The Chart with Two Scales: A Cautionary Tale

There is a common ploy used by many analysts and reporters that often simply does not stand up to close scrutiny, and would in fact be mocked in the university.  The ploy is to take two time series and put them on the same chart but use different scales.

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Long the Loonie and the Yen

Speculators in the futures market were not particularly active in Commitment of Traders reporting week ending April 5.  There was only one gross position adjustment which we regard as significant (defined as a 10k contract change), and that was in the yen.

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The Yen's Rise is Looking for a Good Explanation

The main feature in the foreign exchange market continues to be the surge of the Japanese yen.  A convincing explanation of the yen's strength seems elusive.  Until last week, which means through the fiscal year-end last month, Japanese fund managers have been buying foreign bonds at a near-record pace.

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Currency War Unsupported by the Facts

Conspiracy theories have run amok.  After several years of claiming countries were engaged in currency wars or attempts to drive their currencies down to achieve export advantage, many reporters and analysts announced a volte-face.  At the late February G20 meeting in Shanghai, a secret accord has been concocted that declares a truce in this made up war.

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Should the JSE Be Worried about a New Rival?

The recent announcement of the imminent opening of a rival stock exchange to the Johannesburg Stock Exchange (JSE) caused considerable media excitement. It is indeed a historic development in South Africa’s economic history and is to be welcomed, as competition often brings new thinking that benefits customers.

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Where Oil Goes, So Goes the CRB Index

This Great Graphic, created on Bloomberg, depicts the CRB Index, a basket of commodity prices.  The technical picture has deteriorated, and the price action in the coming sessions is particularly important in determining outlook.

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Could the U.S. Dollar be Bottoming Against the Loonie?

We have been looking for a bottom in the US dollar against the Canadian dollar.  It is been difficult, but now it appears that the technicals are turning.  This Great Graphic, from Bloomberg, shows that the US dollar is moving above a trend line down off the January 20 high just below CAD1.47.

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Sterling Traders Heading for the Br(exit)

The UK referendum is three months away.  Three-month options are a common benchmark for various market segments from speculators, to fund managers to corporations.  Events over the past week have raised the risks that the UK votes to leave the EU.

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Using Breakevens over Spreads

Until last September, the Federal Reserve seemed to play down the market-based measures of inflation expectations, preferring the surveys that showed views were anchored.  At the September 2015 FOMC meeting where the Fed had been expected to tighten until the August turmoil, officials cited among other considerations, the decline in market-based measures of inflation expectations.

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