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The Trend is Your Friend

September 30, 2011
The US dollar appears to be shining as a safe haven.  The Swiss remain committed to their peg and the weakness of consumer confidence and new threats of deflation can only harden the SNB's resolve.  Comments form one SNB member that it will diversify reserves into sterling and yen does not appear to be helping those currencies.  Surely Japanes…
The Trend is Your Friend The Trend is Your Friend Reviewed by Marc Chandler on September 30, 2011 Rating: 5
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Another Yen Update

September 29, 2011
Today is first time in two weeks that the US dollar has been above JPY77 and thus far the penetration is minor. Although no doubt Japanese officials and corporate Japan would prefer a weaker yen, given the concerns about the impact of the success of the SNB in blocking hot flow entering Switzerland, the stability of the yen must be partly welcome.…
Another Yen Update Another Yen Update Reviewed by Marc Chandler on September 29, 2011 Rating: 5
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Bundestag Approves, but Agenda Shifting

September 29, 2011
As widely anticipated the German Bundestag approved the EFSF reform plans.  The euro recovered fully from the sell-off in the US session yesterday that had brought it to almost $1.35 early in the Asian session.  However, that was largely before the vote and subsequently the euro half a cent.  Initial support is seen near $1.36, but the near-term r…
Bundestag Approves, but Agenda Shifting Bundestag Approves, but Agenda Shifting Reviewed by Marc Chandler on September 29, 2011 Rating: 5
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US Durable Goods Orders--Another Point for Good Q3 GDP

September 28, 2011
Today's durable goods orders data lends credence to our projection of fairly robust Q3 US GDP after the dismal 0.8% expansion in H1.
The durable goods report is the third important piece of data that should encourage economists to look for something close to what is regarded as trend growth in the US (2.5%-3.0%). The sharp rise in July persona…
US Durable Goods Orders--Another Point for Good Q3 GDP US Durable Goods Orders--Another Point for Good Q3 GDP Reviewed by Marc Chandler on September 28, 2011 Rating: 5
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Dollar Remains Heavy

September 28, 2011
The US dollar remains soft, near yesterday's lows.  The main developments today include somewhat higher than expected German state reports.  They follow on the heels of the relatively firm M3 and private lending figures and suggest that market talk of a 50 bp rate cut by the ECB is over the top.  As noted previously, the ECB is likely to focus…
Dollar Remains Heavy Dollar Remains Heavy Reviewed by Marc Chandler on September 28, 2011 Rating: 5
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Fox News: GDP Growth Will Boost the Dollar Fox News: GDP Growth Will Boost the Dollar Reviewed by magonomics on September 27, 2011 Rating: 5
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Tuesday's Markets

September 27, 2011
Asian stocks staged their biggest rally in since April 2009 after hitting 16-month lows yesterday.  Wall Street's sharp gains on Monday, encouraged by favorable noises from Europe and action in the US Senate to avoid an imminent closure of the government and a repeat of last month's farce.  The dollar  has been confined to yesterday's …
Tuesday's Markets Tuesday's Markets Reviewed by Marc Chandler on September 27, 2011 Rating: 5
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ECB Appears Focusing on Liquidity Measures

September 26, 2011
There has been some speculation in the markets over the past week or so that the ECB may begin reversing the April and July rate hikes as early as next month. The October 6 ECB meeting is Trichet's last before Draghi takes the reins.
Pricing from the OIS market suggest EONIA rates will remain low and this is achievable through either a ECB rate…
ECB Appears Focusing on Liquidity Measures ECB Appears Focusing on Liquidity Measures Reviewed by Marc Chandler on September 26, 2011 Rating: 5
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Crisis and Instability: Searching for Terra Firma

September 26, 2011
Give me a lever long enough and a fulcrum on which to place it and I shall move the world.- Archimedes
Last week, Europe’s nuclear research organization, CERN, announced that it believes that it has found some sub-atomic particles (neutrinos) that moved faster than the speed of light. Assuming that its findings are confirmed, the speed of light, w…
Crisis and Instability: Searching for Terra Firma Crisis and Instability: Searching for Terra Firma Reviewed by Marc Chandler on September 26, 2011 Rating: 5
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Monday Blues

September 26, 2011
Asian equities took hard the failure of the G20/IMF/World Bank to produce anything concrete.  The MSCI Asia-Pacific Index fell nearly 2.5% to new 16-month lows.   This comes on top of the 7.1% loss last week.    Foreing investors have been persistant sellers of Asian equities this month.  Between South Korea and Taiwan alone the outflow is near $4…
Monday Blues Monday Blues Reviewed by Marc Chandler on September 26, 2011 Rating: 5
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CNBC: Greek Default Rumor CNBC: Greek Default Rumor Reviewed by magonomics on September 24, 2011 Rating: 5
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The Pain in Spain

September 23, 2011
Spain appears to have dropped off radar screens. In part, a disorderly outcome of the Greek crisis continues to be threatened. Italian bond yields and CDS prices have risen above Spain's. Yet, ironically, earlier this week, Spain's central bank warned that its banking problems are bound to get worse.
Spain's 5-year CDS is trading at ne…
The Pain in Spain The Pain in Spain Reviewed by Marc Chandler on September 23, 2011 Rating: 5
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Freaky Friday

September 23, 2011
Much like the 1976 classic (forget that Lindsay Lohan remake nonsense), there is a heightened sense of financial crisis today and the initial G20 statement does little to ease market anxiety.  Early gains in the major currencies against the dollar have largely been reversed, though sterling and the Australian dollar are holding on to modest gains …
Freaky Friday Freaky Friday Reviewed by Marc Chandler on September 23, 2011 Rating: 5
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Two Brakes on Dollar Bulls

September 22, 2011
The market is talking about the possibility of two official measures and that is helping stabilize the major foreign currencies at lower levels.  The first is talk that the Federal Reserve could cut the interest rate on the swap lines by 100 bp, which would essentially lower the rate to the Fed funds rate.  It would help boost liquidity and make i…
Two Brakes on Dollar Bulls Two Brakes on Dollar Bulls Reviewed by Marc Chandler on September 22, 2011 Rating: 5
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Fed Twists, Markets Shout and Some Thoughts on Currency Levels

September 22, 2011
The Federal Reserve announced Operation Twist and rather than increase investors appetite for riskier assets, the market has sought the security of the US dollar and to a lesser extent the Japanese yen. Equities have dropped dramatically, but the impact of the Fed's plans is clear as the US Treasury curve continues to flatten with the long end…
Fed Twists, Markets Shout and Some Thoughts on Currency Levels Fed Twists, Markets Shout and Some Thoughts on Currency Levels Reviewed by Marc Chandler on September 22, 2011 Rating: 5
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Ready to Twist or Shout?

September 21, 2011
Contrary to my expectations, the US dollar is headed into the conclusion of the FOMC meeting bid though within recent ranges.  I had expected some position adjusting given the extensive dollar longs built over the past couple of weeks, especially against the euro.  
There are couple of factors that might help explain the dollar's general tone:
Ready to Twist or Shout? Ready to Twist or Shout? Reviewed by Marc Chandler on September 21, 2011 Rating: 5
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Short Note on Euro Zone Success: Ireland?

September 20, 2011
That said, it is remarkable that Irish 10-year yields have completely decoupled from Greece. At the beginning of the year, the 60-day correlation between Irish and Greek 10-year yields was above 0.90. Today, the correlation stands at -0.42. At the same time, Irish 10-year bonds yields have become significantly more correlated with German bund yiel…
Short Note on Euro Zone Success: Ireland? Short Note on Euro Zone Success: Ireland? Reviewed by Marc Chandler on September 20, 2011 Rating: 5
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Market Takes Italy Downgrade in Stride, FOMC Injects Caution

September 20, 2011
The euro completely recovered from the down draft sparked by S&P one notch cut in Italy's sovereign debt rating.  S&P was already at the lower end of the rating agencies and many expected Moody's to move first.  Moody's says it needs another month or so to work through its review.   The euro had dropped a cent from the announce…
Market Takes Italy Downgrade in Stride, FOMC Injects Caution Market Takes Italy Downgrade in Stride, FOMC Injects Caution Reviewed by Marc Chandler on September 20, 2011 Rating: 5
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Week's Key Events Lie Ahead

September 19, 2011
The US dollar firmed on Friday and those gains have been extended today.   The short-covering advance of the euro last week, helped by the Franco-German support for Greece to remain in the euro and than the new quarterly dollar auctions, ran out of steam.  The longer the euro holds below $1.3720 now, the more likely it is to retest last week's…
Week's Key Events Lie Ahead Week's Key Events Lie Ahead Reviewed by Marc Chandler on September 19, 2011 Rating: 5
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The Dollar and Gold

September 15, 2011
One theme that has captured the imagination of many investors has been the debasement of paper money and the dramatic rise in gold prices. Gold has risen 27.6% in dollar terms thus far this year (24% in euro terms, which reflects 3% euro appreciation net-net against the dollar). However, the funding pressures in Europe seems to be reversing this r…
The Dollar and Gold The Dollar and Gold Reviewed by Marc Chandler on September 15, 2011 Rating: 5
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Thursday's Thoughts

September 15, 2011
The US dollar is slightly firmer as Thursday's European session gets under way.  The dollar peaked on Monday and has drifted lower this week.  Asia consolidated and Europe appears poised to take the dollar lower.   If the euro does rise above the $1.3780-$1.3800 area, the next corrective objective is near $1.39.   Sterling appears to have bott…
Thursday's Thoughts Thursday's Thoughts Reviewed by Marc Chandler on September 15, 2011 Rating: 5
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Thought on Russia's Repo Rate Cut

September 15, 2011
Russia cut its repo rate yesterday (25 bp to 5.25%), the first cut in 15 months. It is tempting to put it in the context of Turkey and Brazil's recent rate cuts. However, we see Russia's move in slightly different terms. It seems to be more of a technical response to the tighter ruble liquidity than a bona fide move to ease monetary policy…
Thought on Russia's Repo Rate Cut Thought on Russia's Repo Rate Cut Reviewed by Marc Chandler on September 15, 2011 Rating: 5
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What to Look for if the Market Wants to Challenge the SNB

September 13, 2011
Since Sept 6, when the SNB surprised the world by putting a floor under the euro at CHF1.20, the market has not deigned to challenge it, despite the continuing pressure in the euro zone debt markets, where spreads continue to widen and CDS prices continue to rise. This is true for banks, many corporates, along with sovereigns. So while the condit…
What to Look for if the Market Wants to Challenge the SNB What to Look for if the Market Wants to Challenge the SNB Reviewed by Marc Chandler on September 13, 2011 Rating: 5
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Turn Around Tuesday--Half Right

September 13, 2011
The euro and sterling did recover in late US yesterday and into the Asian session today.  The euro reached $1.3696, close to the initial objective of $1.37 and sterling rose to $1.5870, close but shy of the $1.59 initial target.  However, neither currency was able to sustain the gains through the European session. 
French bank shares have come und…
Turn Around Tuesday--Half Right Turn Around Tuesday--Half Right Reviewed by Marc Chandler on September 13, 2011 Rating: 5
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Table Being Set for Turn-Around Tuesday

September 12, 2011
Often it seems that when the currency markets are trending, Friday is a trend day in the sense that the dollar moves in the direction of the underlying trend.  Monday then often sees some follow through in that same direction but runs out of steam and Tuesday reverses the near-term trend.  This pattern seems to be playing itself out again now.  
Th…
Table Being Set for Turn-Around Tuesday Table Being Set for Turn-Around Tuesday Reviewed by Marc Chandler on September 12, 2011 Rating: 5
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No Stark Future

September 11, 2011
Three developments from last week will influence the global capital markets in the period ahead: the Swiss National Bank’s decision to aggressively prevented further appreciation of the franc; the resignation of Jurgen Stark from the European Central Bank, following on heels of the resignation of Axel Weber earlier this year; and the strong sugges…
No Stark Future No Stark Future Reviewed by Marc Chandler on September 11, 2011 Rating: 5
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ECB Gives an Inch, BOE Doesn't; and Bernanke?

September 08, 2011
The BOE and ECB left rates on hold as the vast majority expected.  The ECB's new staff forecasts shave the lower end of its growth forecasts for this year and next and Trichet sounds significantly more neutral than hawkish.  However, by noting that rates remain accommodative, at his second to last ECB meeting, Trichet did not move very far.  
T…
ECB Gives an Inch, BOE Doesn't; and Bernanke? ECB Gives an Inch, BOE Doesn't; and Bernanke? Reviewed by Marc Chandler on September 08, 2011 Rating: 5
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Swiss National Bank and Other Surprises

September 06, 2011
The Swiss National Bank had to act.  I don't just say this because they have surprised the market today, but even in yesterday's post, it seemed clear that if it did not act, it would lose credibility and would increase the challenge of coping with a strong franc.  As of yesterday, the Swiss franc had recouped about 50% of its losses sinc…
Swiss National Bank and Other Surprises Swiss National Bank and Other Surprises Reviewed by Marc Chandler on September 06, 2011 Rating: 5
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Poor Start to Important Week

September 05, 2011
This is an important week in terms of market levels and central bank meetings.  At least six G10 central banks meet for policy decisions (Australia, Canada, Sweden, euro-zone, UK, and Japan) and several emerging markets (Poland, Malaysia, South Korea, Indonesia and the Philippines).   In addition, US President Obama is expected to propose some fis…
Poor Start to Important Week Poor Start to Important Week Reviewed by Marc Chandler on September 05, 2011 Rating: 5
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Second Verse Same as the First

September 02, 2011
The news stream continues to push the edges of the narrative outline here earlier.  US mired in slow growth, but not contracting (here in Q3).  A fiscal and monetary response is likely to be forthcoming in the next few weeks. The euro zone slowed dramatically and Q3 is off to a poor start.  Fiscal policy is off limits as the austerity regime remai…
Second Verse Same as the First Second Verse Same as the First Reviewed by Marc Chandler on September 02, 2011 Rating: 5
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