Category: Currency

XE Market Analysis: Pound Slammed After PM Brexit Comments

OVERVIEW German industrial production rose 0.4% versus expectations for a larger 0.7% increase. The trade surplus came in above expectations at €21.7bn, as both imports and exports rose strongly. European unemployment data was released at 9.8%, with concern over Italy unemployment rate hitting an 18-month high of 11.9%. Federal Reserve board member, Eric Rosengren, said… Read more »

XE Market Analysis: North America – Jan 09, 2017

The dollar saw some chop in early-week trade. USD-JPY dove to a low of 116.63 during the London AM session after lifting in Asia to a three-session high of 117.53. EUR-USD settled at near net unchanged levels around 1.0525-30 after whipsawing between 1.0510 and 1.0556. Sterling tumbled, and while off its lows was showing an… Read more »

XE Market Analysis: Europe – Jan 09, 2017

The dollar has risen in early-week trade, supported by favourable yield differentials following the U.S. jobs report on Friday. The data showed a 0.4% spike in earnings, re-energizing expectations for further Fed rate hikes, which had been subdued somewhat following last week’s less hawkish than expected December FOMC minutes. USD-JPY lifted to a three-session high… Read more »

US Bond Market Week in Review: Fed Minutes Show a Fed Ready to Raise Rates

     This week, the Federal Reserve issued their latest meeting minutes.  They viewed the labor market positively: unemployment and initial claims for unemployment were low while wages were increasing at slightly higher rates.  PCEs were growing moderately and future indicators of consumer spending were bullish.  Industrial production was recently unchanged but mostly due to a drop… Read more »

US Equity and Economic Review: A Great Start to the Year, Edition

     The Institute for Supply Management released their manufacturing and service sector reports this week.  The former increased 1.5 points to 54.7.  New orders rose a very strong 7.2 points to 60.2; production and exports orders also rose.  The later was unchanged at a high reading of 57.2. The new order component rose 4.2 points.  Both… Read more »

International Economic Week in Review: A Good Start to the Year

     The international community ended 2016 on solid footing.  China has continued to avoid the predictions of some of a hard landing while the EU had some of its best post-Great Recession manufacturing and service numbers.  The UK continues to avoid the much prophesized post-Brexit recessive while Canada has more likely than not emerged… Read more »

Weekly Indicators: mortgage applications turn negative edition

Commodity prices bottomed over one year ago. After briefly turning negative, metals have now surged higher since the election. Stock prices S&P 500 Up +1.7% w/w Stock prices are positive, having made a string of new all-time highs beginning last summer. Regional Fed New Orders Indexes (*indicates report this week)(no reports this week) Empire State… Read more »

XE Market Analysis: Asia – Jan 06, 2017

After slipping initially, the dollar rallied in N.Y. trade on Friday following the December jobs report, which was light on the NFP print, though upwardly revised back months, and stronger hourly earnings data offset. Yields edged higher, while the three major stock market indices traded to all time highs. As of the time of this… Read more »

XE Market Analysis: US Job Growth Slows

OVERVIEW German retail sales fell more than expected in November, declining 1.8% after their biggest monthly rise in years in October. Eurozone retail sales also declined in November by 0.4%, which was in line with forecasts, but rose 2.3% year-on-year. US unemployment rose as expected to 4.7%, but remains near its lowest level in nine… Read more »

Corporate profits as leading stock prices: year end 2016 edition

One insight generated by making use of overall leading economic indicators is that, if corporate profits are a long leading indicator, and stock prices a short one, then it stands to reason that corporate profits actually lead, rather than follow, stocks, at least when measured as a quarterly average.Since Q4 2016 is ended, let’s update… Read more »

XE Market Analysis: North America – Jan 06, 2017

The dollar recovered from fresh lows that were seen during the early Asia-Pacific session. USD-JPY hit three-week low of 115.07 before recouping over a big figure to the low 116s. EUR-USD logged an eight-day high of 1.0615 before ebbing back to the 1.0580 area. Position rejigging has been afoot as markets brace for the U.S…. Read more »

XE Market Analysis: Europe – Jan 06, 2017

The dollar lifted from fresh lows that were seen during the early Asia-Pacific session. USD-JPY hit three-week low of 115.07 before recouping over a big figure to the low 116s. EUR-USD logged an eight-day high of 1.0615 before ebbing back to the 1.0580 area. Position rejigging has been seen as markets brace for the U.S…. Read more »

XE Market Analysis: Asia – Jan 05, 2017

The dollar took it on the chin in N.Y. trade on Thursday, taking the DXY to 101.30 lows, levels last seen on December 14, and down from 14-year highs of 103.82 printed on Monday. The sell-off was broad based, with all major currencies rallying against the greenback. Incoming U.S. data was pretty good overall, though… Read more »

XE Market Analysis: Chinese Yuan Surge Weakens Dollar

OVERVIEW The Dollar became under pressure overnight following China’s central bank setting its currency at a higher midpoint for the Yuan versus the Dollar.  The FOMC minutes were neutral as most of the committee “indicated that the upside risks to their forecasts for economic growth had increased” due to Trump’s victory.  China’s services sector PMI… Read more »

XE Market Analysis: North America – Jan 05, 2017

The dollar sank to fresh post-FOMC minutes lows during the Asian session before staging a rebound in the European AM session, returning the buck to near net unchanged levels versus the euro and sterling, though still leaving it down by over 0.5% in the case against the yen. USD-JPY recouped above 116.50 after logging a… Read more »

XE Market Analysis: Europe – Jan 05, 2017

The dollar came under broad pressure following the less hawkish than expected tone in the minutes to the December FOMC meeting, when the Fed hike the funds rate by 25 bp. USD-JPY led the way, falling over 1% to a one-week low of 115.58, and has now declined some three big figures since Tuesday’s 118.61… Read more »

XE Market Analysis: Asia – Jan 04, 2017

The dollar faded again in N.Y. trade on Wednesday, though ranges were fairly narrow overall. The FX market appears to be in a bit of consolidation mode, and we look for more of the same into Friday’s U.S. employment report. There was little data to move markets today, though Wall Street managed further moderate gains,… Read more »

XE Market Analysis: Strong Data Helps Emerging Market Currencies

OVERVIEW Upbeat economic data from the world’s major economies are keeping investors positive about the global outlook, boosting emerging market currencies that are today’s top performers. Eurozone business activity growth hit its highest since May 2011 last month, after the services PMI was revised up to 53.7. Japanese manufacturing activity completed a picture of rising… Read more »

XE Market Analysis: North America – Jan 04, 2017

The dollar came off the boil after logging 14-year highs yesterday, by the measure of its narrow trade-weighted gauge. EUR-USD carved out an intraday high at 1..0446 following the largely expected acceleration in Eurozone HICP to 1.1% y/y in December, nearly double the November figure of 0.6%. The final reading of the Eurozone services PMI… Read more »

XE Market Analysis: Europe – Jan 04, 2017

The dollar came off the boil after logging 14-year highs yesterday, by the measure of its narrow trade-weighted gauge. USD-JPY settled in a narrow orbit of 118.00 logged after yesterday logging high of 118.61, which was five pips shy of the trend peak. Japanese markets reopened, and stock markets there roared, with the Nikkei 225… Read more »

XE Market Analysis: Asia – Jan 03, 2017

The dollar rallied early in the session in N.Y. on Tuesday, moving to session highs in the aftermath of strong manufacturing ISM and construction spending data. Yields moved higher, as did Wall Street initially. Another DJIA attempt and fail to print the 20k level however, resulted in profit taking in both stocks and the dollar…. Read more »

XE Market Analysis: US Dollar Starts 2017 On the Front Foot

OVERVIEW FX markets have returned to normal trading conditions after the holidays, as the Euro jumped almost 2% against the Dollar on the last trading day of 2016. German consumer price inflation hit its highest level in over 3 years in December, as rising energy prices and higher food costs saw CPI rise 1.7% year-on-year…. Read more »

XE Market Analysis: North America – Jan 03, 2017

USD-JPY rallied 0.7% to a high of 118.35, resuming the bullish trend that was seen up until Christmas/New Year pause and returning focus on the December 15 trend peak at 118.66. The euro traded weaker despite perky German state inflation data and an encouraging German labour report, which followed yesterday’s release of a solid final… Read more »

XE Market Analysis: Europe – Jan 03, 2017

A subdued start to the new year has been seen in forex markets. USD-JPY has been holding a narrow range in the mid 117s. EUR-USD is trading softer, near 1.0450, well off the high seen at 1.0657 on Friday, which is seen as an aberration as it occurred in an ultra-thin market. A strong PMI… Read more »

Weekly Indicators: interest rates turn more neutral edition

Commodity prices bottomed about one year ago. After briefly turning negative, metals have now surged higher since the election. Stock prices S&P 500 Up +0.3% w/w  Stock prices became a positive having made new all-time highs in summer, and more new highs since.. Regional Fed New Orders Indexes (*indicates report this week) Empire State up… Read more »

Treasury Market Technical Year in Review

     As with the stock market, it seems appropriate to look at the treasury market.  Let’s begin with a look at the weekly ETF charts of the IEFs (7-10 year treasury market) and TLTs (20+ year treasury market):     The IEFs (top chart) and the TLTs (bottom chart) both recently broke important, multi-year uptrends. … Read more »

2016 Equity Market Review and Initial 2017 Market Projections/Observations

     Since we’re not only at the end of the year but are also transitioning to a new administration, this is the perfect time to not only look at the market’s post-recession history but also attempt to find sectors that will outperform the market in 2017.  Let’s get started with the following chart that shows… Read more »

Scoring my 2016 forecast: GOAL!

At the end of every year, I take a look back to see how well my forecast for both the first and second halves of the year turned out.  My methods are pretty transparent, and grading myself is a learning exercise when I miss things. I’m giving myself a little pat on the back this… Read more »

XE Market Analysis: Asia – Dec 30, 2016

Overnight dollar weakness continued into the last N.Y. session of the year, leaving EUR-USD over 1.0550, and USD-JPY near 116.75. Cable managed seven-session highs near 1.2390, while USD-CAD posted six-session lows of 1.3426. The last data release of the year, the Chicago PMI, was weaker than expected, and dented the dollar slightly. Treasury yields moved… Read more »

International Summation for 2016 and Country-Level Thoughts for 2017

     Each paragraph below focuses on the following economic players: the US, the UK, EU, Canada, Japan, Australia and China.       The U.S. is in the strongest economic position when compared to its developed world counterparts.  3Q GDP was over 3%.  While 4Q projections are lower, they’re still higher than most other countries.  The… Read more »

XE Market Analysis: Asia – Dec 29, 2016

The dollar came under pressure in N.Y. on Thursday, the last full trading day of the year, as positions were pared, year-end repatriation flows were finished up, and as yields dipped lower. EUR-USD climbed back over 1.0490 from lows near 1.0445, as USD-JPY slipped into 116.25, as Wall Street traded lower. USD-CAD eased into the… Read more »

Housing at year end 2016

<div style=”color: rgb(0, 0, 0); font-family: UICTFontTextStyleBody; font-size: 17px; line-height: normal;”>Let’s take a look at the very important leading sector of housing at the end of 2016.<br /><br />As per usual, my polestar is that housing first and foremost reacts to interest rates. &nbsp;Secondarily, housing responds to demographics. While housing does respond to price levels,… Read more »

XE Market Analysis: Europe – Dec 29, 2016

EUR-USD has settled back in the 1.04s after foraying to the mid 1.03s yesterday. USD-JPY has traded below its 20-day moving average for the first time since Nov-9 today, making a low at 116.33. The said moving average is presently sitting at 116.47, which now reverts as a resistance. Sterling remains on weak, with GBP-JPY… Read more »

XE Market Analysis: Asia – Dec 28, 2016

Another quiet day in N.Y. FX trade, though EUR-USD did ease to one-week lows of 1.0372, within range of the 13-year low posted last week. USD-JPY came off its 117.79 to print a 117.34 lows, with losses coming on the heels of a moderate Wall Street sell-off. USD-CAD touched levels last seen in February, peaking… Read more »

Potential Risks to the U.S. Economy in 2017

     Overall, the US economy is in strong shape.  Unemployment is low, growth is positive (but moderate) and inflation is under control.  But this expansion is also getting old; the possibility of a negative event hurting growth is increasing.  Looking at the economic landscape, these are the risks that I think could potentially derail the… Read more »

XE Market Analysis: North America – Dec 28, 2016

Following some modest weakness in Asian dealings, the dollar recovered some ground in morning Europe trade, bringing the unit back to near the top of its recent ranges. The USD index currently stands near 103.25, slightly above Tuesday’s N.Y. closing levels. EUR-USD is back under 1.0420 after topping at 1.0479, as USD-JPY is on intra… Read more »

XE Market Analysis: Asia – Dec 27, 2016

The U.S. returned from Christmas break on Tuesday, though the FX market felt like it was still on holiday. Light volumes and narrow ranges were the rule through the session, and more of the same is likely in the cards for the remainder of the week. A 15-year high consumer confidence outcome had little impact… Read more »

XE Market Analysis: North America – Dec 27, 2016

FX trade was very quiet overnight, with London remaining on Christmas break, and a light calendar and year-end conditions keeping thinly staffed desks sidelined. EUR-USD idled in familiar territory near 1.0450, while USD-JPY was steady in the low 117s. Firmed oil prices failed to help the CAD, which remained over 1.3500, following weak Canada GDP… Read more »

US Bond Market Week in Review: Will Inflation Be the Story of 2017?

     In a remarkable policy about-face, for the last several years central banks have been concerned with staving off the effects of deflation.  Japan by far has suffered the most from falling prices, leading the Bank of Japan to push the policy envelope like no bank before.  But the Bank of England, the ECB… Read more »

US Equity and Economic Review: a Year End Spate of Good News

     On Thursday, the Conference Board released the monthly LEIs and CEIs.  Despite 7/10 components increasing, the LEIs were unchanged.  A sharp drop in building permits was the primary reason.  However, the 6-month, rolling rate of change was 1%, which is the third consecutive month of readings around the 1% level.  The CEIs rose… Read more »

International Economic Week in Review: Ending the Year on Mostly Positive News

     This was a light week for economic news.  It’s highly likely that with the first major end-of-the-year holiday on Sunday, statistics agencies deliberately planned a light released schedule.       The primary news from Australia was Monday’s release of the latest meeting minutes.  The economy is growing a bit below trend, but growth is… Read more »

Weekly Indicators: are trade war fears showing up in the data? edition

Commodity prices bottomed about one year ago. After briefly turning negative, metals have now surged higher since the election. Stock prices S&P 500 Up +0.3% w/w  Stock prices became a positive having made new all-time highs in summer, and more new highs since.. Regional Fed New Orders Indexes (*indicates report this week) Empire State up… Read more »

XE Market Analysis: Pound Weakens Despite Strong Economy

OVERVIEW German consumer confidence rose in line with expectations to 9.9. German consumers have become more upbeat about their future income due to the strong labour market and rising wages.  U.S. personal consumption and income were both weaker than expected, rising 0.2% and 0% respectively last month, which points to slower growth in the fourth… Read more »

XE Market Analysis: Europe – Dec 23, 2016

Narrow ranges have been prevailing in very subdued trade. Several Asian centres were closed either for a half or full day, including Japanese markets, which were closed for the Emperor’s Birthday. Many interbank market participants will be unofficially be calling it a half day in London today, too, and many centres will be down to… Read more »

XE Market Analysis: North America – Dec 23, 2016

Narrow ranges have been prevailing in very subdued trade. Several Asian centres were closed either for a half or full day, including Japanese markets, which were closed for the Emperor’s Birthday. Many interbank market participants in London today won’t make back from the pub at lunchtime either, and many centres will be down to skeletal… Read more »

XE Market Analysis: Asia – Dec 22, 2016

The deluge of U.S. data seen on Thursday ultimately had little impact on the markets, as Wall Street ended with modest losses, as Treasury yields moved marginally higher. The dollar perked up some, though for the most part, enthusiasm waned into the Christmas weekend, and the last week of the year. EUR-USD climbed to 1.0499… Read more »

XE Market Analysis: US Economy Grows Faster Than Expected

OVERVIEW US durable goods orders fell 4.6% in November which was in line with forecasts and reversed an identical rise in October. Core capital goods however, increased more than expected.  UK consumer confidence rose for the first time in three months in December to -7, though consumers are concerned by the risk of higher inflation… Read more »

XE Market Analysis: North America – Dec 22, 2016

Euro strength has been the main show in town today, with the shared currency showing a 0.4% gain versus both the dollar and yen going into the New York open. The euro was also up 0.6% versus sterling, and 0.7% against the Canadian dollar. The U.S. dollar was mixed, down versus the euro, flat against… Read more »

XE Market Analysis: Europe – Dec 22, 2016

The dollar has traded mixed in pre-London Asian trading, softer versus the euro, steady against the yen, while gaining some ground versus sterling and the Canadian dollar. EUR-USD logged a three-session high at 1.0456, rising for a second day after posting a 14-year low at 1.0352 on Tuesday. The euro also posted modest gains versus… Read more »

XE Market Analysis: Asia – Dec 21, 2016

A quiet Wednesday session in N.Y. on Wednesday saw the dollar mixed overall. EUR-USD maintained a narrow trading band in the low 1.04s, as USD-JPY bounced from the low 117s. USD-CAD rallied over 1.3425 on softer oil prices, and ahead of CPI and retail sales data on Thursday. Cable meanwhile lost some early shine, falling… Read more »

XE Market Analysis: Swedish Krone Jumps After Riksbank Meeting

OVERVIEW Markets are generally quiet amid a lack of key data and as we edge towards the holidays. The Dollar pulled back from the 14-year high reached yesterday. UK government borrowing came in marginally above expectations at £12.6bn for last month – in line with new, less ambitious deficit reduction goals set out last month…. Read more »

Interest rate spike says slowdown not downturn — for now

[Note:  I am having a problem inserting graphs.  I will update as soon as I am able.] [UPDATE: Until XE fixes the problem, you can see the graphs here: http://bonddad.blogspot.com/2016/12/the-post-election-interest-rate-spik… ] [UPDATE 2: Problem is resolved.] The biggest economic story since the US Presidential election has been the backup in long term interest rates.  Post-Brexit… Read more »

XE Market Analysis: North America – Dec 21, 2016

The dollar has traded softer, showing a 0.2% decline versus the euro and a 0.3% drop against the yen just ahead of the New York interbank open. EUR-USD recouped above 1.0400, putting in some distance from the 14-year low seen yesterday at 1.0352. USD-JPY settled back in the mid 117s after failing to sustain gains… Read more »

XE Market Analysis: Europe – Dec 21, 2016

The dollar has traded moderately softer, showing a 0.2% decline versus the euro and a 0.3% drop against the yen as the London interbank market joined the fray. The greenback is also showing fractional losses versus the dollar bloc currencies. EUR-USD has recouped above 1.0400, putting in some distance from the 14-year low seen yesterday… Read more »

XE Market Analysis: Asia – Dec 20, 2016

The dollar maintained a softer footing through the N.Y. session on Tuesday, giving back gains posted in London, though remaining inside of recent ranges. There was no data to move the market, though Wall Street advanced, with the DJIA approaching the 20,000 mark, as yields edged higher. EUR-USD opened near 1.0355, and later made its… Read more »

XE Market Analysis: Yen Weakens After BoJ Meeting

OVERVIEW Janet Yellen maintained her positive view of the economy, saying that the U.S. labor market had improved to its strongest in over a decade and wage growth is picking up. The Euro weakened despite a pickup in German producer prices and a healthy Eurozone current account surplus. German borrowing costs hit fresh record lows…. Read more »

XE Market Analysis: North America – Dec 20, 2016

USD-JPY and yen crossers were at the fulcrum of activity in thinning year-end markets as the yen came under pressure into and after the BoJ’s announcement of unchanged policy, with bank governor Kuroda ruling out a reduction in ETF purchases during his post-meeting press conference. There had been some speculation that the BoJ might have… Read more »

XE Market Analysis: Europe – Dec 20, 2016

The main theme has been yen weakness today in pre-London open trade in Asia. USD-JPY is off its high at 117.95, but still showing a 0.5% advance at 1117.76 bid. EUR-JPY is up by 0.4%, while the biggest mover has been AUD-JPY, with a 0.7% gain. The yen had been briefly bid following yesterday’s news… Read more »

XE Market Analysis: Asia – Dec 19, 2016

USD-JPY has recouped toward 117.00 after clocking to a pullback low of 116.82, which surpassed the Tokyo session low at 116.97 and marked a new three-session nadir. EUR-USD traded back to near net unchanged levels after logging a low at 1.0411, which made this an outside day, whereby the day’s low and high exceed the… Read more »

XE Market Analysis: Sterling Under Pressure

OVERVIEW Sterling is under pressure after the Financial Times reported yesterday that EU Brexit negotiators are insisting Britain agrees to its European divorce settlement before Brussels offers any transitional deal.  Germany’s IFO business climate index rose to its highest level since February 2014 in December, thanks to strong domestic demand and a weaker Euro that… Read more »

XE Market Analysis: North America – Dec 19, 2016

The dollar traded softer against the yen, recovered from intraday losses versus the euro and posted gains against the Canadian and Australian dollars, all in thin year-end conditions. USD-JPY briefly pierced below 117.00, leaving a four-session low of 116.97 before recouping to around the 117.50 mark, still leaving the dollar with about a 0.4% decline… Read more »

XE Market Analysis: Europe – Dec 19, 2016

The dollar has traded steady-to-softer in early-week trade. USD-JPY has been the biggest mover, registering a 0.7% decline with the pair having drifted to the lower 117.0s after closing on Friday in the upper 117s. Japanese data today were overlooked by markets, although both imports and exports declined less than expected and by the least… Read more »

US Equity and Economic Review: Good Economic News, Slight Sell-Off Edition

     This week saw the release of two important coincidental indicators: retail sales and industrial production.  The former increased .1%, while the core number (retail sales ex-autos) increased .2%.  Despite the small monthly increase, the Y/Y numbers for both are slightly below 4% — a positive sign: Industrial production fell 4%, continuing a downward trend… Read more »

International Economic Week in Review: Will Inflation Be the Story of 2017?

     Recent English statistics show an economy that is resilient in the fact of Brexit.  But the BOE is projecting slower growth and rising price pressures in 2017, potentially placing them in a medium-term policy bind.  On Wednesday, the Bank of England maintained rates at .25%, while also continuing their current pace of asset purchases. … Read more »

US Bond Market Week in Review: To No One's Surprise, the Fed Raises Rates

     To no one’s surprise, the Fed raised rates 25 basis points on Wednesday.  The release contained the following assessment of the economy: Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been expanding at a moderate pace… Read more »

Weekly Indicators: short term indicators falter edition

Commodity prices bottomed about one year ago. After briefly turning negative, metals have now surged higher since the election. Stock prices S&P 500 Down -0.1% w/w Stock prices became a positive having made new all-time highs in summer, and made more new highs one week ago. Regional Fed New Orders Indexes (*indicates report this week)… Read more »

XE Market Analysis: Asia – Dec 16, 2016

The dollar lost some altitude in N.Y. Friday trade, with pre-weekend profit taking setting in ahead of the holiday period, which kicks in in earnest next week. EUR-USD topped near 1.0475, after finding support into the 1.0400 level. USD-JPY meanwhile, was spooked by news that China seized a U.S. naval drone in the South China… Read more »

XE Market Analysis: Euro Recovers Despite Record Low Borrowing Costs

OVERVIEW Eurozone inflation was confirmed at 0.6% year-on-year last month, the fastest pace of price increases since April 2014. US housing starts tumbled 18.7% last month, dropping from a nine-year high in October as construction activity declined.  Russia’s central bank left interest rates unchanged at 10% as expected, and said it will consider cutting rates… Read more »

XE Market Analysis: North America – Dec 16, 2016

The Fed-induced dollar rally came to a pause and correction. EUR-USD shot to a peak of 1.0472 peak, about 60s up on the day, and up on yesterday’s near 14-year low at 1.0366, though still some way short of yesterday’s 1.0514 peak. USD-JPY dipped to a 117.92 low, which is 74 pips below yesterday’s 10-month… Read more »

XE Market Analysis: Europe – Dec 16, 2016

EUR-USD is firmer, USD-JPY is softer today with the post-Fed hike rally having come to a pause. Dollar dips have remained shallow, however. The highest EUR-USD print so far having been 1.0448, some 66 pips short of yesterday’s high, while the lowest USD-JPY print so far being 117.97, which is 60 pips above yesterday’s low…. Read more »

XE Market Analysis: Asia – Dec 15, 2016

The dollar advanced further in N.Y. trade on Tuesday, helped by a rebound on Wall Street, amid a series of strong U.S. data. The Philly Fed and Empire State indices were much improved, helping the DXY to new trend highs of 103.55. EUR-USD slumped to 1.0367 into the London close, though was later able to… Read more »

Late cycle inflation: Fed rate hike, higher YoY CPI

Last week I wrote that I expected typical late cycle inflation to be the story of 2017.  Yesterday’s .25% rate hike by the Fed and this morning’s CPI reading for November play into that scenario. Yesterday’s rate hike drove yields on the 10 year Treasury to 2.57% intraday, and this morning they went as high… Read more »

XE Market Analysis: Dollar Surges After Fed Hike

OVERVIEW The Federal Reserve raised rates as expected yesterday to 0.75% which Janet Yellen called a “very modest adjustment” driven by strong jobs gains and continued pick-up in inflation. The market was surprised by the Fed raising their forecast to three rate hikes in 2017. The increase is partly due to the incoming Trump administration’s… Read more »

XE Market Analysis: North America – Dec 15, 2016

EUR-USD dove into near 14-year low terrain under 1.0440, having taken out yesterday’s post-Fed low and the March 2015 low at 1.0556. The Fed upped rates by 25 bp yesterday, as expected, but its dot plot signal of three more rate hikes in 2017 — one more than signalled in September — is driving dollar… Read more »

XE Market Analysis: Europe – Dec 15, 2016

The dollar rallied following the Fed’s 25 bp rate hike and signal of three more rate hikes in 2017, more than had been anticipated. USD-JPY led the way, rallying to a 10-month high of 117.86. ). The pairing had been trading around 115.25 ahead of the Fed’s announcement. The Federal Reserve’s policy contrasts to the… Read more »

XE Market Analysis: Asia – Dec 14, 2016

FX trade was quiet ahead of the FOMC announcement, with major pairings meandering inside of relatively narrow trading ranged. The dollar surged higher following the as-expected 25 basis point Fed rate hike. The driver was Fed’s expectations for three more hikes in 2017, which may have been on the high side of market expectations. Wall… Read more »

XE Market Analysis: Dollar Dips Ahead of Expected Rate Hike

OVERVIEW UK unemployment rate remained at an 11-year low of 4.8% in October, though employment fell for the first time in over a year. US retail sales rose just 0.1% in November against expectations of a 0.3% growth after October’s increase was revised down to 0.6%. Eurozone industrial output dipped in October for the second… Read more »

XE Market Analysis: North America – Dec 14, 2016

The major dollar pairing saw some chop during the European AM session as markets hunkered down ahead of the Fed announcement. EUR-USD settled around 1.0630-40. The euro had dipped to a 1.0612 low after popping to a 1.0664 peak during a sell-off in the dollar in the early London session. Sub-forecast Eurozone production data had… Read more »

XE Market Analysis: Europe – Dec 14, 2016

Narrow ranges have been the order of the day so far in currency markets as markets hunker down into the Fed’s policy announcement and guidance, which will come with updated economic forecasts from the central bank. EUR-USD drifted about 25 pips, back to around 1.0650, but has remained below yesterday’s six-day peak at 1.0667. USD-JPY… Read more »

XE Market Analysis: Asia – Dec 13, 2016

The dollar largely moved sideways through the N.Y. session Tuesday, as traders sat on their hands ahead of Wednesday’s FOMC announcement, where a 25 basis point rate hike is universally expected. Aside from slightly weaker import and export prices, there was no data on tap to move markets. This said, Wall Street soared to record… Read more »

2016 Economic Year in Review and 2017 Basic Economic Projection

     This is the first of three year-end articles.  This piece will focus on the last 12 months of economic growth along with the upcoming projections of the LEIs and CEIs offered by the Conference Board.  The conclusion is that the next 6-12 months are looking fairly positive.  In the next post, I’ll analyze… Read more »

XE Market Analysis: UK Inflation Hits Two-Year High

OVERVIEW Chinese retail sales rose at their fastest pace since December 2015, climbing 10.8% year-on-year as the economy builds momentum towards year end. The German ZEW survey of economic sentiment was unchanged at 13.8 in December vs expectations of it rising to 14.  Swedish inflation rose 1.4% last month, the fastest pace in over four… Read more »

XE Market Analysis: North America – Dec 13, 2016

The dollar firmed up against the yen and the euro, though lost ground versus the pound, which outperformed during the London AM session, and the Canadian dollar, which was supported by near 1% gain in oil prices on news that some Gulf states have given notice to customers of output cuts, an encouraging sign of… Read more »

XE Market Analysis: Asia – Dec 12, 2016

FX trade was relatively quiet in N.Y. on Monday, though the dollar faded fairly broadly through the session. There was no data to drive prices, and the risk backdrop was neutral overall, with Wall Street mixed, and yields off their highs. Oil prices eased back from 17-month highs as well, with profit taking the motivation… Read more »

XE Market Analysis: World Eyes on FED Decision

OVERVIEW The oil price hits an 18-month high after the recent OPEC deal on production. ​The markets have their eye on the FED meeting this week looking for any signals on further tightening.     Euro recuperates after last weeks’ tumble post ECB announcement. HIGHLIGHT This week is the FOMC two-day meeting, where a 0.25%… Read more »

XE Market Analysis: North America – Dec 12, 2016

The dollar traded mostly softer, though USD-JPY still logged a trend high at 116.12, the loftiest level seen since February as the yen underperformed. The Canadian dollar and the euro outperformed, the former as oil prices rallied some 5% following the weekend’s pledge from major non-OPEC oil producing nations to cut production by 558k barrels… Read more »

XE Market Analysis: Europe – Dec 12, 2016

The dollar has traded mixed in early week trade so far, rallying to fresh trend highs versus the yen, but falling to new tend lows in the case against the Canadian dollar, which was buoyed by a 5%-plus surge in oil prices following the weekend meeting of OPEC and non-cartel oil producing nations. The dollar… Read more »

Weekly indicators: gas usage joins the US$ and interest rates as a negative edition

Commodity prices bottomed about one year ago. After briefly turning negative, metals have now surged higher since the election. Stock prices S&P 500 Up +3.1% w/w Stock prices became a positive having made new all-time highs in summer, and made more new highs this week. Regional Fed New Orders Indexes (*indicates report this week)(no reports… Read more »

XE Market Analysis: Asia – Dec 09, 2016

The dollar moved higher on Friday, aided by an outsized gain in Michigan consumer sentiment data, and ahead of what will almost certainly be a Fed rate hike next week. EUR-USD fell to 1.0532 lows, and will have last Monday’s 1.0505 in the crosshairs. USD-JPY meanwhile, topped 115.36 on the improved risk backdrop and higher… Read more »

XE Market Analysis: Asia – Dec 08, 2016

The dollar rallied broadly after the ECB policy announcement and press conference, with gains pace by EUR-USD losses. The initial releases indicated the ECB would taper its asset purchases to EUR 60 bln from EUR 80 bln, though with Draghi extending the program for 9 months versus the 6 months expected, the markets ended up… Read more »

XE Market Analysis: ECB to Print Money Until Inflation Target Reached

OVERVIEW The European Central Bank kept interest rates on hold as expected. UK house prices reached a seven-month high in November, rising to 30, according to the RICS house price balance.  Japanese GDP growth was revised down from 2.2% to 1.3% in the third quarter as capital expenditure fell unexpectedly.   The Bank of Canada… Read more »

XE Market Analysis: Asia – Dec 07, 2016

The FX market was fairly quiet in N.Y. on Wednesday, with the dollar largely trading sideways, with the exception of USD-CAD, which fell following the BoC policy announcement, and despite oil price losses. EUR-USD ranged between 1.0726 and 1.0768 through the session, as USD-JPY slipped briefly under 113.50, before rallying over 113.90 on the back… Read more »

XE Market Analysis: Brexit Timetable Tumbles Sterling

OVERVIEW US factory orders rose 2.7% in October, the largest gain since June 2015 and the fourth straight month of gains.   UK industrial output suffered its biggest monthly drop in more than four years in October after the temporary shutdown of a major oilfield, while factory output also fell unexpectedly. German industrial production rose… Read more »

XE Market Analysis: Asia – Dec 06, 2016

The dollar firmed up some in N.Y. trade on Tuesday, though only by a bit overall. The dollar index was up about 0.4% to 100.60, after briefly dipping under the 100 mark in London. Incoming U.S. data was USD positive, with factory orders hitting a 1.5 year high. EUR-USD traded to 1.0699 lows after topping… Read more »

2017: a late-cycle year of inflation?

It appears that 2017 is setting up as a typical late cycle year of inflation.That’s certainly what the long bond seems to expect:But there are other reasons to think that inflation may be about to hit a recent high.  To begin with, over the last 8 months, prices have increased 1.7%, or roughly a 2.5%… Read more »

XE Market Analysis: German Industrial Orders Surge

OVERVIEW Last month the U.S. service sector saw activity growth increase at its fastest pace in over a year with the PMI jumping to 57.2 from 54.8 in October. The U.S. trade deficit widened to $42.6 billion in October as exports fell. Australia’s central bank kept interest rates on hold at 1.5% as expected. South… Read more »

XE Market Analysis: Asia – Dec 05, 2016

The dollar struggled through the N.Y. session on Monday, posting highs early in the session before fading lower into the close. EUR-USD appeared to benefit from a fairly pronounced short-squeeze, making its way to highs just under 1.0800. USD-JPY meanwhile, failed to breach last week’s trend high, and fell to 113.16 lows from highs over… Read more »

XE Market Analysis: Euro Rebounds After Italian Referendum Defeat

OVERVIEW Italians voted ‘no’ by a larger than expected margin, with 59% of votes siding against Prime Minister Renzi’s proposed reforms, leading to him resigning.  Markets initially reacted negatively to the news, but have since recovered their losses. The Eurozone services PMI dipped slightly to 53.8, but combined with the strong manufacturing PMI, it pointed… Read more »

XE Market Analysis: North America – Dec 05, 2016

The euro dove in early Asia before rebounding strongly during the European AM. EUR-USD was showing 0.4% gain after declines of more than 1% at the lows, while EUR-JPY has gone from a 1%-plus loss to a 1.0%-plus rise. While markets are cementing in expectations for the ECB to extend its QE program following the… Read more »

XE Market Analysis: Europe – Dec 05, 2016

The euro pared losses after diving by over 1% versus the yen and euro in early Asia. News that Italian PM Renzi suffered a resounding defeat in the weekend referendum on constitutional reform spooked markets, though in Austria the far right and with it anti-EU forces suffered an equally convincing defeat in the weekend’s presidential… Read more »