Tag Archive: Bank of Canada

FX Week Ahead: Evolving Investment Climate

The US dollar’s weakness in recent months, despite negative interest rates in Europe and Japan likely had many contributing factors. These factors include shifting views of Fed policy, weaker US growth, the recovery in commodity prices, including oil, gold and iron ore, and market positioning.

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Are Dollar Fundamentals Lagging the Technical Improvement?

The US dollar extended its recovery that began on May 3.  Its technical condition remains constructive, even though up until now, the gains are still consistent with a modest correction rather than a trend reversal.   The details of the employment report, if not the headline, coupled with the 1.3% increase in retail sales, have boosted …

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Great Graphic: CAD Takes out Trendline

CAD BGN Curncy It has been painful trying to pick a bottom of the US dollar against the Canadian dollar.  But now a 4-5 point downtrend from the secondary high in late-January is being violated today.    It is found near CAD1.2785 today.  Intraday penetration is one thing, but some models may take the signal on … Continue reading...

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Will the Dollar Bloom like May Flowers after April Showers?

April was a cruel month for the US dollar.  It fell against all the major currencies; even those whose central banks have negative yields.  The greenback also fell against nearly all the emerging market currencies, but the Philippine peso and the Polish zloty. Through the first four months of the year, the dollar is lower …

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Do You Believe Six Impossible Things before Breakfast?

The White Queen in Alice in Wonderland (Through the Looking Glass) confesses that when she was younger, she could believe six impossible things before breakfast.  She encourages Alice to do the same.    It appears many in the market are taking ...

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What is the BOJ Going to Do?

Under Kuroda's leadership the BOJ has surprised the market a number of times, most recently with the move to negative rates at the end of January.   It is not that such a move, which has been tried by several European central banks, was without...

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Dollar’s Technical Tone Improves

It is not that the US dollar had a particularly good week.  It was mixed.  The best performers were sterling and the Canadian dollar. The pound led with a 1.6% gain, followed closely by the Canadian dollar.   The latest polls suggest that tho...

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FX Daily April 20: Markets Build on Yesterday’s Dramatic Recovery

Global capital markets staged an impressive recovery after the initial reaction to the failure to freeze oil output sent reverberations through the oil markets, commodities, and Asian equities. The sharp reversal begun in Europe and extended in N...

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Futures Jump On Chinese Trade Data; Oil Declines; Global Stocks Turn Green For 2016

With oil losing some of its euphoric oomph overnight, following the API report of a surge in US oil inventories, and a subsequent report that Iran's oil minister would skip the Doha OPEC meeting altogether, the global stock rally needed another catal...

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FX Daily, April 13: US Dollar Comes Back Bid

The US dollar is well bid in the Europe and is poised to start the North American session with the wind to its back.  Despite firmer equity and industrial metal prices, most emerging market currencies are also succumbing to the rebounding greenback. The euro has yet to convincingly breakout of the range that has confined … Continue reading »

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FX Daily, April12: Higher Inflation Lifts Sterling, Yen Stabilizes

There are three highlights to the foreign exchange market today.  First, the yen is marginally softer.  The yen's strength this month has been the main development.  After making a marginal new high yesterday, some semblance of stability emerge...

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Sterling Shines Temporarily in Choppy Start for Foreign Exchange

In an unusual development, sterling is outperforming today.   It rose to a four-day high near $1.4230 on what appears to be mostly modest position adjustment in relatively subdued turnover.  The $1.40 area held on repeated tests in the second ha...

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FX Daily, April 10: Same Drivers, Different Direction

Over the past three months and the past month, the dollar has fallen against all the major currencies but the British pound.  Sterling's underperformance can largely be explained by uncertainty created by the Tory government's sponsored referendum on continued EU membership.   Most of the polls show those wanting to remain hold on to a slight …

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FX Daily: Yen Pares Gains, Dollar-Bloc Firms

The surging yen has been the main feature in the foreign exchange market in recent days, but its advancing streak has been stopped with today's setback.  The greenback traded briefly dipped below JPY107.70 in North America yesterday but has not ...

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Great Graphic: Vulnerability of the Canadian Dollar

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 …

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

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 »

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A Few Things on Our Mind

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 …

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

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...

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Investment Climate Improves

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...

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FX Outlook: New Phase has Begun

The first two and a half weeks of the new year saw persistent selling of equities, commodities, and emerging markets.  In the foreign exchange market, the dollar-bloc and sterling were crushed.  The yen was the single biggest beneficiary, and spe...

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