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Preview FOMC

July 31, 2012
The FOMC's 2-day meeting begins today, with a decision tomorrow around 2:15 pm EST. While the disappointing data in recent weeks raise the prospect of action by the Federal Reserve, most investors appear to be expecting a tweak in the statement to recognize the down shift in the economy and the forward looking guidance, with a action more li…
Preview FOMC Preview FOMC Reviewed by Marc Chandler on July 31, 2012 Rating: 5
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Great Graphic: Regional Debt Spain (and Italy)

July 31, 2012
Here is a Great Graphic posted on FT Alphaville.  It illustrates the magnitude of Spain's regional debt challenge.  The regional debt is one of  three separate but related debt problems Spain face.  The other two being bank debt and sovereign deficit/debt.   
There are interesting parallels between Spain and its regions on one hand and the cr…
Great Graphic: Regional Debt Spain (and Italy) Great Graphic: Regional Debt Spain (and Italy) Reviewed by Marc Chandler on July 31, 2012 Rating: 5
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FX: Hurry Up and Wait

July 31, 2012
The US dollar is mixed. Against the dollar-bloc, it is soft, but against the other major currencies, it is consolidating in narrow ranges near the middle of yesterday’s ranges. Of the capital markets, the foreign exchange market seems the more wary of being disappointed this week. Risk assets, like equities, commodities and peripheral European …
FX: Hurry Up and Wait FX: Hurry Up and Wait Reviewed by Marc Chandler on July 31, 2012 Rating: 5
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Europe: Urgent or Not?

July 30, 2012
The ECB's Draghi expressed an appreciation for the urgency facing the euro area, but he seems more isolated than he did last week when Merkel and Hollande reiterated their willingness to do what was necessary.
Even though the euro fell more than a 1.5 cents from its pre-weekend high just below $1.24, Spanish bond yields have continued to retrea…
Europe: Urgent or Not? Europe: Urgent or Not? Reviewed by Marc Chandler on July 30, 2012 Rating: 5
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Currencies Consolidate Awaiting Key Events

July 30, 2012
The US dollar is consolidating the losses suffered at the end of last week. It remains largely confined to the ranges seen before the weekend. The Swedish krona is the best performer following the better than expected Q2 GDP (1.4% vs 0.3% consensus).  The Australian dollar is the other exception.  Speculation of a rate cut next week have been sc…
Currencies Consolidate Awaiting Key Events Currencies Consolidate Awaiting Key Events Reviewed by Marc Chandler on July 30, 2012 Rating: 5
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Great Graphic: Capital Flight from Greece Continues

July 29, 2012
Here is a Great Graphic from Zero Hedge. It depicts the ongoing withdrawal of corporate and household deposits from the Greek banking system.  
There has been no reprieve since the second Greek elections and if anything the pace of capital flight has increased.  Bank recapitalization also seems not to have mattered.  
While ECB President Draghi h…
Great Graphic: Capital Flight from Greece Continues Great Graphic: Capital Flight from Greece Continues Reviewed by Marc Chandler on July 29, 2012 Rating: 5
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Currency Positioning and Technical Outlook

July 28, 2012
Last week was of two halves.  In the first part, the dollar remained strong as the European crisis dominated other considerations.  In the second part, the dollar had its recent gains pared as the seemingly bipolar market shifted its focus to the increased risk of a policy response.  In addition, evidence continued to mount that the world's l…
Currency Positioning and Technical Outlook Currency Positioning and Technical Outlook Reviewed by Marc Chandler on July 28, 2012 Rating: 5
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Great Graphic: Big Mac Update

July 27, 2012
Here is a Great Graphic from the Economist:  It updates its classic look at purchasing power parity by comparing the price of Big Mac's from around the world  What is of added interest in this reiteration is that is depicts the changes since 2007.  
There are more sophisticated approaches to purchasing power parity as well.  For your interest,…
Great Graphic: Big Mac Update Great Graphic: Big Mac Update Reviewed by Marc Chandler on July 27, 2012 Rating: 5
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Eight Observations about the Yen

July 27, 2012
The strength of the Japanese yen continues to befuddle policy makers, investors and observers.   It is often claimed to be a safe haven, even though the country does not have a triple-A rating, has a debt-to-GDP ratio of more than 200% and continues to be plagued with outright deflation.  
Yet the "safe haven" claim, like the "carr…
Eight Observations about the Yen Eight Observations about the Yen Reviewed by Marc Chandler on July 27, 2012 Rating: 5
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Great Graphic: California Renewable Energy Growth

July 26, 2012
Today'sgreat graphiccomes from brilliant webmaster who the personification of the Millennial Generation green movement, biking to work, owning a soda stream, and only drinking local beer sorta like this:

California (that state just south of the great land of Portland) utilities have had a renewable energy boom according to Green Tech Media.


Great Graphic: California Renewable Energy Growth Great Graphic: California Renewable Energy Growth Reviewed by magonomics on July 26, 2012 Rating: 5
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Short Note on US Preliminary Q2 GDP Estimate

July 26, 2012
The US reports its first estimate of Q2 GDP on July 27.  It is likely to be around the same pace as Q2 last year which was 1.3% annualized.  Last year the second quarter began the recovery from the 0.4% pace in Q1 that continued to the 3% pace in Q4 '11.  

However, this year Q2 will show a slowing in the expansion which was estimated at 1.9% i…
Short Note on US Preliminary Q2 GDP Estimate Short Note on US Preliminary Q2 GDP Estimate Reviewed by Marc Chandler on July 26, 2012 Rating: 5
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Hidden Water: How much do you use? Hidden Water: How much do you use? Reviewed by magonomics on July 26, 2012 Rating: 5
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Draghi Means Dragon

July 26, 2012
As European leaders take leave for their summer holiday's, ECB President Draghi has again stepped into the vacuum and has helped spark a recovery in the global capital markets.  Not only has the euro rallied to the highest level in a week, but Spanish and Italian yields have fallen sharply and the short-end has fallen more than the long-end.  

…
Draghi Means Dragon Draghi Means Dragon Reviewed by Marc Chandler on July 26, 2012 Rating: 5
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What Nowotny Did Not Say

July 25, 2012
There seems to be some confusion in the markets.  Many think that the head of the Austrian central bank and ECB member Nowotny raised the likelihood that the ESM could get a banking license.  This would allow it to borrow from the ECB to supplement its funds and make for a practically unlimited war chest. 

It would help address concerns that the c…
What Nowotny Did Not Say What Nowotny Did Not Say Reviewed by Marc Chandler on July 25, 2012 Rating: 5
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Great Graphic: Tax Code as Tool in Class Warfare

July 25, 2012
Here are is a Great Graphic that captured our attention.  The first is from the Citizens for Tax Justice courtesy of NPR.  It shows that the return to labor (wages and other earned income) is taxed at a considerably higher rate than the returns to capital (capital gains).  Moreover that gap has widened over the past 20+ years.  
The second chart …
Great Graphic: Tax Code as Tool in Class Warfare Great Graphic: Tax Code as Tool in Class Warfare Reviewed by Marc Chandler on July 25, 2012 Rating: 5
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Short Note On FX Market

July 25, 2012
The general scenario we outlined in our weekly outlook and reiterated yesterdayanticipated follow through selling of the foreign currencies at the start of the week before corrective pressures emerged near mid-week.  That is essentially what is happening today.  
Moreover, today's corrective price action is happening despite a continued poor …
Short Note On FX Market Short Note On FX Market Reviewed by Marc Chandler on July 25, 2012 Rating: 5
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Euro Warnings from the Options Market

July 24, 2012
There are two developments in the options market for euro that one should think about even if one does not trade options.  We have often found that divergences between the spot and options generate important insight into market direction.  
The first development has to do with the pricing of puts and calls equidistant from the money.  These are cal…
Euro Warnings from the Options Market Euro Warnings from the Options Market Reviewed by Marc Chandler on July 24, 2012 Rating: 5
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FX: Nervous Consolidation: Correction Pending

July 24, 2012
The foreign exchange market remains in a heightened state of anxiety, but the majors are mostly trading within yesterday's ranges.  The short sales bans in Italy and Spain have not eased the pressure on the local bourses or bond markets.  In fact, for the first time in eleven years, the Spanish 5-year yield moved above the 10-year yield.   It …
FX: Nervous Consolidation: Correction Pending FX: Nervous Consolidation: Correction Pending Reviewed by Marc Chandler on July 24, 2012 Rating: 5
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The Significance of the Surprising Canadian Dollar

July 23, 2012
The Canadian dollar has lost around 0.5% today and that is with the small modest recovery seen across the board since European markets closed for day.   Although my notes in recent days have highlighted the risk of near-term Canadian dollar losses, its weakness today will have many people scratching their heads.
Consider that two large foreign d…
The Significance of the Surprising Canadian Dollar The Significance of the Surprising Canadian Dollar Reviewed by Marc Chandler on July 23, 2012 Rating: 5
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Great Graphic: US Federal Spending by President

July 23, 2012
Here is a Great Graphic that is from MarketWatch two months ago.  MarketWatch is owned by Dow Jones, and is not known for its left leanings.  The information is as stunning as it is counter-intuitive:  federal spending has gone up less under President Obama than any president since Eisenhower.  
Many friends and critics of Obama want to attribute…
Great Graphic: US Federal Spending by President Great Graphic: US Federal Spending by President Reviewed by Marc Chandler on July 23, 2012 Rating: 5
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Dollar Opens New Week on Firm Note

July 22, 2012
The US dollar has opened broadly higher in the early pre-Asian turnover.  The weekend news stream has been poor.  The euro is now likely to see resistance in the $1.2150 area.  Similar resistance is found in sterling near $1.5630 and the Australian dollar in the $1.0360-70 area.  The dollar may find support near CAD1.0120-30.  The greenback is li…
Dollar Opens New Week on Firm Note Dollar Opens New Week on Firm Note Reviewed by Marc Chandler on July 22, 2012 Rating: 5
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Great Graphic: Euro Area Sovereign Bond Spreads

July 22, 2012
Here is a Great Graphic from the blog Global Macro Monitorthat provides a useful visual of the change in the sovereign 10-year spreads in Europe over the past week to the left and year-to-date below.  
Some may be surprised that only Spain pays a larger premium over Germany compared to the end of last year.  This  reflects heightened concern that…
Great Graphic: Euro Area Sovereign Bond Spreads Great Graphic: Euro Area Sovereign Bond Spreads Reviewed by Marc Chandler on July 22, 2012 Rating: 5
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FX Positioning and In-Depth Outlook

July 21, 2012
In the great ugly contest that is the foreign exchange market, a series of disappointingly poor US economic data had threatened to give the dubious honor to the dollar.  The euro had reached a 7-day high on July 19,  just below the key level we identified near $1.2330.   Sterling traded near its best level in a month, near $1.5740.   For its part…
FX Positioning and In-Depth Outlook FX Positioning and In-Depth Outlook Reviewed by Marc Chandler on July 21, 2012 Rating: 5
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Quick note on Price Action: Look Out Below

July 20, 2012
The euro has been sold off to new two year lows.  It is at the lowest level against the yen since late 2000.  It is at fresh 4 year lows against sterling.  It is also being sold to new lows against a range of other currencies, including the Australian and Canadian dollars.  
There does not appear to be fresh fundamental impetus, though losses in …
Quick note on Price Action: Look Out Below Quick note on Price Action: Look Out Below Reviewed by Marc Chandler on July 20, 2012 Rating: 5
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Tug-of-War Keeps FX Choppy

July 20, 2012
Choppy trading conditions continue to prevail.   Some suspect these conditions are the result of lighter summer conditions.  However, it might instead by a tug-of-war between the poor US data on one hand and the unstable situation in Europe that is pushing Spanish 10-year yields above 7% and 2-year yields above 5%.  Similar Italian benchmark yiel…
Tug-of-War Keeps FX Choppy Tug-of-War Keeps FX Choppy Reviewed by Marc Chandler on July 20, 2012 Rating: 5
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Implications of Summer Drought

July 19, 2012
The US main agriculture region is experiencing the worst drought in more than half a century.  Corn and soybean prices are being driven through the 2007-2008 highs to new record levels.  

The USDA publishes new food price forecasts on the 25th of each month.   There is no prize for guessing the direction of prices in next week's report.  In Ju…
Implications of Summer Drought Implications of Summer Drought Reviewed by Marc Chandler on July 19, 2012 Rating: 5
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Conceptualizing Europe

July 19, 2012
The US dollar is  a bit heavier against most foreign currencies as risk appetites across the board appear to have strengthened.  Global equities are mostly higher.  Core bond markets are also a touch heavier.  Spanish and Italian 10-year yields were flirting with the 7% and 6% levels but have since pulled back (however note that Spain's 2-yea…
Conceptualizing Europe Conceptualizing Europe Reviewed by Marc Chandler on July 19, 2012 Rating: 5
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Bernanke and Fed Options

July 18, 2012
Many observers continue to clamor for a new round of asset purchases from the Federal Reserve. They were disappointed when the FOMC statement and press conference after last months meeting failed to provide fresh clues. They were disappointed again with the minutes from that meeting. They were disappointed again yesterday when Fed chairman Bern…
Bernanke and Fed Options Bernanke and Fed Options Reviewed by Marc Chandler on July 18, 2012 Rating: 5
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Great Graphic: US Minimum Wage

July 18, 2012
Here is a Great Graphic from David Ruccio at Real-World Economics Review Blog.  It captures the fact that in real (inflation adjusted terms),  the US minimum wage is lower than it was 45 years ago.   The pie charts shows that earning minimum wage does not prevent one from being impoverished.  Indeed, the gap between the two has grown considerable…
Great Graphic: US Minimum Wage Great Graphic: US Minimum Wage Reviewed by Marc Chandler on July 18, 2012 Rating: 5
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Dollar Firmer, Euro Worries

July 18, 2012
The US dollar was flat in Asia, but has rallied in Europe.  The inability of the euro to establish a foothold above $1.23 was a sign of encouragement to the bears.  Rumors of an Austrian downgrade and Merkel's comment expressing doubts about the European project have seen the euro drop more than half a cent in late morning turn-over in London…
Dollar Firmer, Euro Worries Dollar Firmer, Euro Worries Reviewed by Marc Chandler on July 18, 2012 Rating: 5
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Dismal US Retail Sales

July 16, 2012
The June retail sales report was simply dismal.  Not only did  sales decline by 0.5% in June rather than rise 0.2% as the consensus expected, but the April data were revised.  The measure used for GDP calculations, excludes gasoline, auto and building material sales fell 0.3% for the second consecutive month.  
While the May data was unrevised, A…
Dismal US Retail Sales Dismal US Retail Sales Reviewed by Marc Chandler on July 16, 2012 Rating: 5
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Three Observations to Start the Week

July 16, 2012
There was a brief attempt in early Asia to extend the US dollar's pre-weekend decline, but this proved limited and buying reemerging especially in Europe.  Concerns about the extent of private sector involvement in Spanish aid seems to be the main talking point and is more evident in the equity market, where financials are the weakest sector (…
Three Observations to Start the Week Three Observations to Start the Week Reviewed by Marc Chandler on July 16, 2012 Rating: 5
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Currency Outlook and Positioning

July 14, 2012
Global growth and the European debt crisis continue to be the two main factors shaping the investment climate. Monetary policy has been eased this month in countries accounting for large part of world GDP. The list includes China, the euro zone, the UK, Denmark, Brazil and South Korea. The Bank of Japan tweaked its asset purchase program to ma…
Currency Outlook and Positioning Currency Outlook and Positioning Reviewed by Marc Chandler on July 14, 2012 Rating: 5
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Great Graphic: China's GDP and Composition

July 13, 2012
Here is a Great Graphic from the Wall Street Journalon China's GDP.  Earlier today it reported Q2 GDP expanded by 7.6% from a year ago, which was largely in line with expectations, though it was still the slowest year-over-year pace since early 2009. 
The composition of growth is disappointing.  Even though net exports continued to be a drag…
Great Graphic: China's GDP and Composition Great Graphic: China's GDP and Composition Reviewed by Marc Chandler on July 13, 2012 Rating: 5
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FX Update and Adjusting to Zero Deposit Rate

July 13, 2012
The US dollar is trading little changed against the major currencies, but the dollar-bloc currencies are a bit better bid, perhaps encouraged by China's data, which on the face of it was not as poor as feared when PBOC cut interest rates earlier this month.   Q2 growth was 1.8% quarter-over-quarter, up from a revised 1.6% in Q1.  Year-over-ye…
FX Update and Adjusting to Zero Deposit Rate FX Update and Adjusting to Zero Deposit Rate Reviewed by Marc Chandler on July 13, 2012 Rating: 5
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Negative Interest Rates and the Currency War

July 12, 2012
There have been some noteworthy developments on interest rates over the past week. The ECB's cut of its deposit rate to zero has pushed some short-term market rates below zero. France sold bills earlier this week with a negative yield. Denmark cut its key two-week CD rate to -20 bp. The Swiss yield curve out 5 year is below 0 (the 2-year …
Negative Interest Rates and the Currency War Negative Interest Rates and the Currency War Reviewed by Marc Chandler on July 12, 2012 Rating: 5
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Six Observations about the Euro

July 12, 2012
1. The odds of a country exiting the euro zone this year have fallen from above 40% on the eve of the Greek election to about 27% today, according to Intrade.Com.  Previously the euro appeared to track the "break up" fear.  However, it has found little succor in the reduced exit speculation.           
2.  We often find that the euro a…
Six Observations about the Euro Six Observations about the Euro Reviewed by Marc Chandler on July 12, 2012 Rating: 5
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Great Graphic: Relative and Absolute Mobility in US

July 12, 2012
Here is a Great Graphic from Catherine Rampellat the NY Times Economix blog.  She draws on the PEW Economic Mobility Project to look at relative and absolute mobility in the US.  The chart to the right looks at relative mobility.  It answers the question: Can one rise/fall from the socioeconomic class one is born into ?  The chart below looks at …
Great Graphic: Relative and Absolute Mobility in US Great Graphic: Relative and Absolute Mobility in US Reviewed by Marc Chandler on July 12, 2012 Rating: 5
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Euro Drifts Lower, Yen Higher; Aussie Spanked

July 12, 2012
The US dollar is broadly higher today.  The drivers continue to be the same.  European debt crisis continues to weigh on sentiment and, separately, world growth worries continue to elicit policy responses, though the lack of stronger support for QE in the FOMC minutes may have also bolstered the dollar bulls.  
Brazil delivered the expected 50 bp…
Euro Drifts Lower, Yen Higher; Aussie Spanked Euro Drifts Lower, Yen Higher; Aussie Spanked Reviewed by Marc Chandler on July 12, 2012 Rating: 5
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Great Graphic: Youth Unemployment

July 11, 2012
Here is a Great Graphic from CNN.  It captures the high level of youth (15-24 year-old cohort) unemployment.   This excludes those that are in school or receiving training.  The CNN report reviews the findings of the OECD, where the data originates.   There are 34 countries in the OECD and their youth unemployment collectively was 18.6% last year…
Great Graphic: Youth Unemployment Great Graphic: Youth Unemployment Reviewed by Marc Chandler on July 11, 2012 Rating: 5
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Spain and the New Model

July 11, 2012
European officials are devising a new approach to the debt crisis.  The model used for Greece, which was the prototype for Ireland and Portugal, is being replaced by a new approach.  It is being hammered out in Spain.  It is evolutionary in the sense that it is responding to the changing environment and conditions, while at the same time the new a…
Spain and the New Model Spain and the New Model Reviewed by Marc Chandler on July 11, 2012 Rating: 5
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Currency Correlations with the S&P 500 Revisited

July 10, 2012
The start of the earnings season in the US provides an opportunity to review the currency correlations with the S&P 500. We conduct our analysis on the percentage change of the currencies and percentage change in the S&P 500. What we find then is the correlation of the returns, which is more important to investors then if the levels are…
Currency Correlations with the S&P 500 Revisited Currency Correlations with the S&P 500 Revisited Reviewed by Marc Chandler on July 10, 2012 Rating: 5
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Great Graphic: Tighter Rental Market may Lift Core CPI

July 10, 2012
Here is a Great Graphic from Barry Ritholtz blog (The Big Picture) and a post by James Bianco.  It illustrates the decline in the vacancy rate of apartments in the US and the corresponding increase in rents.  This has a couple of implications.  First, the declining vacancy rates, which are evident in single family dwellings as well, provide some …
Great Graphic: Tighter Rental Market may Lift Core CPI Great Graphic: Tighter Rental Market may Lift Core CPI Reviewed by Marc Chandler on July 10, 2012 Rating: 5
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Muted Turnaround Tuesday

July 10, 2012
The US dollar is sporting a slight softer tone, but within the consolidative ranges seen in recent days.  The dollar was better bid in Asia but softened in Europe following better than expected industrial production figures from the UK, Italy, and Sweden, leaving France as the exception with a disappointing report.  
Similarly, Asian equities were…
Muted Turnaround Tuesday Muted Turnaround Tuesday Reviewed by Marc Chandler on July 10, 2012 Rating: 5
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Draghi Calls for Bold Action

July 09, 2012
ECB President Draghi calls for bold action, but it is not clear exactly what he means. He does not mean a resumption of the sovereign bond purchase scheme. He does not mean granting the ESM a banking license. He does not mean boosting the funds available to the ESM. Bold action apparently does not mean accepting any more (net basis) state guarant…
Draghi Calls for Bold Action Draghi Calls for Bold Action Reviewed by Marc Chandler on July 09, 2012 Rating: 5
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German Constitutional Court and the Euro

July 09, 2012
The German Constitutional Court is expected to rule Tuesday July 10 on the request for a temporary injunction against the ESM and the fiscal pact on grounds that it transfers an unconstitutional amount of power to European institutions.  German press reports suggest that it is unusual for the Court to entertain requests for a temporary injunction…
German Constitutional Court and the Euro German Constitutional Court and the Euro Reviewed by Marc Chandler on July 09, 2012 Rating: 5
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Spain: Deal in the Making?

July 09, 2012
Spain is on the bubble. The 10-year yield is pushing through 7% and 2-year yield is flirting with 5%. As we noted earlier, the entire curve and CDS pricing is above Ireland's. The Spanish crisis is really a combination of three different debt issues: sovereign, banks and regions.
The Eurogroup of finance ministers…
Spain: Deal in the Making? Spain: Deal in the Making? Reviewed by Marc Chandler on July 09, 2012 Rating: 5
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Great Graphic: US and Europe Industrial Production

July 09, 2012
Here is a Great Graphic from Thomson Reutersthat captures relative performance of industrial production.  There is a clear difference between the Germany and the US on one hand and every one else on the other.  France and the appear stagnant, while Italy, Spain and Greece are contracting.  The real challenge is what will be the source of aggregat…
Great Graphic: US and Europe Industrial Production Great Graphic: US and Europe Industrial Production Reviewed by Marc Chandler on July 09, 2012 Rating: 5
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Calm before the Storm?

July 09, 2012
The US dollar is little changed against most of the major foreign currencies today as a consolidative tone emerges pending fresh developments. The euro made a marginal 2-year low in early Asia, but narrow ranges have prevailed and the euro has traded in a little more than a quarter cent range in Europe, mostly below $1.23. The dollar has been i…
Calm before the Storm? Calm before the Storm? Reviewed by Marc Chandler on July 09, 2012 Rating: 5
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Great Graphic: Fed Unemployment Projections

July 06, 2012
Here is a Great Graphic from Brad Plumer at the Ezra Klein's Wonkblogat the Washington Post.  It shows the Federal Reserve's forecasts of US unemployment and the actual performance.  The disappointing performance is why many continue to look for QE3.   Plumer's piece, though, focuses on a version of Q3 where the Fed would target a par…
Great Graphic: Fed Unemployment Projections Great Graphic: Fed Unemployment Projections Reviewed by Marc Chandler on July 06, 2012 Rating: 5
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Thoughts on Jobs Data

July 06, 2012
The US created a net of 80k jobs in June, slightly below expectations, especially after the ADP data rose  hopes in some quarters for a stronger number.  Some of the underlying details were better though and this appears sufficient to keep the talk of QE3 in check.  
The bright spots in the report are two-fold.  First, hourly earnings rose 0.3% f…
Thoughts on Jobs Data Thoughts on Jobs Data Reviewed by Marc Chandler on July 06, 2012 Rating: 5
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Four Developments Before the US Jobs Data

July 06, 2012
The US dollar is mixed as the market braces for the last main event of the week, namely the Us employment report.  The greenback is consolidating yesterday's outsized gains against the major currencies and is finding a better bid tone against the dollar-bloc.  
It may be more difficult than usual to anticipate the market's reaction to the…
Four Developments Before the US Jobs Data Four Developments Before the US Jobs Data Reviewed by Marc Chandler on July 06, 2012 Rating: 5
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The Two Drivers

July 05, 2012
There are two main concerns which appear to be driving the price action.  First, there is heightened anxiety about the global economic slowdown.  This is evident in the fact that easing of monetary policy by four countries (China, the UK, the ECB and Denmark) failed to breathe fresh life into the moribund animal spirits.  
Second, is that the Europ…
The Two Drivers The Two Drivers Reviewed by Marc Chandler on July 05, 2012 Rating: 5
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China Surprises, ECB, BOE Not

July 05, 2012
Neither the BOE nor the ECB surprised.  Both did what the consensus expected.  The BOE will buy GBP50 bln more gilts.  There was, I thought, some risk of GBP75 bln.  Any additional QE now will have to wait until after the next inflation report in early August, which means an actual increase in QE is September at the earliest.  
The ECB cut key ra…
China Surprises, ECB, BOE Not China Surprises, ECB, BOE Not Reviewed by Marc Chandler on July 05, 2012 Rating: 5
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Dollar Firm Ahead of Key Events

July 05, 2012
The US dollar is trading near its best levels for the week against the euro, Swiss franc and sterling ahead of ECB and BOE meetings, and US ADP and service ISM.  New market moving developments are scarce and the market has largely traded within the ranges set at the end of last week.  The Australian and Canadian dollars have seen some follow thro…
Dollar Firm Ahead of Key Events Dollar Firm Ahead of Key Events Reviewed by Marc Chandler on July 05, 2012 Rating: 5
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Great Graphic: ECB Balance Sheet and Composition

July 04, 2012
This Great Graphic set comes from Sober Look.  Two important points are illustrated.  First, the ECB's balance sheet continues to expand to new record highs, even after the LTROs.  Since late May there has been a dramatic increase in bank borrowings at the ECB's weekly refunding operation.  It was averaging around 40 bln a week in May bef…
Great Graphic: ECB Balance Sheet and Composition Great Graphic: ECB Balance Sheet and Composition Reviewed by Marc Chandler on July 04, 2012 Rating: 5
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Higgs Boson and FX: What Matters

July 04, 2012
The scientists at CERN's atom smasher have reported discovering a new particle. The scientists themselves avoid calling it the "God Particle", though it does not stop the media. Essentially, this particle, called Higgs Boson, is believed to create an invisible field that gives mass to matter. 
Prior to the Big Bang, it is thought …
Higgs Boson and FX: What Matters Higgs Boson and FX: What Matters Reviewed by Marc Chandler on July 04, 2012 Rating: 5
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Currencies Continue To Consolidate

July 03, 2012
The holiday abbreviated US equity and bond session today will likely ensure that the major currencies continue to trade in narrow ranges.  With the BOE/ECB meeting outcomes Thursday and the US employment data Friday, the price action could very well resemble a coiling spring, with a big move to follow this consolidative phase.  
There have been a…
Currencies Continue To Consolidate Currencies Continue To Consolidate Reviewed by Marc Chandler on July 03, 2012 Rating: 5
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Ten Observations on Europe

July 02, 2012
1.  The fact that access to the EFSF/ESM requires unanimous approval from the seventeen participants means that Merkel preserved the German veto.  This circumscribes the victory claimed by Hollande, Monti and Rajoy.   Germany also successfully resisted pressure to increase the size of the funds, even though many, if not most, observers suspect th…
Ten Observations on Europe Ten Observations on Europe Reviewed by Marc Chandler on July 02, 2012 Rating: 5
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Currencies Consolidate Pre-Weekend Moves

July 02, 2012
The major foreign currencies were unable to build on the euphoric gains seen before the weekend in response to the EU Summit developments.  Even before it was clear that the Netherlands and Finland were not keen on the direct bank access to ESM funds, the euro's gains were being trimmed.  
In part, this is a learned behavior.  Participants ha…
Currencies Consolidate Pre-Weekend Moves Currencies Consolidate Pre-Weekend Moves Reviewed by Marc Chandler on July 02, 2012 Rating: 5
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Positioning and Currency Outlook

July 01, 2012
The US dollar bulls had ceded control for the better part of the first three weeks in June as corrective forces took hold.   They had regained the whip hand subsequently, but lost it again at the end of last week as markets responded euphorically to the EU summit. The dramatic reaction has resulted in a significant deterioration of the dollar'…
Positioning and Currency Outlook Positioning and Currency Outlook Reviewed by Marc Chandler on July 01, 2012 Rating: 5
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