Tag Archive: U.S. Treasuries

FX Weekly Review, February 27 – March 04: Dramatic Shift in Fed Expectations Spurs Dollar Gains, but Now What?

The pendulum of market sentiment swung hard and fast toward a Fed rate hike in the middle of March. The signals from Fed officials, including Governor Brainard and Powell, spurred the move. According to Bloomberg, the market had discounted a 90% chance of a hike before Yellen and Fischer spoke. A week ago, Bloomberg calculations showed a 40% chance of a move.

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FX Weekly Review, February 20 – 25: Ranges in FX: Respect the Price Action

It is difficult right now to talk about the foreign exchange market using the dollar as the numeraire. The dollar was stronger against most of the major currencies last week, but not the yen or sterling. The Dollar Index itself was little changed, rising less than 0.15%.

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FX Weekly Review, February 13 – 18: Why still long the dollar?

Arguments for being long the dollar: FX investors because of the difference in monetary policy (e.g. higher US rates), Bond investors long US Bonds because higher bond yields, On the other side, European and Swiss equities are not so much overvalued as U.S. stocks are.

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FX Daily, February 14: Markets Showing Little Love on Valentines

Corrective pressures are gripping the major capital markets today.The Dollar Index's nine-day advancing streak is being threatened by the position adjustment ahead of Yellen's testimony later today. Despite record high closes in the main US equity markets yesterday, Asia could not follow suit. It tried to initially, and recorded new highs since July 2015, but sellers emerged and the MSCI Asia Pacific Index closed marginally lower on the lows of the...

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FX Weekly Review, February 06 – 11: Further Dollar and CHF Strength versus Euro weakness ahead?

We are expecting a further strengthening of both dollar and Swiss Franc against the euro over the next 3 months. Reason is the rising Swiss demand the continued dovishness of the ECB, despite rising inflation.

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FX Daily, February 08: EUR/CHF down to 1.630, Swiss Boom Starting?

The reader might have seen the latest Swiss Consumer Sentiment and the UBS consumption indicator. They suggest that the Swiss boom phase should finally come. I anticipated the boom already in my slides for the CFA Society. The Swiss boom was postponed when the SNB decided to remove the euro peg in early 2015.

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Gold Prices Rising As “World Has Never Been More Uncertain”

Gold prices rising & up 6.6% YTD. Signal “impending market volatility”. World has never been more uncertain (see chart). Fear in Wall Street versus Fear in Washington. Price of ‘plunge protection’ rising even as VIX remains low. Smart money diversifying into gold. Important to watch rising gold and rising bond yields. Gold may prove the “tell”.

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FX Weekly Review, January 30 – February 04: Reversal of Trump Reflation Trade Continues

The Swiss Franc index remained around the 2% gain that for the last month, the recovery from the Trump reflation trade. In this trade, investors preferred U.S. against European stocks. This tendency, however, is reversing now - and with it the franc recovered.

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FX Weekly Review, January 23 – 28: Dollar Downwards and CHF Upwards Correction, for how long?

The US dollar spent the first month of the new year correcting lower after a strong advance in the last several months of 2016. We argue that the correction actually began in mid-December following the Federal Reserve's rate hike.

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FX Weekly Review, January 16 – 21: Dollar Still Appears to Carving out a Bottom

The US dollar turned in a mixed performance over the past week. The technical indicators continue to support our expectation that after correcting since mid-December, following the Fed's hike, the dollar is basing.

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Lagarde Urges Wealth Redistribution To Fight Populism

As we scoffed oveernight, who better than a handful of semi, and not so semi, billionaires - perplexed by the populist backlash of the past year - to sit down and discuss among each other how a "squeezed and Angry" middle-class should be fixed. And so it was this morning as IMF Managing Director Christine Lagarde, Italian Finance Minister Pier Carlo Padoan and Founder, Chairman and Co-CIO of Bridgewater Associates, Ray Dalio, espoused on what's...

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FX Weekly Review, January 09 – 14: Dollar Correction may be Over or Nearly So

For the first week since the election of Trump, the Swiss Franc index had a clearly better performance than the dollar index. It improved by 1.5% in the last ten days.

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Trump Is Set To Label China A “Currency Manipulator”: What Happens Then?

While China has been banging the nationalist drums in its government-owned tabloids, warning daily of the adverse consequences to the US from either a trade war, or from Trump's violating the "One China" policy, a more tangible concern for deteriorating relations between China and the US is that Trump could, and most likely will, brand China a currency manipulator shortly after taking over the the Oval Office.

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FX Weekly Review, January 02 – 07: Is the corrective phase of the dollar over?

The lack of full participation and the resulting choppy conditions may have obscured the signal from the capital markets. That signal we think was one of correction since shortly after the Fed's rate hike in id-December. The question now, after the US employment data showed continued labor market strength and that earnings improvement remains intact, is whether the corrective phase is over.

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FX Weekly Review, December 26 – 30: Dollar Correction Poised to Continue

The technical condition of the US dollar, which has been advancing through most of the Q4 16, has been deteriorating This led us to anticipate a consolidative or corrective phase.

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FX Weekly Review, December 19 – December 23: Assessment of the Dollar’s Technical Condition

The small adjustment to Fed’s anticipated path for the Fed funds target helped lift the US dollar to its highest level against the euro since 2003, and to ten-month highs against the Japanese yen. The graph shows that the dollar has improved by 25% against the euro, but only by 10% against CHF over the last 3 years.

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FX Weekly Review, December 12 – December 16: Fed Lifts Dollar, but Consolidation may be on Tap

The small adjustment to Fed’s anticipated path for the Fed funds target helped lift the US dollar to its highest level against the euro since 2003, and to ten-month highs against the Japanese yen. The graph shows that the dollar has improved by 25% against the euro, but only by 10% against CHF over the last 3 years.

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Swiss 10 year bond yields still negative, but approaching zero.

The global bond rout returned with a bang, sending 10Y US Treasury yields as much as six basis points higher to 2.53%, the highest level in over two years. The selloff happened as oil prices surged by more than 5% following Saturday's agreement by NOPEC nations agreed to slash production, leading to rising inflation pressures. At last check, the 10Y was trading at 2.505%, up from 2.462% at Friday and on track for its highest close since September...

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FX Weekly Review, December 05 – December 09: Dollar Bulls Running Out of Time to See Parity vs Euro in 2016

  Swiss Franc Currency Index The Swiss Franc index remained in a losing position compared to the dollar index. However since November 25, it has remained stable. Given that the ECB extended the QE period, the EUR/CHF has fallen to 1.0730 again.   USD/CHF The US dollar is finishing the year on a firm note.  It rose … Continue reading »

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FX Weekly Review, November 28 – December 02: CHF Index still at its 4% loss since U.S. Elections

The Swiss Franc index continued around its 4% loss since the U.S. elections, while the US Dollar index had a 4% increase. The focus shifts to the ECB meeting, where participants are wary of a "hawkish ease".

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