RSS feedus dollar
’US consumer “confidence” at recessionary levels
A list of antonyms for “confidence”: “uncertainty”, “disbelief”, “carefulness”, “caution”, “circumspection”, “prudence”, “unconfidence”.
[That last one... really? - Ed. Well, thesaurus.com says so.]
Anyways,
Dealing with a global Triffin dilemma
We love a little bit of Triffin’s dilemma on FT Alphaville.
It refers to the idea that whoever has reserve currency status thrust upon them, is simultaneously lumbered with the burden of supplying the world with extra currency — thus entrapping themselves to a permanently indebted existence.
Destination, safety; origin, everywhere
That faint rumbling is the sound of funds investors marching out of… everything:
August is the first month since September 2008 that we’ve seen net outflows from equities, bonds and cash. For the first time this year, Global Bond Funds suffered from net monthly outflows of $16bn in August,
Operation Twist — and shout
Strange, fast, markets. The S&P 500 closed at 1,172.53, up 53 points, or 4.74 per cent. That’s the biggest one day rise since 20 October, 2008. 10-year Treasury yields touched crisis lows. And the US dollar…
Yields at record lows and it’s EURUSD vs CHF
Looks like QE2.0 is going down a treat in the FX and bond markets.
First, 3-year, 5-year, and 10-year charts.
Nice little price bump here for those buying 3-years at the first post-downgrade auction.
Risk off, with nowhere to go
A miserable day.
At one point the headline on the Reuters home page read: “Wall Street slides on earnings, economy, politics.” Short of blaming the collective wisdom of the two cultures, there was nothing left.
Shadow currencies lurking behind a new dollar smile
G3 currencies are just so … démodé.
Where once the US dollar, euro and yen indisputably dominated global currency trading, there are now alternatives. The S3 currencies. So says UBS strategist Syed Mansoor Mohi-uddin in a short note.
The dollar-battering Bernanke presser
To quote (again) a pint-sized musical firecracker from Minneapolis, this is what it sounds like when doves cry:
At pixel time the US dollar index was at its lowest point in nearly three years against a basket of currencies.
GBP, GDP and HSBC
Stagflation or not, sterling has responded positively to Wednesday’s GDP release.
From Reuters:
It looks like some punters were expecting a weaker reading and have been caught short. That and the fact that the dollar has fallen sharply against several major currencies (not just sterling) ahead of the FOMC decision and subsequent press conference.
Assessing the dollar’s weakness
How weak is the dollar?
A timely question asked by Goldman Sachs on Tuesday morning, what with the euro reaching a 15-month high of $1.45 earlier today. Indeed, on the face of it, there is weakness everywhere.
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,
Jefferies: limited risk of TSY selloff by insurance companies
The 1995 Kobe earthquake took place on January 17, but it wasn’t until September of that year that Japanese investors became net sellers of US treasuries:
The graph is from Jefferies (HT Anousha Sakoui),
Magnus on a chronic under-reporting of private sector surpluses
UBS senior economic adviser George Magnus addresses the issue of Washington’s budgetary crisis on Monday.
As he points out, to some there is a major fiscal imbalance that has to be addressed, but no crisis — while to others the US is bust and nothing short of an immediate downsizing will neutralise a looming austerity crisis.
US-China export puzzle
The big story on the trade balance figures released this morning is that US exports climbed to a two-year high in October on the back of a $4.9bn monthly boost over September. Imports declined by $0.9bn.
When quantity may not matter
Interesting graph courtesy of Jeffrey Young at Barclays Capital:
That’s the quantity of liquidity to the value of the US dollar — with the two bearing less relation to each other than you may suppose.
Bernanke: it’s not me, it’s you
The People’s Bank of China sure knows how to gatecrash a party.
In an uncanny coincidence, the PBOC lifted bank reserve requirements 50bps – widely seen as a step against QE-inspired capital flows – just as Fed chairman Ben Bernanke rose to speak at the European Central Bank on,
Money flow misallocation
What do you get when you cross US QE2 with a eurozone crisis?
Something like this chart:
That’s the difference between the US dollar and the euro overnight deposit rate — and you can see it’s been increasing in recent weeks,
Something for the weekend
Here are a couple of contrarian views to mull this weekend.
The first comes from Greg Gibbs at RBS, who says the case for shorting the dollar no longer looks clear-cut:
The market has developed an expectation that the Fed will deliver a big QE on 3 November.
An illustrated history of yen intervention
As you can see from that RBS chart, since the Bank of Japan’s last big splurge of intervention in 2003/04 the yen has appreciated by 20 per cent against the US dollar.
And that makes us one wonder if the BoJ’s decision to increase its fixed rate money market operations by 10,000bn yen ($116bn) to 30,000bn and push out the loan period to six months will have any effect.
Risk off, tin hat on
The risk switch was firmly flicked to “off” on Tuesday afternoon, following weaker than expected US housing data. Much weaker than expected. Sales of existing homes slumped to their lowest level on record in July according to the National Association of Realtors.
The Drachmark rises from the ashes
The biggest surprise of Thursday’s trading session?
The strength of the euro — particularly against the dollar.
And that trend is continuing on Friday morning:
The mainstream media are pinning the rally/dead cat bounce on two factors:
Behold – the dollar swaps
Fresh from the Fed — $9.2bn of US dollar liquidity:
Which means the Federal Reserve’s balance sheet now stands at a cool $2,318bn. It reached an all-time high of $2,343bn on April 14, and had been shrinking for the past few weeks.
The euro premium episode
Despite flooding the system with euro and dollar liquidity on Monday, there’s one money market measure that remains stubbornly negative: the five-year euro-dollar basis swap.
The euro-dollar basis swap is basically an exchange of two floating rates in the two currencies.
CDS report: All eyes on Dubai World
Gavan Nolan of Markit wrote this CDS report
European credit indices rallied today as the economic climate remained supportive of risk assets. The Markit iTraxx Europe index closed at 84bp, 1.5bp tighter than yesterday’s level.
Iran, the self-declared FX shrewdie
Fresh news from the 3rd Seminar on Banking Services and Export in Tehran: Iran gained $5bn by reducing the portion of dollars in its oil currency basket, according to Mahmoud Bahman, head of Iran’s central bank.