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Tag Archives: CAD

December Monthly

The end of the annus horribilis is at hand, and despite the hard winter ahead for the northern hemisphere, there is a sense of optimism for the new year.  The first generation of vaccines for the coronavirus appears promising. The US has elected as president a person who is within the internationalist tradition.  The UK's standstill agreement with the EU will still expire at the end of the year, but many are still hopeful a last-minute deal can still be struck. China has entered into the...

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Speculative Positioning in Selected Currency Futures

With the media playing up the US dollar's negatives, one would think speculators are short the greenback like there is no tomorrow.  Yet a review of the Commitment of Traders report that covers the week through last Tuesday, August 4, shows that this is not really the case.   Below the speculative positioning of four currency futures is reviewed.  Only the euro stands out in terms of extreme positioning.  Speculators are still net short sterling and the Canadian dollar.  The net long...

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In Search of New Incentives

Overview: The global capital markets are subdued. There have been few developments to induce activity. Even President Trump's claims that the talks with China are in the "final throes" failed to excite. Equities are extending their advance. Bonds are little changed, and the dollar is mostly firmer. The MSCI Asia Pacific Index and Europe's Dow Jones Stoxx 600 advanced for the fourth consecutive session. The S&P 500 gapped higher on Monday (~3112.9-3117.4) and has not looked back. It...

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Oil Surge Pared, Markets Remain on Edge

Overview:  Oil prices surged in the initial reaction to the unprecedented drone attack on Saudi Arabia facilities.  Saudi Arabia may be able to restore around half of the lost production in a few days.  Saudi Arabia and other countries, including the US, prepared to tap strategic reserves, oil prices have seen the initial gains halved.  Brent is trading near $65 after finishing last week near $60.  WTI is trading near $59, having been almost at $64 from a little below $55 before the...

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Jump in Yields Didn’t Derail Equity Rally While Sterling Rallies Ahead of the Weekend on (misplaced) Brexit Optimism

The most striking thing about last week's price action was the surge in US yields.  The 10-year yield jumped about 34 basis points, the most in three years and returned to levels not seen since August 2 (1.90%).  A deluge of investment-grade corporate bonds and US Treasuries ($78 bln auctioned to lukewarm reception), coupled with an acceleration of core CPI (highest in 11 years), optimism on the trade front, and Mnuchin's insistence on pushing forward with an extra-long bond, (50, and...

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Debt Deal Help Lifts the Dollar

Overview: The gains in US equities and the apparent US budget agreement has underpinned equities today and the US dollar.  Asia Pacific equities recouped yesterday's losses, and Europe's Dow Jones Stoxx is posting gains for the third consecutive session, helped by some earning beats, to probe two-week highs.  US shares are firmer.  Benchmark 10-year yields are mixed with the Asia Pacific softer and European firmer.  Despite elevated political tensions in Italy, Italian bonds are bucking...

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Powell Spurs Equity and Bond Market Rally, While the Greenback Falls Out of Favor

Overview:  Fed's Powell confirmed a Fed rate cut at the end of this month by warning that uncertainties since the June FOMC had "dimmed the outlook" and that muted price pressures may be more persistent.  It ignited an equity and bond market rally (bullish steepening) while the dollar was sold. The MSCI Asia Pacific Index rose for the second session, led by gains in South Korea and Hong Kong.  Benchmark 10-year yields have slipped lower, with the Asia Pacific and core European yields...

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No Turn Around Tuesday, as Equities Extend Losses and the Greenback Remains Firm

Overview:  Global equity benchmarks are headed for their third consecutive loss today as caution prevails at the start of Q3 after a strong first half.  Ten-year benchmark yields are edging higher after a soft start in Asia.  Italian bonds continue to outperform.  Greek bonds have been set back as the new government reiterated its commitment to ease fiscal commitments as if Tsipras did not try, and got a similar rebuff.  The dollar is firmer against the major currencies and most...

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Collective Sigh of Relief Lifts Equities, Yields, and the Dollar

Overview: A global sigh of relief that the US will not tariff all its imports from Mexico.  Equities are all higher, and the weekend demonstrations in Hong Kong over a bill allowing extraditions to the mainland for the first time did not deter investors from bidding up the Hang Seng over 2.3%, the most this year.  European equities are following suit.  The more modest 0.4% gain through the morning session is the fifth gain in the past six sessions.  US shares are trading higher and the...

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Canada, Mexico, and the USMCA

The US dollar closed today above CAD1.3500 for the first time since January 2.  Despite the setback, the Canadian dollar is the strongest of the major currencies year-to-date with a little less than a one percent gain.  The yen, in second, has is up about 0.2% (~JPY109.50).  Among emerging market currencies,  the Mexican peso's 2.6% gain puts it in in second place behind the Russian rouble's 7.2% appreciation.  It is a gross simplification to suggest that the currency moves are...

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