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Swedish Krona Surges

February 28, 2011
The Swedish krona is surging today. Hawkish central bank comments have offset disappointing retail sales figures and there is some talk of month-end related demand.
The euro recorded multi-year lows against the krona on Feb 16 just above SEK8.7 and had recovered to a high near SEK8.8550 earlier today before reversing sharply. In recent hours the e…
Swedish Krona Surges Swedish Krona Surges Reviewed by Marc Chandler on February 28, 2011 Rating: 5
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Dollar Finishes the Month Softly

February 28, 2011
After a soft start in Asia, the euro has rallied to approach the year's high set February 2 just above $1.3860. The ECB rhetoric ahead of the meeting later this week is expected to reiterate the hawkish tone seen in recent weeks, the euro seems particularly vulnerable to negative news that is mounting, though momentum and technical players hav…
Dollar Finishes the Month Softly Dollar Finishes the Month Softly Reviewed by Marc Chandler on February 28, 2011 Rating: 5
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March Madness

February 25, 2011
If you thought this year was off to a challenging start for investors, fasten your seatbelts. March could very well turn out to be the most important month of the year. This does not mean there is easy money to be made or low-hanging fruit that can be picked.
To the contrary, the event risks are such that even the most insightful investors may be …
March Madness March Madness Reviewed by Marc Chandler on February 25, 2011 Rating: 5
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Sterling Warning, ECB M3 and Swiss Resilience

February 25, 2011
One noteworthy take away from this week's price action is the under-performance of sterling. It's 1% loss against the dollar makes it one of the weakest currencies, second only to the New Zealand dollar, which was undermined by a swing in rate expectations following the devastating earthquake.
Sterling continues its under-performance today…
Sterling Warning, ECB M3 and Swiss Resilience Sterling Warning, ECB M3 and Swiss Resilience Reviewed by Marc Chandler on February 25, 2011 Rating: 5
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Anti-Inflation Credibility Examined

February 24, 2011
The common narrative in the market is that the ECB inherited the German anti-inflation resolve. The ECB has a formal inflation target unlike the Fed. As the euro zone as a whole recovered, the ECB has gradually unwound many of their extraordinary liquidity facilities. It is expected to signal intentions to return to only weekly and monthly liquidi…
Anti-Inflation Credibility Examined Anti-Inflation Credibility Examined Reviewed by Marc Chandler on February 24, 2011 Rating: 5
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Because Treasuries are Safe Haven, Dollar is Not

February 24, 2011
The US dollar has been unable to find much traction in recent days despite the heightened tensions in the Middle East and North Africa. The price action has raised questions about the dollar's role as a safe haven.
What does seem to be a safe haven are US Treasuries. Despite greater confidence that the US economy has gained momentum, the US yi…
Because Treasuries are Safe Haven, Dollar is Not Because Treasuries are Safe Haven, Dollar is Not Reviewed by Marc Chandler on February 24, 2011 Rating: 5
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Bread and Circuses: Reform Saudi Style

February 23, 2011
The time tested way to dampen popular unrest is to provide food and entertainment to the masses. The problem of course is that sometimes the funds are lacking. In Kuwait and Saudi Arabia, for example, this is not the case and the government's have been "generous" in providing relief. Given the impact on oil prices of what appears to…
Bread and Circuses: Reform Saudi Style Bread and Circuses: Reform Saudi Style Reviewed by Marc Chandler on February 23, 2011 Rating: 5
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The Weight on the Dollar

February 23, 2011
The week's two main themes, political unrest in Northern Africa and the Middle East and rate hike speculation have joined forces and is serving to undermine the greenback. The surge in oil prices appears to be shifting the finely balanced outlook for interest rates in favor of tightening, while the Federal Reserve remains committed to easing o…
The Weight on the Dollar The Weight on the Dollar Reviewed by Marc Chandler on February 23, 2011 Rating: 5
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Hamburgers vs Frankfurters: German Politics and the Euro

February 22, 2011
Hamburg, the second largest city in Germany, gave the Social Democrats a stunning victory in the weekend election. It won an outright majority. It is the party's best showing in any state election since 1998. Merkel's CDU drew a little less than 22% of the vote, nearly halved from the 2008 contest.
Local issues, like the failed education r…
Hamburgers vs Frankfurters: German Politics and the Euro Hamburgers vs Frankfurters: German Politics and the Euro Reviewed by Marc Chandler on February 22, 2011 Rating: 5
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Politics Drives FX , Safe Havens Sought

February 22, 2011
The events in the Middle East and Northern Africa are the main spur of market action. The position adjusting pressures that had sent the euro nearly two cents from the high seen earlier yesterday ran into hawkish comments from ECB's Mersch that spurred the short-covering bounce in mid-morning turnover in Europe. Mersch hinted that the ECB may …
Politics Drives FX , Safe Havens Sought Politics Drives FX , Safe Havens Sought Reviewed by Marc Chandler on February 22, 2011 Rating: 5
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Kitco News: Currency Wars Kitco News: Currency Wars Reviewed by magonomics on February 21, 2011 Rating: 5
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President's Day Comment

February 21, 2011
Foreign Exchange: The US dollar is posting modest gains against most of the major currencies as geopolitical concerns blunt the impact of stronger than expected euro zone flash PMI and German IFO reports. The euro extended last week's gains to almost $1.3730 in this pre-Asia activity, retreated and then had another try at it in early Europe, b…
President's Day Comment President's Day Comment Reviewed by Marc Chandler on February 21, 2011 Rating: 5
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CNBC: G20 Finance Ministers Meet CNBC: G20 Finance Ministers Meet Reviewed by magonomics on February 18, 2011 Rating: 5
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Watch the Hamburgers

February 17, 2011
The German city-state of Hamburg goes to to polls this weekend. It is the first of seven state elections this year ahead of next year's national campaign. Next year promises to be a momentous year in politics and it is a theme I will return to, but consider for a moment that in addition to being the end of the Mayan calendar, the US, Germany, …
Watch the Hamburgers Watch the Hamburgers Reviewed by Marc Chandler on February 17, 2011 Rating: 5
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FOMC Minutes and FX

February 16, 2011
As hinted by the FOMC statement last month, the minutes showed the Fed is a bit more optimistic about growth this year--forecasting 3.4%-3.9% growth vs 3.0%-3.6% previously. The inflation forecasts look essentially unchanged at 1.3%-1.7%. That said, the risks of deflation have diminished. The minutes also confirm that the a minority at the Fed are…
FOMC Minutes and FX FOMC Minutes and FX Reviewed by Marc Chandler on February 16, 2011 Rating: 5
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Sterling Spanked

February 16, 2011
Following soft consumer confidence and employment data, the Bank of Enlgand's inflation report failed to satisfy the sterling bulls, who have had the upper hand in the foreign exchange market, and the rate hawks, who have had their way in the debt market. The BOE maintained its view that CPI will be below target in 2-years time at 1.7% compare…
Sterling Spanked Sterling Spanked Reviewed by Marc Chandler on February 16, 2011 Rating: 5
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More Thinking about BBK and ECB

February 15, 2011
It is now widely expected that Merkel's economic advisor Jens Weidmann will be named tomorrow as Weber's successor at the helm of the Bundesbank. There is some marginal concern that his close relationship with Merkel jeopardizes the BBK's independence. While perhaps not ideal, it is unlikely to derail the appointment. However, it does …
More Thinking about BBK and ECB More Thinking about BBK and ECB Reviewed by Marc Chandler on February 15, 2011 Rating: 5
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TIC Data December--2nd Month QEII, Little Impact

February 15, 2011
Foreign purchases of US assets was a bit stronger than expected at $48.2 bln. This is 10% more than the market anticipated and 30%+ above Nov's $35.6 bln. Demand for longer-term securities slipped to $66 bln from $85 bln, but was well above the $40 bln expected. Central banks sold $45 bln of US securities after selling almost $41 bln in Nov. T…
TIC Data December--2nd Month QEII, Little Impact TIC Data December--2nd Month QEII, Little Impact Reviewed by Marc Chandler on February 15, 2011 Rating: 5
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Grenback Under Pressure, but Consolidative Tone

February 15, 2011
The euro remains vulnerable. The Q4 10 GDP figures were slightly disappointing (0.3% rather than 0.4% consensus), but the adverse impact of the weather and the stronger PMI readings this this year encourage the market to look past these figures. Same is true with the ZEW survey. The current assessment remains strong, but the future expectations at…
Grenback Under Pressure, but Consolidative Tone Grenback Under Pressure, but Consolidative Tone Reviewed by Marc Chandler on February 15, 2011 Rating: 5
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Europe Update

February 14, 2011
The euro briefly dipped below $1.3430, but this could very well prove to be the low of the day, but is likely capped around $1.3480. The tone may remain fragile as peripheral issues are in the forefront. Germany and France are not finding much support for their proposals at the EU Fin Min meetings. It is increasingly looking like increasing the ef…
Europe Update Europe Update Reviewed by Marc Chandler on February 14, 2011 Rating: 5
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Dollar Steady, Euro Hit

February 14, 2011
The euro experiencing independent weakness today. There are a number of considerations at work, nearly all of which are negative. Peripheral tensions are running high. Portugal's 10-year bond yield remains well above 7% for the seventh consecutive session and 12 of the past 15 sessions. A sustained rise through 7% seemed to have intensified th…
Dollar Steady, Euro Hit Dollar Steady, Euro Hit Reviewed by Marc Chandler on February 14, 2011 Rating: 5
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Atlantic Council Interview: Euro Debt Crisis Atlantic Council Interview: Euro Debt Crisis Reviewed by magonomics on February 12, 2011 Rating: 5
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CNBC: Where is Oil Headed? CNBC: Where is Oil Headed? Reviewed by magonomics on February 11, 2011 Rating: 5
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Dollar Recovery Solidifying

February 11, 2011
The US dollar is finishing the week on a firm note and we look for additional gains next week. The proximate causes of the greenback's gains include heightened uncertainty over the near-term outlook in Egypt and , renewed pressure on the European peripheral bond market. One of the key factors we have emphasized, the movement of interest rate d…
Dollar Recovery Solidifying Dollar Recovery Solidifying Reviewed by Marc Chandler on February 11, 2011 Rating: 5
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Dollar on Back Foot

February 08, 2011
The ECB's hawkish stance has underpinned the euro. Not only was the market reminded that rates can be hiked before the ECB finishes normalizing monetary policy, but Trichet was explicit that restructuring of Greek and Irish debt. The ECB's stance was reinforced by its market operations, where it had a net drain of about 66 bln euros. EONIA…
Dollar on Back Foot Dollar on Back Foot Reviewed by Marc Chandler on February 08, 2011 Rating: 5
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Sterling Downside Risks Second Half of the Week

February 07, 2011
The British pound remains among the better performing currencies in the wake of the dollar's recovery that began in the second half of last week. Underpinning it are ideas that the BOE may very well be the first of the major central banks to hike rates. In fact, various market based measures suggest the risk is about 1 in 5 that a hike takes p…
Sterling Downside Risks Second Half of the Week Sterling Downside Risks Second Half of the Week Reviewed by Marc Chandler on February 07, 2011 Rating: 5
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Dollar Firm

February 07, 2011
Talk of continued official demand for euros out of Asia appears to be being absorbed by the market that seems keen to pare back positions. Support has been seen in the $1.3540 area and a break would initially target $1.3480 and then later $1.3350. Sterling is lower for the third consecutive session, but is holding up a bit better. The market recog…
Dollar Firm Dollar Firm Reviewed by Marc Chandler on February 07, 2011 Rating: 5
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What About that Yen?

February 04, 2011
Overshadowed by developments in the US and Europe, the Japanese yen has been largely sidelined and its movement more a function of the other side of the trade, like the euro, dollar and even the Australian dollar. The dollar appears poised to trade higher, with a move back toward the upper end of its Q4 range in the JPY84 area.
This will require a…
What About that Yen? What About that Yen? Reviewed by Marc Chandler on February 04, 2011 Rating: 5
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Is the Dollar Turn At Hand?

February 04, 2011
The US dollar sold off in recent weeks. While we recognized the fundamental considerations behind its decline, we disagreed with them. Prudence and financial discipline warned against fighting the market. Now, however, a crack in the dollar bear case has crystallized and there is a potential opportunity here for medium term investors to reduce sho…
Is the Dollar Turn At Hand? Is the Dollar Turn At Hand? Reviewed by Marc Chandler on February 04, 2011 Rating: 5
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Chef's Special: Disappointment

February 04, 2011
Disappointment may be served up as the chef's special today Market expectations are at risk of getting ahead of themselves on the two main events today, the US jobs data and the EU Summit. Nearly every economic report showed an improvement in the US labor market, including both ISM reports, Challenger report, weekly initial jobless claims and …
Chef's Special: Disappointment Chef's Special: Disappointment Reviewed by Marc Chandler on February 04, 2011 Rating: 5
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Euro Observations

February 03, 2011
I have been skeptical of the euro's rally in recent weeks, fueled by a shift in interest rate expectations and confidence that European officials are going to come up with a "comprehensive plan" to arrest the more than a year old debt crisis. However, there have been few signs that selling the euro was a low risk venture. Today could…
Euro Observations Euro Observations Reviewed by Marc Chandler on February 03, 2011 Rating: 5
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Euro Eases Ahead of ECB Press Conference

February 03, 2011
The consoldiative tone in the euro appears to be more a function of caution ahead of Trichet's press conference following the ECB meeting. The January service PMI rose to 55.9 from 55.2 of the flash reading and 54.2 in Dec. Coupled with the strength of the manufacturing PMI earlier in the week, a broadening of the euro zone recovery would seem…
Euro Eases Ahead of ECB Press Conference Euro Eases Ahead of ECB Press Conference Reviewed by Marc Chandler on February 03, 2011 Rating: 5
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Some Thoughts about US Autos and Manufacturing

February 02, 2011
Currency analysis often focuses on the macro economics and does not delve into sectoral performance. Yet what is happening in the auto sector looks promising and is in fact impacting the macro economic variables. The first clue was actually in Q4 GDP figures. Household purchases of durable goods is very cyclical. This jumped in Q4 and consumption…
Some Thoughts about US Autos and Manufacturing Some Thoughts about US Autos and Manufacturing Reviewed by Marc Chandler on February 02, 2011 Rating: 5
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Understanding the FX Drivers

February 02, 2011
Many investors are concluding that the Federal Reserve will lag not only many emerging markets, but also a wider number of European countries. Yesterday’s PMIs drive home the point that growth at the start of the New Year is accelerating. This helps embolden the risk appetite at the same time that the market is being told by European officials tha…
Understanding the FX Drivers Understanding the FX Drivers Reviewed by Marc Chandler on February 02, 2011 Rating: 5
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Highlights for Groundhog's Day

February 02, 2011
The US dollar remains under pressure in the foreign exchange market, driven by its resumption as a financing currency as growth and inflation raise prospects of BOE and ECB rate hikes while the Federal Reserve is still committed easing monetary conditions.
At the same time, investors growing more confident that officials will address the periphera…
Highlights for Groundhog's Day Highlights for Groundhog's Day Reviewed by Marc Chandler on February 02, 2011 Rating: 5
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