Special Reports

Bad US economic news may not hurt the dollar longer-term

Posted on September 7, 2016 at 2:40 pm GMT

The US dollar has experienced quite a flip-flop in the past few weeks, as a summer that was dominated by a relatively uneventful Brexit was drawing to a close. Relatively hawkish statements from Federal Reserve officials (particularly Chair Yellen) that seemed to open the door to a possible rate hike in September, have clashed with some particularly weak readings from the two most important business surveys of the world’s largest economy. In particular, the ISM’s manufacturing and non-manufacturing surveys posted [..]

July employment report gives hope to dollar bulls following GDP, Fed disappointments

Posted on August 8, 2016 at 2:23 pm GMT

The US dollar was under intense pressure during the period July 27 – August 2. During this period the dollar index suddenly lost about 2.5% of its value – a brutal move for the world’s reserve currency. Following some encouraging news out of the US economy such as personal income and spending and the ISM non-manufacturing index the dollar started a recovery which received a big boost from a very strong US employment report. The employment report was better-than-expected in [..]

Australian dollar sticks to 75 cents – what’s next?

Posted on July 27, 2016 at 1:43 pm GMT

The Australian dollar has been on a downtrend versus the US dollar since 2011, although to be fair, most currencies have been losing ground against the greenback in the last 2 years as well. It has been tempting for some to call a bottom around the 68-71 cents level, as a sharp reversal rally to 78 cents was triggered when those levels were tested. The May rate cut however, together with speculation that an additional cut could take place soon, [..]

Fed may rethink rate pause if stocks and data keep looking up

Posted on July 20, 2016 at 2:58 pm GMT

There has recently been some renewed optimism that the Federal Reserve could get up from the fence it has been sitting on since December of last year. As can be seen from the chart of the 2-year Treasury yield, a gauge of short-term interest rate expectations for the next 2 years, expectations have recovered to near pre-Brexit levels. The 2-year yield has managed to claw back to 70 basis points after dropping to around 0.5% in the immediate aftermath of [..]

Risk assets rise together with safe havens following Brexit vote

Posted on July 12, 2016 at 2:50 pm GMT

Gold, silver do best following Brexit Safe government bonds, stocks also do well If situation is not so bad, difficult to justify more stimulus One surprising aspect of the post-Brexit financial environment is how various assets have reacted to this unexpected event. Safe havens did very well as was expected, but perhaps less expected was how quickly risk assets shook off the post-Brexit blues and turned around to post a positive performance. As the chart shows, silver and gold have [..]

Brexit is more similar to Grexit than most think

Posted on June 28, 2016 at 9:57 am GMT

Nearly 1 ½ years ago in January 2015, voters in Greece brought the radical leftist SYRIZA party to power on the promise to do away with austerity while keeping Greece inside the Eurozone. More recently, last Thursday British voters decided to abandon the EU in order to close their borders to free movement of European nationals and stop paying into the EU budget while keeping access to the Single Market for goods and services. So there is a common theme in [..]

New uncertainties dawn on markets as “leave” wins in UK referendum

Posted on June 24, 2016 at 3:02 pm GMT

Having pretty much nearly priced in a win for the “remain” camp shortly after polls closed in the historic UK referendum on EU membership on Thursday, June 23, the flow of results during the night started to contradict this general view. In volatile trading, the markets had the giant task of reversing their earlier judgement and price in the “leave” victory, which meant a huge sell-off in the pound and falls in the prices of risky assets. The prices of [..]

A brief survival guide to trading FX during Brexit

Posted on June 16, 2016 at 2:03 pm GMT

Next week’s UK referendum on EU membership will be the defining risk event of the first half of the year. As such, market participants are readying themselves for a week of volatility and big moves in major asset classes and across financial markets. Central to this is Foreign Exchange, which is the world’s largest and most liquid market. Therefore, traders may find useful some suggestions of how markets might react in either a “leave” or “remain” outcome. First of all, [..]

Fog of Brexit could get thicker before it lifts if “leave” wins the day

Posted on June 13, 2016 at 1:07 pm GMT

It is a well-known rule that markets dislike uncertainty. The June 23 referendum whether or not Britain should remain in the European Union, represents a major risk event in itself. However, it is possible that should the “leave” campaign prevail, it will open up a big range of options for the United Kingdom. Of course the UK economy is a resilient, flexible one and in the long-run a new stable equilibrium will emerge. The short- and medium-run could be messy [..]

US economy scorecard after the big miss in jobs

Posted on June 6, 2016 at 2:11 pm GMT

The disappointment following the latest US employment report weighed heavily on the US dollar and on US bond yields as the data brought into question the Fed’s ability to raise rates during its meetings in June or July. However, it is a good idea to try to put the jobs numbers in a broader context – both comparing with job market numbers of previous months as well as to have a look at other indicators that have been released recently. [..]

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