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Holiday Update

May 31, 2010
UK and US markets are closed. Quieter trading has seen the US dollar pare some of the late Friday gains scored in the wake of the Fitch downgrade of Spanish sovereign risk.
The combination of only a one notch move, when many observers, including ourselves, believe more is justified, and a stable outlook has seems to be a case of "it could be …
Holiday Update Holiday Update Reviewed by Marc Chandler on May 31, 2010 Rating: 5
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Euro Surrenders Earlier Gains

May 28, 2010
The euro has surrendered its earlier gain, dropping a full cent from the session highs set in early Europe just above $1.2450.
The short-term technical indicators were a bit stretched, but the proximate cause seems to be news from the Germany's Bafin, the financial regulator, that the German government remains committed to the naked short ban …
Euro Surrenders Earlier Gains Euro Surrenders Earlier Gains Reviewed by Marc Chandler on May 28, 2010 Rating: 5
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Fallout

May 28, 2010
Increasingly policy makers and investors are thinking about the consequences of the European financial crisis. The following focuses on two such consequences that are unlikely to appear on other lists. The attempt here is to be additive not exhaustive.
Europe: Re-writing the Social Contract This year was supposed to be about the US and UK exiting qu…
Fallout Fallout Reviewed by Marc Chandler on May 28, 2010 Rating: 5
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Euro, Canadian Dollar, Swedish Krona, Yen

May 28, 2010
The euro has broken above the $1.2350-$1.2400 band of resistance that has capped the corrective upticks in recent days. If this is sustained, we have suggested there is potential in the coming sessions toward $1.2600.
Our constructive outlook for the dollar was never based solely on Europe’s woes, though of course that has been the dominant factor…
Euro, Canadian Dollar, Swedish Krona, Yen Euro, Canadian Dollar, Swedish Krona, Yen Reviewed by Marc Chandler on May 28, 2010 Rating: 5
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Euro in Play, Calmer Markets

May 28, 2010
The US dollar is mostly little changed today. The main feature is the covering of short euro positions and this has lifted the single currency to new four-day highs against the dollar.
As I have noted in recent days, its downside momentum had faded and the near-term risk was bout of position squaring.
Euro in Play, Calmer Markets Euro in Play, Calmer Markets Reviewed by Marc Chandler on May 28, 2010 Rating: 5
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Dollar Firms NY Morning

May 27, 2010
The dollar is still lower on the day, but it has recouped more than half of its earlier losses against the euro and sterling.
Sterling has peaked just before the disappointing CBI retail sales report. After being turned back as it approached $1.4600, it is now testing support near $1.4450. A break of this could see another half cent decline today.…
Dollar Firms NY Morning Dollar Firms NY Morning Reviewed by Marc Chandler on May 27, 2010 Rating: 5
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Money Market Developments

May 27, 2010
Three month dollar LIBOR has edged up again today. It has risen every day since May 10th, though the pace has slowed. This reflects the demand for dollar funding. While the focus in on European banks, the scramble to secure funding seems more widespread. The fx forward market is one avenue that dollar funding can be secured and contacts report thi…
Money Market Developments Money Market Developments Reviewed by magonomics on May 27, 2010 Rating: 5
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Today's Drivers

May 27, 2010
The euro has largely retraced yesterday’s losses. The euro’s cyclical low was recorded last Wednesday and it has successfully been retested. This is the longest the euro has gone without making a new low in a month. The $1.2150 area marks the lower end of the range that has emerged. The upper end of the range is seen in the $1.2350 area. A move th…
Today's Drivers Today's Drivers Reviewed by Marc Chandler on May 27, 2010 Rating: 5
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Calmer Capital Markets

May 27, 2010
The US dollar is broadly weaker today as is the Japanese yen as the latest bout of market anxiety eases. News that China indicated that it is not planning on selling its European bond holdings helped the euro recover yesterday’s slide.
A couple of Japanese life insurers made similar supportive comments as did South Korea’s central bank. At the sam…
Calmer Capital Markets Calmer Capital Markets Reviewed by Marc Chandler on May 27, 2010 Rating: 5
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Euro Slips Anew

May 26, 2010
The euro has broken down again and has been pushed through the $1.22 level. It is not as if the market needs new reasons to be bearish the euro, but the news that the market seems to be reacting to now is a Financial Times piece claiming, apparently without attribution, that China's State Administration of Foreign Exchange (SAFE) is reviewing …
Euro Slips Anew Euro Slips Anew Reviewed by Marc Chandler on May 26, 2010 Rating: 5
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A$ Takes Off

May 26, 2010
The Australian dollar is rallying on the back of local press reports claiming the government is preparing a major retreat from its super 40% resource tax.
The resource tax is part of a larger tax reform package and it went over like the proverbial lead balloon. It is too early for us to determine the veracity of the claim, but it is driving the Au…
A$ Takes Off A$ Takes Off Reviewed by Marc Chandler on May 26, 2010 Rating: 5
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Spain Still in Focus

May 26, 2010
The euro is grinding lower in the North American morning. Traders here are talking about the Wall Street Journal article that reports talk that a large Spanish bank has been struggling to roll over $1 bln short-term funding in the US commercial paper market.
Dollar LIBOR crept higher today for the 11th consecutive session and is now at a new 10-mo…
Spain Still in Focus Spain Still in Focus Reviewed by Marc Chandler on May 26, 2010 Rating: 5
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Asian Security Issues May Undermine Japan

May 26, 2010
Japan's DPJ government has been forced to back down on its campaign pledge regarding the moving of the US Marine Corp base in Okinawa. Prime Minister Hatayama's retreat may come at a high political cost. It appears to have weakened his already poor standing in opinion polls and appears to be undermining his governing coalition. In sum, it …
Asian Security Issues May Undermine Japan Asian Security Issues May Undermine Japan Reviewed by Marc Chandler on May 26, 2010 Rating: 5
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Euro, Swiss franc, Fed Update

May 26, 2010
There is no significant driver of the foreign exchange market today. The tone is less tense than it has been in recent days, but there still does not appear to be closure and calm seems fragile.
While the euro, for example, has risen above yesterday’s highs, those gains were recorded in early Asia and Europe has need managed to get the euro above …
Euro, Swiss franc, Fed Update Euro, Swiss franc, Fed Update Reviewed by Marc Chandler on May 26, 2010 Rating: 5
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Calmer Markets, but Fragile

May 26, 2010
The US dollar is narrowly mixed in calmer foreign exchange markets today. Sterling and the Japanese yen are trading around levels seen in late NY yesterday, while the euro is slipping back toward the session lows near midday in London.
The Swiss franc and Australian dollars are modestly firmer. The news stream is light and the market almost appear…
Calmer Markets, but Fragile Calmer Markets, but Fragile Reviewed by Marc Chandler on May 26, 2010 Rating: 5
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Hard Asset Investor: Major Depression in Greece Likely Hard Asset Investor: Major Depression in Greece Likely Reviewed by magonomics on May 25, 2010 Rating: 5
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Spain is the Pain

May 25, 2010
If there was a doubt about it, there isn't any more. The European debt crisis is not simply a Greek phenomenon. Spain is the focus now. Spain (sovereign and private) owes foreign investors roughly $1.1 trillion. In comparison, Greece's external debt is closer to $236 bln.
Besides the news that every one is now aware of (a savings bank take…
Spain is the Pain Spain is the Pain Reviewed by Marc Chandler on May 25, 2010 Rating: 5
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Rujors Helping Euro Catch a Bid in Early North America

May 25, 2010
There is talk that officials will take another step up the escalation ladder to combat the continued rise in LIBOR. The three-month rate has doubled now during the European debt crisis.
The Fed has renewed swap lines to provide foreign central banks dollars that they in turn can auction to their members. The problem is that banks are not taking ad…
Rujors Helping Euro Catch a Bid in Early North America Rujors Helping Euro Catch a Bid in Early North America Reviewed by Marc Chandler on May 25, 2010 Rating: 5
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Asian Central Banks May Have Sold Dollars

May 25, 2010
Strong upward pressure on the dollar emanating from the European debt crisis and the tensions on the Korean peninsula apparently was countered by intervention from several Asian central banks.
At one point the dollar was nearly 5.25% stronger against the Korean won on the day, bringing its advance to more than 13% since May 14. The central bank is…
Asian Central Banks May Have Sold Dollars Asian Central Banks May Have Sold Dollars Reviewed by Marc Chandler on May 25, 2010 Rating: 5
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FX Drivers

May 25, 2010
The main driver today is fear that the European debt crisis is spreading to Spain. Three developments in the past couple of days have put Spain in the market’s cross-hairs. First, the Spanish central bank had to take over a savings bank over the weekend. Second this was followed yesterday by 4 other savings banks merging. Third, the IMF yesterday …
FX Drivers FX Drivers Reviewed by Marc Chandler on May 25, 2010 Rating: 5
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Dollar Races Higher

May 25, 2010
The US dollar is posting strong across the board gains. The sole exception is the Japanese yen, which is also benefiting from the heightened anxiety.
There are three main drivers today. First, there is fear that the European sovereign debt crisis is spreading, with banking issues front and center in Spain. Second, there is concern that some centra…
Dollar Races Higher Dollar Races Higher Reviewed by Marc Chandler on May 25, 2010 Rating: 5
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Is Move From May 10th Over? If So, then What?

May 24, 2010
On May 7th, the market covered some short euro exposure in anticipation of some sort of response by European officials. As we know they came up with a large package of guarantees (not just for Greece) and loans, and the ECB provided now liquidity facilities and agreed to buy sovereign bonds in the secondary market.
The euro initially reacted posit…
Is Move From May 10th Over? If So, then What? Is Move From May 10th Over? If So, then What? Reviewed by Marc Chandler on May 24, 2010 Rating: 5
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Diversification into Dollars ?

May 24, 2010
There has been more talk of central banks moving out of euros into dollars. As far as we can tell, the only confirmation appears to be Russia. Despite its campaign for an alternative to the US dollar, recent comments by the central bank suggest the dollar's share of Russian reserves have increased and it is not simply on a valuation basis.
On …
Diversification into Dollars ? Diversification into Dollars ? Reviewed by Marc Chandler on May 24, 2010 Rating: 5
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Korea: New Wrinkle in SED

May 24, 2010
The compelling evidence that North Korea sank the South Korean vessel that killed 46 sailors has added an extra wrinkle into the US-Chinese Special Economic Dialogue that are underway.
Some 200 US policy makers and advisors have made the trip, including companies who are hoping to export more clean energy technology. There are unlikely to be signi…
Korea: New Wrinkle in SED Korea: New Wrinkle in SED Reviewed by Marc Chandler on May 24, 2010 Rating: 5
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European Developments in Focus

May 24, 2010
The absence of fresh developments over the weekend encouraged euro selling today. Before North American traders returned to their posts, the euro has already retraced 50% of the gains in the second half of last week. The next retracement objective is seen near $1.2346. Recall last week’s low was recorded mid-week near $1.2144.
News that the Spanis…
European Developments in Focus European Developments in Focus Reviewed by Marc Chandler on May 24, 2010 Rating: 5
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New Week, Same Dollar--Higher

May 24, 2010
The US dollar is broadly higher to start the last full week of the month. The pre-weekend short-covering of the euro has been reversed and with today’s more than 1.5% loss has retraced more than 50% of its gains scored in the second half of last week.
News that Spain rescued a savings bank over the weekend contributed the undermining of sentiment.…
New Week, Same Dollar--Higher New Week, Same Dollar--Higher Reviewed by Marc Chandler on May 24, 2010 Rating: 5
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CNBC: Euro's Downfall: Should US Intervene? CNBC: Euro's Downfall: Should US Intervene? Reviewed by magonomics on May 21, 2010 Rating: 5
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Canada Dollar Good Buy, not Good Bye

May 21, 2010
Canada has reported stronger than expected April inflation reading and March retail sales data. The foreign exchange market remains gripped by the sovereign debt crisis in Europe and the threats to world growth, but the economic data underscores the bullish case for the Canadian dollar. When the crisis passes, I expect the Canadian dollar to be on…
Canada Dollar Good Buy, not Good Bye Canada Dollar Good Buy, not Good Bye Reviewed by Marc Chandler on May 21, 2010 Rating: 5
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ECB Intervention Just Now: Color Me Skeptical

May 20, 2010
The euro has rallied about 1% and has spurred talk of ECB intervention. I am skeptical.
There seems to be little reason to expect the ECB to intervene outside of its time zone in a unilateral fashion. Convention, we understand, would dictate that the ECB would have to notify (ask permission?) of the Federal Reserve to intervene in the US market.
I…
ECB Intervention Just Now: Color Me Skeptical ECB Intervention Just Now: Color Me Skeptical Reviewed by Marc Chandler on May 20, 2010 Rating: 5
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Europe Still in Denial

May 20, 2010
Eurogroup head and Lux Prime Minister Jean-Claude Juncker has played down need to intervene in the foreign exchange market, saying there was no need to defend the euro. Yet in the same interview, he claimed that the EU/IMF/ECB Stabilization Mechanism was necessary to defend the single currency.
Yet since the new initiative was announced, the euro …
Europe Still in Denial Europe Still in Denial Reviewed by Marc Chandler on May 20, 2010 Rating: 5
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European Financial Reform: Bluster or Substance?

May 19, 2010
Germany's unilateral imposition of a ban on naked short sales of European bonds, CDS and shares of the top 10 financial firms has stolen the headlines for sure, but it is part of a larger development that needs to be understood. The poor reception to the German moves seemed so obvious it begs the question of why did it do it and why then.
Germ…
European Financial Reform: Bluster or Substance? European Financial Reform: Bluster or Substance? Reviewed by Marc Chandler on May 19, 2010 Rating: 5
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Rumors Fuel Euro Short Squeeze

May 19, 2010
Given the sharp recovery in the foreign currencies in the North American morning, it is hardly surprising that there are numerous rumors seeking to explain what happened.
Although no dealers are reporting actual intervention, there is talk that the pace of the euro's decline has become more salient for policy makers. There is talk that the off…
Rumors Fuel Euro Short Squeeze Rumors Fuel Euro Short Squeeze Reviewed by Marc Chandler on May 19, 2010 Rating: 5
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More Thoughts on Germany's Move

May 18, 2010
German financial regulators announced an immediate ban on naked short sales of European government bonds, credit-default swaps, and shares of the top ten banks and insurers. This appeared to precipitate new euro selling that continued through the North American afternoon and into early Asian trading.
Market participants concluded that the move was…
More Thoughts on Germany's Move More Thoughts on Germany's Move Reviewed by Marc Chandler on May 18, 2010 Rating: 5
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What the Options Market is Telling Us about the Euro

May 18, 2010
The euro's decline is relentless and the foreign exchange market is becoming disorderly. This is how the spot price action feels and this is what the options market is confirming.
The standard metric is 3-month volatility and it is quoted a little above 14.6% currently. To put this in perspective, during the 9/11 period 3-month euro vol reache…
What the Options Market is Telling Us about the Euro What the Options Market is Telling Us about the Euro Reviewed by Marc Chandler on May 18, 2010 Rating: 5
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Ten of 15 Countries Pony Up for Greece

May 18, 2010
Greece received an estimated 14.5 bln euros earlier today and this ensures it will be able to service the debt that comes due tomorrow. There apparently had been some jitters ahead of the event and with today's transfer, Greek bonds staged the biggest rally in several days.
However, what is noteworthy is that there are 16 countries that share …
Ten of 15 Countries Pony Up for Greece Ten of 15 Countries Pony Up for Greece Reviewed by Marc Chandler on May 18, 2010 Rating: 5
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What To Make Of US Senate Conditionality on IMF Funds

May 17, 2010
Late Monday the US Senate approved, by an overwhelming majority (94-0--and who said bipartisanship is dead?), an amendment to the financial regulation overhaul bill that prohibits the US support for IMF loans to countries that aren't likely to repay them. In particular the amendment requires the Treasury Dept to certify whether a loan by the I…
What To Make Of US Senate Conditionality on IMF Funds What To Make Of US Senate Conditionality on IMF Funds Reviewed by Marc Chandler on May 17, 2010 Rating: 5
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Stark Revelations

May 13, 2010
Comments by European Central Bank board member Juergen Stark may be more important that the market initially understood. He indicated that the sovereign bonds the ECB purchases will be held until maturity. This is significant in terms of debt restructuring.
Many observers have seen the dramatic decline in the risk premium that Club Med and especia…
Stark Revelations Stark Revelations Reviewed by Marc Chandler on May 13, 2010 Rating: 5
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Not Just Failure, but Success Weighs on the Euro

May 11, 2010
Many observers are attributing the euro's weakness to concerns that the measures taken by the EU/ECB/IMF may fail to contain the crisis. There is surely an element of this. Yet that interpretation may rely too much on the foreign exchange market rather than the debt market, where the crisis began.
Looking at the dramatic rally in Club Med bond…
Not Just Failure, but Success Weighs on the Euro Not Just Failure, but Success Weighs on the Euro Reviewed by Marc Chandler on May 11, 2010 Rating: 5
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Is Near-Term Euro Momentum Stalling

May 11, 2010
After returning to levels prior to the Europe's 'shock and awe offensive the euro appears to be trying to find a base. There is a bullish divergence in the hourly RSIs.
There also is a stark contrast between the bond market reaction and the currency market response. In the bond market the measures have supported prices and the risk premium…
Is Near-Term Euro Momentum Stalling Is Near-Term Euro Momentum Stalling Reviewed by Marc Chandler on May 11, 2010 Rating: 5
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Merkel's No Tax Cut Warning is Euro Negative

May 10, 2010
The market has scrambled to adjust positions in the wake of the new European initiative. German Chancellor Merkel, who lost control of the upper house of parliament yesterday, has told reporters that there cannot be new tax cuts for at least two years. This is unfortunate. It means that the underlying imbalances in Europe will not be addressed. It…
Merkel's No Tax Cut Warning is Euro Negative Merkel's No Tax Cut Warning is Euro Negative Reviewed by Marc Chandler on May 10, 2010 Rating: 5
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Europe Update

May 09, 2010
Word is still not official, but clearly European officials have taken another step up the escalation ladder to combat the sovereign debt crisis that is threatening to disrupt the recovery seen in the capital markets over the past year.
The latest is that as much as a 600 bln euro package is being put together. It appears that it may consist of aro…
Europe Update Europe Update Reviewed by Marc Chandler on May 09, 2010 Rating: 5
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ECB Rumors and the Euro

May 07, 2010
Rumors circulated the markets today that as early as this weekend the ECB will announced a 600 bln euro 1-year loan facility. Just yesterday the ECB had a chance to do this, but as we know declined to do anything. Perhaps, the ECB was protesting the political pressure brought to bear on it recently and consequently sat on its hands. However, if th…
ECB Rumors and the Euro ECB Rumors and the Euro Reviewed by Marc Chandler on May 07, 2010 Rating: 5
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Strong US Jobs Report, despite Rise in Unemployment

May 07, 2010
For the second consecutive month the US economy grew more than 200k jobs. The private sector has added 400k jobs in the March-April period. The unemployment rate ticked up to 9.9% from 9.7% as more than 800k people joined the work force. This looks like discouraged workers getting back involved and in some ways is a sign of returning optimism.
Strong US Jobs Report, despite Rise in Unemployment Strong US Jobs Report, despite Rise in Unemployment Reviewed by Marc Chandler on May 07, 2010 Rating: 5
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Two Trade Ideas

May 07, 2010
I recommended to our clients to buy Canadian dollars against the yen in Asia today near JPY86.80. During the near panic yesterday this cross collapsed to a degree we have simply not seen before. It traded 5 standard deviations form the 20-day moving average. A move of this extreme was not during the 2007-2009 crisis.
The Canadian fundamentals are …
Two Trade Ideas Two Trade Ideas Reviewed by Marc Chandler on May 07, 2010 Rating: 5
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European Tensions Pose Systemic Risks

May 07, 2010
The euro has recovered more than two cents off of yesterday’s low set late in the North American session yesterday. Many participants seem concerned that such dramatic price action in the capital markets will elicit a policy response. Japanese officials were happy to push this and revealed that the G7 will have a conference call today to discuss t…
European Tensions Pose Systemic Risks European Tensions Pose Systemic Risks Reviewed by Marc Chandler on May 07, 2010 Rating: 5
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A Little of Everything

May 07, 2010
The US dollar is broadly mixed in still volatile market conditions. The euro has been boosted by indications of a G7 conference call. Sterling has been punished in the wake of the indecisive electoral outcome. The yen has weakened as the BOJ injected one-day liquidity for the first time since December. Although there are some large moves today in …
A Little of Everything A Little of Everything Reviewed by Marc Chandler on May 07, 2010 Rating: 5
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Greece Says Yes, but Germany's SPD Says No

May 06, 2010
The Greek parliament has approved the austerity measures the government agreed to and this saw the euro tick up. However, Market News International reports that the German SPD said that it will not vote for the Greek aid bill.
The parliamentary head of the SPD indicated that the government refused to agree to a financial transaction tax, which the…
Greece Says Yes, but Germany's SPD Says No Greece Says Yes, but Germany's SPD Says No Reviewed by Marc Chandler on May 06, 2010 Rating: 5
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Why is the Euro Still Selling Off?

May 06, 2010
The euro has been sold to new lows in the aftermath of the ECB meeting and Trichet's press conference. Trichet did not say or do anything to stop the rot.
There was no attempt to address the liquidity squeeze that is apparent not only in the euribor market but also in short end of the dollar LIBOR curve. To the extent Trichet addressed the eur…
Why is the Euro Still Selling Off? Why is the Euro Still Selling Off? Reviewed by Marc Chandler on May 06, 2010 Rating: 5
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Critical ECB Meeting, SNB Steps Aside

May 06, 2010
The European Central Bank meeting today is critical. As is its pattern, it holds two meetings a year outside of Frankfurt. Today’s meeting is in Lisbon, which is one of the local governments (five in all) that Moody’s put on credit-watch yesterday for a possible downgrade alongside the sovereign. To be sure, what is at stake here is not so much a …
Critical ECB Meeting, SNB Steps Aside Critical ECB Meeting, SNB Steps Aside Reviewed by Marc Chandler on May 06, 2010 Rating: 5
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Capital Market Developments

May 06, 2010
The US dollar remains firm against most of the major currencies today as the participants await the ECB meeting, which given the events in Europe, is the most important meeting arguably since 2008.
There are three currencies that stand out today. First, sterling is independently heavy. A weak CIPS service PMI (55.3 vs 57 expected and 56.5 in March…
Capital Market Developments Capital Market Developments Reviewed by Marc Chandler on May 06, 2010 Rating: 5
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Moody's, Protest in Athens turns Violent, Euro Moves below $1.29

May 05, 2010
News that Moody's has put Portugal's debt on review for a possible downgrade to the AA2 rating has pushed the euro to a new low for the move. Moody's says a 1 or 2 notch downgrade is possible. As we have noted, the rating agencies, and in particular Moody's seems way more optimistic on the debt quality than our proprietary models a…
Moody's, Protest in Athens turns Violent, Euro Moves below $1.29 Moody's, Protest in Athens turns Violent, Euro Moves below $1.29 Reviewed by Marc Chandler on May 05, 2010 Rating: 5
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Norway Hikes, but Sounds more Neutral

May 05, 2010
Norway's central bank, the Norges Bank, hiked key deposit rate by 25 bp today to 2%. It was a close call in terms of opinion surveys and the bank's board did consider keeping rates on hold. I had favored that scenario given some softness in recent data and the ongoing market turmoil.
The Norges Bank hiked rates twice in Q4 09 and this is t…
Norway Hikes, but Sounds more Neutral Norway Hikes, but Sounds more Neutral Reviewed by Marc Chandler on May 05, 2010 Rating: 5
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Second Verse Same as the First: European Debt Crisis Continues

May 05, 2010
There is one major force at work in the global capital markets and it remains the European debt crisis. The basic concern is that the debt dynamics present not simply a liquidity crisis but a solvency issue. The latter point is underscored by the poor growth prospects in the periphery of Europe, which in turn also reflects underlying competitive i…
Second Verse Same as the First: European Debt Crisis Continues Second Verse Same as the First: European Debt Crisis Continues Reviewed by Marc Chandler on May 05, 2010 Rating: 5
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Capital Markets Overivew

May 05, 2010
The US dollar is narrowly mixed as a nervous pall hangs over the market. The European debt crisis remains front and center and the euro has been unable to resurface above the $1.30 level today after it gave way in North America yesterday. Like yesterday, the Swiss National Bank seems determined that the flight to safety does trigger franc apprecia…
Capital Markets Overivew Capital Markets Overivew Reviewed by Marc Chandler on May 05, 2010 Rating: 5
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Don't Chase the Euro, Wait for a Bounce

May 04, 2010
The euro dipped below the $1.30 level, but losses below there were shallow. This is and has been a crowded trade, but the $1.30 level was the objective of many and the price action feels a bit like the end of a boxer's punch, when it loses much of its sting.
To be sure, I remain a euro bear. European officials have lost a degree of credibility…
Don't Chase the Euro, Wait for a Bounce Don't Chase the Euro, Wait for a Bounce Reviewed by Marc Chandler on May 04, 2010 Rating: 5
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Deflationary Forces in US and Senior Loan Officer Survey

May 04, 2010
After the PCE deflator was reported yesterday the Dallas Fed re-jigs it, cutting out strongest and weakest to arrive at a trimmed mean. By its calculations the PCE deflator rose 0.1% at an annualized basis, which is the result of rounding up. On a year-over-year basis the Dallas trimmed mean measure is up 1% vs the 1.3% increase of the core PCE.
A…
Deflationary Forces in US and Senior Loan Officer Survey Deflationary Forces in US and Senior Loan Officer Survey Reviewed by Marc Chandler on May 04, 2010 Rating: 5
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Thai Market Euphoria may be Exaggerated

May 04, 2010
The beleaguered Thai Prime Minister Vejjajia proposed a mid-Nov election as part of a broader compromise meant to end the eight weeks of violent protests and keep him in office until next year's budget makes its way through parliament. Although the financial markets responded positively, with a 4.4% rise in local shares--to the highest level i…
Thai Market Euphoria may be Exaggerated Thai Market Euphoria may be Exaggerated Reviewed by Marc Chandler on May 04, 2010 Rating: 5
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Greenback's Two Legs and Developments in Japan

May 04, 2010
I have argued that the dollar’s rally stands on two legs. The first leg, arguably the bigger of the two, is negative developments elsewhere in the world. While the European debt crisis is the most obvious consideration; it is not the only one. China’s incremental removal of excess liquidity and concerns of an unsustainable rise in real estate has …
Greenback's Two Legs and Developments in Japan Greenback's Two Legs and Developments in Japan Reviewed by Marc Chandler on May 04, 2010 Rating: 5
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Snapshot of Global Capital Markets

May 04, 2010
The US dollar remains firmer across the board. A certain degree of skepticism continues to weigh on the euro. There are suspicions that Greece may need more funds and/or that the official moves do not prevent contagion. Others recognize that even if the package for Greece does the trick, a lower euro is still the likely consequence. In the UK, a w…
Snapshot of Global Capital Markets Snapshot of Global Capital Markets Reviewed by Marc Chandler on May 04, 2010 Rating: 5
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North American Players Not Convinced by Greek Bailout

May 03, 2010
After trading sideways in the London-less European session, North Americans have picked up where Asia had left off and have bought up the greenback. The euro has been pushed below $1.3200 and is approaching the $1.3115 low seen last week. Many have their sights set on $1.30.
The dollar has traded on both sides of last Friday's trading range ag…
North American Players Not Convinced by Greek Bailout North American Players Not Convinced by Greek Bailout Reviewed by Marc Chandler on May 03, 2010 Rating: 5
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Yen is Vulnerable

May 03, 2010
Japan's markets are closed until Thursday. That means that Japanese exporters believed to have capped the dollar's upticks in the JPY94.40-70 in recent weeks may not be there now. At the same time, a recovery in US equities and rising US yields may also favor a push higher for the greenback.
We note that the dollar-yen exchange rate is mor…
Yen is Vulnerable Yen is Vulnerable Reviewed by Marc Chandler on May 03, 2010 Rating: 5
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Global Update

May 03, 2010
The euro initially opened in higher in Asia in response to the Greek/EU/IMF package. However, it trended lower in Asia, though lost its momentum in Europe ahead of $1.3200. The generally firm manufacturing PMIs failed to elicit fresh buying. Many remain skeptical of the lasting impact and are not convinced that closure is really at hand. And in an…
Global Update Global Update Reviewed by Marc Chandler on May 03, 2010 Rating: 5
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FX Market Unimpressed with Europe

May 03, 2010
The US dollar is firmer across the board. The deal worked out by Greece and EU/IMF/ECB is helping to ease strains in the European debt market, but does not appear to have dealt a significant blow to those who think that some form of debt restructuring remains. Support for the euro is seen near $1.3200, while resistance in the North American sessio…
FX Market Unimpressed with Europe FX Market Unimpressed with Europe Reviewed by Marc Chandler on May 03, 2010 Rating: 5
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