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The Dollar Index has been Up for Five Weeks

The US dollar continued the recovery begun May 3 and rose against most of the major currencies over the past week.  A nearly 3.5% rally in oil prices, the fifth weekly gain in the past six weeks (a $9.5 advance over the period), helped the Norwegian krone turn in a steady performance.  The Canadian dollar's 0.2% decline put it in second place.

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Currency Cautiousness Creeping in ahead of Next G7 Meeting

The Japanese yen is recovering from two-day two percent decline.  The yen is the strongest of the majors today, rising about 0.6%.  The greeThe Japanese yen is recovering from two-day two percent decline.  The yen is the strongest of the majors today, rising about 0.6%.  The greenback initially extended its gains marginally in early Tokyo before the selling pressure emerging.  The price action reinforces the importance of the JPY109.50 resistance area.

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Has the Dollar Entered a New, Bullish Phase?

Sometimes the mountain looks clearer from the plain the summit to paraphrase an American-Lebanese poet.  The dollar appears to have entered a new phase on May 3.  On that day, it reversed higher against the euro, yen, and sterling for lows not seen in a while.

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CFTC: Paring Short Foreign Currency Positions Edition

Speculators in the futures market continued to pare short foreign currency positions but were cautious about expanding long positions in the CFTC reporting week ending May 3.  In fact, two of the three largest adjustments were the cutting of gross long Japanese yen and Australian dollar positions. 

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China Writing its Own Merger Story

Alongside China’s booming economy and the country’s appetite for steel, concrete, copper and other construction materials, the last decade has demonstrated that not only can China consume materials, but its corporations are also capable of gobbling up companies around the world.

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The (Commodities) End is Nigh...or Not

While cyclical challenges remain tough in global commodities, structural realities look more tolerable.  According to conventional wisdom, the challenges of global commodities can be attributed to China’s slowdown and poor growth prospects. Advanced economies are not immune. In the US, just two commodity-related sectors – oil and gas, as well as metals and steel – accounted for more than half of the defaults in 2015.

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How About That Loonie, eh?

It has been painful trying to pick a bottom of the US dollar against the Canadian dollar.  Now a 4-5 point downtrend from the secondary high in late-January is being violated today.  It is found near CAD1.2785 today.  Intraday penetration is one thing, but some models may take the signal on a closing basis only.

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Holding on to the Dollar's Null Hypothesis

In quiet turnover, with China, Hong Kong, Singapore and London markets closed, the US dollar is trading with a heavier bias against all the major currencies.  Lower commodity prices, including oil and copper, appears to be taking a toll on some emerging market currencies, including the South African rand.

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Pre-Central Bank Meeting Futures Moves were Expected

Speculators in the futures market made mostly small position adjustments in the sessions leading up to the FOMC and BOJ meetings.  During the Commitment of Traders reporting week ending April 26, the largest adjustment of speculative position in the currency futures was the 12.5 k build of gross long Australian dollar contracts.

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Bailing at the Bottom?

Speculators in the futures market continued to press a bearish view of the US dollar the CFTC reporting week ending April 19.  According to the Commitment of Traders report, speculators added to their gross long currency futures position in seven of the eight currencies we track. The exception was the British pound, where speculators liquidated a minor 1.1k contracts, leaving them with 32.8k gross long sterling future contracts.

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Gold Soared, but Why?

Not so long ago, gold suffered the most challenging losses since 1999.  According to conventional wisdom, US rate hikes will contribute to its further decline. If that’s the case, why did gold prices soar during the last quarter?

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Does China Understand the SDR's Function?

At the IMF/World Bank meetings this week, Chinese officials are again pushing for greater use of the IMF's unit of account, Special Drawing Rights.  It is China's turn as the rotating host of the G20, which gives it greater influence over its agenda.  For its part, the IMF is concerned about global financial stability and must be open-minded.  It wants to strengthen the financial system.  It is only prudent to examine all reform ideas.

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