Weekly Market Update
The crisis in the Middle East is for now having a muted impact on major currency trading, which continues to be driven primarily by inflation numbers and central bank communications and decisions. The September inflation report out of the US showed signs that the downward trend is stalling, and US rates rebounded, dragging the dollar […]
Weekly Market Update
The biggest story in financial markets remains the relentless march higher in long-term interest rates worldwide, led by US Treasuries. Last week, however, rates failed to drag the dollar upward with them, and the US currency lost ground against most currencies, despite Friday’s impressive nonfarm payrolls data. The main exceptions were commodity currencies, which suffered […]
Weekly Market Update
The trend towards higher rates and a higher US dollar did not abate last week. However, unambiguously positive inflation data out of the US and the Eurozone did partially reverse the moves on Friday and gave hope that we are near the top in rates and the bottom in European currencies. Commodities also reversed their […]
Weekly Market Update
Hawkish Fed communications, which suggested that the FOMC could hike further and is in no hurry to cut rates, sent interest rates worldwide higher yet again. The key US 10-year Treasury rate led the way, breaking to fresh multi-decade highs. Risk assets worldwide tumbled, stocks and commodities fell, and credit spreads widened. The impact on […]
Weekly Market Update
The US economy continues to defy the global downturn, and the dollar is reaping the benefits. Dismal July data from German factories and more jitters about the Chinese downturn slammed equities worldwide, but US Treasury yields marched higher anyway. Not surprisingly, the dollar benefited from these worries, particularly since the US economy is so far […]
Weekly Market Update
The macroeconomic story did not change much last week, and most major currencies ended not too far from where they started. The US and the European economies continue to diverge. The former is experiencing solid growth and moderating inflation, while the risks of stagflation are rising on the other side of the Atlantic. Inflation data […]
Weekly Market Update
The Jackson Hole annual conference of central bankers delivered few surprises. The Federal Reserve is less convinced than markets appear to be that inflation has been beaten, and rates are likely to remain at or above 5% for an extended period of time. By contrast, the European Central Bank is caught between a rock and […]
Weekly Market Update
An unsettling updrift in US government bond yields, particularly long-term ones, continued to hobble the performance of both European and emerging market currencies. The market had perhaps become too complacent about the move lower in the dollar after the Fed suggested that it may be done hiking rates. Short dollar positions are stretched, and the […]
Weekly Market Update
The worsening economic data out of the Eurozone didn’t help, but what finally did the euro in last week was a surprisingly dovish European Central Bank meeting. At its meeting last week, the ECB raised rates as expected, although surprisingly hinted that this could be the final one in the current tightening cycle. The euro […]
Weekly Market Update
We’d said the Euro rally against the dollar was looking stretched, and last week’s market action seemed to confirm our view. The dollar rallied across the board on no particular news, a sign of a trend driven by technical factors rather than fundamentals. The bearish consensus on the dollar as disinflation takes hold in the […]