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.
My articlesMy offerMy siteAbout meMy books
Follow on:LinkedINTwitterSeeking AlphaAmazon
Filter archive by: Show All Show only Articles Show only Videos

FX Daily, 03/11: Dollar Recovers Against the Euro and Yen

2016-03-11

by

2016-03-11

The euro is paring the recovery that began in the middle of the ECB's press conference yesterday. The markets had reacted as one intuitively would expected to broad easing of interest rates and credit conditions.   The market reversed, and viol...

Read More »

FX Daily 03/10: Draghi Delivers, but Now What?

2016-03-10

by

2016-03-10

Draghi delivered.  He managed to get approval for everything.  Rate cuts, acceleration of purchases, including corporate bonds to the purchase program and new long-term repos were announced.   The knee-jerk reaction was favorable.  The euro fell over 1% and peripheral European bonds rallied. The deposit rate was cut 10 bp to minus 40 bp.  The …

Read More »

ECB Meeting Promises Fireworks

2016-03-10

by

2016-03-10

Fasten your seat belts.  The ride is going to get bumpy.   Economists may differ on what the ECB will do.   Investors may differ on the market response.  This uncertainty ensures a strong market reaction. The euro is off about 0.25% after recovering in the North American session yesterday.  The euro has spent this week thus … Continue...

Read More »

(5.6.1) Crowther’s Balances and Imbalances of Payments: METI Paper

Geoffrey Crowther
The former chief editor of "The Economist" Geoffrey Crowther published a great work on the development of balance of payments and current accounts over the long-term. It divides development into six phases, which are analogous to Shakespeare's seven phases of life. The seven stages are: Young debtor nation, Mature debtor nation, Debt repayment nation, Young creditor nation, Mature creditor nation, Credit disposition /Asset Liquidation nation and...

Read More »

Thoughts on the Chinese Export Puzzle

2016-03-10

by

2016-03-10

Investors are skeptical of Chinese economic data.  However, news yesterday that Chinese exports fell by a quarter in February was shocking. Many worry about the implications not just for China, but for world growth.  It comes as the IMF is signaling it will likely cut its 3.4% global growth forecast next month. There are three … Continue...

Read More »

Merkel’s Challenge

2016-03-09

by

2016-03-09

German Chancellor Merkel was right. As the Greek crisis was winding down last summer, she noted that the refugee problem would be even more difficult.  And indeed, it is. The refugee issue is challenging Merkel’s leadership in Europe.  While her trademark has been her sensitivity to swings in sentiment, she has seemed rather tone-deaf in …

Read More »

Great Graphic: Vulnerability of the Canadian Dollar

2016-03-09

by

2016-03-09

The Canadian dollar appears vulnerable.  It remains firm while the US two-year premium over Canada has risen sharply.   Like others, we do not expect the Bank of Canada to cut rates today and are looking past it. This Great Graphic was composed on Bloomberg.  It shows the 2-year spread (white line) and the US dollar …

Read More »

FX Daily, 03/09: Euro Pushes Lower Ahead of ECB

2016-03-09

by

2016-03-09

The euro has peeled off a cent from yesterday's high near $1.1060 as some short-term players move to the sidelines ahead of the ECB meeting.  Recall that after peaking near $1.1375 on February 11 when the New Year's market angst peaked, the euro fell back to the lower end of its old range near $1.0825 … Continue reading »

Read More »

A Few Things on Our Mind

2016-03-09

by

2016-03-09

A few weeks ago investors were bemoaning a new bear market for equities, and there was much ink spilled drawing parallels between now and 2008-2009.   Falling commodities, weakening growth, and prospects of Fed tightening saw the MSCI Emerging Market equity index fall 21.5% from early-November through the third week in January.  Since then it has …

Read More »

FX Daily 03/08: Greenback Lacks Momentum, While Profit-Taking Weighs on Dollar-Bloc

2016-03-08

by

2016-03-08

Recent trends which include firmer equities and oil, weaker euro and bonds, and stronger dollar-bloc currencies are in reverse today, a turn-around Tuesday of sorts. MSCI's Emerging Market equity index is snapping a seven-day advancing streak, giving back yesterday's gains and a little more.  However, Chinese shares managed to post small gains. China reported a …

Read More »

Japan: Data and Flows

2016-03-07

by

2016-03-07

Early Tuesday in Tokyo, Japan will announce revisions to Q4 GDP.  A downward revision to business spending risks shaving the initial estimate from a contraction of 1.4% at an annualized rate to 1.5%.  Regardless, the key takeaway is that the world's third-largest economy contracted in two of the four quarters last year.   Recall Initially, the …

Read More »

Great Graphic: US 2-year Premium over Germany and Japan at New Cyclical Highs

2016-03-07

by

2016-03-07

We argue that the dollar is in its third significant rally since the end of Bretton Woods in 1971.  The Reagan dollar rally was driven by the policy mix of tight monetary policy and loose fiscal policy.  The G7 effort to stop the dollar's appreciation at the Plaza Hotel in September 1985 marked the end … Continue...

Read More »

FX Daily, 03/07: Dollar and Yen Post Gains to Start the Week

2016-03-07

by

2016-03-07

The US dollar is retracing part of its pre-weekend losses against the European currencies and dollar-bloc today while falling equity prices are underpinning the yen.   Brent is nearing $40 a barrel, and WTI is pushing through $36.   Iron ore prices were limit up in China.  US 10-year Treasury yield is three bp higher to poke … Continue...

Read More »

Emerging Markets Preview: Week Ahead

2016-03-07

by

2016-03-07

(from my colleague Dr. Win Thin)Risk sentiment ended last week on a strong note, and that should carry over into this week.  The global liquidity backdrop remains positive for EM, with the ECB widely expected to add more stimulus on Thursday.  I...

Read More »

Investment Climate Improves

2016-03-06

by

2016-03-06

Sometimes the news stream drives prices, and sometimes the price action drives the narratives.  We argued that the sharp decline in equities at the start of the year was fanned the doom and gloom in the media and market commentary.  Many had been taking about a new financial crisis and parallels were drawn between the … Continue...

Read More »

Near-term Dollar Outlook is Nuanced

2016-03-06

by

2016-03-06

The US dollar fell against all the major and most of the emerging market currencies last week.   Risk appetites have been rekindled, and the yen has gone from the best performer in recent weeks to the worst over the past week.   Major equity markets advanced for the third week.  The MSCI Emerging Market equity index … Continue reading...

Read More »

Weekly Speculative Positions: Speculators Add to Short Euro and Sterling

2016-03-06

by

2016-03-06

Speculators in the currency futures made mostly small adjustments to their gross foreign currency exposure.  There were only three position adjustments of more than 5k contacts.   Since the markets turned on 11 February, the Canadian dollar has been the strongest of the major currencies, appreciating a little more than 4.5% against the US dollar.    Gross …

Read More »

Ray Dalio: Central banks will get so desperate they will give money away

2016-03-05

by

“If you look around the world, our risk is not inflation and it’s not overheating economies,” Dalio said.

Read More »

Emerging Markets: What has Changed

2016-03-04

by

2016-03-04

In the EM equity space, Brazil (+17.8%), Singapore (+7.1%), and India (+6.4%) have outperformed this week, while Qatar (+0.6%), Poland (+1.1%), and Malaysia (+1.7%) have underperformed.  To put this in better context, MSCI EM rose 6.8% this week whil...

Read More »

US Jobs Headline Better than Details

2016-03-04

by

2016-03-04

The optics of the US jobs report was better than the details, which is the exact opposite of the January employment report.  The US dollar strengthened on the news. The US created 242k jobs in February.  The consensus was for around 195k.  The January gain of 151k was revised up to 172k The household survey … Continue reading »

Read More »