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Grokking Latvia

June 05, 2013
The EU and the ECB formally recommended that the euro area finance ministers approve Latvia to join the monetary union on January 1. They will do so next month. The small Baltic country will become the 18th member of EMU, a year after Estonia. Barring an unexpected setback, Lithuania will become the 19th member at the start of 2015.   Perhaps …
Grokking Latvia Grokking Latvia Reviewed by Marc Chandler on June 05, 2013 Rating: 5
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FX Drivers in the Week Ahead

December 03, 2012
The US dollar's recent losses are being extended at the start of the new week.  The announcement of the details of the Greek bond buy-back scheme has triggered a sharp rally in peripheral bond yields, while the euro area Nov manufacturing PMI is reported at 8-month highs, even if still below the 50 boom./bust level at 46.2.  The euro has compl…
FX Drivers in the Week Ahead FX Drivers in the Week Ahead Reviewed by Marc Chandler on December 03, 2012 Rating: 5
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Portugal and Ireland: Us Too, Please

November 27, 2012
Greece has had trouble implementing the structural reforms demanded in exchange for aid.  The large and rising debt/GDP ratio is also a function of the larger than officially (Troika) expected contraction in the Greek economy.  The resolution achieved after protracted debate includes an easing of the debt servicing vis lower interest rates, defer…
Portugal and Ireland: Us Too, Please Portugal and Ireland: Us Too, Please Reviewed by Marc Chandler on November 27, 2012 Rating: 5
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Another Brick in the Wall

November 20, 2012
There have been several developments to note, but price action has been minimal through the European morning.  
The biggest talking point today is Moody's decision to cut France's rating one notch to AA1 and maintaining a negative outlook.  This saw the euro jerk lower in thin pre-Asian activity to ~$1.2765, which should now offer initial …
Another Brick in the Wall Another Brick in the Wall Reviewed by Marc Chandler on November 20, 2012 Rating: 5
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Nervous Calm Leaves Greenback Mixed

September 25, 2012
The US dollar is decidedly mixed, gaining against the euro, Swiss franc, and the Canadian and Australian dollars compared with yesterday's New York close, but lower against sterling, the yen (for the fifth day), and New Zealand dollar about half way through the 24 hour session.  While the MSCI Asia-Pacific Index eked out a marginal gain, the …
Nervous Calm Leaves Greenback Mixed Nervous Calm Leaves Greenback Mixed Reviewed by Marc Chandler on September 25, 2012 Rating: 5
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Skepticism Due to Misdiagnosis

September 17, 2012
The US dollar is generally firmer in what appears to be a consolidative phase as the market digests last week’s developments and awaits fresh developments.  News of an unexpectedly large (10.6%) drop in Singapore’s August exports is seen as reflective of broader regional weakness.  The 2.1% decline of the Shanghai Composite, the most in ten weeks,…
Skepticism Due to Misdiagnosis Skepticism Due to Misdiagnosis Reviewed by Marc Chandler on September 17, 2012 Rating: 5
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Combination of US Jobs and Draghi's Broad Strokes Helps USD

September 06, 2012
The stronger than expected ADP employment estimate and downward revisions to growth from the ECB has seen the dollar recover earlier losses.  Draghi has indicated that the details of the Monetary Outright Purchases (MOT), which is the SMP2.0, will be released in a separate press release, as will the new collateral rules.  This will of course be s…
Combination of US Jobs and Draghi's Broad Strokes Helps USD Combination of US Jobs and Draghi's Broad Strokes Helps USD Reviewed by Marc Chandler on September 06, 2012 Rating: 5
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Draghi: Call Me Maybe

August 27, 2012
ECB President Draghi appears to have gotten as much as he can get with his word play.  He has been fairly successful.  The pressures that were threatening Europe via Spain and Italy in late July were reduced and summer holidays were still enjoyed by his well placed suggestive comments.  
Spanish 2-year yields fell from over 7% before Draghi to ab…
Draghi: Call Me Maybe Draghi: Call Me Maybe Reviewed by Marc Chandler on August 27, 2012 Rating: 5
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FX Technical Outlook and Futures Positioning

August 25, 2012
There are two main drivers behind the price action in the foreign exchange market and they will likely persist in the days ahead.  First, there continues to be position adjustment ahead of the what promises to be eventful few weeks.  Second, the release of the minutes from the August 1 FOMC meeting has increased the perceived odds that QE3 is laun…
FX Technical Outlook and Futures Positioning FX Technical Outlook and Futures Positioning Reviewed by Marc Chandler on August 25, 2012 Rating: 5
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Time is Money and other Fetishes

August 23, 2012
Doesn't the idea that "time is money" capture the spirit of modernity?  Yet the Greek Prime Minister is suggesting that all Greece needs is some breathing room, given the depth of the economic contraction.  It does not need any more money, he tries to reassure.  
The Troika will not find this believable.  Press reports suggest the I…
Time is Money and other Fetishes Time is Money and other Fetishes Reviewed by Marc Chandler on August 23, 2012 Rating: 5
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Is it Shuttle or Shuffle Diplomacy in Europe?

August 16, 2012
There is one main feature of the euro zone economic data next week. Yet the flash PMI readings are unlikely to be sufficiently different from the July readings to prompt a reassessment of the trajectory of the regional economy. More important than the economic data will be the political maneuverings.

There will be a flurry of meetings…
Is it Shuttle or Shuffle Diplomacy in Europe? Is it Shuttle or Shuffle Diplomacy in Europe? Reviewed by Marc Chandler on August 16, 2012 Rating: 5
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Is Rajoy Serious or is He Just Flirting?

August 14, 2012
A Spanish newspaper is reporting today that a formal request for EFSF aid for domestic banks can come as early as this week. This would be seen to clear the way for the payment of the first tranche of the 100 bln euro bank aid package that had been previously earmarked. That in turn could help meet the conditionality outlined by Draghi that woul…
Is Rajoy Serious or is He Just Flirting? Is Rajoy Serious or is He Just Flirting? Reviewed by Marc Chandler on August 14, 2012 Rating: 5
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Currency Positioning and Outlook

August 11, 2012
Market positioning in the week ending August 7 suggests that speculators in the futures market generally agree with our assessment that ECB President Draghi's recent proposal was not a game changer.  The recent pattern continued.  Essentially what this entails is buying the Australian and Canadian dollars and Mexican peso and some light posit…
Currency Positioning and Outlook Currency Positioning and Outlook Reviewed by Marc Chandler on August 11, 2012 Rating: 5
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Redenomination Genie Remains Out of the Bottle

August 08, 2012
The US dollar is trading with a firmer bias today, but largely remains confined to recent ranges.  Sentiment remains cautious.  Participants seem to lack a near-term focus, but the failure of the foreign currencies to build on last week's gains is a bit disappointing, though the pullbacks have been shallow.

Global equities are mixed.  The MSC…
Redenomination Genie Remains Out of the Bottle Redenomination Genie Remains Out of the Bottle Reviewed by Marc Chandler on August 08, 2012 Rating: 5
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Four Observations to Start the Week

August 06, 2012
The US dollar begins the week consolidating last week’s losses after modest follow through selling was seen in Asia.     Soft UK house prices, anticipation of a dovish BOE quarterly inflation report midweek, and some cross rate selling has seen sterling under perform.   The other major currencies are little changed and the greenback is slightly fi…
Four Observations to Start the Week Four Observations to Start the Week Reviewed by Marc Chandler on August 06, 2012 Rating: 5
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Great Graphic: Mr Market Exaggerates

August 05, 2012
At first the ECB's NATO strategy--No Action Talk Only--produced a sharp sell-off of the euro and Spanish and Italian bonds, especially the long end.  On second thought, the half glass was really half full and there was a dramatic rally of the euro and Spanish and Italian bonds.  The idea was the the ECB was preparing to support the bond marke…
Great Graphic: Mr Market Exaggerates Great Graphic: Mr Market Exaggerates Reviewed by Marc Chandler on August 05, 2012 Rating: 5
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ECB Post-Mortem and US Jobs

August 03, 2012
The US dollar has surrendered around half of yesterday’s gains as European investors, more so than Asia, seemed to look past the drag from Draghi and anticipate a stronger European response next month and a jobs report that will keep the Federal Reserve looking to provide more support. Asian shares finished lower, ostensibly hurt by the decline …
ECB Post-Mortem and US Jobs ECB Post-Mortem and US Jobs Reviewed by Marc Chandler on August 03, 2012 Rating: 5
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Central Banks Do Nothing, Promise More

August 02, 2012
The ECB has disappointed the market who expected some action after Draghi's strong comments last week.  In anticipation the euro was briefly taken through the $1.24 level only to be sold down to new lows for the week, below $1.22.         

Draghi did not break new ground.  He reiterated what was already known.  Countries need to formally req…
Central Banks Do Nothing, Promise More Central Banks Do Nothing, Promise More Reviewed by Marc Chandler on August 02, 2012 Rating: 5
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The Broken Transmission

August 01, 2012
The US dollar is little changed against the major currencies, but as was the case yesterday, it is sporting a softer profile against the dollar-bloc.  Despite a continued push back from Germany, the market seems to favor Draghi and Spanish and Italian bonds markets continue to trade firmly and with yield curves steepening as the 2-year yields fall…
The Broken Transmission The Broken Transmission Reviewed by Marc Chandler on August 01, 2012 Rating: 5
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Europe: Urgent or Not?

July 30, 2012
The ECB's Draghi expressed an appreciation for the urgency facing the euro area, but he seems more isolated than he did last week when Merkel and Hollande reiterated their willingness to do what was necessary.
Even though the euro fell more than a 1.5 cents from its pre-weekend high just below $1.24, Spanish bond yields have continued to retrea…
Europe: Urgent or Not? Europe: Urgent or Not? Reviewed by Marc Chandler on July 30, 2012 Rating: 5
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