Tag Archive: ECB

FX Daily, May 26: Fear is Still on Holiday

Overview: The heightened tensions between the US and China sapped risk-appetites before the weekend, but appear to be missing in action today.  Equity markets have rebounded strongly. Nearly all the equity markets in the Asia Pacific region rose (India was a laggard) led by an almost 3% rally in Australia, which was seen as particularly vulnerable to the Sino-American fissure. 

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The global economy doesn’t care about the ECB (nor any central bank)

The monetary mouse. After years of Mario Draghi claiming everything under the sun available with the help of QE and the like, Christine Lagarde came in to the job talking a much different approach. Suddenly, chastened, Europe’s central bank needed assistance. So much for “do whatever it takes.”They did it – and it didn’t take.Lagarde’s outreach was simply an act of admitting reality.

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FX Daily, May 6: The Euro is Knocked Back Further

Overview:  The late sell-off in US stocks yesterday has not prevented gains in Asia and Europe.   Most of the equity markets, including the re-opening of China, gain more than 1%.  Australia was a notable exception, falling about 0.4%, and Taiwan was virtually flat.  European bourses opened higher but made little headway before some profit-taking set in, while US shares are trading higher. 

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FX Daily, April 30: ECB Takes Center Stage

Overview: Equities continue to recover even as deep economic contractions are reported. Yesterday, the US said Q1 GDP contracted at an annualized pace of 4.8%, while the eurozone reported today that output fell 3.8% quarter-over-quarter in Q1.  Hong Kong and South Korea were closed, but the rest of the Asia Pacific bourses rallied strongly with several, including Australia and India, rising more than 2%.

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FX Daily, April 29: Heavy Dollar amid Month-End Pressure

Overview: The dollar is lower across the board as dealers attribute the selling to month-end pressures ahead of the FOMC today and ECB tomorrow and long-holiday weekend for many. Japan's Golden Week holiday has already begun. Despite the loss in US equities yesterday, despite the higher opening, it has not spilled over, as Alphabet earnings helped lift sentiment.

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The Greenspan Bell

What set me off down the rabbit hole trying to chase modern money’s proliferation of products originally was the distinct lack of curiosity on the subject. This was the nineties, after all, where economic growth grew on trees. Reportedly. Why on Earth would anyone purposefully go looking for the tiniest cracks in the dam?

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FX Daily, April 9: Three Deals Needed ahead of Holiday Weekend

Overview: Three deals need to be struck. First, the Eurogroup of finance ministers needs to reach an agreement of proposals for joint action to the heads of state. Second, oil producers need to cut output if prices are to stabilize. Third, the US Congress needs to strike a deal to provide more funding. Investor seems hopeful, and risk appetites are have lifted equities.

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FX Daily, April 8: Flavor of the Day: Consolidation

Overview: Global equities are struggling after the S&P 500 staged a dramatic reversal yesterday. The early 3.5% gain was completely unwound and closed slightly lower.  With few exceptions (e.g., Japan and the Philippines), most equity markets in the Asia Pacific region and Europe are lower.

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FX Daily, March 25: Relief, but…

Overview: Global equities are marching higher. While the Dow Jones Industrials posted its biggest advance since 1933, the US is lagging behind other leading benchmarks. The MSCI Asia Pacific advanced, led by Japan's Nikkei's 8% gain. It was third consecutive gain, during which time the Nikkei has rallied 17%. Europe's Dow Jones Stoxx 600 is up about 3.5% after bouncing 8.4% yesterday.

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FX Daily, March 23: Greenback Demand Not Satisfied by Swap Lines

Overview: In HG Wells' "War of the Worlds," the common cold repelled a Martian invasion. Now, a novel coronavirus is disrupting everything and everywhere. Global equities continue to get hammered, though the apparent relative resilience of Japan may have spurred some buying of Japanese equities.

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FX Daily, March 19: ECB’s Bazooka Support Bonds but not the Euro

Overview: It is not just that the dollar soared while stocks and bonds continued to plunge. The dollar's strength is, in effect, a powerful short-covering rally. It was used to fund a great part of the global circuit of capital. The circuit of capital is in reverse now, and the funding currency is being bought back. The dollar's strength is a function of the sell-off of other assets.

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FX Daily, March 16: Monday Blues: Fed Moves Bigly and Stocks Slump

Overview: The Federal Reserve and central banks in the Asia Pacific region acted forcefully, but were unable to ease the consternation of investors. The Reserve Bank of New Zealand cut key rates by 75 bp. The Bank of Japan appears to have doubled its ETF purchase target to JPY12 trillion, and the Reserve Bank of Australia is preparing for new measures that will be announced Thursday.

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FX Daily, March 12: Trump Dump as Market Turns to ECB

Overview: After the Bank of England and the UK Treasury announced both monetary and fiscal support, the focus turns to the ECB, but the proximity of the US Congressional recess (next week) without strong fiscal measures being in place sucked the oxygen away from other issues. President Trump's national address in the Asian session failed to reassure investors.

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FX Daily, March 4: Equities Trade Higher, While Yields Continue to Fall

Overview:  The G7 delivered up a nothing burger than was shortly followed by a 50 bp Fed cut.  The equity market seemed to enjoy it briefly and extended Monday's dramatic gains, before falling out of bed.  The S&P 500 lost about 2.2%, while the Dow Industrial slumped 3%, but shortly after the markets closed, equities began recovering, and the recovery carried over to the Asia Pacific region and Europe.

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FX Daily, January 23: ECB’s Strategic Review and the Coronavirus Command Investors’ Attention

The spread of the coronavirus and the lockdown in the epicenter in China has again sapped the risk-taking appetite in the capital markets. Asia is bearing the brunt of the adjustment. Tomorrow starts China's week-long Lunar New Year celebration when markets will be closed, which may have also spurred today's drama that aw the Shanghai Composite tumbled 2.75%, bringing the week's loss to 3.2%, the most in five months.

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FX Weekly Preview: Central Bank Meetings Featured

The US dominated the news stream at the start of 2020. The spasm in the US-Iran confrontation has quickly subsided. The much-heralded US-China Phase 1 trade deal has been signed. The US has completed the ratification process of the US Mexico Canada Free-Trade Agreement. The early signs from the economic entrails suggest the world’s largest economy continue to enjoy a record-long, even if not robust, expansion. 

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Germany, Maybe Europe: No Signs Of The Bottom

For anyone thinking the global economy is turning around, it’s not the kind of thing you want to hear. Germany has been Ground Zero for this globally synchronized downturn. That’s where it began, meaning first showed up, all the way back at the start of 2018. Ever since, the German economy has been pulling Europe down into the economic abyss along with it, being ahead of the curve in signaling what was to come for the whole rest of the global...

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FX Daily, January 16: Markets Look for New Cues with US-China Trade Pact Signed

Overview: The global capital markets are calm today as investors await fresh trading incentives. New record highs in the US equity indices gave Asia Pacific stocks a lift, though China and Taiwan were notable exceptions. Europe's Dow Jones Stoxx 600 is firm new record highs set last week.  US equities are edging higher in Europe. Benchmark bond yields are little changed.

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Lagarde Channels Past Self As To Japan Going Global

As France’s Finance Minister, Christine Lagarde objected strenuously to Ben Bernanke’s second act. Hinted at in August 2010, QE2 was finally unleashed in November to global condemnation. Where “trade wars” fill media pages today, “currency wars” did back then. The Americans were undertaking beggar-thy-neighbor policies to unfairly weaken the dollar.

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