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Great Graphic: Euro-Swiss Shows Elevated Systemic Risk

May 21, 2018
The Swiss National Bank's decision in January 2015 to remove the cap on the Swiss franc (floor on the euro) that it has set at CHF1.20 is seared into the memory of a generation of foreign exchange participants.  It is not exactly clear where the euro bottomed in the frenzied activity that followed the SNB's surprise move.  Bloomberg record…
Great Graphic: Euro-Swiss Shows Elevated Systemic Risk Great Graphic:  Euro-Swiss Shows Elevated Systemic Risk Reviewed by Marc Chandler on May 21, 2018 Rating: 5
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Market Response to De-escalation of Sino-American Trade Tensions: Meh

May 21, 2018
There have been two major developments over the weekend.  First, the US and China appear to have struck an agreement in principle that will reduce the bilateral imbalance.  The precise details have yet to be worked out, but the progress has been sufficient for US Treasury Secretary Mnuchin to that the tariffs are on hold.   
Asian stock markets wer…
Market Response to De-escalation of Sino-American Trade Tensions: Meh Market Response to De-escalation of Sino-American Trade Tensions:  Meh Reviewed by Marc Chandler on May 21, 2018 Rating: 5
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Emerging Markets: Week Ahead Preview

May 20, 2018
(from my colleague Dr. Win Thin)
EM FX ended Friday on a weak note and extended the slide. For the week as a whole, the best EM performers were PHP, TWD, and SGD while the worst were ARS, ZAR, and TRY.  With US rates continuing to move higher, we believe selling pressures on EM FX will remain in play this week.  Our recently updated EM Vulnerabilit…
Emerging Markets: Week Ahead Preview Emerging Markets:  Week Ahead Preview Reviewed by Marc Chandler on May 20, 2018 Rating: 5
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Dollar Power

May 20, 2018
There are several trends in the capital markets at a high-level.  The euro and yen's decline has coincided with sustained rallies in European and Japanese equity benchmarks.  Emerging market equities and currencies have been trending lower. 
There are two other trends that arguably are reinforcing if not causing the other trends.  Both oil pric…
Dollar Power Dollar Power Reviewed by Marc Chandler on May 20, 2018 Rating: 5
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Dollar Surge Continues

May 19, 2018
The US dollar is experiencing a powerful surge.  It is a function of rising US rates and gradually growing confidence that the Federal Reserve may hike rates three more times this year, rather than the two that the median Fed forecast (March dot plot) anticipated. 
The dollar's advance is also a reflection of poor developments abroad.  Consider…
Dollar Surge Continues Dollar Surge Continues Reviewed by Marc Chandler on May 19, 2018 Rating: 5
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Emerging Markets: What Changed

May 18, 2018
(from my colleague Dr. Win Thin) 
·Bank Indonesia started a tightening cycle with a 25 bp hike to 4.5%.·Jailed Malaysia opposition leader Anwar Ibrahim was released by new Prime Minister Mahathir.· Malaysia scrapped the controversial 6% goods and services tax (GST).Violent protests shook Israel as the relocated US embassy opened in Jerusalem.Argent…
Emerging Markets: What Changed Emerging Markets:  What Changed Reviewed by Marc Chandler on May 18, 2018 Rating: 5
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Markets are Uninspired Ahead of the Weekend

May 18, 2018
The US dollar is mostly firmer.  US yields have stabilized.  Asian equities were mostly higher, while European bourses are struggling.  Oil prices are steady. 
There have been a number of sustained trends in the markets that we have been monitoring.  The euro, for example, has fallen each day this week.  It recorded its low for the year on Wednesda…
Markets are Uninspired Ahead of the Weekend Markets are Uninspired Ahead of the Weekend Reviewed by Marc Chandler on May 18, 2018 Rating: 5
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Afta NAFTA

May 17, 2018
Given the US decision to pull out of the Trans-Pacific Partnership trade deal, it was inevitable that the North American Free Trade Agreement would have to be re-opened.  The Obama Administration had anticipated that the TPP would have modernized the 24-year old continental trade pact.  
Given the size of the borders, the uneven development, (GDP p…
Afta NAFTA Afta NAFTA Reviewed by Marc Chandler on May 17, 2018 Rating: 5
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US Rates Edge Higher, while Dollar Turns Mixed

May 17, 2018
The Britsh pound was a cent from yesterday's lows on a press report that claimed the UK cabinet had agreed on seeking to stay in the customs union with the EU beyond the two-year transition period.  The report suggested that the UK wanted to still negotiate other trade deals, which would seem to be a Trojan Horse.  The UK's other trade par…
US Rates Edge Higher, while Dollar Turns Mixed US Rates Edge Higher, while Dollar Turns Mixed Reviewed by Marc Chandler on May 17, 2018 Rating: 5
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