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The Fed and Return to Ad Hocery

March 19, 2014
There has been a sharp rise in US interest rates and the dollar in the immediate response to the Federal Reserve's statement.  The key it seemed was the expectation that Fed funds would be at 1% at the end of next year.  This is more than the market had expected.  The December Fed funds futures were implying a yield of a little less than 65 bp…
The Fed and Return to Ad Hocery The Fed and Return to Ad Hocery Reviewed by Marc Chandler on March 19, 2014 Rating: 5
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Great Graphic: Dollar-Yen Linked More to S&P 500 than Nikkei

January 15, 2014
Foreign investors bought about $156 bln of Japanese shares in 2013. Many appeared to have hedged the currency risk. Other investors were drawn to ETFs that also hedged out the currency risk (e.g. DXJ). 
Observers have generally recognized that a weaker yen coincided with the rise in Japanese shares. The logic was compelling. A weaker yen promo…
Great Graphic: Dollar-Yen Linked More to S&P 500 than Nikkei Great Graphic: Dollar-Yen Linked More to S&P 500 than Nikkei Reviewed by Marc Chandler on January 15, 2014 Rating: 5
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USD Turns Bid: Euro and Sterling Share Dollar-Bloc and Yen's Pain

January 15, 2014
The US dollar is firmer across the board today as investors continue to regain confidence that the FOMC will proceed with its tapering efforts.  The impression is that the strength of the retail sales stripped of autos, building materials and gasoline showed a unexpected resilience of the US consumer that does not mesh with the weakness in employm…
USD Turns Bid: Euro and Sterling Share Dollar-Bloc and Yen's Pain USD Turns Bid: Euro and Sterling Share Dollar-Bloc and Yen's Pain Reviewed by Marc Chandler on January 15, 2014 Rating: 5
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FX: A Return to Form?

January 14, 2014
After trying to  decipher the policy implications of the weak US jobs data, investors are attempting now to look past it.  In the currency markets, this has meant a return to the status quo ante, which was weaker yen and dollar-bloc currencies and stronger euro and sterling.  The euro rallied to test $1.37 and sterling neared $1.6450.  The dollar …
FX: A Return to Form? FX: A Return to Form? Reviewed by Marc Chandler on January 14, 2014 Rating: 5
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Monday Blues: Market Still Deciding

January 13, 2014
The market does not appear to have yet decided what to make of not only the poor US jobs data, but also the initial reaction to it.  The euro and sterling are consolidating the pre-weekend gains, with the former faring a bit better.

However, the dollar has had its losses extended against the Japanese yen, without the help of the Tokyo market, which…
Monday Blues: Market Still Deciding Monday Blues: Market Still Deciding Reviewed by Marc Chandler on January 13, 2014 Rating: 5
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Currency Positioning and Technical Outlook: Euro and Sterling to New Highs? Currency Positioning and Technical Outlook: Euro and Sterling to New Highs? Reviewed by Marc Chandler on January 11, 2014 Rating: 5
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A Few Thoughts on the Job Shocker

January 10, 2014
The shockingly poor US employment data is bolstering bonds, while initial equity market gains have been reversed.   It is weighing on the dollar, nearly across the board, and giving some of the accessible emerging market currencies a reprieve from the recent selling pressure.  
The Fed's Lacker (a non-voting hawk) tried playing up the drop in t…
A Few Thoughts on the Job Shocker A Few Thoughts on the Job Shocker Reviewed by Marc Chandler on January 10, 2014 Rating: 5
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Sterling Pounded, Euro Resilient in Face of Dovish Draghi

January 10, 2014
The main development in the foreign exchange market, as participants await the US jobs data, has been the drop in sterling following the disappointing industrial output data.
Recall that in November, the UK's manufacturing PMI rose to a new 2-year high of 58.1 from 56.5. It had encouraged economists to look for a gain of around 0.4% in industr…
Sterling Pounded, Euro Resilient in Face of Dovish Draghi Sterling Pounded, Euro Resilient in Face of Dovish Draghi Reviewed by Marc Chandler on January 10, 2014 Rating: 5
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ECB Preview: Mostly Thunder, Little Rain

January 08, 2014
The ECB meets tomorrow.  There is much consternation among many observers over the ECB's reluctance to recognize what they see as a potent deflationary threat.  With the US economy gaining momentum and GDP per capita set to surpass its post-crisis peak here in 2014, it is Europe that is feared to be the next Japan.  The secular stagnation hypo…
ECB Preview: Mostly Thunder, Little Rain ECB Preview: Mostly Thunder, Little Rain Reviewed by Marc Chandler on January 08, 2014 Rating: 5
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US Trade Balance Improves, Net Exports to Help Q4 GDP

January 07, 2014
The US trade deficit in November was considerably smaller than expected and it will encourage economists to revise up Q4 GDP forecasts. 
The headline deficit fell almost 13% to $34.3 bln.  Exports rose by less than 1%, but still stand at a new record high.  Imports fell 1.4%, partly reflect a decline in oil imports, which fell to a 3-year low.  The…
US Trade Balance Improves, Net Exports to Help Q4 GDP US Trade Balance Improves, Net Exports to Help Q4 GDP Reviewed by Marc Chandler on January 07, 2014 Rating: 5
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Great Graphic: Yen and Nikkei

January 06, 2014
This Great Graphic, composed on Bloomberg, shows the dollar-yen (white line) and the Nikkei (yellow line) and the 20-day moving average (purple line).  The bottom chart shows the MACD rolling over.  
The dollar slipped through the 20-day moving average for the first time in two months. That average comes in now near JPY104.13. A close of the Nort…
Great Graphic: Yen and Nikkei Great Graphic: Yen and Nikkei Reviewed by Marc Chandler on January 06, 2014 Rating: 5
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Japan Returns and Takes Yen Up and Nikkei Down

January 06, 2014
The Japanese market re-opened after an extended holiday closure and pushed the dollar down against the yen to test the pre-weekend low near the 20-day moving average (~JPY104.15), below which it has not traded since early November. 

The Nikkei gapped lower and proceeded to shed 2.3%, led by consumer services and telecoms.  It is the sharpest fall s…
Japan Returns and Takes Yen Up and Nikkei Down Japan Returns and Takes Yen Up and Nikkei Down Reviewed by Marc Chandler on January 06, 2014 Rating: 5
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Four Drivers in the Week Ahead

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 Four Drivers in the Week Ahead Reviewed by Marc Chandler on January 05, 2014 Rating: 5
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Currency Positioning and Technical Outlook: Position Adjustment or Trend Reversal? Currency Positioning and Technical Outlook: Position Adjustment or Trend Reversal? Reviewed by Marc Chandler on January 04, 2014 Rating: 5
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Short Summary before New Year's Celebration

December 31, 2013
It is difficult to read much into the price action today as activity appears to be dominated by a few last minute orders. Whatever muted signal there may be is drowned by the noise.  Nevertheless, there are a few things to note before heading off to celebrate the end of what has an exceptionally good year for equity investors, especially in the hi…
Short Summary before New Year's Celebration Short Summary before New Year's Celebration Reviewed by Marc Chandler on December 31, 2013 Rating: 5
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A Few Last 2013 Developments

December 30, 2013
In the last full trading session of the year, the US dollar is little changed against the major currencies and a bit softer against many of the freely accessible emerging market currencies. 
Asian equities mostly firmed, with the MSCI Asia-Pacific Index gained a little less than 0.5%, while the Dow Jones Stoxx 600 is little changed as its consolid…
A Few Last 2013 Developments A Few Last 2013 Developments Reviewed by Marc Chandler on December 30, 2013 Rating: 5
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