Marc to Market: Spreads

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Baptism by Fire

Marc Chandler March 07, 2020

The high-frequency economic data that inform investment and policy decisions are too dated to be of much significance now. The muted response to the robust US employment data illustrates this point. Events are moving quickly. The containment of the coronavirus has failed, and it is now reported in more than 90 countries.
The precise economic i…

Baptism by Fire Reviewed by Marc Chandler on March 07, 2020 Rating: 5

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Four Drivers in the Week Ahead

Marc Chandler January 05, 2014
In the first full week of 2014, we identify four main sets of drivers for the foreign exchange market: the significance of last week's price action, interest rate differentials, central banks, and data releases.
1. Significance of last week's price action: Many observers have been discussing the dollar's weakness since the Fed anno…

Four Drivers in the Week Ahead Reviewed by Marc Chandler on January 05, 2014 Rating: 5

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Euro Higher, but the Fed is going to Taper

Marc Chandler December 11, 2013
The euro is flirting with $1.38. Many, including ourselves, have been surprised by the euro's strength in H2 and its persistence. The net speculative futures position briefly moved switched to the short side in late November.

Growth differentials and the trajectory of monetary policy are in the dollar's favor, no ?   The situation seem m…

Euro Higher, but the Fed is going to Taper Reviewed by Marc Chandler on December 11, 2013 Rating: 5

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US Dollar Mixed to Start the Week

Marc Chandler December 09, 2013
The diverging performance of the US dollar is evident today. Its weakness is concentrated against the euro and sterling. It is firm against the dollar bloc and yen. It is mixed against the emerging market currencies.

US Treasuries are steady after seemingly counter-intuitively firming a bit after the stronger than expected jobs data before the…

US Dollar Mixed to Start the Week Reviewed by Marc Chandler on December 09, 2013 Rating: 5

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Currency Positioning and Technical Outlook: Diverging Dollar Performance Set to Continue

Marc Chandler November 23, 2013
The market seemed to get confused last week between the noise and the signal and this confusion gave the dollar a bit of a reprieve. However, by the end of the week, the market seemed to be back on message.
Specifically, market sentiment swung from what was perceived as dovish comments at Yellen's confirmation hearing to a view that the Fed …

Currency Positioning and Technical Outlook: Diverging Dollar Performance Set to Continue Reviewed by Marc Chandler on November 23, 2013 Rating: 5

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Japan and UK in Focus

Marc Chandler November 13, 2013
The foreign exchange market has turned quiet, but there are two developments to note. First, Japanese traders, like their North American counterparts were reluctant to take the US dollar above the downtrend line drawn off the July and September highs. It comes in just below the JPY100 level. The greenback has been confined to a tight 25 tick r…

Japan and UK in Focus Reviewed by Marc Chandler on November 13, 2013 Rating: 5

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Emerging Markets: Preview of the Week Ahead

Marc Chandler October 21, 2013
(from my colleagues, Dr. Win Thin and Ilan Solot)
Today, Brazil will hold an auction for the Libra oil field, which is a test of the new model for oil exploration. The results should be announced at 2pm, Brasilia time. Not surprisingly, the new system is being highly criticized. Most major oil companies (BP, Exxon, Chevron) decided not to partici…

Emerging Markets: Preview of the Week Ahead Reviewed by Marc Chandler on October 21, 2013 Rating: 5

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French Politics and Economics

Marc Chandler October 15, 2013
Understandably overshadowed by the political melodrama in the US, a second round of a local election in France (Brignoles) resulted in a victory by Le Pen's National Front. The Socialist candidate had been summarily defeated in the first found and the Le Pen candidate thumped the UMP candidate 54%-46%. The Socialists have been weakened by th…

French Politics and Economics Reviewed by Marc Chandler on October 15, 2013 Rating: 5

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Thursday's Drivers

Marc Chandler September 26, 2013
The US dollar appears somewhat firmer today, but is in fact consolidating. Against most of the major and emerging market currencies, it remains largely confined to yesterday's ranges. The downside momentum that had threatened to build has dissipated.
One of our thematic points was that the next leg up for the dollar might be more driven by …

Thursday's Drivers Reviewed by Marc Chandler on September 26, 2013 Rating: 5

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Firmer Dollar, Rising Equities to Start the Week

Marc Chandler July 15, 2013
The US dollar is broadly firmer, with some notable exceptions, like the Australian dollar, which may have found succor in the battery of Chinese data and new that its own vehicle sales rose a 4% in June, the strongest since last August. Among the freely traded emerging market currencies, the Turkish lira, South African rand and Mexican peso firm…

Firmer Dollar, Rising Equities to Start the Week Reviewed by Marc Chandler on July 15, 2013 Rating: 5

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Currency Positioning and Technical Outlook: Downside Risk for the Dollar?

Marc Chandler June 15, 2013
The US dollar lost ground against all the major currencies over the past week. The yen (3.5%) and New Zealand dollar (2.0%) led the pack against the greenback. Canada, Australia and Norway were the laggards, the worst was flat and the best--up almost a percent.
We had anticipated a better showing for the US dollar. Yet, indicators suggest we w…

Currency Positioning and Technical Outlook: Downside Risk for the Dollar? Reviewed by Marc Chandler on June 15, 2013 Rating: 5

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Great Graphic: US Interest Rate Premium is Rising

Marc Chandler May 28, 2013
This Great Graphic, composed on Bloomberg, show the 10-year interest rate differential between the US on one hand, and German and Japan on the other.
The yellow line is the spread between the US and Japan. Since early April, the US premium has been confined between 103 and 121 bp.
It is currently flirting with the top of this range after US…

Great Graphic: US Interest Rate Premium is Rising Reviewed by Marc Chandler on May 28, 2013 Rating: 5

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Not to be Bitten by Same Dog Twice: Slovenia Update

Marc Chandler April 18, 2013
Since the Greek private sector debt restructuring, many understood that Cyprus was vulnerable. The timing and policy response is that took most by surprise.   The experience spurred investors to look for the next potential candidate for aid and many have settled on Slovenia.
The general story is now well appreciated. It is a small economy. La…

Not to be Bitten by Same Dog Twice: Slovenia Update Reviewed by Marc Chandler on April 18, 2013 Rating: 5

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China Turns Risk Swtich On

Marc Chandler January 10, 2013
News of strong Chinese exports helped lift market sentiment and gave a fillip to the major and most emerging market currencies. The yen and dollar were broadly weaker. The positive news stream carried over to Europe, where France reported better than expected industrial output figures and the Spanish and Italian bond auctions were well-received…

China Turns Risk Swtich On Reviewed by Marc Chandler on January 10, 2013 Rating: 5

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Drivers in the Week Ahead

Marc Chandler January 07, 2013
There are seven items that will be on the radar screen of global investors in the week ahead.
1. There is confusion over Fed policy. Despite the leadership (Bernanke, Yellen and Dudley) demonstrating their unwavering commitment to use heterodox monetary policy in an attempt to promote a stronger economy in the face of household de-leveraging a…

Drivers in the Week Ahead Reviewed by Marc Chandler on January 07, 2013 Rating: 5

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Catalonia: Much to Do about Nothing and Everything

Marc Chandler November 22, 2012
Catalonia, one of Spain's most important economic regions hold elections on Sunday, November 25. Artur Mas, the premier, called a snap election when the Rajoy government refused to reset the internal transfers that result in Catalonia paying Madrid more than it receives in benefits. These transfers are one of the factors that lie behind Catal…

Catalonia: Much to Do about Nothing and Everything Reviewed by Marc Chandler on November 22, 2012 Rating: 5

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FX Positioning and Technical Outlook: Trend is Your Friend?

Marc Chandler September 15, 2012
Nearly every development in recent days has been embraced by the foreign exchange market as a reason to continue to do what it has been doing since late July, and that is to sell the dollar.

The German Constitutional Court ruling, allowing the European Stability Mechanism to go forward, which in turn bolsters the ECB's Outright Monetary Tra…

FX Positioning and Technical Outlook: Trend is Your Friend? Reviewed by Marc Chandler on September 15, 2012 Rating: 5

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German Court Decision and Data Extend Risk-On Rally

Marc Chandler September 12, 2012
The German Constitutional Court cleared the remaining hurdle to the ESM and this has encouraged a further extension of the risk-on rally. The US dollar is bearing the brunt of the move ahead of the other key event of the week, the conclusion tomorrow of the FOMC meeting, where the perceptions of the risk of QE are running high.
The market appear…

German Court Decision and Data Extend Risk-On Rally Reviewed by Marc Chandler on September 12, 2012 Rating: 5

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FX Positioning and Technical Outlook Ahead of Eventful Week

Marc Chandler September 01, 2012
The week ahead kicks off what we expect to be a period of intense event risk. The combination of positioning, judging from the futures market and anecdotal reports, and the low implied volatility in currencies and equity markets warn of heightened risk in the period ahead.

The week begins off slowly with a long holiday weekend in the US. It is h…

FX Positioning and Technical Outlook Ahead of Eventful Week Reviewed by Marc Chandler on September 01, 2012 Rating: 5

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FX Technical Outlook and Futures Positioning

Marc Chandler 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 Reviewed by Marc Chandler on August 25, 2012 Rating: 5