Tuesday , October 22 2019
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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.

Articles by Marc Chandler

FX Daily, October 21: Dollar Soft, but Stage is being Set for Turn Around Tuesday

1 day ago

Swiss Franc
The Euro has risen by 0.20% to 1.0989

EUR/CHF and USD/CHF, October 21(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: The UK’s departure from the EU remains up in the air as a new attempt to pass the necessary legislation through Parliament continues today. Many market participants seem to remain optimistic that Prime Minister Johnson’s plan will ultimately succeed. After slipping to $1.2875 initially, sterling briefly pushed through $1.30, which had held it back last week. Equities are firm. Nearly all the markets in Asia Pacific rose, and the Dow Jones Stoxx 600 is steady to higher. The US S&P 500 is poised to retest the 3000-mark. Benchmark 10-year bond yields continue last week’s march higher,

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FX Weekly Preview: The Week Ahead Excluding Brexit

2 days ago

I feel a bit like the proverbial guy that asks, “Besides that, Mrs. Lincoln, how did you like the play?” in trying to discuss the week ahead without knowing the results of the UK Parliament’s decision on the new deal negotiated between Prime Minister Johnson and the EU. I will write a separate note about Brexit before the Asian open. However, there are several other developments next week that will help shape the investment climate.
Europe is front and center. Three issues outside of Brexit stand out. First, the US tariffs went into effect on $7.5 bln of European imports that were sanctioned by the WTO for the damage caused by improper subsidies to Airbus. Europe has threatened to retaliate, and if it does so, the US is likely to respond in a tit-for-tat fashion.

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FX Daily, October 18: Markets Becalmed Ahead of the Week

4 days ago

Swiss Franc
The Euro has risen by 0.15% to 1.0999

EUR/CHF and USD/CHF, October 18(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: The global capital markets are ending the week on a subdued note as the UK Parliament decision on Saturday is awaited. The weaker Chinese Q3 GDP had little impact outside of China, where stocks fell over 1%. A brief suspension of hostilities by Turkey was sufficient for the US to lift its threatened sanctions. Asia Pacific equities were mostly a little softer, though the Nikkei eked out a small gain, and India’s Nifty 50 extended its streak to a sixth advancing session, encouraged by strong earnings and anticipation of more. European and US shares are little changed but softer.

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Cool Video: With Rick Santelli on CNBC

5 days ago

I was invited to Rick Santelli’s Exchange on CNBC earlier today.  There is a 3.5-minute clip of the interview that can be found here.
Despite being a dollar bull for nearly a decade (since around the time of my first book–Making Sense of the Dollar–), I do not think a strong or weak dollar is desirable.  It is about the level that is appropriate depending on business conditions and the economic cycle.  If the Fed is easing policy, as it is now, and the dollar strengthens, it works against the thrust of monetary policy.
Rick wanted me to say that the dollar’s strength and the squeeze in the repo market reflected the same macro forces, but I am reluctant to connect the two.  Consider that during the Great Financial Crisis, the Fed did not intervene in the foreign

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FX Daily, October 17: EU-UK Deal Sends Sterling and the Euro Higher

5 days ago

Swiss Franc
The Euro has fallen by 0.26% to 1.0983

EUR/CHF and USD/CHF, October 17(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: A Brexit deal between the UK and the EU has been struck. Whether it can win Parliament’s approval is a horse of a different color. Meanwhile, US-Chinese relations continue to sour. The capital markets are narrowly mixed as investors await further developments. The MSCI Asia Pacific is consolidated after gaining for the past four sessions. Following a better than expected jobs report, that seemed to make a rate cut next month less likely, the Australian equities fell by 0.75% to lead the regional decline. European and US shares are little changed but slightly firmer. Benchmark

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FX Daily, October 16: Fickle Market Tempers Enthusiasm

6 days ago

Swiss Franc
The Euro has fallen by 0.06% to 1.1006

EUR/CHF and USD/CHF, October 16(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: Fading hopes that a Brexit agreement can be struck is seeing sterling trade broadly lower, while China’s demand that US tariffs be rescinded in exchange for a commitment to buy $40-$50 bln of US agriculture goods over two years, makes the handshake agreement less secure. At the same time, Hong Kong is becoming another front in the US-Sino confrontation.  Asia Pacific stocks moved higher, except China and India. The Nikkei and Topix gapped higher for the third consecutive session and set new highs for the year today.  The market appears over-extended, and with the yen firmer,

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FX Daily, October 15: Non-Disruptive Brexit Hopes Remain Elevated

7 days ago

Swiss Franc
The Euro has fallen by 0.16% to 1.0977

EUR/CHF and USD/CHF, October 15(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: Ideas that a Brexit deal may be close is helping to firm sterling, while soft Chinese PPI offset the spike in food prices to show the weakness of the world’s second-largest economy. Minutes from the meeting of the Reserve Bank of Australia earlier this month kept a door open to a rate cut before the end of the year. Japan returned from holiday, and the Nikkei gapped higher, and its nearly 1.9% advance led the MSCI Asia Pacific Index higher. Europe’s Dow Jones Stoxx 600 is recouping yesterday’s 0.5% loss, while US shares are also trading firmer after yesterday’s slippage. Benchmark

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FX Daily, October 14: Optimism Took the Weekend Off

8 days ago

Swiss Franc
The Euro has fallen by 0.16% to 1.0979

EUR/CHF and USD/CHF, October 14(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: Japanese and Canadian markets are on holiday today. While the US bond market is closed, equities maintain their regular hours today. Asia Pacific equities rallied, led by 1% of more gains in China, Taiwan, South Korea, and Thailand. The buying did not continue in Europe, and after a 2.3% rally before the weekend, the Dow Jones Stoxx 600 is about 0.75% lower in the European morning. US shares are trading slightly heavier, and the gap in the S&P 500 created by last Friday’s sharply higher opening is worth monitoring (~2948.5-2963.1). Benchmark yields in Asia Pacific were pulled

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FX Weekly Preview: Same Three Drivers in the Week Ahead but Changing Tones

9 days ago

Three themes have dominated the investment climate: US-China tensions, Brexit, and the policy response to the disinflationary forces. None have been resolved, which contributes to the uncertainty for businesses, households, and investors. However, the negativity that has prevailed is receding a little. It begins with the most substantive progress on Brexit in months, but also entails a possible new tariff truce between the US and China. Indeed, we irreverently suggested that the more President Trump denied interest in an interim agreement with China, the more likely it was. The disinflationary forces remain but seem to have stabilized, helped by some better indications coming from the interest rate-sensitive sectors in the US economy, like housing, and a rise in

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FX Daily, October 11: Nothing Like Approaching the Edge to Focus the Minds

11 days ago

Swiss Franc
The Euro has risen by 0.56% to 1.1031

EUR/CHF and USD/CHF, October 11(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: As the edge of the abyss is approached in three distinct areas, there is hope that victory can be snatched from the jaws of defeat. US-China trade talks continue today, and there is hope of a small deal that could lead to the US not hiking tariffs next week. A shift in the UK toward a free-trade agreement with the EU seems to have opened fertile ground in negotiations that could still avoid a no-deal Brexit. Reports suggest the demonstrators in Hong Kong are considering ending their vandalism ahead of this weekend’s protests. Hong Kong stocks posted their biggest gains since June.

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FX Daily, October 10: Setback for the Greenback

12 days ago

Swiss Franc
The Euro has risen by 0.37% to 1.0962

EUR/CHF and USD/CHF, October 10(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: Conflicting headlines about US-China trade whipsawed the markets in Asia, but when things settled down, perhaps, like the partial deal that has been hinted, net-net little has changed. Asian equities were mixed, with the Nikkei, China’s indices, and HK gaining, while most of the others slipped lower. The 0.9% gain in the S&P 500 yesterday failed to lift European stocks, and the Dow Jones Stoxx 600 is near the week’s lows. US shares also are trading softer. Benchmark 10-year bond yields are edging higher, perhaps playing a little catch-up to the 5.5 bp increase in the US 10-year

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FX Daily, October 9: Hope is Trying to Supplant Pessimism Today

13 days ago

Swiss Franc
The Euro has risen by 0.35% to 1.0912

EUR/CHF and USD/CHF, October 9(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: The 1.5% drop in the S&P 500 and the deterioration of US-China relations and the prospects of a no-deal Brexit failed did not carry over much into today’s activity. Asia Pacific equities were mostly a little lower, though China and India bucked the regional trend, while Korea was closed for a national holiday. Taiwan led the losses amid a sell-off in semiconductor stocks. Europe’s Dow Jones Stoxx 600 is little changed as small early losses were reversed. US shares are firmer. The S&P 500 gapped lower yesterday, and that gap (~2925.5-2935.7) is important technically. Benchmark

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FX Daily, October 8: Not a Good Day for Negotiators

14 days ago

Swiss Franc
The Euro has fallen by 0.27% to 1.0881

EUR/CHF and USD/CHF, October 8(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: The re-opening of Chinese markets after a long holiday did not produce the volatility that many expected. Chinese stocks alongside most Asia markets traded higher today, and the yuan advanced. After opening higher and extending its recent rally, Europe’s Dow Jones Stoxx 600 turned down, even though Germany announced an unexpected gain in August industrial output. US shares are trading a bit lower. Benchmark 10-year bonds are little changed. The dollar is mostly softer. Among emerging market currencies, the South Korean won, aided by a better than expected Samsung earnings, and the

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FX Daily, October 7: Markets Unsettled to Start the Week

15 days ago

Swiss Franc
The Euro has risen by 0.05% to 1.0926

EUR/CHF and USD/CHF, October 7(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: The global capital markets are uneasy as the risks that have dominated investors’ concerns–trade and Brexit–remain front and center today. Expectations are low that this week’s talks between the US and China will lead to a breakthrough or will be sufficient to postpone further the next round of tariff increases set for next week. The UK government has indicated it will challenge Parliament’s effort to block a no-deal exit to the Supreme Court. Equities in Asia Pacific mostly higher, except for Japan and Indonesia. China and Hong Kong were closed. European shares initially advanced

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FX Weekly Preview: China Returns, ECB Record, Fed Minutes and the Week Ahead

16 days ago

Many high-income countries experienced little growth but strong price pressures in the 1970s. Since the mainstream economics said the two were mutually exclusive, a new term had to be created, hence stagflation. Fast forward almost half a century later, and mainstream economists are still having a problem deciphering the linkages between prices and economic activity, such as inflation and employment. Theory needs to accommodate the new facts.
Theory is being challenged in another profound way now. Germany, the world’s fourth-largest economy appears to be contracting and experiencing disinflation pressures despite its entire yield curve being below zero. Negative rates have not spurred inflation. It has not bolstered investment. The lower price of money (interest

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FX Daily, October 4: The US Jobs Data to Close a Sobering Week

18 days ago

Swiss Franc
The Euro has fallen by 0.37% to 1.0913

EUR/CHF and USD/CHF, October 4(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: The recovery of US shares yesterday signaled today’s fragile stability. Gains in Japan, Australia, and Taiwan blunted the losses elsewhere in the region, including a 1% slide in Hong Kong. The MSCI Asia Pacific Index fell for the third week. China’s markets have been closed since Monday and will re-open Monday and may play some catch-up. Europe’s Dow Jones Stoxx 600 is extending yesterday’s recovery. Although the week’s losses have been pared, the 3.3% drop would still be among the largest of the year. US shares are trading softer in Europe, unable to extend yesterday’s 2% recovery

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FX Daily, October 3: Shades of Q4 18?

19 days ago

Swiss Franc
The Euro has risen by 0.34% to 1.0959

EUR/CHF and USD/CHF, October 3(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: Disappointing economic data again drove US equities lower, which in turn carried into Asia Pacific activity. Losses were recorded throughout the region, with the notable exception of Hong Kong. The Nikkei and Australia’s ASX were off by 2%. After its largest losing session of the year (-2.7%) yesterday, Europe’s Dow Jones Stoxx 600 continues to trade heavily. The composite PMI was revised lower (50.1 vs. 50.4 flash). Growth concerns weighed on the dollar yesterday through the interest rate channel. The January 2020 fed funds futures imply about a 75% chance of a cut later this month

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FX Daily, October 2: Greenback Shows Resiliency, Stocks Don’t

20 days ago

Swiss Franc
The Euro has risen by 0.66% to 1.0928

EUR/CHF and USD/CHF, October 2(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: Shockingly poor ISM data sent shivers through the market on Tuesday and hand the S&P 500 its biggest loss in five weeks and took the shine off the greenback. The S&P 500 reached a five-day high before reversing course and cast a pall over today’s activity. All the markets were lower in Asia Pacific, with China and India closed for holidays. Europe’s Dow Jones Stoxx 600 reached a two-month high yesterday before selling off sharply, and it has seen follow-through selling today, with the benchmark off around 1.5%. US shares are trading softly, and the S&P 500 is off about 0.7% in

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FX Daily, October 1: Dollar Jumps to Start New Quarter

21 days ago

Swiss Franc
The Euro has risen by 0.17% to 1.0893

EUR/CHF and USD/CHF, October 1(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: The US dollar is rising against nearly every currency today as global growth concerns deepen. Japan’s Tankan Survey showed large manufacturers confidence is a six-year low. The Reserve Bank of Australia cut 25 bp as widely expected and kept the door open for more. The final EMU PMI ticked up from the flash, but it is still at a seven-year low. The MSCI Asia Pacific Index eked out a small gain, and a weaker yen facilitated a rise in Japanese shares. Europe’s Dow Jones Stoxx 600 rose initially but is threatening to end a three-day advance, while US shares are trading firmer. A poor

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FX Daily, September 30: A Busy Week Begins Quietly

22 days ago

Swiss Franc
The Euro has risen by 0.24% to 1.0862

EUR/CHF and USD/CHF, September 30(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: As the quarter ends, the capital markets are mixed. Equities in Asia Pacific were heavier, except in Hong Kong and Australia, while shares were mixed, leaving the Dow Jones Stoxx 600 little changed through the European morning. US shares are trading firmer. Benchmark 10-year bond yields are 2-3 basis points higher, though Australia’s bond yield was up seven basis points. The Australian and New Zealand dollars are bearing the brunt of the stronger US dollar today. The Aussie is testing last week’s base, while the Kiwi is unwinding last week’s gains. Sterling and the Canadian

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FX Weekly Preview: Forces of Movement at the Start of Q4 19

23 days ago

United States
The world’s largest economy appears to have grown by about 2% in Q3 at an annualized pace, the same as in Q2, and in line with what many Fed officials understand to be trend growth. The strength of the US labor market underpins consumption, the powerful engine of the US economy. The latest readings of both the labor market and consumption will highlight the economic data in the week ahead.
The strength of the recent housing data (starts and sales) suggest that the decline in interest rates is beginning to have some traction in the particularly sensitive sectors of the economy. It seems that the economic conditions that foster residential investment also favor auto sales. US light vehicle sales have averaged 16.93 mln a month a seasonally-adjusted

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FX Daily, September 27: Markets Limp into the Weekend with the Euro Languishing at New Lows and Sterling under Pressure

25 days ago

Swiss Franc
The Euro has risen by 0.01% to 1.0851

EUR/CHF and USD/CHF, September 27(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: Equities remain under pressures. The MSCI Asia Pacific Index lower today, though Chinese and Australian shares were firmer. It is the second consecutive week the benchmark has fallen. European equities are firmer, but not enough to offset the losses earlier this week and are set to snap a five-week advance. US shares are firmer, and the S&P 500 needs to gain about 0.5% today or record a back-to-back weekly decline. Core bond yields are a little firmer today paring this week’s decline. Dovish comments by a member of the Bank of England’s Monetary Policy Committee who is often seen

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FX Daily, September 26: Greenback Remains Firm

26 days ago

Swiss Franc
The Euro has risen by 0.15% to 1.0866

EUR/CHF and USD/CHF, September 26(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: A compelling narrative for yesterday’s disparate price action is lacking. A flight to safety, which is a leading interpretation, does not explain the weakness in the yen, gold, or US Treasuries. Month- and quarter-end portfolio and hedge adjustments may be at work, but the risk is that it is a black box: is difficult to verify and lends itself to misuse as a catch-all explanation.  Nevertheless, the rise in US equities yesterday helped lift most Asia Pacific shares today, with China, Taiwan, and Australia the notable exceptions. European bourses are firmer, and the Dow Jones

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FX Daily, September 25: Risk Appetite Stymied: Dollar Recovers while Stocks Slide

27 days ago

Swiss Franc
The Euro has fallen by 0.13% to 1.0842

EUR/CHF and USD/CHF, September 25(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: Global equities and fixed income reacted to the large moves yesterday in the US when the 10-year note yield fell eight basis points, and the S&P 500 fell by 0.85%. Investors have focused on three separate developments and two of which came from President Trump’s speech at the UN. He dismissed the likelihood of a short-term trade deal with China and was critical of the large social media platforms. The other consideration was the movement toward an impeachment inquiry against Trump in the US House of Representatives. Nearly all the markets in Asia Pacific were lower. Of note,

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FX Daily, September 24: UK Supreme Court Deals another Defeat to Johnson

28 days ago

Swiss Franc
The Euro has fallen by 0.03% to 1.0874

EUR/CHF and USD/CHF, September 24(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: A fragile calm hangs over the capital markets today. Equities in Asia Pacific were narrowly mixed. Japan, China, and HK advanced. India saw some profit-taking after a two-day surge in response to the unexpected corporate tax cuts but recovered in late dealings. European shares are recovering after posting its largest loss in a month yesterday (-0.8%). US shares are trading firmer in Europe.  Benchmark bond yields are little changed. Bonds in the European periphery are a little firmer, while the core is a touch lower. The US 10-year yield hovers a little above 1.70%. The US

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Great Graphic: Views Distill to Short Sterling Long Yen Opportunity

29 days ago

We have argued that the road to an orderly Brexit remains arduous and that sterling had entered an important technical area ($1.2500-$1.2530). At the same time, see the dollar as having approached the upper end of its broad trading range against the yen. One of the important drivers lifting the dollar was the dramatic rise in US yields. We thought that move is counter trend and that yields are headed lower again.
These views could be expressed in a short-sterling long yen position. The cross posted a key reversal before the weekend by making a new high for the move and then closing below the previous day’s lows. The technical indicators failed to confirm the new high and the RSI (nine-day) has turned lower. The MACDs and Slow Stochastics are poised to turn lower

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FX Daily, September 23: Dreadful European Flash PMI Drags the Euro Lower

29 days ago

Swiss Franc
The Euro has fallen by 0.24% to 1.089

EUR/CHF and USD/CHF, September 23(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: The critics who claim the ECB’s policy response was disproportionate got a rude shock today with the unexpected weakness revealed by the flash PMI. The euro looks to re-visit the lows set recently near $1.0925. Sentiment has also been eroded by the poor South Korean export figures. Asia Pacific equities moved lower, though Tokyo markets were closed. Indian equities, however, continue their pre-weekend surge. Investors are bidding up Indian shares (5% before the weekend and 3% today) on the back of the corporate tax cuts. Led by financials, materials, and information technology,

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FX Daily, September 20: UK and India Provide Excitement Ahead of the Weekend

September 20, 2019

Swiss Franc
The Euro has fallen by 0.25% to 1.0932

EUR/CHF and USD/CHF, September 20(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: A word of optimism on a Brexit deal has sent sterling to its best level in two months. Corporate tax cuts sparked a more than 5% rally in Indian stocks as the week draws to a close. The MSCI Asia Pacific Index snapped a four-day losing streak to pare this week’s decline.  Europe’s Dow Jones Stoxx 600 was flat for the week coming into today, and its four-week advance is at stake. US shares are trading firmer in Europe, and the S&P 500 is near its record high set in late July. Benchmark 10- year bond yields are narrowly mixed. The US 10-year yield that had been flirting with 1.90%

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FX Daily, September 19: Investors Looking for New Focus

September 19, 2019

Swiss Franc
The Euro has fallen by 0.22% to 1.0975

EUR/CHF and USD/CHF, September 19(see more posts on EUR/CHF, USD/CHF, ) – Click to enlarge

FX Rates
Overview: Central bank activity is still very much the flavor of the day, but investors are looking for the next focus. The Bank of Japan and the Swiss National Bank stood pat, while Indonesia cut for the third consecutive time and the Hong Kong Monetary Authority and Saudi Arabia quickly followed the Fed. Brazil cut its Selic rate yesterday by 50 bp as widely expected. Norway’s Norges Bank hiked rates and signaled a near-term pause. Decisions by the Bank of England and the South African Reserve Bank are awaited. Several of the larger market in Asia Pacific, including Japan, China, South Korea, and Australian

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FX Daily, September 18: FOMC Meets Amid Money Market Pressures

September 18, 2019

Swiss Franc
The Euro has risen by 0.05% to 1.10

EUR/CHF and USD/CHF, September 18(see more posts on EUR/CHF, USD/CHF, ) Source: markets.ft.com – Click to enlarge

FX Rates
Overview: News that Saudi Arabia was able to restore 40%-50% of the oil capacity lost by the weekend strike coupled with the Fed’s efforts to offset the squeeze in the money markets are allowing the global capital markets to trade quietly ahead of the conclusion of the FOMC meeting. Equities are little changed with a lower bias that has been seen in the first few sessions this week. Asia Pacific markets were mixed, with Japan, Australia, Hong Kong, and many small bourses slipped while China, Taiwan, and South Korea advanced. Europe’s Dow Jones Stoxx 600 is struggling to post its first gain

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