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Tag Archives: EUR

The Week Ahead: It’s Not about the Data

High frequency economic reports will be not be among the key drivers of the capital markets in the week ahead. The light schedule, consisting mostly of industrial production in Europe, inflation for Scandinavia, and US retail sales, will have minimal impact on rate expectations.   A November rate Fed move was never very likely.  The September employment report needed to be amazingly strong to boost the chances, and it was not.  To overcome tradition, and the logistical...

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US Jobs Data Disappoints, but Still Strong Enough to Keep Risks of a Dec Move on Rates

The US grew 156k jobs in August, missing the median estimate by about 16k.  The July series was revised up by 16k.  The unemployment and participate rate ticked up 0.1% to 5.0% and 62.9% respectively.    Hourly earnings rose 0.2% to lift the year-over-year rate to 2.6% from 2.4%.  The average work week increased to 34.4  hours from 34.3.   As we noted the initial estimate in September has typically disappointed since the financial crisis.  However, we had thought this...

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Sterling Stabilizes After Harrowing Drop, Now Jobs

Sterling Stabilizes After Harrowing Drop, Now Jobs | Marc to Marketc wc w wc w wc w w e+uGGz e+uGGz e+uGGz e+uGGz e+ e+ Gz e+uG e+uG e+ uG e+ e+ uGDDDDDDuGOctc w7c wc w wc w wc wc DDD e+ Gz e+DDD Stea.DAg StabplXNds AZWQgdHarrowRED Drop, Now JobsDe+ Gz DDD c wcDDStea.DAg agadn steale++US limeauYsA.  InASArly Asia, stea.DAgYDAYxplicably dropp9HonSArly s eas-typS-head-LDRw0s (to ~$1840),DDDDD-I5someEAQ3tRIA s,U0ey havAAAAA/eyarticKn$1.1380.  It alm AddimjSQhDtely rebABgTed6o0e oNS...

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The Dollar is Firm in Quiet Market

[unable to retrieve full-text content]The US dollar is advancing against the major and most emerging market currencies.    Activity is subdued and ranges are narrow. We share four observations about the price action.  First, the euro has been unable to sustain upticks even after Germany reported a jump in industrial orders three-times more than the median estimate (1.0% vs. 0.3%).  More generally the dollar's rise has coincided with the firmer equities and higher...

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Great Graphic: US-German 2-Yr Differential and the Euro

This Great Graphic from Bloomberg shows two time series.  The white line is the spread between the German two-year interest rate and the US two-year yield.  The yellow line is the euro-dollar exchange rate.    Two different scales are needed as when the times series are indexed; the relative volatility is such that the details cannot be observed.   The German discount to the US reached 152 bp today, which is a new high extreme since 2006.  The pre-crisis peak was...

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Why Portugal Matters

Many observers continue to tout Italian risks as the greatest in the euro area into the year end.  The constitutional referendum that would emasculate the Senate, and end the perfect bicameralism that has contributed to more than 60 governments since the end of WWII. The fact that Prime Minister Renzi indicated he would resign if the referendum did not pass highlighted the political risk.  The second largest party in Italy after Renzi's PD coalition is the Five-Star...

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Euro Remains Firm Despite Dubious Tapering Story

The euro is consolidating yesterday's recovery.  It is trading in about a quarter cent range above $1.12.  The focus is not on today's service and composite PMI, which in aggregate was in line with the flash readings.  The service PMI ticked up to 52.2 from 52.1 in the flash, but the composite reading was steady at 52.6.  Recall that 52.6 matches the lowest level since January 2015.  While the markets can be an incredibly efficient discounting mechanism, it sometimes...

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Sterling’s Slide Continues, but Greenback is Broadly Bid

UK Prime Minister May's comments at the Tory Party Conference over the weekend played up the risk of what has been dubbed a hard Brexit and triggered a slide in sterling saw it fall to new 30-year+ low against the dollar just below $1.2760.  A stronger than expected recovery in the UK construction PMI helped sterling stabilize in mid-morning London turnover.   May offered little solace to financial services industry, which accounts for about an eighth of the UK's GDP...

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Cool Video: Bloomberg TV–Dollar Supercycle and Brexit

I was on Bloomberg TV earlier today with Tom Keene, the one of a kind anchor, and Booth Business School Professor Luigi Zingales.  In the first clip, we look at the Federal Reserve's broad trade weighted index of the dollar.  It rose 0.65% in September.  It is the fifth month this year, this measure of the dollar increased.  It rose nine months in 2015.  It is 1.75% lower since the end of last year.   The US dollar has had two other significant rallies since the end of...

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IMF’s Reserve Data: Dollar Share Little Changed, Yen Share Jumps, Helped By Valuation

The IMF provides the most authoritative data on central bank reserves.  The composition is published at the end of the quarter for the preceding quarter.  At the end of last week, its COFER report was published with data through the end of June 2016.   This Great Graphic from the IMF provides 2.5 years of the composition of allocated reserves.   Beginning at the highest level, we note that the dollar value of global reserves increased by $55 bln in Q2 to $10.993...

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