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Markets Watching Three Developments
May 5, 2017
Financial markets this Friday, May 5, are watching three developments. The U.S. April jobs report. A rebound in employment growth from 98K in March is anticipated. The jobless rate in March was 4.5%, 0.2 percentage points less than in February, but average hourly wage earnings also ticked lower to a 2.7% on-year advance. Wednesday’s FOMC […] More
Currency Management Norms Under Threat
May 23, 2016
A statement released April 15 by G20 finance ministers and central bank governors reaffirmed a position against currency manipulation that represents a coordinated stance that’s been in place already for a long time: Excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will consult closely on […] More
The Mother of All Resistance Levels is Par (1:1)
May 11, 2016
Currencies readily alternate between cycles of appreciation and depreciation, but it is a much rarer event for a currency’s unit of account to transition from being weaker than another to being worth more. Put differently, movements through par, or in the case of USD/JPY 100:1, happen very infrequently. Take the key EUR/USD relationship, now almost […] More
Covert Currency War Games
May 3, 2016
Even with U.S. monetary stimulus being throttled back and other central banks pressing harder on the stimulus pedal, the pace of policy change thus far and in the future will be too gradual to make a huge difference in a direct way through their influence on short- and long-term interest rate differentials. The cutting edge […] More
Risk Aversion Returns after Upbeat Monday
May 3, 2016
Stocks, Treasury yields, and oil prices faltered Tuesday for various reasons. Disappointing Chinese, British and Irish manufacturing purchasing manager surveys reported. Mediocre first-quarter U.S. corporate reports in the background. EU Commission’s Spring Forecast revised 2016 and 2017 projected growth marginally downward. Credibility of BOJ policy very low. Japanese market shut for first of three consecutive […] More
Holidays, Manufacturing PMI Releases, and Japanese Recession Concerns
May 2, 2016
There is a wide spectrum of holiday closures today due to the confluence of labor day observances (May Day), the Greek Orthodox Easter Monday, and the early spring British bank holiday. Markets are shut in Russia, China, Singapore, Taiwan, Hong Kong, Thailand, Malaysia, Vietnam, Laos, Sri Lanka, Greece, South Africa, Kenya, Bosnia, Cyprus, Ireland, Bulgaria, […] More
A Most Peculiar Year
March 2, 2016
Face it, anticipating the movements of currencies has never been intuitive, and it’s hard to recall a time quite as confusing as the present. The United States, Britain, eurozone, Japan, China and Brazil each face economic and political crossroads of enormous importance. United States: The presidential primaries have highlighted an extremely high level of voter […] More
The Year is Still Young, Yet Already Full of Surprise
February 17, 2016
The first eighth of 2016 was eventful. The surprises are not limited to China and other developing economies, either. Financial markets have been very volatile. Although near the middle of its high-low range thus far, the price of oil is down around 16% on balance, and gold is more than $100 above its end-2015 level. […] More
Tougher Dollar Sledding Against the Euro and Yen
February 1, 2016
The strong dollar performance of 2015 carried over into the first month of 2016 against a large number of currencies. Appreciation last month was most pronounced against commodity sensitive currencies and emerging economy monies and also included the performances against the Swiss franc and sterling. The dollar’s two most influential relationships moved only slightly on […] More
What to Make of Three Helter Skelter Weeks that Felt Like a Year
January 21, 2016
Central bankers tend to be cautious and not prone to scrapping a forecast on the basis of a couple of difficult weeks when developments haven’t jived with baseline assumptions. But there was the ECB President today declaring that “downside risks have increased again and citing a trio of causes — increased uncertainty surrounding emerging markets, […] More
