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FX Update and Adjusting to Zero Deposit Rate

July 13, 2012
The US dollar is trading little changed against the major currencies, but the dollar-bloc currencies are a bit better bid, perhaps encouraged by China's data, which on the face of it was not as poor as feared when PBOC cut interest rates earlier this month.   Q2 growth was 1.8% quarter-over-quarter, up from a revised 1.6% in Q1.  Year-over-ye…
FX Update and Adjusting to Zero Deposit Rate FX Update and Adjusting to Zero Deposit Rate Reviewed by Marc Chandler on July 13, 2012 Rating: 5
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Sentiment Turning on Germany?

June 14, 2012
It has been a difficult week for Germany.  Instead of attributing the intensification of the crisis to the debtors, some officials and observers, as well as the media, are blaming Germany for not opening its purse more.  Germany, we are told, is isolated, but it is not.  The key division in Europe is creditor and debtor.  For much of its resistanc…
Sentiment Turning on Germany? Sentiment Turning on Germany? Reviewed by Marc Chandler on June 14, 2012 Rating: 5
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Calmer Tone Ahead of the Weekend

May 25, 2012
A nervous and fragile calm has settled over the global capital markets.   The dollar has been thus far confined to yesterday's ranges against sterling and the euro, and attempts to push the dollar higher faltered against the yen and Swiss franc, leaving the greenback is narrowly mixed on the day.  European equities are mostly slightly firmer,…
Calmer Tone Ahead of the Weekend Calmer Tone Ahead of the Weekend Reviewed by Marc Chandler on May 25, 2012 Rating: 5
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Dollar Firm, Tensions Mount

April 16, 2012
Rising tensions in Europe continue to be a dominant force in the foreign exchange market, with the euro briefly dipping below the $1.30 level for the first time since mid-February. Another reflection of the tensions is the further recovery of the Japanese yen. The dollar slipped below JPY80.50 in Asia, a level not seen since late-February, despite…
Dollar Firm, Tensions Mount Dollar Firm, Tensions Mount Reviewed by Marc Chandler on April 16, 2012 Rating: 5
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China Disappointment Buoys Dollar

April 13, 2012
China's Q1 GDP disappointed expectations and market rumors and is the chief driver of the capital markets today.  The official measure of growth was 8.1%.  The consensus was 8.4% before yesterday's rumors of a 9% rise made the rounds and helped lift sentiment--seeing equities rally, gains in the dollar bloc currencies and a weaker dollar.…
China Disappointment Buoys Dollar China Disappointment  Buoys Dollar Reviewed by Marc Chandler on April 13, 2012 Rating: 5
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The Challenge of Sterling

April 11, 2012
Many participants can single out a currency that is particularly vexing for them. Some say that the yen is the graveyard of all good (and poor) traders. Yet for many currency pairs there are some factors that seem to be more influential than others, even if over time, there is significant variability. For example, the two-year interest rate diffe…
The Challenge of Sterling The Challenge of Sterling Reviewed by Marc Chandler on April 11, 2012 Rating: 5
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What are They Thinking?

April 11, 2012
In recent days, policy makers have been most noticeable by their absence. This absence has weakened their credibility and encouraging speculative attention.
The recent string of questionable tactical moves began last week when the Swiss National Bank was unable to prevent a breech of the euro/Swiss floor of 1.20. A modest change in tactics could …
What are They Thinking? What are They Thinking? Reviewed by Marc Chandler on April 11, 2012 Rating: 5
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When Virtuous Cycles Turn Vicious

April 10, 2012
The LTRO's provided more than 1 trillion euros of liquidity. Spanish and Italian banks bought large amounts of sovereign bonds. Recent reports indicate in the Nov-Feb period, Spanish banks bought about 68 bln euros of sovereign bonds and Italian banks bought around 54 bln euros of sovereign bonds (mostly believed to be their own sovereign'…
When Virtuous Cycles Turn Vicious When Virtuous Cycles Turn Vicious Reviewed by Marc Chandler on April 10, 2012 Rating: 5
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Four Trade Ideas

April 10, 2012
Short Euro: Since late Jan, the record net short euro futures position was scaled back and as of last Tuesday was at its lowest level in about 20 weeks. This was partly a function of shorts being pared and partly longs being established. As a proxy for trend followers and momentum players, we suspect that market segment is now better balanced to a…
Four Trade Ideas Four Trade Ideas Reviewed by Marc Chandler on April 10, 2012 Rating: 5
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Dollar and Yen Bounce Back

April 10, 2012
As full liquidity returns to the markets for the first time in nearly a week, the US dollar and Japanese yen have rallied.  First though weak short euros and long yen cross positions were squeezed in early Asia, but by the time Europe entered the fray, the moves were well under way, with the euro and sterling coming off and the yen rallying. 
Th…
Dollar and Yen Bounce Back Dollar and Yen Bounce Back Reviewed by Marc Chandler on April 10, 2012 Rating: 5
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Quick Thoughts on the US Jobs Data

April 06, 2012
One word can summarize today's report:  disappointing.   The 120k rise in the headline figure was roughly half of the whisper figure.   The unemployment rate ticked down to 8.2%, but the details are disappointing.  The household survey upon which it is based showed a decline of 31k jobs and 164k people leaving the labor force. 
The easy expl…
Quick Thoughts on the US Jobs Data Quick Thoughts on the US Jobs Data Reviewed by Marc Chandler on April 06, 2012 Rating: 5
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Jobs Data and the Week in Perspective

April 06, 2012
The pending holidays have drained activity in the global capital markets. The US jobs report may spark some short-lived interest, though the thinness of the market may exaggerate the impact of real orders.
There are 132.7 mln employees in the US. An increase of 0.1 hours of the work week is tantamount to 330k full time equivalents. Earnings grow…
Jobs Data and the Week in Perspective Jobs Data and the Week in Perspective Reviewed by Marc Chandler on April 06, 2012 Rating: 5
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FOMC Sets Dollar Tone

April 04, 2012
The minutes from the March FOMC meeting have continued to drive the dollar higher, except against the yen, and bonds and stocks lower.  Especially in the context of Bernanke's recent remarks, the, should we say less than dovish, tone to the minutes caught the market wrong footed.
The FOMC in essence tweaked its economic and inflation assessme…
FOMC Sets Dollar Tone FOMC Sets Dollar Tone Reviewed by Marc Chandler on April 04, 2012 Rating: 5
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Spain and Italy Update

April 03, 2012
Spain
The more Spanish officials talk about the budget the less credible it seems. The 10-year yield fell 11 bp on Friday when the budget first presented before the weekend. Now as more detail emerge as it goes to parliament, 10-year yields are rising.
The budget assumes that yields will remain around February levels. The 10-year yield averaged a…
Spain and Italy Update Spain and Italy Update Reviewed by Marc Chandler on April 03, 2012 Rating: 5
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Dollar Firms, But Pittance Thus Far

March 29, 2012
The greenback is generally firmer today, but still remains largely bouncing along its recent trough.  The best case for a more positive assessment is with the Australian dollar, which has now fallen through last week's low to trade at its lowest level since mid-Jan. 
European officials have been making all kinds of allusions to the worst of …
Dollar Firms, But Pittance Thus Far Dollar Firms, But Pittance Thus Far Reviewed by Marc Chandler on March 29, 2012 Rating: 5
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Short Update on France

March 23, 2012
France reported better than expected business confidence figures today. The March reading of 96 compares with Feb's 93 and is the first time in over a year that business confidence has improved two consecutive months.
Yesterday's disappointing flash PMI report (mfg 47.6 vs 50.0 in Feb and service unch at 50.0 vs expectations for a small …
Short Update on France Short Update on France Reviewed by Marc Chandler on March 23, 2012 Rating: 5
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Japan to Report Another Trade Deficit

March 21, 2012
Early Thursday in Tokyo, Japan is likely to report a trade deficit for February. On a unadjusted basis, it will be the 5th monthly deficit. Based on the trade figures for the first twenty days of February, it will likely be the smallest of the streak. The consensus is for JPY120 bln shortfall. On a seasonally adjusted shortfall, will the eleventh …
Japan to Report Another Trade Deficit Japan to Report Another Trade Deficit Reviewed by Marc Chandler on March 21, 2012 Rating: 5
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Why I Like the Australian Dollar

March 19, 2012
The Australian dollar held support in the middle of last week near $1.04.  Japanese retail and institutional investors, always yield hungry have taken a new look, especially as they begin trying to diversify away from the Brazilian cash register.  There is still scope for another rate cut from the Reserve Bank of Australia, possibly in May, but t…
Why I Like the Australian Dollar Why I Like the Australian Dollar Reviewed by Marc Chandler on March 19, 2012 Rating: 5
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Spain Update

March 19, 2012
The Spanish news stream is poor as the media focuses on local bank reliance central bank funding and the 2012 budget that will be unveiled next week. Just like roughly 1 in 3 that are unemployed in the euro zone are in Spain, Spanish banks account for almost half of the borrowing from the ECB in February.
Recall that Prime Minister Rajoy unilate…
Spain Update Spain Update Reviewed by Marc Chandler on March 19, 2012 Rating: 5
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Thoughts Ahead of Spanish and Italian Bond Auctions

January 11, 2012
Spain and Italy begin this year's funding operations with bond auctions tomorrow and Friday. Although the euro is bouncing along its recent trough against not only the dollar, but against many of the other major currencies as well, there has been a modest improvement in some of the measures the market has focused on as metric of stress.
The 3-m…
Thoughts Ahead of Spanish and Italian Bond Auctions Thoughts Ahead of Spanish and Italian Bond Auctions Reviewed by Marc Chandler on January 11, 2012 Rating: 5
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