Banking

14 January 2016

What is Driving Sterling Lower?

Sterling fell 4.25% from the high on December 28 to yesterday.  It has been confined to yesterday's range today.  After finishing below the lower Bollinger Band yesterday, it has moved back into the band today. The Bank of England meets...

12 January 2016

The BOE Meets This Week, but Likely Won’t Help the Pound

A subdued Chinese session, with the yuan, little changed and local equities securing minor gains, let market participants look elsewhere for directional cues.  The new lows in oil, near $30 a barrel, and the bankruptcy filing of Glencore's US subsidiary...

11 January 2016

When Currency Manipulation is not the Answer

The broad measures of the US dollar are trending higher, and former Fed Chair Bernanke recently refuted claims the US was engaged in a currency war. Many observers had thought that with its unprecedented asset-purchase program, the BOJ was engaged...

8 January 2016

Yeah, I’m the (Bitcoin) Taxman

Bitcoin enthusiasts have recently been roiled by claims that an Australian named Craig Wright and his deceased partner are the mysterious founders behind the cryptocurrency. Bitcoin enthusiasts have recently been roiled by claims that an Australian named Craig Wright and...

5 January 2016

The Yen Flexes Some Muscle

Last year was the fourth consecutive year that the yen fell against the dollar.  However, obscured by this factoid is that over the past six months, the yen has been the strongest of the major currencies, rising almost 3.2% against...

30 December 2015

The Dollar Wins over the Euro and Yen

The US dollar will finish 2015 higher against both the euro and yen.  Sometimes those of us who follow the economic and financial news closely can be caught up with the short-term fluctuations.  As traders, that is what we do. ...

24 December 2015

The Renminbi-Dollar Complex

As China’s renminbi has been included in the IMF elite currencies and the Fed has started its rate hikes, conventional wisdom sees the RMB weakening and US dollar strengthening as simple long-term trends. The realities are far more complex, however....

23 December 2015

Halfway to the (First) Holiday

The thinness of the order-driven capital markets is making price action that seems more inexplicable than usual.  The US dollar is mixed. It has recouped all the ground it lows against the euro yesterday, as the single currency briefly dipped...

14 December 2015

Caution, Your Yuan Might Be Worth Less

Following the mini-devaluation in August, the yuan appreciated in September and October.  It began depreciating again in November and this has continued through the first half of December.  The dollar finished the local session at new multi-year highs against the...

13 December 2015

Dollar Status Ahead of the Fed

The US dollar turned in a mixed performance in the week following the ECB's surprise and the healthy US jobs report.  In some ways, the greenback was like a fulcrum, not the driver.  The dollar-bloc currencies and the Norwegian krona...

10 December 2015

Are Dollar Dominant Days Done?

The cat is finally out of the bag. The IMF has confirmed that the Chinese yuan will be included in the Special Drawing Rights (SDR) basket of reserve currencies. It was only a matter of time until the IMF acted...

10 December 2015

The CNY-CNH Gap is Widening

China’s instructions from the IMF were that, as an operational requirement for joining the SDR, the gap between the onshore and offshore yuan (CNY and CNH respectively) needs to close.  This was important for central banks to hedge.  The opposite...

8 December 2015

Driving the Euro-Dollar Exchange Rate

This remains one of my favorite Great Graphics that illustrate the divergence theme that I think is the main driver of the euro-dollar exchange rate.  Composed on Bloomberg, it shows two time series.  The first (white line) shows the German...

2 December 2015

Need versus Want: A Yuan-inclusive SDR

Adding the renminbi in the IMF’s basket is the first step in opening up the world’s elite reserve currencies to emerging economies. Currently, the International Monetary Fund’s (IMF’s) basket of major reserve currencies has only four members: the US dollar,...