Tag Archives: FX Trends

The Bank of Japan meets later this week.  We do not think that it will expand its already aggressive monetary policy stance.   Given the largely operational adjustments announced last month, it seems premature to expect substantive adjustment now.    It is true that the recent string of data has been mostly disappointing, and the yen has strengthened on a trade-weighted basis over the past month.  Our takeaway from talking to Japanese officials is that they are not exceptionally concerned. ...

Greek Prime Minister Tsipras is celebrating the one-year anniversary of this election.  He offered Greek voters an opportunity to replace him last summer, but they stuck with him. Many economic issues remain unresolved. Pension reform promises to be a flashpoint between the Tsipras government and the official creditors.    Although the G10 has eleven members, official creditors are no longer represented by the Troika, as there are now four.  The ESM has joined the EC, ECB and IMF. When...

(from my colleague Dr. Win Thin) EM enjoyed a nice bounce to end last week. The global liquidity outlook has clearly moved in favor of EM, at least for now.  However, the overall global backdrop has not shifted in favor of EM just yet.  Bottom line:  enjoy this EM rally with a short-term timeframe in mind, with the idea that EM turbulence will likely return later this year. Idiosyncratic risks abound in the usual suspects.  The Brazilian real is likely to underperform in light of COPOM’s...

[unable to retrieve full-text content] Asia followed suit, extending the recovery seen in the last couple of sessions to end last week.  Equities rose as did oil prices.   The MSCI Asia-Pacific Index rose 1.2%, and the Nikkei posted its first back-to-back gains this year.  Brent firmed, with the March contract trading to $32.80.   However, in late-Asia and early Europe, the momentum fizzled.  Brent retreated $2 before finding support, and European equities edged lower before recovering...

Whatever force had gripped the global capital markets since the start of the year has been broken.   This simple characterization is rich.  It is not clear if or what macroeconomic considerations were driving the markets.  The markets had taken the unsurprising Fed rate hike in mid-December in stride. The dramatic moves in the market did not begin until this year.  Some have suggested China was at the crux of it, but the global impact seemed out of proportion.   Others suggested it was...

The latest Commitment of Traders report that covers the four sessions through January 19 saw speculators anticipating the continuation of the current moves.  Of the sixteen gross positions we track, only five were in reducing exposures.  Last week there was only six increased exposures.   With the benefit of hindsight, we know that something changed a day or two after the reporting period ended.  Given the magnitude of the reversal in some cases, some of these late positions were likely...

The first two and a half weeks of the new year saw persistent selling of equities, commodities, and emerging markets.  In the foreign exchange market, the dollar-bloc and sterling were crushed.  The yen was the single biggest beneficiary, and speculators in the CME are net long the yen in the futures market for the first time since late 2012.  It was as if many equity sellers returned from the year-end holidays, and got the jump start on the buyers.  Some of the selling was passive as...

ECB President Draghi made clear at yesterday's press conference that new risks have materialized and the central bank's job to reach its mandate is far from over. Current efforts may not suffice to achieve its legal prescribed mandate. Monetary policy will be reviewed and reassessed at the next meeting in March, when new staff forecasts will also be available. In his opening remarks, Draghi cited the "slightly expansionary" fiscal policy, "reflecting in particular measures in support of...

 (from my colleague Dr. Win Thin) 1) Malaysia’s central bank kept rates steady at 3.25%, as expected, but cut bank reserve ratios from 4% to 3.5%2) S&P downgraded Poland one notch to BBB+ with negative outlook3) Brazil’s central bank did a complete about-face and left rates steady at 14.25%4) Mexico may tweak its FX auction program again when it is extended this month5) Argentine officials met with IMF chief Lagarde at the World Economic Forum in Davos In the EM equity space, Russia...

Like a car ignition that finally catches after several attempts, the global markets are building on the recovery seen in North America yesterday.   Asian stocks rallied, with the Nikkei leading the way with a 5.9% rally.  More modest 1.25% gains in Shanghai Composite allowed Chinese stocks to finish the week with small gains.  Australian, Korean, and Thai shares have also finished higher on the week.  European bourses are higher, and the Dow Jones Stoxx 600 is up 2.5%.  Not only is it...