequency economic reports will be not be among the key drivers of the capital markets in the week ahead.The light schedule, consisting mostly of industrial production in Europe, inflation for Scandinavia, and US retail sales, will have minimal impact on rate expectations.

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Great Graphic: US-German 2-Yr Differential and the Euro

2016-10-09

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2016-10-09

The US premium over Germany is at its widest since 2006. This is despite a small reduction in odds of a hike in December. There are many forces are work, but over time, the widening differential will likely give the dollar better traction.

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Swiss Franc Net Shorts Getting Reduced

2016-10-08

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2016-10-08

Last week SNB Q3 window cleaning that led to a big CHF net short position. This week this changed again. Both longs and shorts on CHF increased, but the net short position fell.

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British Pounding

2016-10-08

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2016-10-08

Flash-Crashed. Earlier this morning the British Pound suddenly found itself on the receiving end of a 6% flash crash during Asian trading hours. Some of the losses have been recouped since then, but that will be of little consolation to anyone who may have been long the GBP overnight.

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FX Weekly Review, October 03-07: Dollar Profits on Strong ISM Index

2016-10-08

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2016-10-08

Swiss Franc Index Trade-weighted index Swiss Franc
The Franc index lost considerably in the last week, in particularly in comparison to the dollar index. Reason was the exceptionally strong U.S. ISM Non-Manufacturing Index.

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FX Daily, October 07: Sterling Stabilizes After Harrowing Drop, Now Jobs

2016-10-07

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2016-10-07

FX Performance, September 7, 2016
Sterling again steals the limelight. In early Asia, sterling inexplicably dropped nearly eight cents in minutes (to ~$1840), and on some platforms, may have traded below $1.1380. It almost immediately rebounded but has not resurfaced above $1.2480.

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US and Canada Jobs: Sill Strong Enough for a Rate Hike

2016-10-07

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2016-10-07

The US grew 156k jobs in August, missing the median estimate by about 16k. The July series was revised up by 16k. The unemployment and participate rate ticked up 0.1% to 5.0% and 62.9% respectively. Hourly earnings rose 0.2% to lift the year-over-year rate to 2.6% from 2.4%. The average work week increased to 34.4 hours from 34.3.

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Algos, Barriers, Rumors: Some Theories On What Caused The Pound Flash Crash

2016-10-07

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2016-10-07

As reported moments ago, just around 7:07pm ET, cable snapped and plunged by what some say may have been as much as 1200 pips, dropping from 1.26 to as low as 1.14 according to some brokers, before snapping back up.

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FX Daily, October 06: The Dollar is Firm in Quiet Market

2016-10-06

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2016-10-06

FX Performance, October 06 2016 Movers and Shakers
The US dollar is advancing against the major and most emerging market currencies. Activity is subdued and ranges are narrow. We share four observations about the price action. First, the euro has been unable to sustain upticks even after Germany reported a jump in industrial orders three-times more than the median estimate (1.0% vs. 0.3%).

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Canadian Dollar: A Little Less About Oil, a Little More about Rates

2016-10-06

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2016-10-06

Canadian Dollar and Oil
The Canadian dollar's link to oil has loosened. Its sensitivity to interest rates has increased. Lumber issue is coming to a head shortly.

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FX Daily, October 05: Euro Remains Firm Despite Dubious Tapering Story

2016-10-05

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2016-10-05

FX Performance, October 05 2016 Movers and Shakers
After the sudden rise to 1.0973 the EUR/CHF is falling again. The volatiliy is related to the CHF speculative postion, that suddenly was Short CHF. Traders that moved with the SNB Window Dressing for Q3 are closing their shorts again.

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Why Portugal Matters

2016-10-05

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2016-10-05

DBRS reviews its investment grade rating of Portugal on Oct 21. A cut in its rating would have far reaching implications. A cut in the outlook is more likely than a cut the rating.

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