by I had the privilege to join Sri Jegarajah at CNBC Asia at the start of today’s Asia Pacific session. We had a broad chat about the dollar, Brexit, and the euro. He gave me the opportunity to sketch out my views: The dollar’s entered a cyclical decline, and the “twin deficit” issue will likely frame the narrative. Many observers do not use that particular phrase now, but their arguments seem to rest on one if not both of the legs. Sterling gains appear to be more short-covering than the establishment of new longs. Like Sri, many seem to think it is nearly a foregone conclusion that officials will fail to strike a deal. I suggest sterling could fall a 2-3% in a knee-jerk reaction to no deal. Some observers see the risk that the BOE would adopt a negative bank rate
Topics:
Marc Chandler considers the following as important: 4) FX Trends, 4.) Marc to Market, Brexit, Cool Video, Euro, Featured, GBP, newsletter, USD
This could be interesting, too:
Marc Chandler writes Sterling and Gilts Pressed Lower by Firmer CPI
Ryan McMaken writes A Free-Market Guide to Trump’s Immigration Crackdown
Wanjiru Njoya writes Post-Election Prospects for Ending DEI
Swiss Customs writes Octobre 2024 : la chimie-pharma détermine le record à l’export
I had the privilege to join Sri Jegarajah at CNBC Asia at the start of today’s Asia Pacific session. We had a broad chat about the dollar, Brexit, and the euro. He gave me the opportunity to sketch out my views:
- The dollar’s entered a cyclical decline, and the “twin deficit” issue will likely frame the narrative. Many observers do not use that particular phrase now, but their arguments seem to rest on one if not both of the legs.
- Sterling gains appear to be more short-covering than the establishment of new longs. Like Sri, many seem to think it is nearly a foregone conclusion that officials will fail to strike a deal. I suggest sterling could fall a 2-3% in a knee-jerk reaction to no deal. Some observers see the risk that the BOE would adopt a negative bank rate in such circumstances.
- The euro’s strength is not about the economic performance in Q4. investors seem to be looking past it and into next year. It is partly a reflection of a dollar-bearish view, but also ideas that European equities can outperform the US have returned after again being disappointed. I have previously suggested that I thought the euro could trade into the $1.25-$1.30 area next year. Although I was early on the dollar bear call, the call is rather modest, compared to some of the large banks and Stephen Roach, who sees a record 35% appreciation of the euro based on low US savings. The median forecast in the Blomberg survey is for the euro to finish 2021, near $1.24.
You Might Also Like
Cool Video: Forces Driving the Dollar and Downplaying Claims Sterling is an Emerging Market Currency
2020-06-30
From my remote location in Ocean Grove (next to Asbury Park of Bruce Springstein fame), I joined Martin Soong and Sir Jegarajah for a brief interview as the Asia session was about to begin the new week. A three-minute clip of the interview can be found here.
Cool Video: TD Ameritrade with Ben Lichtenstein
2020-08-20
With the dollar continuing to trend lower, it was time to check again with Ben Lichtenstein at TD Ameritrade. It was a privilege to join him today to discuss the drivers. I sketched out my views that the greenback’s two legs, growth and interest rate differentials have been knocked from under it.
FX Daily, September 09: Investor Anxiety Continues to Run High Despite Some Stability in the Capital Markets
2020-09-09
News that the AstraZeneca Phase 3 test had to be stopped to study the adverse reaction of one subject added to the uncertainty of investors amid one of the more significant reversals of risk appetites since March. Equities continued to slump in the Asia Pacific region, with many large markets off more than 1%, led by Australia’s more than 2% decline.
FX Daily, September 11: Still Reluctant to take Euro above $1.19 but Sterling Remains Unloved
2020-09-11
Yesterday’s roller-coaster price action has not had much impact on today’s activity. The slide in US equities after early gains failed to prevent Japanese, Chinese, and Hong Kong equities from advancing, though other markets in the region were not as resilient.
FX Daily, September 16: Dollar Eases Ahead of the FOMC
2020-09-16
Overview: The dollar has been sold against nearly all the world’s currencies ahead of what is expected to be a dovish Federal Reserve, even if no fresh action is taken. The Scandis and Antipodean currencies are leading the majors.
FX Daily, September 29: Consolidation Still Featured
2020-09-29
A consolidative tone continues across the capital markets. Equities have lost their momentum. The MSCI Asia Pacific Index was mixed, while Europe’s Dow Jones Stoxx 600 is paring yesterday’s sharp 2.2% gain. US shares are little changed but mostly softer.
FX Daily, October 14: UK Blinks on Threat to Walk Away on Eve of EU Summit
2020-10-14
Overview: Turn around Tuesday saw the dollar bounce, particularly against the Australian dollar and European currencies, among the majors. Sterling pared earlier losses on reports that the UK would not walk away from the talks just yet, while the euro remains on its back foot.
FX Daily, October 19: Sterling Sparkles in Dollar Setback
2020-10-19
Investors have not let the surge of the virus or uncertainty over the UK-EU talks or US fiscal stimulus to stand in their way. Sterling is leading the major currencies higher, returning to the $1.30 area, while global equities are trading higher.
Tags: #GBP,#USD,Brexit,Cool Video,Euro,Featured,newsletter