Tag Archives: FX Trends

EM ended last week on a soft note.  Perhaps the main driver was rising US yields, as markets become wary of a more hawkish Fed this Wednesday.  Perhaps it was technical, as the EM rally became over-extended.  Whatever the reasoning, the correction continued into the weekend and is likely to carry over to this week as well.  While we remain cautious on EM at such rich valuations, a significant correction (which we have not seen in quite some time) could make some assets more attractive. ...

The US dollar starts what promises to be an eventful week giving back some the gains score in second half of last week against the euro and yen.    Equity markets are extending their pre-weekend losses.   Commodities are also trading with a heavier bias.  Markets in Australia, New Zealand, and Italy are closed for national holidays. The consolidative tone may not be very surprising give the data to be released in the coming days and the FOMC and BOJ meetings.  Investors will see the first...

The last week of April is eventful. The Reserve Bank of New Zealand, the Federal Reserve and the Bank of Japan hold policy meetings.  The UK, eurozone, and the US provide the first estimates of Q1 GDP. Japan, the eurozone, and Australia report consumer prices, while the US updates the Fed’s preferred (targeted) inflation measure, the core deflator of personal consumption expenditures.   These events will not take place in a vacuum.  The backdrop is an improving tone in the global capital...

Speculators in the futures market continued to press a bearish view of the US dollar the CFTC reporting week ending April 19.According to the Commitment of Traders report, speculators added to their gross long currency futures position in seven of the eight currencies we track. The exception was the British pound, where speculators liquidated a minor 1.1k contracts, leaving them with 32.8k gross long sterling future contracts. That said, most gross currency adjustments were small, but...

It is not that the US dollar had a particularly good week.  It was mixed.  The best performers were sterling and the Canadian dollar. The pound led with a 1.5% gain, followed closely by the Canadian dollar.   The latest polls suggest that those who want the UK to remain in the EU have generally seen some gains in the polls.  Also, unwinding short cross positions against the euro, helped sterling get better traction against the greenback.  Firmer oil, better data, and a central bank that...

(here is a draft of my monthly column for a Chinese paper) The US dollar has had a rough few months.  It has fallen against most major and emerging market currencies this year.  A critical issue for global investors and policymakers is whether the dollar’s uptrend is over, or is this just a respite.  Much is at stake with the answer. The variability of exchange rates could account for a third of the total return of a basket of international equities and twice as much for a basket of...

(from my colleague Dr. Win Thin)China’s central bank may be leaning less dovish Turkey has a new central bank governor Argentina issued external debt for the first time since it defaulted 15 years ago Brazil's lower house voted to impeach President Rousseff by a 367-137 vote In the EM equity space, Russia (+2.7%), Indonesia (+1.9%), and UAE (+1.8%) have outperformed this week, while China (-3.0%), Taiwan (-1.9%), and Hungary (-1.2%) have underperformed. To put this in better context, MSCI...

Equity markets are seeing this week's gains trimmed after the S&P 500 fell 0.5% yesterday, recording its biggest loss in two weeks.  Disappointing earnings in some tech leaders spurred profit-taking, The US 10-year Treasuries are consolidating the week's nine basis point increase in yields after nearing 1.90% yesterday.  Asian bonds yields tracked US Treasury yields higher while European bonds are narrowly mixed as they consolidate yesterday's increase.   The US dollar recovered from...

The following observations are drawn from the weekly report of Japan’s Ministry of Finance unless noted otherwise.  We use the weekly data instead of monthly to identify changes of trend earlier.  We use simple convention of the week by the last rather than the first day. That means that the report for the week ending April 1 is the first week of April.  To smooth out the volatility, we will often refer to a four-week average. The latest MOF report was released earlier today.   1....

The ECB meeting is the session’s highlight.  In recognition of the risk that ECB President Draghi expresses displeasure with the premature tightening of financial conditions through the exchange rate channel is encouraged a modest bout of euro selling.  The single currency has drifted back toward the lows seen at the start of the week near $1.1275.   The euro has held above last week’s lows, which were set April 14 near $1.1235.  A retracement target of the euro’s gains since March 10 ECB...