The US dollar’s downtrend is extending. The euro traded above $1.16 for the first time since last August. With Japanese markets closed for the second half of the Golden Week holidays, perhaps participants felt less hampered by the risk of intervention and pushed the dollar to almost JPY105.50. Despite an unexpectedly large fall in the UK’s manufacturing PMI (49.2 from 50.7), sterling has pushed to its highest level in four months (~$1.4770).
This Great Graphic was posted by Hale Stewart on Seeking Alpha. It draws on US government data to show the increase in the median asking rent for vacant units since 1995. There are other measures of rent, including rent on primary residences. However, what is important is the trend.
When nations rank highly for imports and exports according to an Organization for Economic Cooperation and Development (OECD) study, that is usually cause for celebration. A recent OECD study, however, has left a number of Asian nations with a bit of a black eye for their popular trade items. The study in question ranked the nations with the largest traffic in counterfeit and pirated goods.
The die is cast. The Federal Reserve is on an extended pause after the rate hike last December. The market remains convinced that the risk of a June hike is negligible (~ less than 12% chance). The ECB has yet to implement the TLTRO and corporate bond purchase initiatives that were announced in March. The impact of its programs has to be monitored before being evaluated. It is unreasonable to expect any new initiative in the coming months.
April was a cruel month for the US dollar. It fell against all the major currencies; even those whose central banks have negative yields. The greenback also fell against nearly all the emerging market currencies, but the Philippine peso and the Polish zloty.
In 2009, Myanmar agreed on the huge dam project with Chinese contractors; in 2011, it was suspended. As the new government must decide its future, it is closely watched by both Chinese and international investors.
In 2009, after years of talks, most of the $3.6 billion Myitsone Dam project was to be covered by the China Power Investment Corp. in a joint venture with Myanmar’s Ministry of Electric Power. Myanmar was expected to get 10% of the electricity garnered, own the project after a 50-year period and earn $54 billion via tax payment, power and shares.
The White Queen in Alice in Wonderland (Through the Looking Glass) confesses that when she was younger, she could believe six impossible things before breakfast. She encourages Alice to do the same. It appears many in the market are taking the Queen’s advice too seriously.
Here is a quick thumbnail sketch of seven of our non-consensus views:
Two main forces in the foreign exchange market are rippling through the capital markets. The first is the continued weaker dollar tone. The combination of what appears to be a stagnating US economy (0.5% annualized pace in Q1) and a market that does not believe the Federal Reserve will hike rates in June, and is in fact, judging from the Fed Fund futures strip, skeptical of a single hike this year.
The foreign aid arena in Africa has traditionally been dominated by the Organisation of Economic Co-operation and Development (OECD) countries. However, over the past three decades non-traditional donors such as China have emerged.
One can appreciate the frustration in Tokyo. The Bank of Japan surprised the world by adopting negative rates in January and the yen rallied. Today it disappointed many by not easing, and the yen rallied. The BOJ next meetings in mid-June and like this week, the outcome of its meeting will be announced the day after the FOMC meeting. There is some idea that BOJ may be waiting for Abe’s new fiscal package and the G7 meeting Japan hosts next month.
