Tag Archives: FX Trends

The relentless pounding that investors suffered in the first two weeks of the year has subsided.  It is too early to have much confidence that a turn is at hand.  By various measures, the sell-off had stretched the technical condition.     In any event, the stability of the yuan, gains in the Chinese stocks, and a bounce in oil prices appears to be giving the bears a day off.  Chinese economic data (Q4 GDP, retail sales, industrial output, and fixed asset investment were a little softer...

EM ended last week on a sour note. The most important factor for global risk appetite has become China, with the Fed tightening cycle now on the back burner.  Our base case remains that China muddles through, but policymakers there need to communicate better with the markets.  The PBOC fix and Chinese equity market performance will likely be the biggest drivers for global markets this week.  Commodity prices continue to slide, with oil and copper making new cycle lows last week and...

The market is trying to get its bearings today. The large decline in the US equities before the weekend has had modest spillover effects elsewhere.  Equity markets, barring the Shanghai and Shenzhen Composites, are mostly modestly lower.  The MSCI Asia-Pacific Index is off about 1% while the Dow Jones Stoxx 600 is less than 0.5% lower in late-London morning turnover.   Iranian oil sanctions were lifted.  Oil prices are off a little more than 1% today, with Brent and WTI briefly slipped...

Two weeks into the year and most investors are nursing sizable drawdowns.  The recovery in the US equities on January 14 looked like a potential turning point. However, the coattails proved non-existent, and the bull trap was sprung with new downside momentum established before the weekend. The obvious takeaway is that the current driver is not to be found in New York.   And to be sure, we are not just talking about equities, but during this market meltdown, correlations between various...

Speculative activity in the CME currency futures picked up in the latest reporting period. There were six significant gross position adjustments, which in our work is more than 10k contracts.   The gross short speculative euro position was reduced by 17.9k contracts, leaving 209.6k. Since early December, 53k gross short euro contracts were covered.  During the same time, about 17k gross long contracts were added.   Speculators stayed long the yen for the second consecutive week, and...

The US dollar remains strong against most currencies.  The exceptions are the Japanese yen, Swiss franc and euro though the franc and euro pulled back in the US afternoon before the weekend.  The greenback is still appreciating on a trade-weighted basis, which is the metric that counts in assessing its impact on the overall economy.   The euro, yen and franc strength is not as is often portrayed as some kind of safe haven that is flocked to in turbulent times.  Rather those currencies...

1) The Hong Kong dollar posted its biggest two-day decline since 1992 2) Bank Indonesia restarted its easing cycle, cutting rates for the first time since February 2015 3) Poland’s current Monetary Policy Council (RPP) held its last policy meeting 4) Poland’s president proposed a draft bill on FX loan conversion 5) Russia will reportedly cut budgetary expenditures by 10% due to low oil prices 6) Russia’s central bank has turned more hawkish 7) Argentina officials and debt holdouts met...

There are three developments today, which while not driving the market, are important for many investors.  The first are comments from German Finance Minister Schaeuble and EC President Juncker.  The second is an important development in Poland.   The third are growing problems in Greece. Schaeuble is formally acknowledging what investors have known for some time. The Schengen Agreement, which opens the internal borders in Europe, is at risk.  This agreement pre-dates EMU itself.  So how...

The recovery of US shares and oil yesterday provided short-lived.  Asian shares were dragged lower with the help of Chinese equities.  The 3.5% fall in the Shanghai Composite today brings the year-to-date decline to a little more than 18%. Taiwan, which goes to the polls this weekend ( the opposition that has been critical of the government's pro-China policy is ahead) bucked the trend to post minor gains. European shares are also moving lower, with the Dow Jones Stoxx 600 off more than...

The US stock market and the oil market appear joined at the hip. The Great Graphic here, created on Bloomberg, shows the correlation of the two markets.  It is near 0.77, which is the highest since September 2013.   The correlation was conducted on the level of the S&P 500 and the level of the front-month light sweet crude oil futures contract.  It tells us that the two markets have been moving in the same direction nearly eight of ten sessions over the past 60 sessions.   As the...