Tag Archives: FX Trends

Summary: Many think sterling has bottomed. A number of technical factors point to potential toward $1.42. Fundamental considerations do not appear as supportive as technicals. With the Bank of England apparently surprising the market more than one might have expected, given the split surveys, many are thinking sterling has bottomed.   If it has bottomed, where could it go?  A number of technical...

Summary: BOE neither cut rates not announced a new asset purchase plan. Sterling rallied hard. However, the BOE indicated an August ease and I look for sterling to pare knee-jerk gains. The Bank of England surprised many, if not most, participants by not changing policy.  There was no rate cut and no asset purchase plan. However, there can be little doubt that the BOE will take action next month.  The minutes...

Swiss Franc Improving US job data also helped to increase demand for EUR/CHF long. For last week’s sight deposits see here. Click to enlarge. The combination of the rebounding US job growth and gains in the S&P 500 to near record levels before the weekend is helping boost the US dollar against the major currencies, while the emerging market currencies are mixed.  In addition, indications that Japan will put...

(Here is the latest monthly column I write for Caixin.  It is on Brexit and I wrote it as an email to my mother.  Here is the link.  The text follows) To: Mother Date: July 4, 2016 Subject: Re: Did you know Britain was leaving Europe? Should I worry? Glad to see you figured out how to access your email account. I smiled when I saw your note in my inbox. Thank you, though I am not sure that Thomas Watson felt the...

Summary: European Court of Justice could rule on July 19 that private investors do not have to be bailed in before public money can be used to recapitalize banks. Italy stands to gain the most, at least immediately, from such a judgment. Italian bank shares recovered after initial weakness. After the 2007-2008 bank recapitalization by governments, which means taxpayers’ money, Europe changed the rules.  The...

Shortly before I was on Bloomberg TV today, Leadsom withdrew from the Tory leadership context, leaving May, who favored remaining the EU, as the likely successor of Cameron.  Leadsom had been trailing May even before her controversial weekend comments. Sterling shot up to almost $1.3020, and as was the case last week, there appeared to be a wall of sterling sellers lurking there.  Sterling was trading below $1.29...

Summary: Electoral politics remains significant. BOE is likely to cut rates, while BoC may tilt more dovishly. US Q2 earnings season formally begins. Investors are under siege.  A growing proportion of bonds in Europe and Japan offer negative yields. The German and Japanese curves are negative out 15-years, while one cannot find a positive yield among any tenor of Swiss government bonds.   Despite a string of...

Swiss Franc Currency Index In the Brexit month, the Swiss franc index clearly underperformed the dollar index. The major reason is that the dollar is seen as a better safe-haven than the Swiss Franc, possibly because Swiss sales are affected more when British demand falls. Click to enlarge. Swiss Franc Currency Index (3 years) The Swiss Franc index is the trade-weighted currency performance (see the currency...

The UK voted to leave the EU. The German and Japanese yield curve is negative out through 15 years.  The entire Swiss curve have negative yields.  There is little doubt that the US economy was recovering from a soft six-month stretch even before the recent string of data.  And even then speculators in the futures market mostly added to foreign currency exposures. In five of the eight currency futures, we track,...

Swiss Franc The Non-Farm Payrolls for June were very positive, even if Marc Chandler is not totally convinced. Good job data in the United States are typically positive for both USD and EUR, because the odds of a rate hike are increasing. Consequently the EUR/CHF rose. In the last two days SNB interventions should have been smaller. The Swiss (seasonally adjusted) unemployment rate fell from 3.5% to 3.3%. Click to...