Despite a dovish tinge to the FOMC minutes this past session, equities were not heartened by the possibility of a little more time before the Fed lifts rates. Further, positive headlines for China and Greece seemed to offer little global confidence and stock appetite. Even the most dovish central banks with stimulus fully engaged don't seem to be helping their own...
GBPUSD surged after the UK statistics group reported a stronger-than-expected jump in core inflation. However, the critical follow through necessary to transition a short-term rally into a serious break - much less trend development - wasn't there. We've pushed the Cable's range, but resistance still in place. Now, what will happen with US CPI and FOMC minutes coming up?
GBPUSD has the technical makings of a possible breakout candidate. There is a clearly defined range and the recent shift in momentum from earlier this year to reverse a well tread bear trend. More importantly, there is key event risk ahead from the UK today (Tuesday) and US tomorrow (Wednesday). Yet technicals and fundamentals accounted for, it will still be...
Oil's tumble is good for consumers, but it is hurting suppliers. Here we have the drop in crude against ETFs for the Middle East (Orange), Russia (Green ) and Canada (Blue).
Last week, the top themes were China's Yuan devaluation and Greece receiving its rescue proceeds. Ahead, the focus will be on interest rate forecasts (both US and UK) as well as pressure behind commodities with oil at six-year lows.
Here we have CNHUSD and S&P 500 futures (Emini). Looks like there was a response to today's PBoC fix, but the magnitude and direction for both fix and reaction has flipped.
While the market low was arguably around March 2009, I have benchmarked these major asset benchmarks to the start of 2009 to avoid cherry picking. We can see the connection in the recovery, the reinvestment and then the doubt. The stages have unfolded at different times but the underlying reasoning is the same.
Despite hitting multi-year lows on crude prices, the CBOE's volatility index doesn't seem to be too concerned about the implications. Perhaps we are reverting to this indicators more fundamental nature - activity level - rather than a semi-proxy for direction.
In the Tuesday and Wednesday PBoC Yuan reference rate fixes, we witnessed dramatic response from the markets to the seeming devaluation move. The FX response seems to be moderating, and overnight equity market response seems to have cooled this morning. The verdict is still out though on how permanent the calm is though.
Much of China's financial interaction with the global economy is through Hong Kong. That said, the 'intervention panic' seems to be moderating on USDHKD.
Looks like the PBoC devaluation has paid off. The Yuan is finally down against the dollar compared to the beginning of 2012 - when the tides of stimulus started to seriously pick up.
Most of the majors have experienced a significant depreciation in recent years thanks to the Fed's shift from an exceptionally accommodation monetary policy position. As the Fed started to talk about hikes, other central banks pursued easing efforts leading their currencies to depreciate versus the Dollar. That was an economic prop for those economies. But,...
The off-shore Renminbi has not traded for very long. So, it is not a surprise that this USDCNH move is a record. However, better perspective is seeing the move compared to recent price action. Prior to Tuesday's charge, the average true range of the previous 10 days was less than 70 pips. This move blew that average out of the water.
USDCNY has seen much larger revaluations by Chinese authorities in the past, but it has been 20 years since the last large Yuan devaluation. Does this conflict with their aim to have a market-derived exchange rate?
FX Volatility measures have maintained a premium to many other asset classes, but is that gap going to close through these summer lull conditions?
FX volatility is still far more buoyant than the activity gauges of other assets classes. That means there is more room to deflate as the pair continues to carve out its range. When will it finally break 1.15 or 1.08? That will be the decision of time and the eventual fundamental impetus.
The S&P 500 marked one of its biggest daily rallies in months, but volume seems to be trailing well behind for conviction. That is a problem for long-term trend development, but it doesn't hamper some short-term follow through via swing setups. In fact, the last low-volume jump produced a move that almost set a fresh record high.
The restrictive range for USDollar this past three weeks shows how constricted the market is. Yet, despite the clear boundaries and the presence of NFPs this past week, the market wouldn't clear its range. Meanwhile, activity measures show that we are hitting some extreme levels. The 20-day ATR has dropped to its lowest level since January and the width of the...