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US Q1 GDP: Recovery Intact, Deflation Risk Remains

April 30, 2010
The first look at Q1 US GDP was largely in line with expectations. The 3.2% annualized pace was slower than the 5.6% of Q4 09, but every one recognized that that pace was not sustainable. Although growth seemed more solid, price pressures eased, further underscoring the lack of price pressures. Despite then the slightly above trend growth for the …
US Q1 GDP: Recovery Intact, Deflation Risk Remains US Q1 GDP: Recovery Intact, Deflation Risk Remains Reviewed by Marc Chandler on April 30, 2010 Rating: 5
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Greece and Japan in Focus

April 30, 2010
There are two main forces at work today in the global capital markets. The first is the signal from various sources that the aid package for Greece is at hand, following new substantial savings by the Greek government. It now looks like something could materialize over the weekend.
The second force is month-end consideration as positions and hedge…
Greece and Japan in Focus Greece and Japan in Focus Reviewed by Marc Chandler on April 30, 2010 Rating: 5
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Greece Optimism and Month-End Dominate

April 30, 2010
The US dollar is surrendering its recent gains against most major and emerging market currencies today amid reports that new substantial Greek savings (24 bln euros) will be sufficient to spur a larger (100-120 bln euro) aid package that could be ready in days. The yen has also suffered in this less anxious environment. Polls suggesting the Tory’s…
Greece Optimism and Month-End Dominate Greece Optimism and Month-End Dominate Reviewed by Marc Chandler on April 30, 2010 Rating: 5
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Did the Swiss National Bank Show its Hand?

April 29, 2010
There is a suspicion in the foreign exchange market that the Swiss National Bank intervened forcefully yesterday, even if quietly, and may have been in today as well. The SNB rarely confirms intervention. Confirmation is often only available when the quarterly reserve figures are released.
Much to the surprise of the market, which thought Swiss fr…
Did the Swiss National Bank Show its Hand? Did the Swiss National Bank Show its Hand? Reviewed by Marc Chandler on April 29, 2010 Rating: 5
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Newstream Turns Market Cautious

April 29, 2010
Many if not most foreign exchange participants understand that the short euro position is a crowded trade and that this leaves the market vulnerable to a short-covering bounce on a favorable news development. However, fundamentals and sentiment suggest there will be selling into euro bounces. In the European morning euro has been lifted through ye…
Newstream Turns Market Cautious Newstream Turns Market Cautious Reviewed by Marc Chandler on April 29, 2010 Rating: 5
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Euro Bounces; Like a Dead Cat?

April 29, 2010
The US dollar is somewhat softer today as the market takes a pause to consider recent developments. News that Fitch reaffirmed its AAA rating for Spain, despite S&P’s move yesterday, and heightened speculation that European officials are working on a larger multi-year fund for Greece, and a relatively smooth Italian bond auction, are helping t…
Euro Bounces; Like a Dead Cat? Euro Bounces; Like a Dead Cat? Reviewed by Marc Chandler on April 29, 2010 Rating: 5
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FX Price Action

April 28, 2010
The euro traded down to about $1.3143, which has not been seen in nearly a year. Although it found a bid there as news wires announce a number of official press conferences in Europe as officials try to calm market anxiety that the EU/IMF negotiations with Greece may include a debt restructuring. Recall that when S&P slashed Greek’s ratings ye…
FX Price Action FX Price Action Reviewed by Marc Chandler on April 28, 2010 Rating: 5
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Europe Dominates

April 28, 2010
The US dollar is generally firmer as the European debt crisis escalates and dominates the global capital markets. As was the case in the post-Lehman environment, the demand for dollars is just as much a function of securing funding as it is a safe haven.
Ironically, sterling has been sold-off harder than the euro today. Investors continue to try t…
Europe Dominates Europe Dominates Reviewed by Marc Chandler on April 28, 2010 Rating: 5
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Two Additional Points About Greece

April 27, 2010
First, note that Moody's rating for Greece is A3, which is the same as A-. As long as one rating agency has Greece BBB- or above, the ECB will still allow its use as collateral. Of course the S&P aggressive move is significant and cannot be for European banks, who hold Greek bond, including Greek banks themselves, but Greece is thus far no…
Two Additional Points About Greece Two Additional Points About Greece Reviewed by Marc Chandler on April 27, 2010 Rating: 5
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Kiwi is More than a Fruit; Approaching a Low Risk Buy

April 27, 2010
The Reserve Bank of New Zealand meets tomorrow. There is little chance of a hike in the 2.5% official cash rate. The market continues to expect the RBNZ to begin raising rates in Q3. There is unlikely to be a shift in these expectations.
This should not stand in the way of a continued gradual appreciation of the New Zealand dollar. Earlier this mo…
Kiwi is More than a Fruit; Approaching a Low Risk Buy Kiwi is More than a Fruit; Approaching a Low Risk Buy Reviewed by Marc Chandler on April 27, 2010 Rating: 5
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Every One Gets A Haircut?

April 27, 2010
The main talking point for many today is the ongoing tension between Greece and Germany, with the consequence being felt in the debt market and the inability of the euro to sustain even modest upticks. However, perhaps rather than the apparent differences, what is really going on is being driven by their similarities. Specifically the latest opini…
Every One Gets A Haircut? Every One Gets A Haircut? Reviewed by Marc Chandler on April 27, 2010 Rating: 5
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Greenback Recovers

April 27, 2010
The US dollar has recovered from the decline seen in North America yesterday against the major European currencies. The take away from the price action is not however one of consolidation, but rather that good dollar buying emerged on the pullback.
The EMU situation is continuing to deteriorate. Good support was encountered yesterday just below $1…
Greenback Recovers Greenback Recovers Reviewed by Marc Chandler on April 27, 2010 Rating: 5
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Yen Outlook and BOJ Meeting This Week

April 26, 2010
The BOJ meets at the end of the week. For good reason, no one is expecting a change in rates. The risks lie with its economic and inflation assessment. It could revise both higher. Export growth has been fairly robust in recent months and this is helping boost industrial output and capex plans.
Japan continues to be the only major industrialized c…
Yen Outlook and BOJ Meeting This Week Yen Outlook and BOJ Meeting This Week Reviewed by Marc Chandler on April 26, 2010 Rating: 5
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Federal Reserve: Profits and FOMC meeting

April 26, 2010
In a not very well advertised announcement last week, the Federal Reserve turned over about $47.4 bln to the US Treasury. This was a record payment. Over the past decade, the Fed typically gives the Treasury about $25 bln of its profits. The Fed reportedly made some $53.4 bln last year, mostly from its MBS investments.
However, about 10% of the pro…
Federal Reserve: Profits and FOMC meeting Federal Reserve: Profits and FOMC meeting Reviewed by Marc Chandler on April 26, 2010 Rating: 5
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Europe in Denial, UK Benefits

April 26, 2010
Throughout the unfolding of the Greek crisis, European officials have repeatedly failed to get ahead of the curve of market expectations and events and this is the case once again. The impression that officials had given was that funds would be there once Greece formally requested assistance, but now it seems that Greece’s formal request simply op…
Europe in Denial, UK Benefits Europe in Denial, UK Benefits Reviewed by Marc Chandler on April 26, 2010 Rating: 5
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Dollar Bid, No Closure in Europe

April 26, 2010
The US dollar enjoys a firm tone against most of the major foreign currencies today. There are two main features in the foreign exchange market today. The first is investors still lack closure on the European crisis even after Greece formally acknowledged that it needs to draw on the European/IMF backstop facility. This has undermined the euro, wh…
Dollar Bid, No Closure in Europe Dollar Bid, No Closure in Europe Reviewed by Marc Chandler on April 26, 2010 Rating: 5
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A Quick Word on Latest Developments in Greece

April 23, 2010
Apparently, German Finance Minister Schaeuble tried to attach the authorization for the Greek backstop facility. However, this path reportedly was blocked and his fall back plan is for a parliamentary meeting on Monday. This would seem to lend support to ideas that the IMF's part of the facility may be exercised first. Still Greece theoretical…
A Quick Word on Latest Developments in Greece A Quick Word on Latest Developments in Greece Reviewed by Marc Chandler on April 23, 2010 Rating: 5
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Canada CPI

April 23, 2010
Canadian CPI figures for March were tamer than the market expected and this should help take ease what we thought had been an over-reaction to recent official statements.
Headline inflation slipped 0.2% on the month. The market had looked for a fall report. The year-over-year rate eased to 1.4% from 1.6%. More importantly from a policy point of vi…
Canada CPI Canada CPI Reviewed by Marc Chandler on April 23, 2010 Rating: 5
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Still Want to Fade Euro Bounce

April 23, 2010
Events in Athens are dominating the focus in the foreign exchange market. After yesterday’s blowout following the Eurostat report finding that last year’s deficit was even larger Greece (and Ireland) than previously reported and the Moody’s downgrade of Greek debt, initiating the emergency backstop facility appears to have become inevitable. Repor…
Still Want to Fade Euro Bounce Still Want to Fade Euro Bounce Reviewed by Marc Chandler on April 23, 2010 Rating: 5
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Greece, Greece, Greece

April 23, 2010
The US dollar has surrendered earlier gains that pushed the euro lows not seen in nearly a year, just above $1.3200, before reports spurred speculation that Greece will seek to activate the backstop facility. The euro traded to almost $1.3350 as some shorts moved to the sidelines.
There was talk of sovereign interest as well as short-covering by h…
Greece, Greece, Greece Greece, Greece, Greece Reviewed by Marc Chandler on April 23, 2010 Rating: 5
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Europe, Japan, UK Developments

April 22, 2010
Eurostat says that Greece’s deficit last year is at least 13.6% and not the 12.9% the government estimated on April 9th. It notes that the deficit may be 0.3-0.5% higher if the off-market swaps, classification of some public entities and social security funds are taken into account.
Eurostat also noted that the Irish deficit was 14.3%, giving it t…
Europe, Japan, UK Developments Europe, Japan, UK Developments Reviewed by Marc Chandler on April 22, 2010 Rating: 5
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Woes in ROW Lift Dollar

April 22, 2010
The US dollar is mostly firmer today. The euro is heavier following news that Greece and Ireland’s budget deficits were even larger than expected by the EU’s calculations and this is seen as much more important that the flash PMI readings, which showed continued improvement. New that Fitch warned that Japan’s creditworthiness was a risk from its r…
Woes in ROW Lift Dollar Woes in ROW Lift Dollar Reviewed by Marc Chandler on April 22, 2010 Rating: 5
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Let's Get Serious About the Loonie

April 21, 2010
The Bank of Canada's statement yesterday, where it dropped it conditional promise about keeping rates steady and raised this year's growth outlook triggered new Canadian dollar buying. We too have been bullish the Canadian dollar. However, what concerns us is that the market seems to be getting ahead of itself. Forward rates are rising fur…
Let's Get Serious About the Loonie Let's Get Serious About the Loonie Reviewed by Marc Chandler on April 21, 2010 Rating: 5
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European Bond Woes and German Reluctance Drives Euro Down

April 21, 2010
The euro has been pushed to an 8 day low in early North American turnover as the peripheral bonds, led by Greece and Portugal continue to sell off. Their fiscal positions are more or less known. What remains the source of anxiety is the policy response. In particular German officials seem to be in no hurry move. It is not clear whether the lack of…
European Bond Woes and German Reluctance Drives Euro Down European Bond Woes and German Reluctance Drives Euro Down Reviewed by Marc Chandler on April 21, 2010 Rating: 5
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Euro-zone, UK, Switzerland and Japan Talking Points

April 21, 2010
The price action in the foreign exchange market has been particularly choppy. The last three weeks the euro has finished near $1.3500. Within that time, it traded between roughly $1.3285 and $1.3690. As I write this, it is trading almost smack in the middle of the range. While the market appears to have priced in the Greek developments, the situat…
Euro-zone, UK, Switzerland and Japan Talking Points Euro-zone, UK, Switzerland and Japan Talking Points Reviewed by Marc Chandler on April 21, 2010 Rating: 5
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Today's Capital Market Drivers

April 21, 2010
The US dollar is mostly firmer today, but the drivers are elsewhere. Greek talks with the EU/ECB/IMF are to beginning, but they look to continue for a couple of weeks. It seems increasingly likely that Greece may have to initiate the backstop facility while these discussions are underway. Sterling has fully recovered the erosion seen in North Amer…
Today's Capital Market Drivers Today's Capital Market Drivers Reviewed by Marc Chandler on April 21, 2010 Rating: 5
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Fissure in the BRICs

April 20, 2010
We recognize that BRIC was a clever marketing device, but besides being large developing economies, they don't really have that much in common outside of ambivalence toward unipolar world in which the US dominates.
The recent BRIC summit did not generate new initiatives and the subject of the yuan was not apparently on the agenda. However, Bra…
Fissure in the BRICs Fissure in the BRICs Reviewed by Marc Chandler on April 20, 2010 Rating: 5
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BOC Hawkishness Sends Loonie Back toward Parity

April 20, 2010
The Bank of Canada left rates on hold, but changed the wording of its statement to suggest the risk of a rate hike is greater and sooner than previously anticipated. This has sent the Canadian dollar broadly higher. Key support for the US dollar is seen near CAD0.9950.
The BOC said that economic conditions no longer warrant extraordinary policy. I…
BOC Hawkishness Sends Loonie Back toward Parity BOC Hawkishness Sends Loonie Back toward Parity Reviewed by Marc Chandler on April 20, 2010 Rating: 5
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Yuan, G7/G20, Pigs and Chicken

April 20, 2010
Multilateral meetings of the G7 and G20 and IMF/World Bank begin at the end of the week. There is little doubt that either formally or informally, explicitly or implicitly, there will be calls on China to adopt allow the yuan to appreciate. If one thinks, as some do, that China won't move without international pressure, one might expect an imm…
Yuan, G7/G20, Pigs and Chicken Yuan, G7/G20, Pigs and Chicken Reviewed by Marc Chandler on April 20, 2010 Rating: 5
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Greek Drama, UK Developments, German Data

April 20, 2010
The Greek drama continues to be a key focus in the foreign exchange market. It is expected to rival financial regulation as key topics at G7 meeting and G20 meetings at the end of the week. Officials, Greek and others, continue to play down the risks of default. Even if Greece can muddle through this year, there is growing realization that that wi…
Greek Drama, UK Developments, German Data Greek Drama, UK Developments, German Data Reviewed by Marc Chandler on April 20, 2010 Rating: 5
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Turn-Around Tuesday Unfolding in FX

April 20, 2010
The US dollar has surrendered yesterday’s gains most of the major foreign currencies, after the upside momentum stalled in North America yesterday. The recovery US equities yesterday helped arrest the heightened anxiety seen before the weekend and early Monday. Constructive data from Japan in the form of a smaller than expected decline in the tert…
Turn-Around Tuesday Unfolding in FX Turn-Around Tuesday Unfolding in FX Reviewed by Marc Chandler on April 20, 2010 Rating: 5
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Canadian Dollar Setback

April 19, 2010
Falling commodity prices amid general position adjustment in the foreign exchange market is weighing on the Canadian dollar today. The Loonie is trading at its lowest level since late March. The near-term risk seems to extend toward CAD1.03, but the underlying favorable fundamentals remain intact.
On top of the softer commodity story and unwinding…
Canadian Dollar Setback Canadian Dollar Setback Reviewed by Marc Chandler on April 19, 2010 Rating: 5
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India Poised to Tighten Again Tomorrow

April 19, 2010
India's central bank meets tomorrow and the risk is asymmetrically biased toward continued tightening of monetary conditions. Generally speaking, following the intra-meeting move last month, most expect India's central bank to hike key short-term rates by 25 bp. However, the risk is that officials take stronger action. This could take the …
India Poised to Tighten Again Tomorrow India Poised to Tighten Again Tomorrow Reviewed by Marc Chandler on April 19, 2010 Rating: 5
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Greece, China, UK Drivers

April 19, 2010
Greek interest rates are rising from levels that officials have indicated were prohibitive. The country needs to finance about 12 bln euros next month. The weekend talks have been delayed to the middle of this week due to the disruption of air flights. The pressing issue that needs is preparing for joint (EU/IMF) program of conditionality for init…
Greece, China, UK Drivers Greece, China, UK Drivers Reviewed by Marc Chandler on April 19, 2010 Rating: 5
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Dollar and Yen Bid on World's Woes

April 19, 2010
The US dollar is well bid against most of the major and emerging market currencies. Three issues dominate foreign exchange trading today: the now global investigation into one of the leading US banks, which appears to be part of a growing investigation that includes other banks as well; continued pressure on Greece, and to a lesser extent Portugal…
Dollar and Yen Bid on World's Woes Dollar and Yen Bid on World's Woes Reviewed by Marc Chandler on April 19, 2010 Rating: 5
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EU: Closing the Barn Door after the Horses Fled

April 16, 2010
One vocal camp says European Monetary Union will disintegrate in the face of this crisis. We have consistently argued that while possible, such a scenario is unlikely because of the political will and commitment.
We argue that on the other side of the crisis, it is more likely that there will be greater integration (loss of sovereignty) and greate…
EU: Closing the Barn Door after the Horses Fled EU: Closing the Barn Door after the Horses Fled Reviewed by Marc Chandler on April 16, 2010 Rating: 5
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U.S. Exports: Where and What

April 16, 2010
Presidents of the United States often announce lofty goals in their annual State of the Union addresses. President Obama is no exception, among the recent goals he cited was a commitment to double U.S. exports in the next five years. To this end he appointed what the Administration calls an “export promotion cabinet”, composed of the Secretaries o…
U.S. Exports: Where and What U.S. Exports: Where and What Reviewed by magonomics on April 16, 2010 Rating: 5
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Mexico

April 16, 2010
Mexico's central bank is widely expected to remain on hold at the conclusion of today's policy making meeting. The key rate has been steady at 4.5% for nine months. Most recently Finance Minister Cordero has argued that inflation is "controlled" and year-end inflation is likely to be just over 5%. It was just below 5% in March.
Co…
Mexico Mexico Reviewed by Marc Chandler on April 16, 2010 Rating: 5
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Europe in Focus

April 16, 2010
The key talking point today is whether the EU/IMF backstop for Greece will be formally tapped this weekend. The summit in Madrid appears to be underway and the general news environment is poor. The Greek Prime Minister still is denying that funds are needed, claiming the facility is a safety net and incredulously suggests that the IMF involvement …
Europe in Focus Europe in Focus Reviewed by Marc Chandler on April 16, 2010 Rating: 5
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Dollar Up, Europe Choking

April 16, 2010
The US dollar remains firm against the euro as Greek woes continue to weigh on sentiment. The euro has practically returned to levels seen prior to last weekend’s financial aid package details. That area, $1.3480-$1.3500 remains key support. The $1.3560 area offers the initial cap now. The immediate reaction to the UK televised debates had the Lib…
Dollar Up, Europe Choking Dollar Up, Europe Choking Reviewed by Marc Chandler on April 16, 2010 Rating: 5
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Sweden Cuts GDP Forecasts, Boosts Stimulus

April 15, 2010
The Swedish government cuts its growth forecasts for this year and increased its spending to boost the economy, ahead of the Sept parliament elections. The krona is gaining against the euro, but this is more a reflection on the euro's weakness than the krona's strength.
This year's official GDP forecasts was cut to 2.5% from the 3% for…
Sweden Cuts GDP Forecasts, Boosts Stimulus Sweden Cuts GDP Forecasts, Boosts Stimulus Reviewed by Marc Chandler on April 15, 2010 Rating: 5
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Good IP Data, but Drag from Utility Output

April 15, 2010
Industrial production headline increase of 0.1% seemed disappointing, but a quick look at the details shows a strong 0.9% rise in manufacturing output and a 2.3% increase in mining output (includes oil drilling). Utility output collapsed 6.4%, the largest decline in more than 4 years. This is wholly explained by the weather.
The increase in manufa…
Good IP Data, but Drag from Utility Output Good IP Data, but Drag from Utility Output Reviewed by Marc Chandler on April 15, 2010 Rating: 5
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Germany's Bruederle Lets Euro/Trade Cat Out of the Bag

April 15, 2010
The US presses China to appreciate the yuan to redress the bilateral imbalance. China says that the currency is not the key to the trade balance. US Congress seems to think this is a self-serving explanation.
Germany, which exports roughly the same share of GDP as China (~40%), is thought to often prefer a weaker euro. Today German Economics Minis…
Germany's Bruederle Lets Euro/Trade Cat Out of the Bag Germany's Bruederle Lets Euro/Trade Cat Out of the Bag Reviewed by magonomics on April 15, 2010 Rating: 5
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Europe: Your Rope

April 15, 2010
Europe cannot get out of its own way. The schadenfreude of a year ago has faded and the most profound crisis more than a generation is gripping Europe. Poorer families may not have qualified for low interest rate loans to purchases houses as they were in the US. The European strain of the same virus, promoted lending to weaker sovereign credits. I…
Europe: Your Rope Europe: Your Rope Reviewed by Marc Chandler on April 15, 2010 Rating: 5
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Dollar Up on European Woes

April 15, 2010
The US dollar is broadly higher; boosted by renewed pressure on the European periphery. Greece is still the lightening rod, but the contagion is clearer today. Just like the premium Greece is being forced to pay over Germany is back to the widest of the week, so too has the euro returned to the lower end of this week’s range. Key support is seen i…
Dollar Up on European Woes Dollar Up on European Woes Reviewed by Marc Chandler on April 15, 2010 Rating: 5
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Data Gives Bernanke No Reason to Change Tune

April 14, 2010
We were skeptical of yesterday's speculation that Bernanke would tout a less dovish line in his testimony before the Joint Economic Committee of Congress. And today's CPI figures underscore the reason why it may still be appropriate to look for rates to reamin low for "an extended period of time.".
Headline CPI rose 0.1% and the …
Data Gives Bernanke No Reason to Change Tune Data Gives Bernanke No Reason to Change Tune Reviewed by Marc Chandler on April 14, 2010 Rating: 5
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Strong Brazilian Retail Sales, Strong Real

April 14, 2010
Brazil reported much better than expected Feb retail sales and this is encouraging expectations of a 75 bp rate hike later this month and allowing the real to extend its winning streak for the fifth consecutive session. The real has now recovered all the ground lost in the first several weeks of the year. Today is the first day the greenback is tr…
Strong Brazilian Retail Sales, Strong Real Strong Brazilian Retail Sales, Strong Real Reviewed by magonomics on April 14, 2010 Rating: 5
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More Mid-Week Color

April 14, 2010
Real new developments among the major industrialized countries remain thin on the ground. And this is largely conducive of the consolidative tone that has emerged since the initial reaction to the news over the past weekend that European officials were putting some details of the backstop mechanism that had apparently been agreed upon at the March…
More Mid-Week Color More Mid-Week Color Reviewed by Marc Chandler on April 14, 2010 Rating: 5
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It is EM Today

April 14, 2010
The US dollar is mixed but largely within ranges that have prevailed in recent sessions. The afterglow of yesterday’s Greek T-bill auction has faded and Greek bonds are lower, but the euro is holding above yesterday’s highs in the European morning, but does not appear to have the momentum to challenge the $1.3700 cap. Sterling is challenging yeste…
It is EM Today It is EM Today Reviewed by Marc Chandler on April 14, 2010 Rating: 5
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Fed Talk Helps Dollar Recover

April 13, 2010
Speculation that the Fed may on the verge of changing the wording of its guidance as early as tomorrow's testimony by Fed Chairman Bernanke before the Joint Economic Committee of Congress may be giving the dollar an extra boost in the North American morning.
It has been recognized that some regional Fed presidents are a bit more hawkish, if su…
Fed Talk Helps Dollar Recover Fed Talk Helps Dollar Recover Reviewed by Marc Chandler on April 13, 2010 Rating: 5
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Trade Day for UK, US and Canada

April 13, 2010
The UK reported a smaller than expected trade deficit and, although likely distorted by weather-related effects, it helped sterling recover from early weakness and now is up more than a cent off the session lows made in Asia. We see initial resistance near the high set in Europe yesterday near $1.5465, though yesterday's Asian high was set nea…
Trade Day for UK, US and Canada Trade Day for UK, US and Canada Reviewed by Marc Chandler on April 13, 2010 Rating: 5
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Market Lacks Short-term Conviction

April 13, 2010
The US dollar is consolidating yesterday’s decline and has largely been confined to narrow trading ranges. With the Greek bill auction behind it, the market may lack a clear focus, but sentiment towards the euro remains poor, even though there had been some short-covering in the futures market in the most recent reporting week that ended April 6. …
Market Lacks Short-term Conviction Market Lacks Short-term Conviction Reviewed by Marc Chandler on April 13, 2010 Rating: 5
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CNBC: Greek Bailout: What it Means for Spain & Portugual CNBC: Greek Bailout: What it Means for Spain & Portugual Reviewed by magonomics on April 12, 2010 Rating: 5
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Canada Update

April 12, 2010
The Canadian dollar has completely recouped the pre-weekend slippage recorded on the back of disappointing jobs data.
Today's economic data have been mixed, with a slightly weaker than expected March housing starts data, but a relatively healthy business outlook survey and comments from Fin Min Flaherty that seemed to welcome the recent rise o…
Canada Update Canada Update Reviewed by Marc Chandler on April 12, 2010 Rating: 5
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US Economy Real Sector Preview of the Week Ahead

April 12, 2010
Estimates for Q1 US GDP appear to be creeping higher.
Wholesale inventories were released before the weekend the 0.6% increase was twice the consensus and the Jan series was revised to 0.1% from -0.2%. This inventory accumulation seems wholly desirable and is a response to increased demand. Wholesale sales rose 0.8% in Feb.
Business inventories wi…
US Economy Real Sector Preview of the Week Ahead US Economy Real Sector Preview of the Week Ahead Reviewed by Marc Chandler on April 12, 2010 Rating: 5
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It is All Greek To Me

April 12, 2010
The US dollar is broadly mixed today. Details of the funding facility for Greece spurs strong gains in the euro, lifting European currencies in general. However, the greenback is holding its own against the yen and the dollar-bloc currencies. The euro reached a high of almost $1.3700 in Asia, but has drifted off in the European session. Initial su…
It is All Greek To Me It is All Greek To Me Reviewed by Marc Chandler on April 12, 2010 Rating: 5
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3-D: Deflation, Disinflation, and the Dollar

April 09, 2010
There are many things that investors should worry about with the US economy. The federal deficit and debt, coupled with the weak finances of many state and local governments, the increasing tax burden on a shrinking number of households, regulatory uncertainty, and weakness in bank credit may be on many lists.
One issue that investors (and policy …
3-D: Deflation, Disinflation, and the Dollar 3-D: Deflation, Disinflation, and the Dollar Reviewed by Marc Chandler on April 09, 2010 Rating: 5
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Thoughts on Canada after the Disappointing Job Data

April 09, 2010
Canada's employment data were disappointing. Not only did it create few overall jobs than expected, but it lost 14.2k full-time jobs. However, it seems too hasty to conclude that the Bank of Canada will not hike rates in the June/July period as previously expected. Canada created 81k jobs in Q1, after about 21k in Q4 09, when the economy expan…
Thoughts on Canada after the Disappointing Job Data Thoughts on Canada after the Disappointing Job Data Reviewed by Marc Chandler on April 09, 2010 Rating: 5
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Greenback Eases

April 09, 2010
The US dollar has been softening since the yesterday in the European morning. There has been follow through euro buying today after the year’s low was successfully tested yesterday.
However, despite protestations from ECB Trichet that Greece would not default, the issues are far from resolved and this will likely contain euro upticks. Buying inter…
Greenback Eases Greenback Eases Reviewed by Marc Chandler on April 09, 2010 Rating: 5
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Greece Update

April 08, 2010
There have been two developments in the past couple of hour or so that may be helping Greek debt instruments to stabilize and lending the euro support as well.
The first are comments from Trichet. His comments suggest that officials are trying to weather the storm--the dramatic sell-off of Greek bonds--without panicking. He also suggested the risk…
Greece Update Greece Update Reviewed by Marc Chandler on April 08, 2010 Rating: 5
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Greece is the time, is the place, is the motion.

April 08, 2010
The US dollar is again being broadly supported by heightened concern that Greece’s debt/deficit issues are soon to reach a climax. The pressure on Greece is more clearly spilling over to the other Mediterranean countries. The yen too has generally benefited from these same development, despite an unexpected and large drop in manufacturing orders (…
Greece is the time, is the place, is the motion. Greece is the time, is the place, is the motion. Reviewed by Marc Chandler on April 08, 2010 Rating: 5
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CNBC: Dollar Bull vs. Bear CNBC: Dollar Bull vs. Bear Reviewed by magonomics on April 07, 2010 Rating: 5
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Greek Bonds Reverse, Push European Currencies Lower

April 07, 2010
Greek bonds, which had begun the day recovering from yesterday's dramatic slide, have reversed. This is weighing on the already vulnerable European currency complex. The euro has been pushed below yesterday's lows. The next target is seen near $1.3270. Sterling tested yesterday's lows near $1.5130 and thus far it has held. A break, how…
Greek Bonds Reverse, Push European Currencies Lower Greek Bonds Reverse, Push European Currencies Lower Reviewed by Marc Chandler on April 07, 2010 Rating: 5
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Consolidation in FX

April 07, 2010
The US dollar is narrowly mixed as a consolidative tone emerges. Technical pressures for a more serious bout of profit-taking on long dollar positions had been cut short by heightened concern about Greece’s ability to raise capital. Although the Greek debt market is calmer today, the issue has not gone away. That may help explain why the euro has …
Consolidation in FX Consolidation in FX Reviewed by Marc Chandler on April 07, 2010 Rating: 5
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Fed Funds Expectations, Inflation and the Dollar

April 06, 2010
On the heels of the healthy March jobs report and new cyclical highs for both the manufacturing and service sector ISM surveys, the market moved to fully discount a 25 bp rate hike at the Nov FOMC meeting. This was evident in the Fed funds futures strip and the OIS/Fed funds rate. The market has backed off slightly today.
US interest rates have ea…
Fed Funds Expectations, Inflation and the Dollar Fed Funds Expectations, Inflation and the Dollar Reviewed by Marc Chandler on April 06, 2010 Rating: 5
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Taiwan: Low Inflation in Region, Buys Central Bank Time

April 06, 2010
Taiwan reported lower than expected March inflation earlier today and this solidifies Taiwan's position as a low inflation country in a region that is experiencing higher inflation and prompting central banks to tighten monetary conditions. Malaysia and India have already hiked rates. Through increases in the required reserves and administrati…
Taiwan: Low Inflation in Region, Buys Central Bank Time Taiwan: Low Inflation in Region, Buys Central Bank Time Reviewed by Marc Chandler on April 06, 2010 Rating: 5
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Greece Returns with Vengeance

April 06, 2010
The US dollar is enjoying broad gains today as the Greece’s fiscal woes have returned with vengeance. Market News International reports that having been given some idea of what an IMF program could entail is now looking for support excluding. The sharp backing up in Greek yields plays on market fears over the country’s ability to secure financing …
Greece Returns with Vengeance Greece Returns with Vengeance Reviewed by Marc Chandler on April 06, 2010 Rating: 5
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USD Responds Well to Better than Expected Data

April 05, 2010
For most of last year, it seemed that better US economic data was often greeted with a weaker dollar on ideas that it encouraged the risk-on trades, which involved selling the greenback. Last week's US jobs data were generally favorable, especially given the back month revisions and the longer work week and the dollar advanced. Today the stron…
USD Responds Well to Better than Expected Data USD Responds Well to Better than Expected Data Reviewed by Marc Chandler on April 05, 2010 Rating: 5
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Brazil Update: Meirelles Stays, BRL Firm

April 05, 2010
Brazil's central bank President Henrique Meirelles has decided to resist the temptation of politics and will stay at his post. Speculation that Meirelles would step down may have been a slight negative for the Brazilian real, which has lost almost 0.9% against the US dollar this year.
The outlook for monetary policy is largely the same, even …
Brazil Update: Meirelles Stays, BRL Firm Brazil Update: Meirelles Stays, BRL Firm Reviewed by Marc Chandler on April 05, 2010 Rating: 5
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Monday Morning Quarterback

April 05, 2010
The US dollar is mixed to start the week, though market conditions remain thin due to the holiday. The constructive employment report before the weekend has kept the greenback bid against the euro and Swiss franc. Opinion polls in the UK suggest the Tory Party may be pulling ahead, with an election announcement expected as early as tomorrow. The d…
Monday Morning Quarterback Monday Morning Quarterback Reviewed by Marc Chandler on April 05, 2010 Rating: 5
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Generally Good News for US Economy, but USD May Still Weaken

April 02, 2010
The 162k rise in March non-farm payrolls was a little below expectations but the Feb series was revised to a loss of 14k rather than a loss of 36k. The unemployment rate was steady at 9.7%. 
The private sector added 123k jobs and this was a bit better than expected. Feb's initial 18k loss was revised to +8k. The average private sector job growt…
Generally Good News for US Economy, but USD May Still Weaken Generally Good News for US Economy, but USD May Still Weaken Reviewed by Marc Chandler on April 02, 2010 Rating: 5
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Holiday Pre-Jobs Data Note

April 02, 2010
Asia: Asian equities rallied on improving global growth prospects, with the MSCI Asia-Pacific Index advancing for its 6th consecutive session. The 0.3% rise puts the index at its highest level since mid-Jan. Of note, the Nikkei closed almost 0.4% higher, for a 2.7% rise on the week to new six month highs. Leading sectors including oil & gas, t…
Holiday Pre-Jobs Data Note Holiday Pre-Jobs Data Note Reviewed by Marc Chandler on April 02, 2010 Rating: 5
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What to Make of the Swiss Franc

April 01, 2010
The SNB's apparent absence had emboldened the market, which has driven the euro to record lows against the Swiss franc. The SNB had been clear. It was still closely monitoring the Swiss franc even though it acknowledged that at some point its QE would end. The Swiss reported a very strong PMI earlier today and the market was returning to its r…
What to Make of the Swiss Franc What to Make of the Swiss Franc Reviewed by Marc Chandler on April 01, 2010 Rating: 5
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Euro and Stocks--Shifting Sands

April 01, 2010
My hypothesis is that the risk-on/risk-off matrix that seemed to dominate market development during much of the crisis is breaking down. I suspect it is being replaced by a greater emphasis on country specific macro-economic developments that we place under the rubric of the closure of the output gap.
Euro and Stocks--Shifting Sands Euro and Stocks--Shifting Sands Reviewed by Marc Chandler on April 01, 2010 Rating: 5
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