SNB & CHF

The US dollar continues its mixed performance.  The fragile stability of commodity prices today is not lending much support to the Australian and New Zealand dollars though the Canadian dollar is flat after yesterday's slide.  The euro has pushed above $1.09 for the first time this week.  We had suggested a $1.08-$1.10 range would likely dominate this week.  Technically, it appears poised to test the upper end of that range.  Stops above the $1.1010 retracement objective could carry the...

Many observers conclude OPEC is dead.  Oh, its demise has been claimed before, but after the oil cartel failed to provide a quota (output goal) in last week's statement, the claim has been given new life.  The problem is that OPEC's action under Saudi leadership may be perfectly rational for a cartel.  Suppose you were playing Machiavelli to a Saudi Prince.  What would you advise?  The Prince is concerned that many OPEC and non-OPEC producers increased their output and expected the...

Richard C. Koo, Chief Economist of the Nomura Research Institute and of Balance Sheet Recession fame recently wrote a paper entitled “Central Banks in Balance Sheet Recessions: A Search for Correct Response.” In this post I want to respond specifically to Koo’s remarks on the global Great Recession:  “These are extraordinary times for central banks. Near zero interest rates and massive liquidity injections are still failing to bring life back to so many economies in the developed world. If...

This remains one of my favorite Great Graphics that illustrate the divergence theme that I think is the main driver of the euro-dollar exchange rate.  Composed on Bloomberg, it shows two time series.  The first (white line) shows the German two-year yield minus the US two-year yield.  It bottomed near -80 bp in mid-October and slid persistently through last Wednesday to hit reach almost -138 bp.   The second time series (yellow line) shows the euro.  It too peaked in mid-October near...

The US dollar is firm against the dollar-bloc currencies, and sterling, but is heavier against the euro and yen.   The 13th consecutive year-over-year decline in China's imports helped keep the pressure on the commodity producers.  Despite New Zealand reporting strong Q3 manufacturing sales (3.5% vs. -0.2% in Q2), the pendulum of market expectations have continued to swing for a rate cut later this week.   The drop in oil prices, and secondarily the widening of the interest rate gap with...

A company led by Swiss engineer Pascal Jaussi is building a space shuttle by combining technologies from all over the world. (SRF/swissinfo.ch) Jaussi, an engineer and Swiss Air Force military pilot, founded the company Swiss Space Systems in 2013 in Payerne, canton Vaud. Through the firm, he is pursuing his childhood dream of becoming an astronaut. The company’s goal is to make space accessible by developing, manufacturing and operating suborbital spaceplanes. The SOAR (Sub-Orbital...

Charles Hugh Smith and Gordon T Long discuss the puzzle of the falling US Civilian Labor Participation Rate in which all the pundits express concern but few agree on what the root cause is. RELENTLESS TECHNOLOGY ADVANCEMENT - Gaining The Right Perspective Together they show that it is instructive to start with the larger picture going back to 1970 when massive historic computer technology advancements truly began to be adopted. Schumpeter's Creative Destruction was in full swing and...

(from my colleague Dr. Win Thin) EM starts the week off in the familiar position of coming under pressure.  The strong US jobs report has all but cemented a Fed lift-off this month, helping the dollar to claw back some of its post-ECB losses.  Meanwhile, commodities continue to sink under the prospects of increased supply.  Brent oil in particular is making new cycle lows after last week’s OPEC meeting saw the quota system basically scrapped.  These factors all continue to conspire...

Economists expected China's reserves to fall by around $33 bln in November.  Instead, they fell by a little more than $87 bln.   This is the third largest decline it has recorded, and a little below the $94 bln drop reported in |August. China's reserves peaked in June 2014 near $3.993 trillion.  At the end of November, they were just above $3.438 trillion, which is essentially where they stood in October 2014. What happened in November?  There are two main considerations.  The first is...

The exaggerated response to last week's ECB meeting continues to unwind.   Draghi's dovish comments and the strength of US employment data have helped keep the divergence meme front and center.   The euro traded quietly in Asia before breaking down to almost $1.0800 in the European morning.   There seemed to be only two news developments that had a bearing.  First, the results of the first round of the French elections saw the National Front capitalize on the refugee and terrorism to lead...