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’The currency pair league table
$/€ races ahead of $/£, $/¥ and $/SFr, but $/AUD has made a strong run from behind…
Actually, the thing that jumps out from Table 4 of the most recent FX trading survey from London’s Foreign Exchange Joint Standing Committee is that none of the columns — April 2011 thru October 2011 — are ranked consecutively.
Goldman’s € forecast: down and up
That’s a facetious title, for sure — but also broadly accurate.
Thomas Stolper and team at G Sachs have adopted a new quantitative two-stage model for mapping their macro views on to the likely possible course of the $ vs the €.
A fistful of ______
Iranian FX management — still as bonkers as ever:
TEHRAN, Jan 10 (Reuters) – Iran’s currency has slid 20 percent against the dollar in the last week despite central bank intervention, and Iranians concerned about the economy said on Tuesday attempts to send text messages using the word “dollar”
Euro crisis, Brent oil edition
Courtesy of Olivier Jakob at Petromatrix, FT Alphaville presents the price of front-month Brent oil futures expressed in euro terms:
That would be echoes of the 2008 record oil price. This time,
Euro rout
Brutal:
The wires are pinning the drop on this:
RTRS-EURO FALLS AFTER SOURCES SAY MERKEL REJECTS RAISING UPPER LIMITS OF FUNDING FOR ESM BAILOUT MECHANISM
RTRS-EURO FALLS TO WEAKEST LEVEL SINCE MID-JANUARY VERSUS DOLLAR
RTRS-EURO EXTENDS LOSSES VERSUS DOLLAR,
The ‘dollars for euro collateral’ crunch
Back in September 2010, the European Repo Council’s survey of the European repo market noted a striking anomaly.
The European repo market — worth approximately €6,979bn — had seen a near doubling in the amount of repo being used for dollar funding.
Inter-yention — it’s back
After the Japanese yen hit a record high of ¥75.311 against the dollar on Monday morning, the BoJ/Japanese government jumped in, selling an unspecified amount of yen which brought its valuation down about 5 per cent against the dollar and 4 per cent against the euro:
What makes a reserve currency?
Here’s an interesting way of looking at the market’s current obsession with public debt and reserve currency status.
Consider, for example, that a large amount of public debt is an absolute necessity to ensure a functional monetary system and a reserve currency position.
Gold and other currencies
It won’t be of any consolation to those stopped out during Monday’s wild trading, but the gold price is still underpinned by two very powerful pillars, reckons Capital Economics.
They are: the outlook for monetary policy – i.e.
Currency basis swaps as a funding tool
Currency basis swaps are all the rage again. SocGen has even referred to the basis swap market as a key means for managing “access to short-term USD liquidity” in its “hard facts” release.
Of course,
Avoiding the monetary road to serfdom
Sometimes it’s the simplest observations that stand out.
For example, when it comes to the question of money, perhaps popular singing sensation ABBA said it best:
I work all night, I work all day,
Asia update: It’s getting grimmer
Firstly, the Chinese official inflation figures for July came in higher than expected: 6.5 per cent compared with an average forecast of 6.3 per cent in Reuters and Dow Jones polls — the highest monthly increase for three years.
The US’s Greece-y new debt dynamics
Some debt doom and gloom from Independent Strategy’s Bob McKee…
… a man who, quite literally, wrote the book on sovereign debt crises.
He notes that the debt deal reached earlier this week does little to address the most pressing of the US’s fiscal issues.
Swiss bank avalanche
This might be a deferred sell-off following Monday’s holiday in Switzerland. In the words of one analyst though, they’re ‘stuck between a soft dollar and a hard franc…’
(That’s because the wealth management arms of both banks have mainly US dollar revenues and Swiss franc costs).
Inter-yention stations
It wouldn’t be a proper dollar panic unless there were rumours, uncertainty and fear that the Bank of Japan is intervening in the yen:
So here we are. Rumour, uncertainty, fear:
Gold’s not as stretched as you might think, Citi says
One for the gold bugs, this.
The possibility of a surge in the price of gold is growing, according to the commodities team at Citigroup.
In fact, they say, the probability of a short-lived spike in gold is now above 25 per cent (up from 5 per cent just a few weeks ago) and that’s even without a worst-case economic scenario actually happening.
Dick Bove says – the search for a new safe haven is on
Gold? Pffft.
The euro? Too euro-trash.
The dollar? Puh-lease.
Rochdale banking analyst Richard Bove reckons the search is on to find a new global safe haven. Because even if this US debt debacle gets sorted by lifting the ceiling,
The Swiss franc’s safe-haven status, a visual interpretation
The Swiss franc is on the rise against the euro and the dollar again on Wednesday thanks, as multiple market reports state, to its safe-haven status.
In fact, the currency was last quoted at about 1.158 versus the euro and 0.7996 against the dollar.
$8,000bn speaks reserve currencies
The dollar is down, the euro is out, and SDRs are in. Results from UBS’s reserve management survey, canvassing institutions with a collective $8,000bn of assets:
And all the liquidity in all the world…
Ongoing Greek turmoil. The end of QE2. Slowing growth. An oversupply of credit. A US default.
The list of current developments to keep investors up at night could go on.
No surprise then, that the dollar’s been rallying on the back of risk-reversal — a development which in itself could feed through to plenty of other asset classes.
Risk remains… off
More of the same on Thursday morning as commentators set nerves on edge by referring to Greece as the eurozone’s Lehman moment.
And so, the euro has taken further punishment, breaking its 100-day moving average for the first time since February.
Risk… off
EURUSD below its 100-day moving average (you can guess why):
RTRS-EURO POSTS BIGGEST PERCENTAGE DECLINE VS DOLLAR SINCE AUGUST, 2010
On the flip side, there’s a real plunge in oil on the strengthening dollar.
Bitcoin’s Black Friday
When we first mentioned Bitcoin — the virtual currency — it was hovering at $8 against the US dollar.
Last week it reached $28. And we first mentioned Bitcoin last Monday — seven days ago.
The digital currency has not gone unnoticed by the City either.
Should the US adopt the euro?
Here’s some innovative thinking courtesy of Bill Bonner at the Daily Reckoning blog.
He wonders if the US might be looking at its problems the wrong way round.
Rather than worrying about the fate of the dollar,
“The FX market has lost its anchor of reason”
Take everything you ever thought you knew about foreign exchange and bin it.
According to HSBC’s stellar FX guru David Bloom, currency markets are trading through the looking glass, and will continue to do so for some while.
A shiver of core contagion
A surprisingly strong reaction to S&P’s late Friday negative revision of Italy’s credit rating, plus Greek torpor, plus Spanish elections…
Either way — the euro’s at a two-month low and just above $1.40 at pixel time.
Another commodities crash layer – the $100bn intervention
Tracking the causes of the commodities crash is starting to feel like peeling an onion.
One layer gets pulled back only to reveal another, and then another — and then you start to cry. Last week we had UBS analysts blaming “extreme positioning short the dollar and long commodities.”
So peeling back another layer,
China’s copper collateral – and covert credit
Whatever happened to China’s amazing copper collateral shenanigans?
Goldman Sachs said last month that China’s central bank may have cracked-down on the scheme, which saw Chinese corporates use copper as collateral for new loans.
The 2001 shift
Kevin Gaynor at Nomura — long-standing side-kick to Bob ‘The Bear’ Janjuah — has had an epiphany.
The crisis didn’t begin in the subprime fuelled mid-naughties.
It began in 2001, when the world experienced a structural shift like none other.
UBS on the commods crash – and getting ready for the next one
We’ve heard from Deutsche Bank, who blamed the coming end of QE for last week’s precipitous price moves.
UBS have now added their view to the causes of the commodities crash. In a nutshell, they’re citing: