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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.
FX trader du jour [updated]
Hildebrand’s wife, Kashya Hildebrand, said in a written statement published on Swiss television late yesterday that her “interest in the dollar purchase was motivated by the fact that it was at a record low and almost ridiculously cheap.”
Via Bloomberg.
Citi: EM rate cutters sheathed
If you were expecting widespread easing of policy rates across the emerging world, think again.
Since the end of August three EM central banks have cut rates — Brazil, Israel and Indonesia – but don’t go expecting much more monetary easing,
Free at last in Belarus
Belarus has finally unified the two remaining segments of the FX market, after months of dragging its feet. In other words, the Belarusian rouble is now “properly devalued” to quote Nomura analyst Tatiana Orlova.
Albert Edwards: Hold on for a hard landing in China
What are chances of a soft landing for the Chinese economy? Pretty slim if you ask über bear Albert Edwards.
The Société Générale strategist reckons “blind faith” in the competence of the Chinese authorities to guide the economy to a soft landing is misguided.
‘Is it dangerous to borrow dollars?’
Or, remembering the crisis dollar swap lines, and noting a funding currency elephant in the room for Australian and Swedish banks.
Moody’s downgrade of four Australian banks on Wednesday was serendipitous in a way.
The volatility is out there
FT Alphaville has pondered over why the Vix is currently so low.
We’ve also wondered if QE may be inadvertently triggering a gigantic ‘Bernanke put’ in the equity market, pushing volatility elsewhere — specifically into the FX market.
Don’t bet on Japanese repatriation
There’s been a lot of talk about how repatriation of funds will affect the yen in the weeks and months to come.
Most believe the flow of funds back into Japan will see the yen strengthen. There are,
The yen and economic fundamentals
How do we know that foreign funds are being repatriated into Japan? Because the yen strengthened against the dollar after the earthquake and until the G7 intervened. Why did the yen strengthen? Because funds were being repatriated,
Chinese inflation through surging online searches
Inflation in (simplified) Chinese is 通 货膨胀.
Standard Chartered are back with another ‘wisdom of China’s online crowds’ piece, or a look at Chinese consumer trends through internet searches. There’s a difference this year though.
‘Tis the season to watch for carry trading
Here’s something to add to those lists of 2011 investment themes doing the rounds: whether we’ll get a full-blown comeback of the dollar carry trade in the new year.
Controversial, we know.
But here’s how BNY Mellon’s Michael Woolfolk set the scene on Wednesday,
Euro-correlation max
Correlation, as we are now well learning, is a phenomenon which increases when market tensions rise.
That is because when investors flock to the exits, they tend to move more uniformly than usual.
So here’s the interesting thing.
Sovereign euro leakage
Counterfactual currency calculations are complicated.
Kudos, then, to Jens Nordvig and Charles St-Arnaud, FX analysts at Nomura:
We estimate that the EUR risk premium linked to sovereign risk in the eurozone could account for a 12% decline in the euro since late 2008,
Go on, Treasury: buy dollars
What’s the best way for the US to show commitment to avoiding currency belligerence after pledging its faith at the latest G20 summit?
Answer, courtesy of BNY Mellon’s FX strategist Neil Mellor: it should buy dollars — and help weaken the yen.
Brazil, the clever currency warrior
Yes, Brazil’s finance minister coined the term in the first place.
But, if you’ve been following the currency war, the country’s actually proving to be one of its more curious combatants.
Exhibit A — Brazil’s just moved to toughen up a tax on foreign ownership of bonds issued onshore.
That Chinese rate rise [updated]
The market was a bit confused on Tuesday by the People’s Bank of China’s ‘surprise’ move to raise lending and deposit rates by 25bps this week. Here’s the announcement in Chinese:
Which roughly translates as ‘keep on not calling us a currency manipulator,
Yen is envy
Everyone laughed at the Bank of Japan when it prepared a big foreign exchange market intervention in September, against a strengthening yen.
Maybe we shouldn’t have. And maybe we should start watching what the BoJ’s example might inspire in the strengthening euro.
Dollar meltdown
This is getting a bit much, isn’t it?
The dollar suddenly lurched down across the board on Thursday.
First, cable flying past $1.60 (all charts via Reuters):
While the euro settled down to life after $1.40:
A yen for history
‘I can’t go on. I’ll go on’. That would appear to be the Bank of Japan’s Beckettian motto, as the yen hit a 1995 high against the dollar with no intervention in sight on Thursday (chart via Reuters):
We’re well under September’s Y82 intervention level now.
A hold-out in the devaluation wars
Schwing! As they might be saying at European Central Bank HQ:
That’ll be the euro sauntering past $1.35 at pixel time, marking the single currency’s strongest position against the dollar since just before Europe’s sovereign debt crisis sent it tumbling in April.
The renminbi’s release is speeding up
Now here’s a renminbi mystery.
Not only did the People’s Bank of China fix the USDCNY cross-rate lower for the eighth time running on Monday at 6.7110, versus Friday’s 6.7172 — the longest run of low fixes since October 2007.
What next for the yen: ‘A lot of fake movements’
Here’s the latest on Tokyo’s long promised (or should that be, threatened) intervention in the FX markets, as of about 6pm Tokyo time (10am BST).
The Bank of Japan is said to have sold a total of about $11-$12bn worth of yen into the market on Wednesday to buy dollars,
Guest post: Michael Stumm on FX trading leverage
The chief executive of OANDA, Michael Stumm, discusses the recent US regulatory crackdown on outlandish leverage ratios offered to currency speculators.
- – - – - -
The Dodd-Frank Wall Street Reform and Consumer Protection Act as signed into law on July 21st of this year,
Adventures in FX intervention
Now, even by Japanese central banking standards, this… is weird.
Via Citigroup’s FX wire on Wednesday:
Apparently, the BoJ has been carrying out what a colleague calls “mock dry runs/drills in intervention”
The politics of (yen) intervention
With the S&P 500 up nearly 4 per cent in two days, commodities prices firming, better-than-expected economic data, and core bond prices under pressure, some analysts are (already) seeing a rebound in risk appetite.
Intervention threats — the never-yending story
Will they, won’t they - and would it matter either way? These are the key (yen-related) questions of the day, or indeed, the month.
Japan’s signalled (with slightly more feeling this time around) that it might – really,
Moody’s tires of Hungary, Hungary tires of austerity
Yet more evidence that Hungarian politicians’ careless talk costs, uh, currency — Moody’s placed Hungary’s Baa1-rated government bonds on downgrade review Friday in response to failed IMF talks.
Moody’s reckons a one-notch cut is most likely,
Swiss intervention, exiting stage left
Is the Swiss National Bank throwing in the towel on EUR/CHF intervention?
IFR Markets’ Divyang Shah thinks so:
The SNB has given the green light to tolerating further CHF strength by dropping the reference to intervention in their latest monetary policy assessment.
The dollar shortage in one easy graph
BIS academic Stephen Cecchetti has been much exercised by the currency costs of international financial integration lately — quantifying the yen carry trade.
And now he’s taken another look at dollar shortages.