Special Reports

Pound stabilizes after sell-off, stocks rise on policy hopes, oil

Posted on February 26, 2016 at 2:37 pm GMT

Cable finds some support after Johnson-shock After some vicious selling at the beginning of the week, the pound found some support just below 1.40 versus the US dollar. True the pair dipped to as low as 1.3878 – a new 7-year low- in the aftermath of London Mayor Boris Johnson’s announcement that he was backing the ‘Leave’ campaign. The pound subsequently emerged back above 1.40 by Friday after spending Wednesday and Thursday below that key psychological level. The issue of [..]

Sterling and euro united in pain amid rising Brexit fears

Posted on February 23, 2016 at 12:16 pm GMT

The pound and the euro under pressure The pound was under severe pressure at the beginning of the week after the Mayor of London, Boris Johnson, an important member of the ruling Conservative party’s leadership, decided to take a stance against the position of the leader of his own party, Prime Minister David Cameron. Specifically, Boris Johnson said he would back the “Leave” campaign on the upcoming June referendum for Britain’s EU membership. In hindsight, as Britain’s conservatives have been [..]

Is last week’s rebound in risk assets for real?

Posted on February 19, 2016 at 3:41 pm GMT

Some technicals The past week has been marked by a strong comeback in risk assets, with the key S&P 500 benchmark rising by around 100 points from its low on February 11. The fact that US stocks managed to rise three days in a row this week (for the first time this year) was significant, as the lows of the 1800-1820 area held. The subsequent rally pushed the S&P as high as the 1920-1930 region. The rebound in the S&P [..]

Risk helped by Chinese markets’ return from holidays in calm mood

Posted on February 16, 2016 at 2:54 pm GMT

The first two trading days of this week have been marked by the return of some positive risk appetite. While one can cite many factors for this – bargain-hunting, positive US economic statistics the previous week, promises of more stimulus, a rebounding oil price – one factor probably stands out – China. The reopening of markets in China following the Lunar New Year holidays was surprisingly uneventful given the volatility of the previous week when the country’s markets were closed. [..]

Less divergent and not as safe: the US dollar rally stumbles

Posted on February 12, 2016 at 2:35 pm GMT

The most important theme of this week’s trading has been the sharp selloff in the US dollar. The dollar has been the favorite currency for traders to be long of since the first half of 2014. The dollar index, which measures the value of the greenback against a basket of 6 major currencies (the euro makes up more than half the basket), has fallen by more than 4% since the beginning of February. The index is currently at 95.80. Although [..]

Nowhere to hide? Turmoil presents tough choices to investors

Posted on February 9, 2016 at 1:20 pm GMT

The latest episode of volatility in financial markets has been a defining characteristic of the trading environment since the beginning of the year. In this environment, key relationships and trends of previous periods – such as the unquestioning belief in the US dollar uptrend or confidence in the mostly positive outlook for developed economies and their stock markets – have been seriously shaken. Many investors are looking for safe havens as shelters in which to weather this storm and some [..]

ECB, Bank of Japan may find it harder to push their currencies down

Posted on February 5, 2016 at 10:56 am GMT

The past couple of weeks’ events and price action have yielded some interesting insights with respect to the major currencies of the dollar, the yen and the euro. This relates particularly to the intentions and possible actions of the monetary authorities in the US, Japan and the Eurozone and how they could influence the respective exchange rates. Starting with the yen, the Bank of Japan surprised markets the previous week with its announcement of negative interest rates. The yen nosedived [..]

Are financial markets the tail that wags the monetary policy dog?

Posted on February 2, 2016 at 1:18 pm GMT

Following the end of the first month of 2016, some conclusions can be drawn. It was a difficult month for financial markets and equities and commodities in particular. Concerns about the Chinese economy and a falling oil price was what pushed risk assets and commodities more broadly lower. On the side of the winners, gold and silver had a particularly good start to the year, as did government bonds in the US and Germany. What is also noteworthy however, is [..]

Oil rebound leads to recovery for risk, commodity currencies

Posted on January 29, 2016 at 12:32 pm GMT

One of the most interesting features of the previous week in foreign exchange was how the rebound in the price of oil provided fuel for a comeback by the beaten-down commodity and emerging market currencies. The Russian Rouble led the rebound, followed by the South African Rand, the Canadian Dollar, the Australian Dollar and the Norwegian Krona. The recovery in oil prices also helped risk assets recover as stocks managed to reduce their losses year-to-date. The oil price recovery was [..]

Will Central Banks come to the rescue again?

Posted on January 26, 2016 at 11:53 am GMT

As risk assets have fared very badly at the beginning of 2016, there are hopes that some of the world’s top central banks will offer some more stimulus, which should help soothe investors’ nerves. Although a correction in stocks should normally be welcome given their near 7-year continuous assent (since 2009) without a bear market (at least in the US), there is quite a lot of nervousness among policymakers about the fragility of the global economy. Specifically, policymakers might become [..]

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