Marc Chandler

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Marc Chandler
About the author:

Head of Global Currency Strategy at Brown Brothers Harriman.

Buck(ing) the Data

Date: 5 September 2016

The US dollar showed an unexpected resiliency to the disappointing August employment data.  The dollar's resilience in the face of the jobs data may reflect that many see the report did not alter investors' or policymakers' information set.  It did not sway opinion very much for or against a move.  There is not much market-moving data from the US next week outside of the ISM non-manufacturing report.

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Now about that September Rate Hike

Date: 2 September 2016

The US grew 151k jobs last month and when coupled with the 20k upward revision to the July figure the net job creation is not far from the 170k-180k median expectation.

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Jobs Report, and more about UK Data

Date: 2 September 2016

The US dollar is little changed ahead of the job report.  Our near-term bias is for a lower dollar.   Sterling is flat and is holding on to about a 1% gain this week.  The Japanese yen is about a 0.3% lower and is off 1.7% this week.  The euro was coming into today for the week.

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All You Need to Know about FX Turnover

Date: 1 September 2016

How much growth has foreign exchange experienced from the last report in April 2013?  Overall trading in foreign exchange has fallen from a year-to-year basis.  Markets in April 2016 saw turnover fall to $5.1 trillion from $5.4 trillion due primarily to less movement in the JPY in the current market environment.

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All Hail the New SDR Bond...or Not

Date: 1 September 2016

The World Bank sold the equivalent of about $700 mln of a three-year of a multiple currency bond that duplicated the composition of the IMF's Special Drawing Right or SDR.  There has been much fanfare.  It is the first SDR bond in more than 30 years according to reports.

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UK Manufacturing's PMI Upside Surprise

Date: 1 September 2016

The new month has begun with a couple of surprises.  The biggest surprise has been the record jump in the UK manufacturing PMI to 53.3 from 48.3.  A much smaller rebound was expected in August after the Brexit shock drop in July.

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Oil Output Freeze Looking Less Likely

Date: 31 August 2016

Oil has broken down further today.  The ostensible trigger was the larger than expected build in US inventories.  However, the price of oil has been trending lower since the beginning of last week.  It appears that our skepticism of talk of an output freeze is gaining support.

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Maybe Third Times a Charm for Rajoy?

Date: 31 August 2016

There is a small chance that the political deadlock in Spain will be resolved this week.  Despite the agreement on some 150 policy points, the Popular Party and Ciudadanos, the new center-right party, they will not secure a majority without the tacit support of some members of either the Socialists or the new left party Podemos.

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First its the Jobs Estimate, then the Data, while the Dollar Waits

Date: 31 August 2016

The US dollar is a little softer against most of the major and emerging market currencies.  The exception is the Japanese yen, where the greenback has moved above JPY103 for the first time in a month.  The tone is consolidative as the market awaits assurances that the jobs growth this month has been sufficiently strong as to keep the prospects of a September meeting still alive.

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Decoding the R* (R-Star) Mystery

Date: 30 August 2016

The market recognizes that the indication by the FOMC at the end of last year that four rates hikes in 2016 may be appropriate was far from the mark.  At the same time, investors are coming around to the prospects that the Fed is not one and done either.

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Odds of a September Rate Hike Move Higher

Date: 30 August 2016

The US dollar is trading firmly, largely within yesterday's ranges.  The odds implied by the September Fed fund futures eased to 36% from 42% before the weekend, but ahead of Fischer's Bloomberg TV appearance, and tomorrow's ADP employment estimate, the market seems cautious about fading the dollar's strength.

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The Divergent Monetary Policy Theme is Back

Date: 29 August 2016

The US dollar staged a strong pre-weekend rally on hints that the Fed will raise rates before the end of the year.  There was initially follow through dollar buying in Asia before a more stable tone emerged in Europe, where London markets are closed for a bank holiday.  The easing of the dollar’s upside momentum may set the stage for a bout of profit-taking later today and tomorrow.

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Setting Up Your Emerging Markets Week

Date: 29 August 2016

EM ended last week on a soft note, as Fed tightening expectations ratcheted up.  The December Fed funds futures contract has an implied yield of 0.5%, the highest since June 2.  Note that on June 3, US rates plunged after the May jobs shocker (+38k).  If the hawkish Fed storyline can be maintained, then EM will have trouble getting traction.  This Friday’s jobs report for August will be key, with consensus at +185k vs. +255k in July.

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Yellen is Part of a Larger Equation

Date: 29 August 2016

With 17 simple words and the help of clarification from her deputy, Yellen changed the near-term dynamics in the capital markets.  By saying that "...I believe that case for an increase in the federal funds rate has strengthened in recent months," Yellen placed her marker down.

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CFTC: No Highlight Reel for Currency Speculators

Date: 29 August 2016

The summer lull for speculators in the currency futures market continued in the CFTC reporting week ending August 23.  Of the 16 gross currency futures positions we track, speculator adjustments were less than 3k contracts in all but three.

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Summer goes On, but not the Market Doldrums

Date: 29 August 2016

The US dollar had spent the last full week of August mostly confined to narrow trading ranges against the major currencies until the Yellen spoke as at the end of the week.  She confirmed the constructive assessment of the economy already offered by both Fischer and Dudley in recent days. While acknowledging that the case of a rate hike was strengthening, she shed no light on the timeframe.

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India, South Africa and Colombia Lead the EM Headlines

Date: 26 August 2016

Reserve Bank of India Deputy Governor Patel has been named to succeed outgoing Governor Rajan; political risk is back in South Africa; the Colombian government and the FARC rebels have reached a final peace agreement; S&P cut the outlook on Mexico’s BBB+ rating from stable to negative.

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Playing the Central Bank Odds

Date: 26 August 2016

Yellen's presentation at Jackson Hole today is the highlight of the week.  It also marks the end of the summer for many North American and European investors.  It may be a bit of a rolling start for US participants, until after Labor Day. However, with US employment data next Friday, many will return in spirit if not in body.

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