The Shortened Week Saw Smaller Speculative Position Changes

The CFTC Commitment of Traders reporting week ending February 16 was short due to the US holiday.  This may have contributed to the small adjustments to speculative positioning in the currency futures.  It also may reflect the lack of conviction that a dollar recovery was at hand.

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Euro Gains despite QE Programs

When we look at many of the financial media headlines over the last year, we have seen a good deal of attention focusing on the declining valuation in the Euro.  However, when we take a closer at specific valuations in the Euro, we can see that this is not necessarily the case.

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Despite Big News, Futures Speculators Limited Big Moves

The latest Commitment of Traders report covers the week ending February 2 that included the FOMC meeting and the BOJ's surprise cut.  There was also speculation of a potential deal between Russia and OPEC to cut output.  Speculative position adjustment in the futures market was more limited than one might have expected.

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The Dollar on its Heals, at Least for a Week

The US dollar traded higher before the weekend with the help a fairly robust jobs report.  Although the jobs growth itself was somewhat disappointing, the details were constructive:  More people working a longer workweek and earning more.  The participation rate rose, and the unemployment rate (U-3) fell.  The Atlanta Fed GDPNow tracker increased to 2.2% in Q1 16 from 1.2% at the start of the week.

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The Barbarous Relic

Keynes and others may have referred to gold as a barbarous relic, but many investors continue to track it.  In early January, we warned that gold appeared to be breaking out of a short-term bottoming pattern.

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The Pound Brushes off BOE Comments

Sterling has neared the 50% retracement of the 11.5-cent decline since mid-December.  It is near $1.4660.  After easing ahead of the BOE announcement, sterling sold to $1.4530 on the initial headlines that showed the BOE was cutting its growth, inflation, and wage forecasts.

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Japanese Government Bonds May no longer be Retail-worthy

The Bank of Japan surprised investors by introducing negative rates last week.  Leave aside the fact that the negative rates do not go into effect for more than another week, and even when in effect, will apply to a relatively small amount of deposits at the central bank.  The important point is that it is another central bank to introduce negative rates.

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When a Safe Haven is not a Safe Haven

The yen is the strongest currency today.  Many are still referring to it as a safe haven.  However, this strikes us as a misuse of the concept.  Investors are not flocking to the yen to find quiet place to ride out the storm.  Rather the yen's strength is a reflection of the turmoil.

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Currencies Advance Against the Dollar but Want More Data

There is a mixed tone in the global capital markets today.  Asian shares were mixed with declines in the Nikkei (-.07%) and Shanghai (-2.9%) being offset by modest gains elsewhere.  European bourses are also mixed and the Dow Jones Stoxx 600 is off slightly.  European bonds benchmark bond yields are lower though US yields are firmer.

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Teetering Around the Dollar Totter

The latest Commitment of Traders report that covers the four sessions through January 19 saw speculators anticipating the continuation of the current moves.  Of the sixteen gross positions we track, only five were in reducing exposures.  Last week there were only six increased exposures.

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Currency Snap Back as Buyers Take a Stand

The first two and a half weeks of the New Year saw persistent selling of equities, commodities, and emerging markets.  In the foreign exchange market, the dollar-bloc and sterling were crushed.  The yen was the single biggest beneficiary, and speculators in the CME are net long the yen in the futures market for the first time since late 2012.

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