Marc Chandler

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Marc Chandler
About the author:

Head of Global Currency Strategy at Brown Brothers Harriman.

So Much to Watch with Only Two Eyes

Date: 15 August 2016

Japan's Q2 GDP:  The week begins off with the first estimate of Japan's Q2 GDP.  Growth is expected to slow from 0.6% in Q1 to 0.2%-0.3% in Q2. Consumption likely slowed more than investment increased.  The GDP deflator, another measure of prices, is expected to have eased to 0.7% from 0.9% (year-over-year).

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CFTC: Are You into the Pound and Yen?

Date: 15 August 2016

Speculative position adjustments in the currency futures continued at a low pace in the Commitment of Traders report for the week ending August 9.  There were though two distinct patterns.

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Economic Data may not Help the Dollar

Date: 15 August 2016

The dollar's push lower that we anticipate until later in the month gained momentum following the disappointing US retail sales report before the weekend.  The dollar's technical tone has deteriorated, while the economic data is unlikely to be sufficient to reverse sentiment.

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Korea Gets a Credit Upgrade and Thailand's Constitution Referendum Passes

Date: 12 August 2016

S&P upgraded Korea a notch to AA with a stable outlook, Voters passed the constitutional referendum in Thailand by a wide margin, The IMF and Egypt have reached a staff-level agreement on a 3-year $12 bln loan program, Argentina’s central bank will begin using a new overnight rate to manage monetary policy, Political uncertainty has returned to Brazil

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Retail Sales, Japanese Nuclear Power and Spanish Politics for Your Weekend

Date: 12 August 2016

There is a general consolidative tone in the capital markets as the week draws to a close.  The US retail sales report may offer a brief distraction, but it is unlikely to significantly shift expectations about the trajectory of Fed policy.  Indeed, it might not really change investors' information set.  The US consumer was busy in Q2 and is likely to have stayed active in Q3.  Consumption is not the main challenge of the US economy (see inventories and investment).

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New Zealand's Central Bank Cuts, but the Currency Shrugs

Date: 11 August 2016

The US dollar has found steadier footing today after trading heavily yesterday.  There are two main themes.  The first is sterling’s heavy tone.  After closing the North American session 0.5% higher yesterday to snap a five-day losing streak, it has come under new pressure today.

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Emerging Markets Boosted by Lower Rates

Date: 10 August 2016

Scratch an investor, and you will find two models.  One is a fair value model, perhaps based on free-cash-flow or earnings expectations, or breakup value.  The other is based on liquidity.  We suspect that the latter is overwhelming the former in the emerging market equity space.

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Eurozone Finance Ministers to Iberia: No Fines for You

Date: 10 August 2016

The Eurozone finance ministers have accepted the EC's recommendation that Spain and Portugal not be fined for their fiscal excesses.  A few weeks ago, the EU Commissioner for Economic Affairs, Moscovici explained that punitive actions would strengthen anti-EU sentiment.  However, that consideration did not prevent the EU from threatening to cut off part of the European Structural and Investment (ESI) funds for next year.

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Nothing New to Change the Lower Rates for Longer Theme

Date: 10 August 2016

The robust US jobs report at the end of last week had arrested the down draft seen the previous week in response to the disappointing Q2 GDP report.  The mostly sideways movement has given way to a broader pullback today.  The greenback is heavier against all the major and most emerging market currencies today.

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A Heavy Pound

Date: 9 August 2016

In an otherwise uneventful foreign exchange market, sterling's slide for its fifth consecutive session is the highlight.  It was pushed below $1.30 for the first time since July 12.  Initial resistance for the North American session is seen near $1.3020, while the $1.2960 area corresponds to a minor retracement objective.

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A New OPEC Meeting May Give Oil New Life

Date: 9 August 2016

This Great Graphic from Bloomberg shows the September light sweet crude oil futures contract since peaking in early June near $52.75.  It reached a low last week of about $39.20.

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Here is Your China Update

Date: 9 August 2016

This is the period in the monthly cycle that China releases most of its high frequency data.  The process is well under way.  Over the weekend, China reported its reserve figures that suggested capital outflows have slowed.

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Pre-weekend Equity Rally Shows Increased Risk Appetite

Date: 8 August 2016

Investors favor risk assets today.  Global stocks are moving higher in the wake of the pre-weekend US rally that saw the S&P 500 close at record levels.  Bond yields are mostly firmer, again with US move in response to the robust employment report setting the tone in Asia.

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Many EM Central Banks Meet though Few, if any, Will Act

Date: 8 August 2016

EM ended last week on a firm note, despite the stronger than expected July jobs report.  As we suspected, one strong US data point is not yet enough to derail the dovish Fed outlook.  With the RBA and BOE cutting last week and the RBNZ expected to cut this week, the global liquidity backdrop remains supportive for EM and risk.

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The Macroeconomic Picture Comes to the Fore

Date: 8 August 2016

The drip-feed of high frequency economic data from the major economies slows in the week ahead. The data that is reported is unlikely to have much impact on the expectations of policy going forward.  The state of play is fairly straightforward.  The Federal Reserve is finding it difficult to take the next step in the normalization of monetary policy.  According to Bloomberg calculations, the Fed funds futures strip does not show greater than a 42% chance of a rate hike at any meeting through the end of next year.

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The Dollar Might Receive a Boost from the Employment Report

Date: 6 August 2016

The robust US employment report before the weekend allowed the dollar to recoup the losses it experienced earlier in the week against most of the major currencies.  The Australian dollar and Japanese yen managed to hold onto minor gains for the week.

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An Emerging Markets Status Update

Date: 6 August 2016

India’s upper house approved the creation of a Good and Services Tax (GST).  This national sales tax would replace more than a dozen separate taxes.  The vote was by a unanimous 203-0 margin, though one regional party abstained.

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