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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Measuring Inflation

2015-12-21

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2015-12-21

(co-authored with my colleague Sam Waters) Inflation or indeed its opposite has driven monetary policy among the largest high income economies. With nominal rates thought to be bounded by zero, the US, UK, and Japan engaged in operations to inc...

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Four Drivers of the Investment Climate in 2016

2015-12-20

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2015-12-20

The broad interpretative framework we developed since late 2014, one that centers the de-synchronization of the major economies, will retain its usefulness into the New Year and beyond.  The first phase of divergence was characterized by the Fe...

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Weekly Speculative Positions: Significant Position Adjustment Ahead of FOMC Meeting

2015-12-19

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2015-12-19

Speculative position adjustments in the currency futures were minimal in the immediate aftermath of the ECB's December 3 meeting and US employment data the following day. However, activity dramatically increased in the days ahead of the FOMC meeting on December 16.   In most Commitment of Traders reports the gross position adjustment of 10k or more …

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Near-Term Dollar Outlook: May the Force be With You

2015-12-19

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2015-12-19

The dollar rose against all the major currencies over the past week.  The divergence meme we have emphasized has continued to unfold.  The ECB eased policy at the start of the month.  Less than 48 hours after the Fed hiked rates, the BOJ tweaked its asset purchase program to sustain it.  Holiday-thin markets make for more … Continue reading...

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Emerging Markets: What has Changed

2015-12-18

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2015-12-18

In the EM equity space, Poland (+5.6%), Colombia (+5.6%), and China (+4.4%) have outperformed over the last week, while Brazil (-2.1%), Qatar (-0.8%), and Russia (+0.1%) have underperformed.  To put this in better context, MSCI EM rose 2.3% over the ...

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Great Graphic: Visualizing the Refugee/Asylum Seekers in Europe

2015-12-18

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2015-12-18

The Greek crisis that dominated the European discussion in the first half of the year was barely ending when attention turned to the refugee problem.   While it often seemed that all of Europe was united against Greece, the refugee problem is si...

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BOJ Surprises, but Substance Minor

2015-12-18

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2015-12-18

The Bank of Japan was the fourth major central bank to meet this week.  Sweden and Norway kept policy unchanged.  The Fed hiked.  The BOJ was not expected to do anything.  Governor Kuroda surprised the market with largely operational tweaks to what Japan calls Qualitative and Quantitative Easing.  Initially, and perhaps with the help of …

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Odds Improving for IMF Governance Reforms

2015-12-17

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2015-12-17

For five years, governance reforms at the IMF have been stymied by the refusal of the US Congress to accept a new and higher quota (money) to the IMF.  This has frustrated efforts to integrate the developing countries, especially the large ones, like China, better into the global economy.  It may have also helped spur …

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The World Survives Fed Hike

2015-12-17

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2015-12-17

Asia extended the US dollar's post-Fed gains while Europe has seemed content to consolidate the move, perhaps waiting for US leadership.  Much of the commentary about the Fed's action have noted that the FOMC statement used the word "gradual" no...

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We have Lift-Off

2015-12-17

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2015-12-17

The Federal Reserve delivered a hawkish hike.  The dot plot reflects expectations for four rate hikes in 2016.   There were no dissents.  This is important. It underscores the decisiveness of the decision.  There have been three voting Fed mem...

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Downgrade Points to Continued Brazil Underperformance

2015-12-16

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2015-12-16

INVESTMENT OUTLOOK

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Great Graphic: US Bill Yields and Fed Hikes

2015-12-16

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2015-12-16

There are many investors and observers who do not think the Fed ought to raise interest rates today.   The Fed's targeted inflation measure, the core PCE deflator, stood at 1.3%, well below the 2% target.   They see the fresh sell-off in oil prices and are more concerned disinflation than inflation.  Over the past week or so, …

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Fe Fi Fo Fed

2015-12-16

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2015-12-16

The much awaited Fed meeting is here.  A 25 bp increase in the Fed funds range to 25-50 bp is widely expected.  The near certainty of this contrasts to the high uncertainty of the immediate impact stocks, bonds, and the dollar.   There are five components of the Fed's decision that will command attention.  First, is … Continue reading...

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Great Graphic: US Equities in December

2015-12-15

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2015-12-15

This Great Graphic shows how different measures of US equities perform in December by day for the past 20 years.  I got it as a tweet from Urban Carmel, who got it from the Stock Almanac.   Today is eleventh session of the month.  Equities typically rallied starting now in December.   Since 1994, the S&P … Continue reading...

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While Waiting for the Fed, Don’t Forget Fiscal Policy

2015-12-15

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2015-12-15

The focus of most investors is the rate decision by the Federal Reserve tomorrow.  Since the central bank completed its asset purchase program at the end of last year, a rate hike has been understood as a matter of time.   Expectations for a Ju...

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Corrective Forces Dominate

2015-12-15

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2015-12-15

The euro made marginal news highs near $1.1060 while sterling and the yen have been confined to yesterday's ranges.  European equities are bouncing off ten-week lows.   The dollar-bloc is firm; the upbeat RBA meetings provided only a short-lived...

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Great Graphic: Large Yuan Devalution in 2016?

2015-12-14

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2015-12-14

Following the mini-devaluation in August, the yuan appreciated in September and October.  It began depreciating again in November and this has continued through the first half of December.   The dollar finished the local session at new multi-year highs against the yuan.  Many observers see in the pre-weekend announcement about monitoring the yuan against a basket …

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Emerging Markets: Week Ahead Preview

2015-12-14

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2015-12-14

Indonesia reports November trade Tuesday.  Exports are expected at -11.5% y/y, while imports are expected at -21.3% y/y.   Bank Indonesia then meets Thursday and is expected to keep rates steady at 7.5%.  We believe an easing bias is in place, given ...

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Outlook for Spain’s Election

2015-12-14

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2015-12-14

The pace of reform in Spain has slowed, with electoral considerations likely playing a role.  A new center-right government may resume efforts to reform the labor market, even if leading a government costs Rajoy his job.   Representation of Podemos i...

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Great Graphic: Euro Forecast by Global Banks

2015-12-14

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2015-12-14

The dollar-euro is the most actively traded currency pair in the world.  It is often what is meant when people ask where is the dollar trading.   Dollar bullish sentiment prevailed in 2015, but many large banks doubt that it will continue in 2016.  This Great Graphic from the Wall Street Journal shows the euro forecasts … Continue...

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