Tag Archive: $CNY

Inclusion in SDR Does Not Spur Official Demand for the Yuan

2017-04-04

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2017-04-04

China's share of global reserves is in line with expectations prior to its inclusion in the SDR. Three factors influencing allocated reserves - valuation, portfolio decisions, and China's gradual inclusion in allocated reserves. The Swiss franc's as a reserve asset diminished, but the "other" category appeared robust.

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FX Weekly Preview: The Macro Backdrop at the Start of the Second Quarter

2017-04-03

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2017-04-03

The macroeconomic fundamentals have not changed much in the first three months of the year. The US growth remains near trend, the labor market continues to improve gradually, both headline and core inflation remain firm, and the Federal Reserve remains on course to hike rates at least a couple more times this year, even though the market is skeptical. The uncertainty surrounding US fiscal has not been lifted, and it may not be several more months.

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Pressure, Sure, But From Where?

2017-03-22

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2017-03-22

Belly of the Curve Gone Flat 2009-2017
It may just be that in life you have to get used to disappointment. Though not for lack of trying, I have spent a great deal of time over the years intending to piece together exactly what happened on days like October 15, 2014. The official explanation is an obvious whitewash, one so haphazard that I doubt it will ever be referred to again outside of ridicule.

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Time, The Biggest Risk

2017-03-11

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2017-03-11

Oil WTI, May 2016 - February 2017
If there is still no current or present indication of rising economic fortunes, and there isn’t, then the “reflation” idea turns instead to what might be different this time as compared to the others. In 2013 and 2014, it was QE3 and particularly the intended effects (open ended and faster paced, a bigger commitment by the Fed to purportedly do whatever it took) upon expectations that supposedly set it apart from the failures of QE’s 1 and 2. This...

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FX Daily, March 08: Dollar Bid as Rates Firm

2017-03-08

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2017-03-08

The US dollar is moving higher against nearly all the other major foreign currencies today. As far as we can tell, the driving force remains interested rate considerations. US rates are rising in absolute terms and about Europe and Japan. The US 10-year yield is moving above the downtrend that has been in place since the day after the Fed hiked rates last December.

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FX Weekly Preview: Four Sets of Questions and Tentative Answers for the Week Ahead

2017-03-06

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2017-03-06

The week ahead features the ECB meeting and the US February jobs report. The Reserve Bank of Australia meets, Europe reports industrial production, Japan reports January current account figures, and China reports its latest inflation and lending figures. We frame this week's discussion of the drivers in terms of four sets of questions and offer some tentative answers.

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FX Daily, February 24: Anxiety? What Anxiety?

2017-02-24

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2017-02-24

The US dollar is finishing the week on a mixed note in choppy activity in narrow ranges. It is an apt way to finish this week, which has been largely directionless as investors wait for fresh incentives, and are especially looking toward Trump's speech to a joint session of Congress next week.

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Great Graphic: Mexico and China Unit Labor Costs

2017-01-29

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2017-01-29

Unit Labor Costs in China and Mexico 2007 - 2015
Mexico has been gaining competitiveness over China before last year's depreciation of the peso. The depreciation of the peso, and other US actions can contribute to the destabilization of Mexico. An economically prosperous and stable Mexico has long been understood to be in the US interest.

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FX Weekly Preview: Macro Forces Underpin Dollar, Equities and Yields

2017-01-09

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2017-01-09

Rushmore
Odds of a March Fed hike edged up last week, and Q4 GDP figures were revised higher. Many continue to expect the new US Administration to pursue pro-growth tax reform, deregulation and infrastructure spending. Although many other high income countries are growing, near trend divergence of monetary policy continues.

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Cool Video: CNBC’s Power Lunch-China and Mexico

2017-01-07

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2017-01-07

Marc Chandler - Bloomberg
Two central banks were particularly active today. Chinese officials appear to be engineering short squeeze that has lifted the yuan 1.2% over the past two sessions. While this does not sound like much, it is a record two-day move, for the still closely managed currency.

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FX Daily, January 06: Dollar Consolidates Losses, Peso Firms while Yuan Reverses

2017-01-06

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2017-01-06

FX Performance, January 06 2017 Movers and Shakers
I am reading a lot about the pound in 2017 which is likely to be as volatile as in 2016. But the Franc is a harder beast to predict. Loosely tracking the euro but subject to its own rules and trends GBPCHF could be an interesting pair to watch in 2017. There are numerous global events which can shape the direction on the Franc and clients looking to exchange pounds into Francs or move Francs back to the UK should be considering the path ahead.

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FX Daily, January 05: Dollar Slide but Resilience Demonstrated while Yuan Squeezed Higher

2017-01-05

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2017-01-05

FX Performance, January 05 2017 Movers and Shakers
There are two main developments. First, the high degree of uncertainty expressed in the FOMC minutes and the repeated references to the strong dollar spurred a wave of dollar selling. The dollar retreated in Asia, but European participants saw the pullback as a new buying opportunity.

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A Few Takeaways from the Latest IMF Reserve Figures

2017-01-04

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2017-01-04

Official Foreign Exchange Reserves by Currency
Overall reserve holdings hardly changed in Q3. China continues to bleed its reserves from unallocated to allocated. Sterling's share of new reserves warns it may be losing some allure.

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FX Daily, December 29: Dollar, Equities and Yields Fall

2016-12-29

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2016-12-29

FX Performance, December 29 2016 Movers and Shakers
In thin holiday markets, a correction to the trends seen in Q4 has materialized. The US dollar is heavy. Japanese and European equities are lower. Bonds are firmer.

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You Know what Happened to Nominal Exchange Rates, but What about Effective Exchange Rates?

2016-12-21

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2016-12-21

BISBCNR Index
Yen is up slightly this year on an effective trade weighted basis. The euro has gained about 1% this year on an effective trade weighted basis. Sterling's decline has been significant on an effective basis. The yuan's decline looks to have corrected overshoot and is still holding an 11-year uptrend on the BIS real effective basis.

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FX Daily, December 13: Narrowly Mixed Dollar Conceals Resilience

2016-12-13

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2016-12-13

FX Performance, December 13 2016 Movers and Shakers
The US dollar is little changed against most of the major currencies. The dollar finished yesterday's North American session on a soft note, but follow through selling has been limited. After rallying to near 10-month high above JPY116 yesterday, the greenback finished on session lows near JPY115.00. Initial potential seemed to extend toward JPY114.30, but dollar buyers reemerged near JPY114.75, and it rose back the middle of the two-day range...

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FX Daily, December 08: Dollar Heavy into ECB

2016-12-08

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2016-12-08

FX Performance, December 08 2016 Movers and Shakers
The ECB prolonged its bond purchases, which came unexpected for markets. Consequently the EUR/CHF lost nearly half of its big gains that it registered in the beginning of the week. The ECB expects lower inflation for longer, which makes the life for the SNB harder for longer.

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FX Daily, December 07: Greenback is Broadly Steady While Sterling Slides

2016-12-07

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2016-12-07

FX Performance, December 07 2016 Movers and Shakers
The US dollar is little changed against most of the major currencies. Sterling is the notable exception, losing about 0.75% to trade at three-day lows. It was on the defensive in early European turnover but got the run pulled from beneath by the unexpectedly poor data. UK industrial output fell by 1.3% in October. The median forecast was for a small increase.

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FX Daily, November 30: Renewed OPEC Hopes and Month End Featured

2016-11-30

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2016-11-30

FX Performance, November 30 2016 Movers and Shakers
Rates for buying Swiss Francs dollars remain incredibly subdued post Brexit but there has been a general improvement over the last month. Rates for the moment appear to have found support over 1.24 for GBP CHF and this has largely come about following the Trump US presidential election victory. Despite a leaked government document titled Have cake and eat it, the markets and sterling were largely unphased.

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Great Graphic: Yen and Yuan Connection

2016-11-28

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2016-11-28

The US dollar has rallied against both the Japanese yen and Chinese yuan since the end of September. Through today, the yen has fallen 9.8% and the yuan has fallen by 3.5%. What they have in common is the rise in US interest rates relative to their own. Since September 30, the US 10-year yield has from below 1.60% to above 2.40% at the end of last week. Japan's 10-year yield has risen from minus nine basis points at the end of September to five...

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