Tag Archives: FX Trends

The US dollar traded higher before the weekend with the help a fairly robust jobs report.   Although the jobs growth itself was somewhat disappointing, the details were constructive:  More people working a longer work week and earning more.   The participation rate rose, and the unemployment rate (U-3) fell.  The Atlanta Fed GDPNow tracker increased to 2.2% in Q1 16 from 1.2% at the start of the week. Despite the pre-weekend gains, the greenback lost ground against all the major...

Chinese markets will be closed next week for the Lunar New Year celebration.  However, over the weekend, China will report its January reserve figures.  The market suspects that the PBOC burnt through another $120 bln of reserves.   China's reserves stood at $3.81 trillion in January 2015.  They are expected to stand near $3.21 trillion as of the end of last month.    This draw down, coupled with its trade surplus and the pressure on the currency have led many to express concerns about...

1) China relaxed some rules on foreign capital flows 2) Malaysian Prime Minister Najib is tightening his grip on power 3) The Czech National Bank (CNB) has tilted more dovish 4) Ukrainian Economy Minister Abromavicius resigned abruptly, throwing the ruling coalition into turmoil 5) Argentina unexpectedly settled with holdout Italian investors 6) Press reports suggest Brazil’s central bank is considering rate cuts later this year.In the EM equity space, UAE (+6.2%), Indonesia (+4.0%),...

The US created fewer jobs than anticipated and the December gain was revised lower.  However, the other details were favorable--better than expected.  The unemployment rate ticked down to 4.9%, a new cyclical low, despite the rise in the participation rate (62.7% from 62.6%).   Average hourly earnings were stronger than expected at 2.5%.  The consensus expected a 2.2% year-over-year pace.  The December pace was revised to 2.7% from 2.5%.  The average weekly hours also ticked up to 34.6...

The US nonfarm payroll report typically dominates the first Friday a new month.  In recent years, it has become among the most important economic reports globally.  Not today.   The market's focus has shifted from Chinese stocks and yuan that dominated the first week or so, then oil, and now it is heightened concern about a US recession.  This means there is likely to be an asymmetrical response to the jobs report.  Stronger than expected data is unlikely to deter those who think the US...

Sterling has neared the 50% retracement of the 11.5 cent decline since mid-December.  It is found near $1.4660.  After easing ahead of the BOE announcement, sterling was sold to $1.4530 on the initial headlines that showed the BOE was cutting its growth, inflation, and wage forecasts.    However, the short-sterling futures had already largely discounted the rates being low for longer, and UK debt instruments also sold off, and after the initial flurry, sterling stabilized and recovered...

The US dollar remains under broad pressure after yesterday's sharp decline.  Neither dovish comments by ECB President Draghi, nor the Reserve Bank of New Zealand have managed to reverse the gains of their respective currencies.   Similar, the rise in US yields and firm equities have failed to push the yen lower.  Investors and policymakers are trying to link news developments to the price action, but it seems to be a bit of a stretch.  It is true that NY Fed President Dudley, who had...

Apparently, when Irish eyes are smiling, it’s time to call an election. And that is what Prime Minister Kenny has done.  The election will be held on February 26.  The polls suggest that the governing coalition (Fine Gael and Labour) may struggle to secure a majority.   In some ways, Kenny is making the same bet as Spain's Rajoy.  The economy's strength will provide a lift on election day.  It has not worked out so well for Rajoy though Kenny may have greater success.  However, this is...

The US dollar is sporting a softer profile today as the global capital markets are trying to stabilize.  Oil prices have steadied, with WTI back above $30.   Bond markets are narrowly mixed though the 10-year US Treasury is steady near 1.85%.  Asian and European equities followed US markets lower, but American equities have stabilized, and ahead of the ADP employment estimate and the ISM for non-manufacturing, S&P 500 is set to open slightly higher. The dollar continued to shed the...

The yen is the strongest currency today.  Many are still referring to it as a safe haven.  However, this strikes us as a misuse of the concept.  Investors are not flocking to the yen to find quiet place to ride out the storm.  Rather the yen's strength is a reflection of the turmoil. As we have explained the yen and euro have been used to finance the purchases of other assets.  As those assets are liquidated, the funding currency is bought back.  The dollar, euro and yen are the most...