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, August 04: The BOE Owns Today, but Tomorrow is a Different Story

2016-08-05

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2016-08-05

The Swiss Franc appreciated today against the euro. Given that the Bank of England started monetary easing, this slight appreciation is unexpectedly weak - reason was probably intervention. The SNB intervention level should be around 1 billion francs. Numbers revealed in next week's sight deposits.

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Carney Gets Ahead of Market Expectations; Sterling Slumps, Gilts Soar

2016-08-04

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2016-08-04

BOE cuts rates and expands QE. Door is open to more easing. Sterling stabilizes after selling off 2 cents.

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FX Daily, August 03: Consolidation Featured

2016-08-03

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2016-08-03

The US dollar is consolidating yesterday's losses. The greenback's upticks have thus far been shallow and unimpressive, except perhaps against the New Zealand dollar, which is off 0.8% ahead of next week's RBNZ meeting. Softer than expected labor cost increase reinforces the conviction that a 25 bp rate cut will be delivered next week.

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How to trade the August BOE interest rate decision

2016-08-03

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On August 4th, the BOE will announce there interest rate decision. The expectations is for a cut of 25 basis points to 0.25%. What do they say in the statement? Do they do more QE? Do they surprise and say they don’t have enough information yet? The pair has rallied over the last few days … Continue reading...

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Gorilla or Elephant, Chinese Surplus Capacity is the Challenge

2016-08-03

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2016-08-03

China's excess capacity is one of the most formidable challenges the China and the world face. Unexpectedly, China's steel industry reported a profit in H1 16. M&A for industry rationalization and foreign markets seem to be the main ways China is trying to address the excess capacity.

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FX Daily, August 02: Greenback Slides Despite RBA Rate Cut and 7-year Low in UK Construction PMI

2016-08-03

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2016-08-03

The US dollar is offered against the major currencies, but appreciating against many emerging market currencies, include the South African rand and Turkish lira. Oil prices are trying to stabilize with Brent near $42 and WTI near $40, but the recent losses continue to weigh on the Malaysian ringgit and the Mexican peso.

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Great Graphic: The Decline in Durable Goods Prices

2016-08-02

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2016-08-02

This economic graph is maybe the most important in the last decade.  Service prices are rising, while goods prices have steadily fallen. The main reason for us is the possibility to outsource big parts of the durables supply-chain to China and East Asia. This is where productivity growth happens. Prices of services, however, are ever increasing. …

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Abe’s Fiscal Policy: More of the Same

2016-08-02

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2016-08-02

Japan's fiscal stimulus if smaller than it appear and is unlikely to boost the economy as much as officials may think. The problem in Japan is not that interest rates are too high or that pubic investment is too weak. The risk is that the yen strengthens further, and we suggest the dollar may fall toward JPY94.60.

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FX Daily, August 01: Dog Days of August Begin

2016-08-01

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2016-08-01

The US dollar is trading with a small upside bias in narrow trading ranges. The main news has consisted of PMI reports, while investors continue to digest last week's developments. In particular the BOJ's underwhelming response to poor economic data and a missed opportunity to reinforce the fiscal stimulus, and the dismal US GDP.

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Great Graphic: Real Broad Trade-Weighted Dollar

2016-08-01

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2016-08-01

The real broad trade-weighted dollar index rose in July for the third month. It peaked in January above trendline drawn through the Reagan and Clinton dollar rallies. Expect the trendline to be violated again before the end of the year.

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No Big Thoughts, but Several Smaller Observations

2016-08-01

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2016-08-01

Notable that as the CRB Index moves lower, MSCI emerging market equities have done well. European banks are retreating after the stress test results. Tokyo elected its first women governor as this seem to be in part a sign of protest against Abe.

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FX Weekly Preview: After this Week, Does August Matter?

2016-07-31

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2016-07-31

RBA meeting is a close call. BOE meeting consensus on rate cut, maybe new QE and lending-for-funding. More details of Japan's fiscal policy. U.S. jobs data. After this week, and outside of RBNZ rate cut, August may be uneventful.

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FX Weekly Review, July 25 – July 29: Dollar Hobbled; Technicals Warn of More Losses

2016-07-31

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2016-07-31

The US dollar advance was stopped in its tracks by the disappointingly weak Q2 GDP figures. The 1.2% annualized growth rate was roughly half of the pace expected. The FOMC statement earlier in the week did not leave the impression that a September hike was likely, and with the poor growth numbers, the odds were downgraded further.

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Weekly Speculative Postions: Speculators Sell European Currency Futures

2016-07-30

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2016-07-30

The euro bears added another 10.3k contracts to their gross short position, which brought it to 221.8k contracts., This is this is the largest grossshort position since early January.

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Emerging Markets: What has Changed

2016-07-29

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2016-07-29

Indonesian President Widodo shuffled his cabinet Egypt has requested a three-year $12 bln loan from the IMF Johannesburg Stock Exchange data on investment flows into South Africa was wrong Fitch downgraded South Africa’s local currency rating by one notch to BBB- with a stable outlook Fitch cut its outlook on Colombia's BBB rating from stable to negative

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Great Graphic: Relative Performance of Bank Stocks–US, Europe, and Japan

2016-07-29

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2016-07-29

MSCI US Bank Index, MSCI European Bank Index and the Japan Topix Bank Index compared. Divergence in the health of the financial sector.

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FX Daily, July 29: Kuroda Hesitates, Yen Advances, Focus Turns to Europe and North America

2016-07-29

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2016-07-29

Main events: Far Lower GDP Growth due to higher inflation and bigger trade deficit. Yen and Swissie advance and weaker dollar. Swiss economy remains on track based on the KOF economic barometer.

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FX Daily, July 28: Dollar Pulls Back Further Post-FOMC

2016-07-28

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2016-07-28

After reversing lower yesterday after the FOMC statement, the US dollar has continued to move lower against the major currencies, save sterling. While the market is not fully confident of a rate cut by the Reserve Bank of Australia, indicative pricing in the derivative markets suggest a UK rate cut has been fully discounted (and a new asset purchase plan may also be announced).

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Fasten Your Seat Belts: Tomorrow Promises to be Tumultuous

2016-07-28

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2016-07-28

Japan reports on labor, consumption, inflation and industrial output before the BOJ meeting. ECB reports inflation and Q2 GDP and the results of the stress test on banks. US reports first look at Q2 GDP.

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The BOJ is about to go big

2016-07-28

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Preview of the Bank of Japan decision for July 28, 2016. This is a highly-anticipated central bank announcement and Adam Button from ForexLive breaks down what to watch out for and how to be ready for the BOJ.

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