Investing

The Unlikelihood of 'Secret' Currency Meetings

In our work, we have argued that the dollar is having its third significant rally since the end of Bretton Woods.  The first rally was associated with Reagan though it began under Carter and followed 100 bp hike by a new Federal Reserve Chairman (Volcker).

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The Loony Loonie

The Canadian dollar appears vulnerable.  It remains firm while the US two-year premium over Canada has risen sharply.  Like others, we do not expect the Bank of Canada to cut rates today and are looking past it.

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Third Dollar Rally is a Charm

We argue that the dollar is in its third significant rally since the end of Bretton Woods in 1971.  The Reagan dollar rally was driven by the policy mix of tight monetary policy and loose fiscal policy.  The G7 effort to stop the dollar's appreciation at the Plaza Hotel in September 1985 marked the end of the Reagan dollar rally.

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Safe Haven Assets in Financial Markets

Over the last decade, we have seen several instances where most market investors have been caught off-guard and surprised by new developments.  Most notably, the stock market events of 2008-2009 were some of the most significant in recent memory -- and this has led many investors to feel skittish when looking to establish new investment positions.

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Breaking Down the 'Breakevens'

Over the next fortnight the major central banks, including the ECB, BOJ, Fed and BOE will hold policy-making meetings.  Of the four, expectations are the highest for the ECB to ease policy.

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Charities' Challenge of Socially Responsible Investing

Charitable organisations by definition aim to do good with the money they receive and spend. However, what about the investments they make? What if these investments don’t appear to match the aims that the organisation promotes? For example, a charity that promotes conservation would raise eyebrows if they invested and received returns from an oil company.

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Your CFTC Report: Minor Position Changes

The position adjustment among speculators in the currency futures market was minor in the reporting week that ended February 23.  We regarded only one gross adjustment as significant (more than 10k contracts).  The Mexican officials sprung a bear trap and forced speculators to cover.  There were 15.8k gross short peso in speculative hands bought back, leaving 83k contracts still short. 

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Technical Considerations Favor Further Dollar Gains

As systemic anxiety eased, the US dollar got better traction. The dollar-bloc currencies managed to hold their own as cross positions were unwound.  Major bourses posted gains for the second consecutive week.  With the recent advance, several markets, including the S&P 500, FTSE and Sweden, China, Korea, and Taiwan are now positive on the month.

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Can You Break a 500-Euro Note?

The internecine pitch battle between ECB President Draghi and the man who may very well be his successor, Bundesbank President Weidmann opened a new front this week.  It is over the future of the 500-euro note.

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Was Yesterday's U.S. Reversal a Fluke?

The foreign exchange market is unusually calm.  The US dollar is little changed against currencies.  While the selling pressure that took sterling below $1.39 and the euro below $1.10 has subsided, neither has been able sustain upticks.  The euro rose to $1.1040 before sellers re-emerged. Sterling was capped near $1.3965.

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