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Some Technical Thoughts

December 30, 2011
Euro:   It has not closed above its 20-day moving average since late October.  It comes in now $1.3120 and falling around 20 ticks a day.  Ahead of there resistance is likely to be encountered in the $1.3000-50 area.  The 50 day moving average crossed below the 200 day (golden cross) in early October.    Volatility has trended lower most of the mo…
Some Technical Thoughts Some Technical Thoughts Reviewed by Marc Chandler on December 30, 2011 Rating: 5
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Dollar Finishing Year Mixed, Second Annual Gain Against Euro

December 30, 2011
The US dollar is narrowly mixed as activity winds down. The main price action to note is that the euro fell through the JPY100 level for the first time since mid-2001. For the most part, the dollar is confined to yesterday's ranges against the major currencies.
Emerging market currencies are finishing the year in mixed fashion as well. Interve…
Dollar Finishing Year Mixed, Second Annual Gain Against Euro Dollar Finishing Year Mixed, Second Annual Gain Against Euro Reviewed by Marc Chandler on December 30, 2011 Rating: 5
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Euro Slump Extended, Mediocre Italian Bond Auction, Poor Hungarian Debt Sale Euro Slump Extended, Mediocre Italian Bond Auction, Poor Hungarian Debt Sale Reviewed by Marc Chandler on December 29, 2011 Rating: 5
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Great Graphic: Global Debt Clock from The Economist Great Graphic: Global Debt Clock from The Economist Reviewed by magonomics on December 28, 2011 Rating: 5
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Italy Raises Funds, Market Still MIA

December 28, 2011
A favorable reception to Italy's debt sales failed to breathe fresh life into the moribund foreign exchange market.  The euro continues to trade in last Thursday's range of $1.3017-$1.3119.  It continues to trade within the range seen on Monday, when much of the world was still on Christmas break, and it was confined to $1.3035-$1.3083.���…
Italy Raises Funds, Market Still MIA Italy Raises Funds, Market Still MIA Reviewed by Marc Chandler on December 28, 2011 Rating: 5
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Japan and China: Small Beer

December 26, 2011
The main financial development over the Christmas holiday was an apparent agreement between Japan and China on a wide range of financial issues. The two key aspects are an effort to settle more of the bilateral trade in yen or yuan and that Japan will apply to buy Chinese bonds next year.
Japanese officials had already signaled interest in buying …
Japan and China: Small Beer Japan and China: Small Beer Reviewed by Marc Chandler on December 26, 2011 Rating: 5
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Happy Holidays from Marc to Market!

December 25, 2011
Well I'm Jewish, but my webmaster (and let's face it she is running the show here) thought I should put some holiday spirit on the site. So I give you Last Christmas by Wham! as the (clearly superior) Taylor Swift cover doesn't have a music video.

Happy Holidays from Marc to Market! Happy Holidays from Marc to Market! Reviewed by magonomics on December 25, 2011 Rating: 5
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Consolidation in FX

December 22, 2011
A consolidative tone has emerged after yesterday's powerful reversals after the warm reception to the initiation of the ECB's 3-year funding facility. Although the argument advanced in this space is that banks will 1) use the funds as a liquidity cushion, 2) service own liabilities, and 3) to the limited extent they increase sovereign bond…
Consolidation in FX Consolidation in FX Reviewed by Marc Chandler on December 22, 2011 Rating: 5
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More Thoughts on ECB's Liquidity Provisions

December 21, 2011
Many observers seem to be looking at the 523 banks that took 489.1 bln euros from the ECB's 3-year repo operation and recognize it to be on the upper end of expectations. Yet the situation is more complicated and the injection of new liquidity is not nearly as much.
Note that the ECB provided funds in three different facilities. 169 bln was …
More Thoughts on ECB's Liquidity Provisions More Thoughts on ECB's Liquidity Provisions Reviewed by Marc Chandler on December 21, 2011 Rating: 5
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Classic Buy Rumor Sell Fact after LTRO

December 21, 2011
The euro extended its rally to a six day high, just shy of $1.32 before the results of the ECB's allotment.  The results were at the upper end of expectations and the euro was returned to session  lows.  A classic buy the rumor of a strong demand and sell the fact.  Expectations seemed to have crept higher.    The larger short squeeze in the …
Classic Buy Rumor Sell Fact after LTRO Classic Buy Rumor Sell Fact after LTRO Reviewed by Marc Chandler on December 21, 2011 Rating: 5
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Interview with Global Finance Magazine Interview with Global Finance Magazine Reviewed by magonomics on December 20, 2011 Rating: 5
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ECB's Long-Term Repo Operation

December 20, 2011
The ECB will conduct its first 3-year repo operation tomorrow. Yet it is already having an influence on the capital markets. Some banks are thought to have been buying short-term Spanish and Italian bonds that will ostensibly be used for collateral, for example. In turn the generally good reception last week to the Spanish 5-year bond auction and …
ECB's Long-Term Repo Operation ECB's Long-Term Repo Operation Reviewed by Marc Chandler on December 20, 2011 Rating: 5
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Euro Squeezed Higher, Takes Others With It, Positive Newstream

December 20, 2011
Successful Spanish and Greek bill auctions and better than expected German IFO caught the market wrong-footed, if the record net speculative short at the IMM is anything to go by.  The euro has shot up to almost $1.3090 and pulled up the other major currencies and emerging market currencies in its wake.    The greenback also surrendered nearly all…
Euro Squeezed Higher, Takes Others With It, Positive Newstream Euro Squeezed Higher, Takes Others With It, Positive Newstream Reviewed by Marc Chandler on December 20, 2011 Rating: 5
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Riksbank Meets Tuesday, Market Risks Disappointment

December 19, 2011
In recent days the Swedish krona has been among the strongest of the major currencies. It continues to trade like a high beta euro in the sense that it seems to move in the same direction of the euro but more so. The recent low in the euro was in the middle of last week near $1.2950. The dollar's high against the krona, the highest since last …
Riksbank Meets Tuesday, Market Risks Disappointment Riksbank Meets Tuesday, Market Risks Disappointment Reviewed by Marc Chandler on December 19, 2011 Rating: 5
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CNBC: Markets Seek Merriment CNBC: Markets Seek Merriment Reviewed by magonomics on December 19, 2011 Rating: 5
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Europe's Three No's in Two Parts: Part II

December 18, 2011
European Bond The ECB, as illustrated by the Fitch comments, is seen to be the key protagonist and the pressure is more acute on it to act.  Yet it steadfastly refuses, though since the resumption of its bond purchase program, it has acquired almost the same amount of bonds as Spain and Italy have sold in the primary market.
Europe's Three No's in Two Parts: Part II Europe's Three No's in Two Parts: Part II Reviewed by Marc Chandler on December 18, 2011 Rating: 5
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Europe's Three No's in Two Parts: Part I

December 18, 2011
The European debt crisis is the single most important driver of the global capital markets and will continue to be so well into next year.  While observers have their favorite proposals how the crisis can be addressed and closure finally brought to the crisis, which is extending into its third year, most do not seem politically realistic.
Europe's Three No's in Two Parts: Part I Europe's Three No's in Two Parts: Part I Reviewed by Marc Chandler on December 18, 2011 Rating: 5
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Dollar Softer, Likely Temporary

December 15, 2011
Contrary to much speculation in the markets yesterday, France's sovereign credit worthiness has not been downgraded. Euro zone flash PMIs were slightly better than expected (though still below 50) and Spain raised much more money in its bond sales ( 6 bln euros vs 2.5-3.5 bln).  This helped spark a largely short-covering led euro bounce and ha…
Dollar Softer, Likely Temporary Dollar Softer, Likely Temporary Reviewed by Marc Chandler on December 15, 2011 Rating: 5
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The Euro and the S&P 500: Correlation Update

December 14, 2011
(This follows up on posts here and here.) One of the characteristics of the investment climate that we have tracked over the course of the year is the tight relationship between the euro and the S&P 500. The following observations are based correlations conducted on percentage change of the euro and the S&P 500.

The 60-day rolling correlat…
The Euro and the S&P 500: Correlation Update The Euro and the S&P 500: Correlation Update Reviewed by Marc Chandler on December 14, 2011 Rating: 5
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Norway Surprises and Ongoing Funding Woes

December 14, 2011
Norges Bank cut its official deposit rate by 50 bp to 1.75%. Most were looking for a 25 bp move, but some local banks had been warning of a 50 bp. The central bank was clearly concerned about the knock-on effects from the euro zone, but also noted that market funding for Norwegian banks was less accessible.
The dollar funding pressure continues to…
Norway Surprises and Ongoing Funding Woes Norway Surprises and Ongoing Funding Woes Reviewed by Marc Chandler on December 14, 2011 Rating: 5
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Flat Bounce Means Euro Downside Not Over

December 14, 2011
The euro barely managed to move above reaction high seen in New York yesterday near $1.3050.  There is widespread talk of large demand in front of $1.30 and the low thus far today is $1.3005.  Stops are thought to be below, so a break could see strong follow through, once though bids are absorbed. 
Flat Bounce Means Euro Downside Not Over Flat Bounce Means Euro Downside Not Over Reviewed by Marc Chandler on December 14, 2011 Rating: 5
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FOMC--Rare Non-Event

December 13, 2011
In an unusual but not unexpected fashion, the last FOMC meeting was as much of a non-event as such a gathering ever is. The FOMC left policy unchanged. This includes not only interest rates of course, but also its asset purchase program and its communication policy.
FOMC--Rare Non-Event FOMC--Rare Non-Event Reviewed by Marc Chandler on December 13, 2011 Rating: 5
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Misconceptions

December 13, 2011
Market participants, including economists and strategists are prone to confusing what they believe should be the case with what will be the case.

Paul Krugman's recent post recognizes this: "It's actually quite remarkable", the Nobel-prize winning economist wrote, "how many sensible people base their analysis on the presumpt…
Misconceptions Misconceptions Reviewed by Marc Chandler on December 13, 2011 Rating: 5
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Nervous Calm over Currency Market

December 13, 2011
A good reception to a Spanish bill auction and a some what better than expected German ZEW investor survey helped stabilize the risk sentiment which had been battered yesterday.  The major foreign currencies are mostly firmer on the day, but the modest gains have left the short-term momentum indicators a bit over-extended.  This would seem to favo…
Nervous Calm over Currency Market Nervous Calm over Currency Market Reviewed by Marc Chandler on December 13, 2011 Rating: 5
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Risk Off Monday

December 12, 2011
The US dollar is firm against all the major and emerging market currencies.  Equity markets are lower, giving back all of Friday's gains and more.  The euro has dropped 1% and the next level of support is seen near $1.3200. 
Risk Off Monday Risk Off Monday Reviewed by Marc Chandler on December 12, 2011 Rating: 5
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Three Key Developments

December 11, 2011
Three events took place last week that will shape the general investment climate in the weeks and months ahead.
Pump it Up The ECB significantly increased its liquidity provisions. Some observers seem to be disappointed that the ECB did not flout its own legal mandate and indicate it would buy an unlimited amount of peripheral bonds.
This should not…
Three Key Developments Three Key Developments Reviewed by Marc Chandler on December 11, 2011 Rating: 5
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The Long and Short of It

December 09, 2011
The most important take away from this week's developments is that there will be no European joint bond and no substantial change in the ECB's sovereign bond purchase program AND that the euro and monetary union will survive.
The Long and Short of It The Long and Short of It Reviewed by Marc Chandler on December 09, 2011 Rating: 5
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Draghi Turns Spigots, but Still a Drag

December 08, 2011
The ECB has giveth and taketh away today, leaving the market pessimistic about the outcome of tomorrow's summit.

The ECB delivered the much expected 25 bp rate cut, though the decision was not unanimous. There was some immediate disappointment by some players positioned for the outside chance of a 50 bp move. The ECB addressed the liquidity an…
Draghi Turns Spigots, but Still a Drag Draghi Turns Spigots, but Still a Drag Reviewed by Marc Chandler on December 08, 2011 Rating: 5
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Wrestling with the Imponderables: Worrisome Signs

December 07, 2011
Opinion polls and surveys are finding an increasing number of people expect one or more countries to leave the euro zone. Investors are anxious. What is to be done ? What makes this so difficult is that there are so many moving parts and possibilities. The way the question is asked often conditions the answers.
The initial reaction to what happen…
Wrestling with the Imponderables: Worrisome Signs Wrestling with the Imponderables: Worrisome Signs Reviewed by Marc Chandler on December 07, 2011 Rating: 5
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Key Disagreements at Late Stage Weigh on Euro

December 07, 2011
The EU Summit begins in a little less than 24 hours and the signals coming from European officials are anything but encouraging.  We did not expect the kind of closure than many investors want to emerge from this meeting.  We did expect some important steps toward erecting the scaffolding to facilitate great fiscal union. 

There are several areas o…
Key Disagreements at Late Stage Weigh on Euro Key Disagreements at Late Stage Weigh on Euro Reviewed by Marc Chandler on December 07, 2011 Rating: 5
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Two Developments Push Euro Lower in Europe

December 07, 2011
Asia extended the euro's recovery, but developments in Europe have seen it surrender the earlier gains and move back toward the lows seen in North America yesterday near $1.3360.  The relatively light participation in the ECB's 84-day dollar auction and signs that even at this late date there are key disagreements among euro zone officials…
Two Developments Push Euro Lower in Europe Two Developments Push Euro Lower in Europe Reviewed by Marc Chandler on December 07, 2011 Rating: 5
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Liquidity is the Word

December 06, 2011
The Bank of England introduced a new contingency liquidity facility--Extended Collateral Term Repo (ECTR) Facility. The purpose is to have a facility in place in case there is a market wide shortage of sterling liquidity. This is currently not a problem, so the facility is preemptive in nature.
Liquidity is the Word Liquidity is the Word Reviewed by Marc Chandler on December 06, 2011 Rating: 5
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Euro Recovers After S&P Slam

December 06, 2011
The euro sold off amid the rumors of the S&P decision to put on credit watch 15 euro zone countries.  Spared was Greece, in a world of its own, and Cyprus, which was already on credit watch.  It sold off further in Asia, but Europe has shrugged it off and, with the help of a monster manufacturing orders report from Germany has fully recovered …
Euro Recovers After S&P Slam Euro Recovers After S&P Slam Reviewed by Marc Chandler on December 06, 2011 Rating: 5
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CNBC: Focus on Europe and ECB CNBC: Focus on Europe and ECB Reviewed by Marc Chandler on December 05, 2011 Rating: 5
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China and Europe

December 05, 2011
Many observers mistakenly think that because China is not a parliamentary democracy that is it monolithic. Yet repeatedly we have seen this is not the case. Many officials at the PBOC, for example,seem more sympathetic to a more flexible currency regime, while officials more involved with commerce and trade are more opposed.
China and Europe China and Europe Reviewed by Marc Chandler on December 05, 2011 Rating: 5
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US Dollar Softer on Slightly Better News Stream

December 05, 2011
The US dollar is beginning the week on a softer note, but well within recent ranges.  Most of this week's key events lie ahead.   The day earlier than planned and somewhat larger Italian austerity plan coupled with talk of ECB purchases has helped send Italian bond yields sharply lower, with the 10-year yield falling over 50 bp toward 6%.  Spa…
US Dollar Softer on Slightly Better News Stream US Dollar Softer on Slightly Better News Stream Reviewed by Marc Chandler on December 05, 2011 Rating: 5
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March to Folly: Underestimating Germany and the ECB

December 04, 2011
The House of Finance is accustomed to a cacophony of opinions and voices. Rarely out of the free market place of ideas has such a strong consensus emerged: Germany and the ECB must capitulate.
The ECB must act as a backstop and support the bond markets ofthe heavily indebted euro zone members. Germany must relent and permit the issuance of Eurobon…
March to Folly: Underestimating Germany and the ECB March to Folly: Underestimating Germany and the ECB Reviewed by Marc Chandler on December 04, 2011 Rating: 5
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Some Thoughts on the U.S. Jobs Report and Implications

December 02, 2011
As often is the case, economic data can be a bit of a Rorschach test, in that reasonable people can see and value different aspects of the report. This holds for today's US employment report. The headlines were good--140k private sector jobs were created, near expectations, back months were revised up by 72k, and the unemployment rate fell une…
Some Thoughts on the U.S. Jobs Report and Implications Some Thoughts on the U.S. Jobs Report and Implications Reviewed by Marc Chandler on December 02, 2011 Rating: 5
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Hard Asset Investor: No Race to Debase Hard Asset Investor: No Race to Debase Reviewed by magonomics on December 01, 2011 Rating: 5
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Short Note on Canada

December 01, 2011
The Canadian dollar has appreciated about 1.5% since the start of the week. The general investment environment has improved compared to last week and the Canadian dollar responded well to yesterday's central bank swap line decision and the stronger than expected Q3 GDP (3.5% annualized vs 3.0% consensus). Yet the Canadian dollar has under-perf…
Short Note on Canada Short Note on Canada Reviewed by Marc Chandler on December 01, 2011 Rating: 5
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Fasten Your Seatbelts: A Week that Can Rock your World

December 01, 2011
Starting today and running through next week, there is a key event nearly every day.  The reports suggesting that the EU may sanction bank bond guarantees through next year is also indicative of the kind of headline risk that will exist as Europe officials grapple with the crisis. This is also an important element that can help banks secure their …
Fasten Your Seatbelts: A Week that Can Rock your World Fasten Your Seatbelts: A Week that Can Rock your World Reviewed by Marc Chandler on December 01, 2011 Rating: 5
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Great Graphic: Making Sense of Europe Great Graphic: Making Sense of Europe Reviewed by magonomics on December 01, 2011 Rating: 5
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Wating for Another Shoe to Drop

December 01, 2011
The major currencies are consolidating in yesterday's broad trading ranges, but the "real" action is in the European bond markets, with acceptable auctions in Spain and France, helping support of a bond market rally that was already underway, encouraged by yesterday's step to increase access to dollar funding.   
Egan-Jones cut F…
Wating for Another Shoe to Drop Wating for Another Shoe to Drop Reviewed by Marc Chandler on December 01, 2011 Rating: 5
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