Tag Archives: FX Trends

Summary: Some romanticists want to have another Bretton Woods fixed exchange rate regime. Bretton Woods had difficulty from nearly the day it went operational. It is misguided to think a new rigid regime is needed or is appropriate. Today is the anniversary of the final blow to the dollar-gold standard. By August 15, 1971, the exchange of dollars for gold was limited to central banks, and US President...

Summary: The GDP deflator may be just as important as overall growth for BOJ considerations and the possibility of fresh action next month. Falling UK rates and a weaker pound are desirable from a policy point of view. Dudley’s press conference may be more important than FOMC minutes. Two German state elections that will be held next month comes as Merkel’s popularity has waned. Japan Japan’s Q2 GDP: The...

Speculative position adjustments in the currency futures continued at a low pace in the Commitment of Traders report for the week ending August 9.  There were though two distinct patterns: Speculators reduced their exposure in EUR, CHF and peso. Speculator increased their exposure in JPY, GBP, CAD and NZD. Euro, Swiss Franc, Peso: Lower Exposures The first pattern is found in the euro, Swiss franc,...

Swiss Franc Currency Index The CHF index experienced its first good week since many weeks, when we compare it against the dollar index. It is up 1.25%, while the USD index lags with -0.50%. Click to enlarge. Swiss Franc Currency Index (3 years) The Swiss Franc index is the trade-weighted currency performance (see the currency basket) On a three years interval, the Swiss Franc had a weak performance. The dollar...

Swiss Franc The weak U.S. Retail Sales report let the euro improve against the dollar. We would have expected a stronger franc, given that the German growth was stronger (see more on the relationship between the German economy and CHF). Some technical movement after yesterday’s strong fall of EUR/CHF may have prevented that. Click to enlarge. United States There is a general consolidative tone in the capital...

Swiss Franc Once again, EUR/CHF reverses in the middle of the week. A part from technical reasons, the weak French CPI (+0.4% YoY) and Italian CPI (-0.2% YoY) exercised downwards pressure on the euro. Click to enlarge. FX Rates The US dollar has found steadier footing today after trading heavily yesterday.  There are two main themes.  The first is sterling’s heavy tone.  After closing the North American session...

Summary: LIBOR continues to rise. The relative calm of the markets will likely end next month. The last four months of the year are jammed with key events that have potential to disrupt the markets. US LIBOR continues to rise.  LIBOR may not be what it was before the Great Financial Crisis, or before the scandalous revelations.  However, it remains an important benchmark. Three-month LIBOR rose from around...

Click to see video. I was invited to appear on CNBC Asia Rundown show with Pauline Chiou.   We discuss the Chinese yuan on the anniversary of last summer’s unexpected devaluation.  I suggest that most of the things that get observers excited, like the internationalization of the yuan, or the Hong Kong-Shanghai link or, perhaps by the end of the year,a Hong Kong-Shenzhen link are really Chinese machinations that...

Swiss Franc Click to enlarge. FX Rates European bourses are mixed, and this is leaving the Dow Jones Stoxx 600 practically unchanged in late-European morning turnover. Financials are the strongest sector (+0.4%), and within it, the insurance sector is leading with a 0.8% advance and banks are up 0.4%. The FTSE’s Italian bank index is up 1.4% to extend its recovery into a fifth session. Bond markets are broadly...

Summary: Liquidity rather than intrinsic value seems to be driving EM assets. MSCI EM equity index looks constructive technically. The chart pattern suggests scope for around 13% gains from here. Scratch an investor, and you will find two models.  One is a fair value model, perhaps based on free-cash-flow or earnings expectations, or breakup value.  The other is based on liquidity.  We suspect that the latter...