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Irish GDP Turns Positive, Sort Of

June 30, 2010
Ireland, the first euro zone country to fall into a recession in 2008 (it would have been sooner except my younger and wiser webmaster was studying abroad there in '07 and kept the economy afloat with her excessive Guinness consumption), reported today that Q1 GDP expanded by 2.7% from Q4 09.
The headline is impressive, even if Q4 09 was revis…
Irish GDP Turns Positive, Sort Of Irish GDP Turns Positive, Sort Of Reviewed by Marc Chandler on June 30, 2010 Rating: 5
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Market Overview

June 30, 2010
There has been much anxiety surrounding tomorrow’s expiry of the 442 bln euro 12-month funding operation. Spanish banks in particular were believed to be facing difficulty. Euribor rates had been creeping up. Banks were holding a large amount of funds overnight with the ECB, though earning less than they would in the interbank market.
The ECB offe…
Market Overview Market Overview Reviewed by Marc Chandler on June 30, 2010 Rating: 5
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Dollar Softer, Soft Demand ECB's Refi

June 30, 2010
The US dollar is generally softer, consolidating yesterday’s moves. In fact, the three best performers yesterday and for the month of June, namely the Swiss franc, British pound and Japanese yen, are the laggards today. Month-end and quarter-end adjustments are commingling with normal market forces after outsized moves the previous day.
The key ev…
Dollar Softer, Soft Demand ECB's Refi Dollar Softer, Soft Demand ECB's Refi Reviewed by Marc Chandler on June 30, 2010 Rating: 5
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What to Expect from the COFER data

June 29, 2010
The IMF provides the most authoritative data on the currency composition of reserves. (Think of it as the Ron Swanson of currency composition data) It is reported at the end of the quarter for the proceeding quarter. Tomorrow it is expected to report reserve holdings as of the end of Q1 10.
The COFER data is not perfect. Not every one reports thei…
What to Expect from the COFER data What to Expect from the COFER data Reviewed by Marc Chandler on June 29, 2010 Rating: 5
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World Growth Concerns, ECB Refi, Euro-Yen Woes

June 29, 2010
The market has been well aware that last year’s massive 442 bln euro 12-month repo operation by the ECB, which accounts for a little more than half of ECB’s outstanding 870 bln euro of liquidity, was set to expire this week, however the situation is getting a bit more acute. There has been underlying concern that banks in the periphery of Europe a…
World Growth Concerns, ECB Refi, Euro-Yen Woes World Growth Concerns, ECB Refi, Euro-Yen Woes Reviewed by Marc Chandler on June 29, 2010 Rating: 5
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Dollar Broadly Higher

June 29, 2010
The US dollar is broadly higher, alongside the Japanese yen, amid heightened anxiety over the possible stalling of the global economic recovery and the fragility of the banking system. The euro has borne the brunt of the adjustment. Not only has the euro fallen below its 20-day moving average against the euro fro the first time in a couple of week…
Dollar Broadly Higher Dollar Broadly Higher Reviewed by Marc Chandler on June 29, 2010 Rating: 5
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G20 Post-Mortem

June 28, 2010
The G20 meeting did not provide much in the way of fresh trading incentives. However, there were a couple of developments that were noteworthy.
The most important of these is the balance struck between growth and fiscal austerity. Ahead of the meeting much was made of the different directions that the US and Europe appeared to be headed. The US em…
G20 Post-Mortem G20 Post-Mortem Reviewed by Marc Chandler on June 28, 2010 Rating: 5
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Streak of Soft Data Continues; Light at the End of the Tunnel?

June 28, 2010
One of the recent developments has been increased fear that the global economic recovery is losing momentum and that renewed contraction is likely.
In the US, the string of economic data that began with disappointing May jobs data was followed by the retail sales report and poor housing data. The composition of the revisions to Q1 GDP also warned …
Streak of Soft Data Continues; Light at the End of the Tunnel? Streak of Soft Data Continues; Light at the End of the Tunnel? Reviewed by Marc Chandler on June 28, 2010 Rating: 5
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Capital Markets Overview on Monday

June 28, 2010
The US dollar is narrowly mixed to start the new week. It is hanged against most of the major currencies as the market waits for fresh trading incentives.
The euro was turned back on the initial test of the $1.24 area, Initial support is near $1.2320, but only a break of $1.22 would signal a break of the recent range. The dollar has been confined …
Capital Markets Overview on Monday Capital Markets Overview on Monday Reviewed by Marc Chandler on June 28, 2010 Rating: 5
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Financial Reform Bill Encourages Risk-Taking

June 25, 2010
As the details of the agreement struck by the key House and Senate conference on financial reform has been embraced favorably by the US equity market, that is being led by the financials, and the foreign currencies.
In the past three months the major foreign currencies, like the euro, sterling, yen, and the Canadian and Australian dollars are more…
Financial Reform Bill Encourages Risk-Taking Financial Reform Bill Encourages Risk-Taking Reviewed by Marc Chandler on June 25, 2010 Rating: 5
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China, the Yuan and Euro

June 25, 2010
The euro has declined about 0.75% this week. This seems fairly resilient, given that news stream that included the downgrade of a large French and Dutch bank, record premiums by Greece and Portugal and disappointing euro zone industrial order data.
Some have sought to link this resilience to China, which is at the heart of so many conspiracy theor…
China, the Yuan and Euro China, the Yuan and Euro Reviewed by Marc Chandler on June 25, 2010 Rating: 5
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US GDP Revised Lower, but Corporate Profits Higher

June 25, 2010
The final revision to Q1 US GDP was disappointing in the headline and composition. It is mitigated on the margins, for investors, by the substantial upward revision in corporate profits.
Growth was revised to 2.7% from 3.0% previously and 3.2% advance reading. Consumption was cut to 3.0% from 3.5%. Equipment and software spending was revised to 11…
US GDP Revised Lower, but Corporate Profits Higher US GDP Revised Lower, but Corporate Profits Higher Reviewed by Marc Chandler on June 25, 2010 Rating: 5
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What Happens in Romania Stays in Romania

June 25, 2010
(With regards to the title it was either that or a Béla Károlyi pun)The Romanian leu is under pressure following the Constitutional Court finding that some of the government's austerity measures were unconstitutional. The leu is setting new six week lows against the euro today. The local stock market is also adversely impacted--with a 4.2% sli…
What Happens in Romania Stays in Romania What Happens in Romania Stays in Romania Reviewed by Marc Chandler on June 25, 2010 Rating: 5
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Poor Europe No Place to Hide

June 25, 2010
Poor Europe. (Cue Charlie Brown sad music) China starts the week with an outflanking maneuver, putting the G20 once again off-balance. That leaves little to distract from Europe’s debt crisis. Yes, the G20 will talk about financial reform, but the UK, Germany and France do not yet appear to convince a majority of its bank tax proposals.
While the …
Poor Europe No Place to Hide Poor Europe No Place to Hide Reviewed by Marc Chandler on June 25, 2010 Rating: 5
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Dollar Firms, Risk Aversion Strong

June 25, 2010
The US dollar is little is generally firmer in a risk averse environment ahead of the weekend. The notable exception is the Swiss franc, which is benefiting from tensions in the euro zone and the recent downgrade of deflation risks by the SNB. The euro ahs fallen to new record lows against the franc and has returned to yesterday’s lows against the…
Dollar Firms, Risk Aversion Strong Dollar Firms, Risk Aversion Strong Reviewed by Marc Chandler on June 25, 2010 Rating: 5
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CNBC: Midday Market Headlines CNBC: Midday Market Headlines Reviewed by magonomics on June 24, 2010 Rating: 5
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Canadian Dollar Near Swing Level

June 24, 2010
The recent buzz was how foreign central banks, like Russia, were exploring the greater use of the Canadian dollar as a reserve asset. The combination of yesterday's weaker than expected Canadian retail sales data, coupled with the dismal US housing data and the subdued Fed statement has seen the Canadian dollar losing streak extend into the fo…
Canadian Dollar Near Swing Level Canadian Dollar Near Swing Level Reviewed by Marc Chandler on June 24, 2010 Rating: 5
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Attracitveness of Colombian Bonds

June 24, 2010
Often when global investors think about high yielding Latam debt, Brazil is the first country to come to mind. And for good reason. Brazil's local currency debt offers among the highest yields in the world. On a 2-year local currency bond, Brazil pays a little more than 12%.
Colombia has the same credit rating as Brazil at BBB- by S&P. Its…
Attracitveness of Colombian Bonds Attracitveness of Colombian Bonds Reviewed by Marc Chandler on June 24, 2010 Rating: 5
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Disappointment Reigns

June 24, 2010
In some ways, today is about disappointment. To be sure, it is not that the disappointing news is surprising, but it is disappointing nonetheless.
Yesterday the FOMC statement seemed to downgrade growth a notch and characterized underlying inflation as “trended lower” following exceptionally poor housing data. This follows the disappointing jobs d…
Disappointment Reigns Disappointment Reigns Reviewed by Marc Chandler on June 24, 2010 Rating: 5
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Capital Market Overview

June 24, 2010
The US dollar is little is generally firmer. However, the main driver is not really the greenback but heightened risk aversion and fears of a renewed economic downturn given the austerity in Europe and weakness in the US. Yesterday’s dramatic drop in new home sales and the Fed’s downgrade of its economic assessment weighs on risk appetites.
Despit…
Capital Market Overview Capital Market Overview Reviewed by Marc Chandler on June 24, 2010 Rating: 5
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Fed Stands Pat for an Extended Period

June 23, 2010
The decision to leave rates on hold was an easy one for the Fed to make. The Fed still anticipates this will be the case for an extended period. The statement seemed to recognize some of the less favorable data since it met last. For example it dropped the phrase that said housing starts had edged up. It recognized that financial conditions were a…
Fed Stands Pat for an Extended Period Fed Stands Pat for an Extended Period Reviewed by Marc Chandler on June 23, 2010 Rating: 5
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Horrific US New Home Sales--Reduce Risk

June 23, 2010
The 32.7% decline in new homes sales to a new cyclical low has actually sparked a bout of dollar and yen buying on risk aversion. The revisions to the March and April time series also point to a much weaker picture than we had.
The dollar had already turned better bid before the news as the equity market failed to hold initial gains, but the news …
Horrific US New Home Sales--Reduce Risk Horrific US New Home Sales--Reduce Risk Reviewed by Marc Chandler on June 23, 2010 Rating: 5
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Shifting Correlations Euro and Yen

June 23, 2010
As Q2 winds down, it is interesting to look at shifting correlations for the euro and yen. The figures cited below are based correlation studies conducted on percentage changes rather than the levels themselves.
Euro: Over the past 2 months, the euro's correlation with US-German 2-year yield differentials has turned positive (0.3) compared wit…
Shifting Correlations Euro and Yen Shifting Correlations Euro and Yen Reviewed by Marc Chandler on June 23, 2010 Rating: 5
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Rudd to Resign (Reports say), Good for Australian Dollar

June 23, 2010
Australian PM Rudd is coming under stronger domestic pressure as the opposition to the resource tax gains momentum. There have been press reports of a leadership challenge and a local report claims that a key bloc in the Rudd's Labor Party is supporting Rudd's deputy Julia Gillard. Rudd has now called a press conference and SKY TV is now r…
Rudd to Resign (Reports say), Good for Australian Dollar Rudd to Resign (Reports say), Good for Australian Dollar Reviewed by Marc Chandler on June 23, 2010 Rating: 5
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More on Sterling, the Euro and Korea/Taiwan

June 23, 2010
The UK budget has been widely embraced. The OECD called it “courageous”. Fitch said it strengthens the UK’s triple-A status. The IMF said it was the most rapid reduction next to Greece.
The budget credibility, the lower gilt issuance and reduced risk of a downgrade is helped sterling recover yesterday from below $1.47 to almost $1.4860. Sterling’s…
More on Sterling, the Euro and Korea/Taiwan More on Sterling, the Euro and Korea/Taiwan Reviewed by Marc Chandler on June 23, 2010 Rating: 5
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Global Market Overiview, Sterling's the Star

June 23, 2010
The US dollar is little changed against most of the major foreign currencies, but sterling continues to respond favorably to yesterday’s budget. News that for the first time since Aug 08 a BOE member (Sentence) called for a rate hike helped push sterling extend its gains, bring the week’s high near $1.4940 into view.
The yen remains largely sideli…
Global Market Overiview, Sterling's the Star Global Market Overiview, Sterling's the Star Reviewed by Marc Chandler on June 23, 2010 Rating: 5
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Canadian and Australian Dollars as Reserve Assets

June 22, 2010
Last year Russia had indicated it was thinking about adding Australian and Canadian dollar to its reserves. More recently it said it was preparing to do just that. At the end of last week, the ECB's Noyer opined that these two currencies were going to have an increased role as a reserve assets. There is even some talk that when the composition…
Canadian and Australian Dollars as Reserve Assets Canadian and Australian Dollars as Reserve Assets Reviewed by Marc Chandler on June 22, 2010 Rating: 5
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Fed Preview

June 22, 2010
The Federal Reserve begins a two day policy meeting today. While it is highly unlikely that there will be a substantive change in policy or the guidance which suggests that rates will likely remain low for an extended period.
That said, investors should expect some changes in the Fed's economic assessment. While the FOMC is still likely to ant…
Fed Preview Fed Preview Reviewed by Marc Chandler on June 22, 2010 Rating: 5
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China's Flexibility, UK/Japan Fiscal Plans, and Euro Weakness

June 22, 2010
China remains very much in the center of attention today. The reference rate was set at CNY6.7980, which seemed to validate yesterday’s yuan strength in the spot market. However, as the session progressed the yuan weakened and is back at CNY6.8130 in late dealings. This leaves the yuan about 0.2% higher than where it finished last week.
China's Flexibility, UK/Japan Fiscal Plans, and Euro Weakness China's Flexibility, UK/Japan Fiscal Plans, and Euro Weakness Reviewed by Marc Chandler on June 22, 2010 Rating: 5
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Dollar Firms, Yuan Softens

June 22, 2010
The US dollar remains firm after yesterday’s recovery. New concerns about the funding needs of European banks have been sufficient to offset the stronger than expected German IFO survey. Euro support is seen in the $1.2230-40 area. Sterling remains on the defensive ahead of what promises to be an austere budget.
China fixed the yuan higher, valida…
Dollar Firms, Yuan Softens Dollar Firms, Yuan Softens Reviewed by Marc Chandler on June 22, 2010 Rating: 5
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Euro Continues to Slip

June 21, 2010
North American participants have not been as enthusiastic as Asian and European operators. The euro has slipped lower throughout the session. News that Fitch cut BNP Paribas long-term international rating to AA- from AA (stable outlook)has seen the euro record new session lows.
France has been in the news. Bot the IMF and EC have expressed doubts …
Euro Continues to Slip Euro Continues to Slip Reviewed by Marc Chandler on June 21, 2010 Rating: 5
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China's Impact

June 21, 2010
China's Ministry of Commerce is on the wires saying it will monitor the yuan reform impact on Chinese export companies. While China is a big exporter it is also a significant importer as well. The increase in the yuan's value may increase the price of exports, though we are skeptical on the grounds that yuan-denominated inputs are estimate…
China's Impact China's Impact Reviewed by Marc Chandler on June 21, 2010 Rating: 5
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Spain Update

June 21, 2010
Spanish sovereign bonds have been trading better and the market is still in relief of news that Spain's top two banks have fared well in the recent stress tests. However, S&P has taken action on seven different financial institutions today, mostly shifts to negative outlooks. In addition, S&P has increased the 2009-2011 loan loss assum…
Spain Update Spain Update Reviewed by Marc Chandler on June 21, 2010 Rating: 5
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Latam Currencies Poised To Benefit

June 21, 2010
Ideas that China will allow greater flexibility in the yuan, which for many means appreciation, will have positive impact on Latam currencies. The Mexican peso and Brazilian real are leading the advance with about 0.66% gain today. Chile is next with about a 0.33% rise.
The risk is that market's euphoric reaction in Asia and Europe is not foll…
Latam Currencies Poised To Benefit Latam Currencies Poised To Benefit Reviewed by Marc Chandler on June 21, 2010 Rating: 5
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China --Under-whelming

June 21, 2010
There is one main talking point today: China. On Saturday, the PBOC noted on its web site that it was reforming the yuan’s mechanism for greater flexibility, but that it was not altering the 0.5% band against the dollar and did not see the necessity of a large move. The statement also seemed to upgrade the importance of its trade-weighted basket a…
China --Under-whelming China --Under-whelming Reviewed by Marc Chandler on June 21, 2010 Rating: 5
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Monday Macro View

June 21, 2010
The US dollar is generally softer. News that China has agreed to make its currency more flexible has captured the imagination of the market and this has been expressed in what are regarded as risk trades. Among the majors, the dollar-bloc has led the advance, with the Australian dollar the chief beneficiary. In Asia, the South Korean won and the M…
Monday Macro View Monday Macro View Reviewed by Marc Chandler on June 21, 2010 Rating: 5
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China to G20: The Yuan is Not the Problem

June 18, 2010
The US Treasury and the Congress appear to be intensifying pressure on the China to allow the yuan to appreciate. Other officials may weigh in ahead of the G20 meeting (June 25-27).
Congressional support is reportedly strong for a bill that would allow US businesses to incorporate estimates of the yuan's under-valuation in setting countervaili…
China to G20: The Yuan is Not the Problem China to G20: The Yuan is Not the Problem Reviewed by Marc Chandler on June 18, 2010 Rating: 5
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More on European Stress Tests

June 18, 2010
Stress tests on European banks have emerged as a key talking point. The criteria is not clear, though European officials are apparently telling anyone who is interested that the these tests are more robust than the previous tests conducted last October.
One difference between the US and European approaches is that the former indicated that it was …
More on European Stress Tests More on European Stress Tests Reviewed by Marc Chandler on June 18, 2010 Rating: 5
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State and Local Governments: What A Drag

June 18, 2010
The European debt crisis has thus far unfolded as a sovereign debt crisis. And the sovereign here is the national government. This is particularly true in Greece. However in the coming months, it may become clearer that local and regional governments in Europe, including those of Germany, Spain and Italy, also face serious fiscal challenges.
The s…
State and Local Governments: What A Drag State and Local Governments: What A Drag Reviewed by Marc Chandler on June 18, 2010 Rating: 5
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Euro, Swiss Franc, Sterling, Stress Tests

June 18, 2010
One of the most important take-aways from this week’s activity is that arguably long overdue dollar correction is becoming convincing. What had begun as choppy consolidation has morphed into an outright correction.
The euro is having its best week in nearly a year, gaining a bit more than 2% against the greenback over the past five days. There hav…
Euro, Swiss Franc, Sterling, Stress Tests Euro, Swiss Franc, Sterling, Stress Tests Reviewed by Marc Chandler on June 18, 2010 Rating: 5
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Capital Markets Overview

June 18, 2010
The US dollar is generally consolidating this week’s losses in quiet and largely uneventful turnover. The shallowness of dollar bounces warns that the downside correction is not complete.
Given the structural arguments that the euro bears drew upon to fuel the single currency’s 13%+ decline between mid-April and earlier this month, the risk seems …
Capital Markets Overview Capital Markets Overview Reviewed by Marc Chandler on June 18, 2010 Rating: 5
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Euro-Swiss and Lessons from the BOJ

June 17, 2010
The Swiss National Bank revised higher growth and inflation forecasts. Implicitly and explicitly it indicated that deflationary pressures were abating. Those deflationary forces were the justification for the quantitative easing that included large scale sales of the Swiss franc.
The last major central bank to engage is extensive intervention was t…
Euro-Swiss and Lessons from the BOJ Euro-Swiss and Lessons from the BOJ Reviewed by Marc Chandler on June 17, 2010 Rating: 5
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More On Spain, Swtizerland, UK, and Fallacy of Composition

June 17, 2010
Once the Spanish bond auction event risk passed, the euro’s recovery was extended. While Spain was able to place its paper, it came at a price and that is higher yields. The 10-year bond sale produced a bid-cover of 1.88 (vs 2.03 last time), while the yield rose to 4.84% from 4.04%. The 30-year bond had a better bid cover (2.44 vs 1.4 last) but th…
More On Spain, Swtizerland, UK, and Fallacy of Composition More On Spain, Swtizerland, UK, and Fallacy of Composition Reviewed by Marc Chandler on June 17, 2010 Rating: 5
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Dollar Slumps, Spain Bond Sale Fine, SNB Surpises

June 17, 2010
The US dollar is broadly lower, following a successful Spanish bond auctions and indications that the Swiss National Bank is not prepared to continue the heavy intervention that was reported last month. After a slow start the euro extended its recent gains, and although over-extended on a short-term basis, still appears on track for $1.25 and poss…
Dollar Slumps, Spain Bond Sale Fine, SNB Surpises Dollar Slumps, Spain Bond Sale Fine, SNB Surpises Reviewed by Marc Chandler on June 17, 2010 Rating: 5
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Spain in the Cross Hairs

June 16, 2010
There have been several press reports in recent days, all vehemently denied, that a multilateral effort is underway to put together a special aid package for Spain. Often times, one hears "where there is smoke, there is fire." Yet in this case, the denials look credible. The European Financial Stabilization Facility (EFSF) which is the l…
Spain in the Cross Hairs Spain in the Cross Hairs Reviewed by Marc Chandler on June 16, 2010 Rating: 5
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Euro, Sterling, Krona, Asian Central Banks

June 16, 2010
The euro’s resilience remains impressive. The news stream has soured in the last 48 hours or so, following the Greek downgrade by Moody’s,, the dropping of Greek bonds from a couple of industry benchmark indices, the haircut on Greek bonds the ECB is requiring, continued talk of some kind of financing package for Spain (the most recent in El Econo…
Euro, Sterling, Krona, Asian Central Banks Euro, Sterling, Krona, Asian Central Banks Reviewed by Marc Chandler on June 16, 2010 Rating: 5
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Dollar Consolidates Recent Losses

June 16, 2010
The US dollar is consolidating its recent losses and is enjoying a somewhat firmer tone today. Although the initial advance in the euro was helped by a favorable news stream, macro-developments do not appear to be driving the foreign exchange market presently. That said, the news stream out of the euro zone has soured since the start of the week, …
Dollar Consolidates Recent Losses Dollar Consolidates Recent Losses Reviewed by Marc Chandler on June 16, 2010 Rating: 5
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Brazil Real is Rich, Might Get Richer

June 15, 2010
Brazil is getting ready to play its first World Cup game and the real is trading firmly. For the last three days, the dollar has been flirting with its 100-day moving average, just above BRL1.80. Today's break below that looks, well, for real.
The fundamental story looks fairly solid. The economy is enjoying robust growth, which by most accoun…
Brazil Real is Rich, Might Get Richer Brazil Real is Rich, Might Get Richer Reviewed by Marc Chandler on June 15, 2010 Rating: 5
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Empire and Import/Export prices

June 15, 2010
The Empire State manufacturing survey was in line with expectations rising to 19.57 in June from 19.11 in May. Of note new orders were strong, but weakness was seen in jobs and unfilled orders. Input prices fell sharply (to 27.16 from 44.75) while prices received softened (4.94 from 5.26), suggesting the rising orders trend is not spilling over to…
Empire and Import/Export prices Empire and Import/Export prices Reviewed by Marc Chandler on June 15, 2010 Rating: 5
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Euro, UK and Japan Update

June 15, 2010
The resilience of the euro in the face of the yesterday’s announcement by Moody, the warning by the chairman of BBVA, the weaker than expected German ZEW survey and news that euro zone exports in April declined by 2.4% is noteworthy.
In recent days I had noted that the news stream had improved and that this had encouraged a bout of short-covering.…
Euro, UK and Japan Update Euro, UK and Japan Update Reviewed by Marc Chandler on June 15, 2010 Rating: 5
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Dollar Chops Around, Euro Resilient

June 15, 2010
The US dollar is mixed in choppy trading. The euro has shrugged off a weaker than expected ZEW survey (28.7 vs 42.0 consensus after finding a bid near $1.2170. The BOJ unveiled a new JPY3 trillion loan facility to aid business and, although equity prices are firm, the yen remains somewhat better bid. Slightly softer than expected UK inflation figu…
Dollar Chops Around, Euro Resilient Dollar Chops Around, Euro Resilient Reviewed by Marc Chandler on June 15, 2010 Rating: 5
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Moody's Downgrades Greece--Euro Already Coming Off

June 14, 2010
News that Moody's cut Greece's credit rating to Ba1 from A3 is encouraging the market to do what it was already doing and that is paring the euro's earlier sharp gains.
This was a four notch downgrade, which reflects the slowness of Moody's to respond to developments. Moody's suggests its base case is for Greece's debt to G…
Moody's Downgrades Greece--Euro Already Coming Off Moody's Downgrades Greece--Euro Already Coming Off Reviewed by Marc Chandler on June 14, 2010 Rating: 5
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Why I Like Poland

June 14, 2010
There are two considerations that commend the Polish zloty--fundamentals and technicals.
The zloty had sold off against the euro as the euro declined against the dollar. This was partly a function of unwinding risk trades, but also recall that in late Q1, the Polish central bank intervened in an attempt to slow the zloty's rise.
Why I Like Poland Why I Like Poland Reviewed by Marc Chandler on June 14, 2010 Rating: 5
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Euro Up but Spain Under Pressure

June 14, 2010
For the fifth day, the euro is recording higher highs and higher lows. It has advanced by roughly 3.25% since last Monday's lows. While we recognize an improved news stream, the main circumstances of the European debt crisis have not gone away. Spain's challenges are overshadowing Portugal and Greece.
Last week Spain offered bonds for the …
Euro Up but Spain Under Pressure Euro Up but Spain Under Pressure Reviewed by Marc Chandler on June 14, 2010 Rating: 5
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Shifting Japanese Retail

June 14, 2010
Various reports have highlight the increasing importance of the retail community in Japan. Some official estimates suggest for example that retail investors could account for a quarter of the yen turnover in Tokyo, while some industry estimates put the number significantly higher.
Japan's Investment Trust Association notes a significant shift …
Shifting Japanese Retail Shifting Japanese Retail Reviewed by Marc Chandler on June 14, 2010 Rating: 5
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Forces at Work: Euro, Yen, Swiss franc

June 14, 2010
This is the first substantial upside correction in the euro in the better part of two months. The euro’s move above its 20-day moving average puts momentum traders on alert. While the next target comes in near $1.2300, given the extended positioning and the pace of the losses in recent weeks, a short-covering fueled recovery can exceed technical o…
Forces at Work: Euro, Yen, Swiss franc Forces at Work: Euro, Yen, Swiss franc Reviewed by Marc Chandler on June 14, 2010 Rating: 5
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Dollar Extends Last Week's Losses

June 14, 2010
The US dollar is extending last week’s pullback in what appears to be largely position adjustments, partly as a function of a better news stream and a healthier appetite for risk. For the first time since mid-April, the euro has traded above its 20-day moving average and sterling has completely recouped the losses seen in response to the unexpecte…
Dollar Extends Last Week's Losses Dollar Extends Last Week's Losses Reviewed by Marc Chandler on June 14, 2010 Rating: 5
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Shockingly Weak Retail Sales--Risk Taken Off

June 11, 2010
The unexpectedly large drop in US May retail sales has perversely boosted the dollar in early North American trading as risk is taken back off.
The 1.2% drop is the largest fall since late Q3 09. The slight upward revision tot he April series (0.6% from 0.4%) is not enough to blunt the negative implications. Of the 13 major categories, 5 declined,…
Shockingly Weak Retail Sales--Risk Taken Off Shockingly Weak Retail Sales--Risk Taken Off Reviewed by Marc Chandler on June 11, 2010 Rating: 5
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It's About Hu not Yuan

June 11, 2010
The Russian despot Vladimir Lenin was a big fan of Frederick Taylor. Taylor's time and motion studies revolutionized the work process by boosting output, albeit often at the cost of worker dehumanization. Taylorism is not about capitalism per se, it is about efficiency, and apparently good communists can respect that.
As Taylorism was adopted …
It's About Hu not Yuan It's About Hu not Yuan Reviewed by Marc Chandler on June 11, 2010 Rating: 5
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Euro Tone Improves, Japan Machinations, Weak UK Mfg

June 11, 2010
There have been a number of positive developments in recent days that have broken the sharp downside momentum of the euro. The unlimited liquidity that the ECB promised to provide over the next three months is helping to ease some of the tensions in the money markets.
Moody’s has opined that European banks can cope with the losses related to their…
Euro Tone Improves, Japan Machinations, Weak UK Mfg Euro Tone Improves, Japan Machinations, Weak UK Mfg Reviewed by Marc Chandler on June 11, 2010 Rating: 5
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Consolidation in FX, Gains in Equities

June 11, 2010
The US dollar is mixed in choppy trading as yesterday’s sharp moves are consolidated. The shallowness of the euro’s pullback suggests continued position squaring may be taking place. Some short-term momentum players may be playing from the long side, and there is talk of short dated euro calls being bought. Sterling is underperforming following th…
Consolidation in FX, Gains in Equities Consolidation in FX, Gains in Equities Reviewed by Marc Chandler on June 11, 2010 Rating: 5
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Euro May Be Aided By Constitutional Court

June 10, 2010
News that the German Constitutional Court has reject efforts to block Germany from participating in the guarantees that are a critical part of the Stabilization Mechanism.
While many expected such a ruling, there was a risk that may have weighed on the euro sentiment. This decision coupled with the unlimited 3-month funding by the ECB for the next…
Euro May Be Aided By Constitutional Court Euro May Be Aided By Constitutional Court Reviewed by Marc Chandler on June 10, 2010 Rating: 5
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More Trichet

June 10, 2010
Trichet announced the ECB will provide unlimited funding at the 3-month tenor and this seems to be helping euribor rates ease. Separately, Trichet said that while the ECB is looking at various options it will not issue debt certificates to absorb the excess liquidity generated by the sovereign bond purchases.
The euro has recovered and is back near…
More Trichet More Trichet Reviewed by Marc Chandler on June 10, 2010 Rating: 5
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Initial Take on ECB

June 10, 2010
Besides the boilerplate comments about inflation being anchored, emergency measures are temporary, the important part of the prepared remarks are the new staff forecasts--slightly higher forecasts this year, a little less next year and slightly higher inflation forecasts, largely a function of higher commodity prices.
Initial Take on ECB Initial Take on ECB Reviewed by Marc Chandler on June 10, 2010 Rating: 5
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ECB Meeting, Rate Hikes and Chinese Data

June 10, 2010
There is no reason to expect that the ECB wil change rates today. Instead the key focus is on possible new measures in terms of the short and long-term repo operations and the ECB’s bond sterilization efforts. With last year’s 442 bln euro 12-month repo expiring at the end of the month, banks are seen hoarding cash—overnight deposits at the ECB ar…
ECB Meeting, Rate Hikes and Chinese Data ECB Meeting, Rate Hikes and Chinese Data Reviewed by Marc Chandler on June 10, 2010 Rating: 5
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Look for the Dollar to Recover Today

June 10, 2010
The US dollar is softer across the board and is indeed at new lows for the week against most of the major currencies ahead of amid relatively constructive string economic data and rate hikes from New Zealand and Brazil, a healthy reception to the first Spanish bond auction since the credit downgrade at the end of May. The Bank of England left rate…
Look for the Dollar to Recover Today Look for the Dollar to Recover Today Reviewed by Marc Chandler on June 10, 2010 Rating: 5
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Euro as Reserve and Invoicing Currency

June 09, 2010
A news wire is reporting that Russia remains committed to diversifying its reserves and has not changed its view of the euro. This is consistent with what several other central banks, including China, Japan and South Korea have indicated recently.
That said, Russian data out in the middle of last month showed an increase in dollar holdings (44.5% …
Euro as Reserve and Invoicing Currency Euro as Reserve and Invoicing Currency Reviewed by Marc Chandler on June 09, 2010 Rating: 5
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Developments in Europe, UK, Japan and Sweden

June 09, 2010
Tomorrow’s ECB meeting is drawing attention today. No one expects a change in rates. Instead the focus is on liquidity provisions. A news wire report claiming that the ECB would announce an extension of some facilities.
There is some thought that given the systemic strains, the ECB may want to take additional measures to help smooth the maturation…
Developments in Europe, UK, Japan and Sweden Developments in Europe, UK, Japan and Sweden Reviewed by Marc Chandler on June 09, 2010 Rating: 5
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Range Trading Day

June 09, 2010
The US dollar is narrowly mixed in relatively quiet, though choppy, trading. The euro has largely been confined to a $1.1920-$1.1990 trading as the market awaits fresh trading incentives. There is some talk of Asian sovereign interest in the single currency, though market sentiment remains overwhelmingly bearish. The dollar-bloc is seeing yesterda…
Range Trading Day Range Trading Day Reviewed by Marc Chandler on June 09, 2010 Rating: 5
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More Thoughts on Switzerland and Why the Euro is Not Lower

June 08, 2010
Investors are still trying to get their heads around the SNB's preliminary indication that is reserves rose to CHF232 bln in May from CHF153 bln in April. This represents more than a 50% increase in reserves in a single month.
It would be tempting to attribute this to valuation changes. As we have noted when looking at the IMF's COFER data…
More Thoughts on Switzerland and Why the Euro is Not Lower More Thoughts on Switzerland and Why the Euro is Not Lower Reviewed by Marc Chandler on June 08, 2010 Rating: 5
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Fitch Warning Gives Osborne Tailwind

June 08, 2010
Fitch warned earlier today that the UK government faces a "formidable" challenge in addressing it's debt and deficits. Although sterling sold in reaction, Fitch's warnings may help the new UK government. It provides additional justification for a significant cuts in spending and a tighter fiscal policy in general.
Before parliame…
Fitch Warning Gives Osborne Tailwind Fitch Warning Gives Osborne Tailwind Reviewed by Marc Chandler on June 08, 2010 Rating: 5
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Two Potential Asian Financial Adjustments

June 08, 2010
Japan and China are contemplating adjustments international investors should note.
Japanese news wires are reporting that the BOJ and Financial Services Agency and financial services companies may be considering reducing the settlement period for Japanese government bonds to 2 days from 3 days. This is thought to reduce settlement risk. It is poss…
Two Potential Asian Financial Adjustments Two Potential Asian Financial Adjustments Reviewed by Marc Chandler on June 08, 2010 Rating: 5
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Europe Moves, Market Yawns

June 08, 2010
The market seems largely unimpressed with the European finance minister’s decision yesterday to formally initiate the special purpose vehicle that will sell bonds backed by guarantees from euro zone countries and then uses those funds to make loans to members in need.
The bonds will be sold only if/when aid is requested. The European Financial Sta…
Europe Moves, Market Yawns Europe Moves, Market Yawns Reviewed by Marc Chandler on June 08, 2010 Rating: 5
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Euro Still Can't Sustain Upticks

June 08, 2010
The US dollar eased in Asia as a modicum of an appetite for risk returned, but the greenback rebounded in the European session. The euro returned to the $1.19 area after being unable to rise above the $1.20 level.
Comments by Fitch, that the UK fiscal challenge is “formidable” ahead of Chancellor of the Exchequer Osborne’s speech before the House …
Euro Still Can't Sustain Upticks Euro Still Can't Sustain Upticks Reviewed by Marc Chandler on June 08, 2010 Rating: 5
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German Constitutional Court To Get into Mix

June 07, 2010
The G20 tried to paper over differences, but to little avail. The shift in the statement from the need for fiscal support for the fragile recoveries to the need for fiscal consolidation did not survive through the press conferences, which saw US Treasury Secretary Geithner call on Europe and Japan to boost domestic demand and not to count on expor…
German Constitutional Court To Get into Mix German Constitutional Court To Get into Mix Reviewed by Marc Chandler on June 07, 2010 Rating: 5
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Dollar Pares Early Gains

June 07, 2010
The US dollar has seen its initial gains scored in Asia pared, but the risk is that North American players resume the buying of the greenback. The euro initially fell to about $1.1876 in early Asia before recovering. The $1.2000-$1.2050 area may be sufficient to cap the single currency. There is some chatter that of some official interest that mig…
Dollar Pares Early Gains Dollar Pares Early Gains Reviewed by Marc Chandler on June 07, 2010 Rating: 5
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Gas Now, Brake Later

June 04, 2010
The G20 finance ministers and central bankers are meeting in South Korea to prepare for the summit in Toronto in a few weeks time. There seem to be three broad areas of discussion. The first is the European debt crisis, which causing some disruptions and strains in the global capital markets and could put at risk the fragile economic recovery. The…
Gas Now, Brake Later Gas Now, Brake Later Reviewed by Marc Chandler on June 04, 2010 Rating: 5
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Euro Holds for the Moment above $1.20

June 04, 2010
After being crushed, the euro is stabilizing for the moment. The combination of the reassessment of the French PM comments and the disappointing US employment data by be contributing to the more stable tone as Europe prepares to close the week. There is a Eurogroup meeting of euro zone finance ministers on Monday and more jawboning is likely.
The …
Euro Holds for the Moment above $1.20 Euro Holds for the Moment above $1.20 Reviewed by Marc Chandler on June 04, 2010 Rating: 5
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Jobs Data Disappoints

June 04, 2010
The US employment data was disappointing. The key measure of private sector job creation was only 41k compared with expectations for 180k and a 3 month moving average of 155.6k. The fact that the unemployment rate ticked down is not really good news as the decline in unemployment was not a function of more jobs but a reflection of people leaving t…
Jobs Data Disappoints Jobs Data Disappoints Reviewed by Marc Chandler on June 04, 2010 Rating: 5
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Jungary Plunges

June 04, 2010
A combination of ill-thought out comments by the new Hungarian government coupled with a surge in the Swiss franc is seeing the forint drop like a rock and is seeing CDS on Hungary explode.
Jungary Plunges Jungary Plunges Reviewed by magonomics on June 04, 2010 Rating: 5
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Where is the SNB

June 04, 2010
The euro has collapsed through the CHF1.40 level where the SNB had thought to be defending. It quickly slumped to CHFCHF1.3865 before finding a bid. This has helped drag the euro below $1.21. Strains are growing in the European bond markets and Eastern European currencies are being hit hard. It is difficult to see exactly what was the trigger, but…
Where is the SNB Where is the SNB Reviewed by magonomics on June 04, 2010 Rating: 5
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Jobs Data in Focus

June 04, 2010
Today’s US employment data is important. Market participants are now well aware that the Census workers will flatter the headline number of non-farm payrolls. The key will be the private sector. Recall that in recent months, the US state and local governments have been laying off people sometimes faster than the census department hired. This was a…
Jobs Data in Focus Jobs Data in Focus Reviewed by magonomics on June 04, 2010 Rating: 5
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Today's Markets

June 04, 2010
The US dollar trading higher just as the North American session is about to start. However, position squaring in Asia and Europe had pushed short-term technical indicators into an over-extended condition and near-midday in Europe, the dollar began recovering. The euro has been sliding across the board. One trigger may have been the collapse in the…
Today's Markets Today's Markets Reviewed by magonomics on June 04, 2010 Rating: 5
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Spanish Cajas Merging, but are They Serious Yet?

June 03, 2010
Spanish savings banks, called cajas, are finally moving. It took the central bank to take over CajaSur, which is controlled by the Catholic church in Cardoba, ten days ago to light a fire under the others. There were about 45 of these cajas and a number of mergers have been announced in recent days.
Another 4 announced a merger earlier today. The …
Spanish Cajas Merging, but are They Serious Yet? Spanish Cajas Merging, but are They Serious Yet? Reviewed by Marc Chandler on June 03, 2010 Rating: 5
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Despite Upticks Euro Still Fragile

June 03, 2010
The euro is advancing for a second day after recording new 4-year lows on Tuesday. It is moving above a 5-point downtrend line in place for the past month. It comes in near $1.2262 today.
The two main reasons we have been negative the euro are intact. The European crisis is not over. One indication of this is that overnight deposits at the ECB rea…
Despite Upticks Euro Still Fragile Despite Upticks Euro Still Fragile Reviewed by Marc Chandler on June 03, 2010 Rating: 5
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Consolidative Phase

June 03, 2010
The US dollar is modestly lower against the major and emerging market currencies. The key driver is really the absence of bad news and some position adjusting in the wake of stronger commodity and equity prices.
The dollar-bloc currencies are leading the way higher, while the yen is being undermined by the likelihood that Finance Minister Kan, a v…
Consolidative Phase Consolidative Phase Reviewed by Marc Chandler on June 03, 2010 Rating: 5
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Some Interesting Price Action

June 02, 2010
Canadian dollar: The US dollar is recording an outside down day against the Canadian dollar--that is it has traded on both sides of yesterday's range and the US dollar looks likely to finish the NY session below yesterday's low ~CAD1.0420. The BOC hiked rates as widely expected and traders searched high and low for all sorts of reasons for…
Some Interesting Price Action Some Interesting Price Action Reviewed by Marc Chandler on June 02, 2010 Rating: 5
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More About Japan and the Yen

June 02, 2010
The yen is drifting lower in the North American morning. If at first in response to the resignation of Prime Minister Hatoyama the yen was sold on political uncertainty, it may be being sold because of uncertainty appears to be diminishing and the more likely successor as prime minister is a person who is vocally in favor of a weaker yen.
It will …
More About Japan and the Yen More About Japan and the Yen Reviewed by Marc Chandler on June 02, 2010 Rating: 5
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A New EMU Member before Any Exits

June 02, 2010
There has been much talk in the markets that a country like Greece or Germany drop out of the euro zone. There were press reports that indicated that using brinkmanship tactics, French President Sarkozy threatened to leave. We have consistently argued against such ideas and in fact, sometimes have even gone one step further: that a new country wil…
A New EMU Member before Any Exits A New EMU Member before Any Exits Reviewed by Marc Chandler on June 02, 2010 Rating: 5
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Japanese Politics, Central Banks, and Sterling Outperforms

June 02, 2010
Japan’s Prime Minister Hatoyama resigned. There were such hopes for the DPJ, but the combination of party scandals and the controversy over the failure to carry out a campaign promise about moving the US Marine Corp base off of Okinawa ultimately proved overwhelming. His resignation and the resignation of the DPJ Secretary General Ozawa, who was a…
Japanese Politics, Central Banks, and Sterling Outperforms Japanese Politics, Central Banks, and Sterling Outperforms Reviewed by Marc Chandler on June 02, 2010 Rating: 5
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Dollar Sidelined, Yen in focus

June 02, 2010
The US dollar is little changed against most of the European currencies and within the dollar-bloc as a consolidative phase is emerging. The yen is center stage today following the resignation of Japan’s prime minister. The political uncertainty and calmer capital markets have seen the greenback extended its recovery against the yen to about 3% of…
Dollar Sidelined, Yen in focus Dollar Sidelined, Yen in focus Reviewed by Marc Chandler on June 02, 2010 Rating: 5
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Hard Asset Investor: Bullish on the Dollar Hard Asset Investor: Bullish on the Dollar Reviewed by magonomics on June 01, 2010 Rating: 5
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CNBC: Currency Plays CNBC: Currency Plays Reviewed by magonomics on June 01, 2010 Rating: 5
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CNBC: Impact of Canada's Rate Hike CNBC: Impact of Canada's Rate Hike Reviewed by magonomics on June 01, 2010 Rating: 5
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RBA Sits Tight, Q1 GDP Up Next

June 01, 2010
The Reserve Bank of Australia met earlier today and as widely expected kept the official rate steady at 4.5%. The tone of the statement was fairly neutral, as one might expect after 6 rates hikes since last October and increased uncertainty about the economic outlook of Europe and China.
Australia reports Q1 GDP figures first thing in the Australi…
RBA Sits Tight, Q1 GDP Up Next RBA Sits Tight, Q1 GDP Up Next Reviewed by Marc Chandler on June 01, 2010 Rating: 5
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US Holding Up Better than Europe

June 01, 2010
The US manufacturing ISM held up better than expected and better than the euro zone. The US ISM slipped to 59.7 from 60.4. Orders were steady at the lofty 65.7 while production slipped slightly (66.6 from 66.9). Employment rose to 59.8 from 58.5 and this will likely encourage some economists to revise higher forecasts for the employment data due a…
US Holding Up Better than Europe US Holding Up Better than Europe Reviewed by Marc Chandler on June 01, 2010 Rating: 5
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Canada Hikes, No Promise for Next Month

June 01, 2010
The Bank of Canada hiked its overnight target 25 bp to 0.50%, as widely expected. A Reuters poll showed all primary dealers expected it and expect a hike at next month's meeting as well (July 20). However, the Bank of Canada's statement is somewhat more neutral, The BOC also took measures to restore the normal operating band to 50 bp.
The …
Canada Hikes, No Promise for Next Month Canada Hikes, No Promise for Next Month Reviewed by Marc Chandler on June 01, 2010 Rating: 5
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Two Things Ail the Euro: What We Know and What We Suspect

June 01, 2010
The euro is plagued by two things: what the market knows and what the market suspects.
What the market knows has increased today with the euro zone manufacturing PMI readings for May. While readings remain above the 50 boom/bust level, the pace of activity slowed. For the euro zone as a whole the headline pace slowed to 55.8 from 57.6 in April. Se…
Two Things Ail the Euro: What We Know and What We Suspect Two Things Ail the Euro: What We Know and What We Suspect Reviewed by Marc Chandler on June 01, 2010 Rating: 5
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New Month -- Same Weak Euro

June 01, 2010
The US dollar has begun the new month off on strong footing against both and emerging market currencies. The yen is the sole exception.
There are three drivers today. The first is economic data from China and Europe that play on fears that the financial turmoil is taking a toll on the real economies. The second is continued concerns about European…
New Month -- Same Weak Euro New Month -- Same Weak Euro Reviewed by Marc Chandler on June 01, 2010 Rating: 5
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