We have argued that the road to an orderly Brexit remains arduous and that sterling had entered an important technical area ($1.2500-$1.2530). At the same time, see the dollar as having approached the upper end of its broad trading range against the yen. One of the important drivers lifting the dollar was the dramatic rise …
Great Graphic: Views Distill to Short Sterling Long Yen Opportunity Read More »
US President Trump recently bemoaned the fact that the euro is undervalued. While his critics complain that he is prone to exaggeration, in this case, the euro is undervalued. This Great Graphic is a long-term chart of the euro has moved around its purchasing power parity as measured by the OECD. Currently, the euro is about 22% …
To be sure, the Dollar Index is not the dollar. It is not even a trade-weighted measure of the dollar. Two of America’s largest trading partners, China and Mexico, are not represented. It is heavily weighted to the euro and currencies that move in its orbit, like the Swiss franc Swedish krona, and arguably the …
Great Graphic: The Dollar Index Climbs a Wall of Worry Read More »
The softer than expected PCE deflator today plays into the dovish market mood. There may be little that can resist it until next Friday’s employment data, which should be another robust report with hourly earnings holding above 3% year-over-year. Last November, average hourly earnings rose by 0.3%. As this drops out of the year-over-year comparison, even …
Great Graphic: Weekly Jobless Claims and the S&P 500 Read More »
Analysts are also more bullish the yen than the dollar as the similar chart below illustrates. Based on current volatility, the dollar will likely (74.3%) be between about JPY99.90 and JPY119.10 in 12-months (blue lines). The probability distribution is represented by the red dotted line. Based on current interest rate differentials and a spot rate of JPY113.15, …
The decline in the global equity market is the most serious since the February and March spill. In this Great Graphic, the white line is the S&P 500. With the setback, it is up a little more than 8% for the year. It managed to recover fully from the sell-off earlier in the year. The fuchsia …
Great Graphic: What is Happening to Global Equities? Read More »
This Great Graphic comes from Peter Coy and team’s article in Business Week. It succinctly shows three metrics for the internationalization of domestic currencies: global payments, international bonds, and foreign exchange reserves. It does not strike me as surprising, and the role of the euro as a payments currency reflects its role in intra-European trade. …
Boosted by tax reform, deregulation, and strong earnings growth, US equities have motored ahead, leaving other benchmarks far behind. As the Great Graphic here shows, most of the other benchmarks are lower on the year. The S&P 500 (yellow line) is up 8.8% for the year before the new record highs seeing seen now, while …
The CRB index has been trending lower since late May. It fell nearly 10% to retrace 50% of the rally come June 2017. This Great Graphic shows the 4 1/2 month trendline. It had been violated in late August but fell back under it at the end of last week. On Monday, it gapped higher, …
The euro recorded the low for the year so far on August 15 near $1.13. We had been anticipating a corrective phase for a couple days before the low was recorded. Recall that the previous Friday, August 10, all the major currencies, but the Japanese yen and Canadian dollar were beyond their Bollinger Bands. The …
Great Graphic: Is that a Head and Shoulders Bottom in the Euro? Read More »