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Insightful articles on the latest dynamics shaping major currency pairs and global market sentiment. The pieces combine a fresh approach of analyzing currencies by way of yields, commodities, equities and risk appetite. Rather than obtaining another recap of the market's activity, readers gain a unique perspective of the latest market developments, along with actionable and forward looking views.
Yen Leads Risk-Driven Jobs Reaction - December 5, 2008
Aside from the shocking 533K decline in US November payrolls (expectations -330K), the ward revisions in layoffs in prior months were as horrendous, with September payrolls revised to -403K from initial -284K. [read more]
Risk Aversion Fills Data Vacuum - November 11, 2008
Market turmoil deepens as US auto manufacturers, retailers and shippers, are forced into making fresh waves of layoffs, feeding off the negative loop from rising employment, falling consumption, lower earnings and eroding bank credit. [read more]
Reflationary Trade Here to Stay - October 29, 2008
The combination of market and macroeconomic elements will maintain global monetary policy in a rare unison of easing mode (again typical of global recession), hence, paving the way for the reflationary trade (explained below).
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Yen Still Outperforms in Forex Meltdown - October 22, 2008
As the dollar continues to rally against higher yielding currencies, the yen remains the clear outperformer during the latest market sell-off, making GBPJPY and NZDJPY the greatest losers in today's forex activity. [read more]
Retail Sales' Message from Main Street - October 15, 2008
The attached chart shows the year on year change in retail sales of 1.03% was the first decline since October 2002. There has been only 3 annual declines since 1992 (September 2001 and October 2002). [read more]
FX Performance Since the Storm - October 10, 2008
The charts show the performance of major currencies as measured against gold and each other, since September 2-- two weeks before the makets' plunge. [read more]
Margin Debt Shows More Selling Ahead - October 7, 2008
There is one concrete reason why US indices could lose at least another 20-25% from current levels. The powerful correlation between margin debt usage by member firms of the NY Stock Exchange and the trend of major indices such as the S&P500 and the Dow Jones Industrials Average suggests further selling ahead in the main indices.
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What Retail Layoffs are Telling us - October 3, 2008
Rather than looking at just overall payrolls or the unemployment rate, focus also on the duration of layoffs in retail jobs, which tell us a great deal about the prospects for the US consumer. [read more]
More EUR, GBP Selling Ahead - October 1, 2008
Further dollar gains seen ahead on European banks' short-term funding problems and the eroding fundamentals in the Old Continent. Gains in equity indices are seen limited. [read more]
Fed Cut May Come Before Oct 29 - September 25, 2008
The Swiss Franc outperform the yen as forex traders seek refuge to the least risky currency on soaring LIBOR rates, weak US data, GE earnings downgrade and rising odds of a Fed cut. [read more]
A Super Tuesday for the Dollar ? - September 23, 2008
Todays quadruple testimony (Fed's Bernanke, Treasury's Paulson, SEC's Cox and OFHF's Lockhart) at the Senate Banking Committee is expected to priduce a solid day for the US currenct and equity indices. [read more]
Implications of Gold's Rise Relative to Oil - September 18, 2008
In recent months, I warned of the ominous implications of a rebounding gold/oil ratio. Yesterday, gold further outpaced oil in relative terms, giving more credence to the thesis of intensifying declines in US fundamentals. [read more]
Bridge Loans to ... Everywhere - September 17, 2008
Despite another historic intervention by US authorities, the intended market reaction evaporates in the midst of heightened market worries and risk aversion. Forex traders pare down earlier yen losses and maintain pressure on the dollar. [read more]
Confluence for a Dollar Top? (with Charts) - September 15, 2008
The confluence of forces in the dollar, oil and gold sugests a powerful signal of a top in the dollar's upward cocrrection. The historical faillures of US banks and their bailouts strike a vocal reminder of the fundamental deificiencies of the US dollar. [read more]
Fed Forced Back to Easing Mode - September 12, 2008
Today's unexpected declines in US retail sales and PPI coupled with the worsening state of conditions with US banks make interest rate cuts a foregone conclusion in Q4, supporting my calls since May that the next interest rate change is down, rather than up. [read more]
Risk Aversion Drives JPY, GBP in Opposite Ways - September 9, 2008
Increased risk aversion continues to benefit the low yielding JPY and CHF, while punishing GBP, as the Bank of England hast yet to cut rates in H2 2008. Even bad news in the US are becoming GBP negative as risk appetite is eroded. [read more]
FX Implications of Latest US Jobs Report - September 5, 2008
The US August jobs report clears doubts of a US recession, but the currency implications remain kinder to the US dollar due to relative global macro strengths. The yen, however, is the exception. [read more]
Secular Currency Performance - August 28, 2008
Why the dollar has outperformed and which currencies have fared the worst. A secular FX performance measure since the beginning of H2 and YTD. [read more]
Sterling's Olympian Dive - August 13, 2008
The dollar regains composure following a brief retreat following the US retail sales report, but the tumbling pound remains the headliner in foreign exchange markets. [read more]
US vs Eurozone Weakness - July 25, 2008
We disagree with the notion that emerging weakness in Europe would be a reason for a 5-7% decrease in the EURUSD exchange rate . Rather, such weakness is an obstacle to further record highs in the euro against the dollar. [read more]
EUR Share of FX Reserves vs USD - June 30, 2008
The Q1 2008 IMF data on currency composition of Official Foreign Exchange Reserves shows a continued gradual fall in USD claims along with continued increase in the EUR claims. [read more]
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