Investing

Monetary policy is said to have lost its impact on the foreign exchange market, as investors scratch their heads at the resilience of currencies with negative interest rates.  Yet the price action in the action cannot be understood without recognizing...

Our underlying constructive outlook for the US dollar remains intact.  It is broadly based on the divergence between the US and most other major economies.  The US acted early and aggressively to counter the Great Financial Crisis.  Unorthodox policies, such...

The combination of a robust US jobs report, speculation of bolder action by Japan, the possibility that the ECB drops the capital key to overcome the ostensible shortage of some core bonds (e.g. German bunds), and the anticipation of easier...

The US dollar is easily the most traded currency, and despite the plethora of other currencies, it is on one side of nearly 90% of all trades.  Yet the movement in the foreign exchange market presently is not so much...

With the Bank of England apparently surprising the market more than one might have expected, given the split surveys, many are thinking sterling has bottomed.  If it has bottomed, where could it go?  A number of technical considerations suggest toward...

The UK voted to leave the EU. The German and Japanese yield curve is negative out through 15 years.  The entire Swiss curve has negative yields.  There is little doubt that the US economy was recovering from a soft six-month...

Here are two Great Graphics that portray two time series: the dollar-yuan exchange rate and the yuan against a trade-weighted basket.  The first chart comes from a highly reputable consulting firm. It replicates the trade-weighted basket that Chinese officials unveiled...

It sounds like a scene from “Jurassic World”: fast, agile predators pursue their slower, less nimble prey, as the latter flee for safer pastures. Yet this ecology framework turns out to be an apt analogy for today’s financial markets, in...

The British pound has been hammered to fresh lows just above $1.3115.  The euro is moving toward GBP0.8500.  The immediate catalyst is three-fold. First, one of the UK's largest property funds has moved to prevent retail liquidation. Second, the BOE...

In the sessions before and after the UK referendum speculators in the currency futures did three things. First, they generally reduced exposure.  This means gross longs and short positions were reduced.  Of the 16 gross speculative currency futures positions we...

The CFTC reporting week ending June 21 covers the day FOMC and BOJ meetings and ends two days before the UK referendum. The overarching theme was the reduction of exposure.  This is not measured by net positions but by gross...

The dramatic reaction to the UK decision to leave the European Union has changed the technical condition in the foreign exchange market.  While the precipitating factor is a fundamental political development, it is mediated by psychology.  Group psychology is the...

Sterling is recording its daily advance since 2008 today.  It is up about 2.3%.  The ostensible driver is the weekend polls suggesting that, as we suspected the murder of the UK MP acting as a catalyst of sorts for public...

In the days ahead of the murder of Jo Cox, a UK member of parliament, apparently for her support for remaining in the EU, speculators in the futures market scooped up sterling.  They added 25.4k sterling contracts to lift the...

The US dollar recovered from the sell-off sparked by the poor employment data released on June 3. It continued to move higher after the Federal Reserve met and shaved its forecasts for the next year and 2018.  The number of...