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Tag Archives: EUR

Divergence Reasserted, Extends Greenback’s Recovery

The combination of stronger US economic data and signals from the Federal Reserve that it is looking to continue the normalization process helped the dollar extended its recovery.  The dollar posted a significant technical reversal against many of the major currencies on May 3.  The Dollar Index rose for its third week, as the greenback climbed against all the major currencies but sterling (+0.9%).   Sterling was aided by some polls indicating a shift toward the Remain camp.  The...

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FOMC Minutes Extend Dollar Gains

We felt strongly that the FOMC minutes would be more hawkish than the statement that followed the meeting, and we were not disappointed.  However, our caveat remains:  the minutes dilute the signal that emanates from the Fed's leadership, Yellen, Fischer, and Dudley.  The latter two speak in the NY morning.  Fischer and Dudley's comment will be scrutinized for confirmation of the hawkish read of the FOMC minutes.  Yellen speaks at Harvard at the end of next week.  Her comments at the...

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Greenback Recovers as Rate Support is Enhanced

The US dollar is rising against all the major currencies today.  The Australian dollar is retracing a sufficient part of its recent gains to suggest that the current phase of the US dollar's recovery is not over. Given that the Aussie topped out a week before the other major currencies, it is reasonable that it begins recovering first.  Its recent resilience was noted, but that has evaporated today, but a 0.8% drop by early European activity.   We had noted the divergence between what...

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Brief Look at the Start of the New Week’s Activity

The most notable thing is not what has happened, but what has not happened.  The market has not responded to the soft Chinese data over the weekend.  Chinese equities began softer but recovered fully and the Shanghai Composite closed on its highs.  The MSCI Asia Pacific Index is snapping a two-day losing streak with a 0.5% gain. The Australian dollar is often perceived be influenced by developments in China.  China's disappointing industrial output figures (6.0% from 6.8% in March and...

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Are Dollar Fundamentals Lagging the Technical Improvement?

The US dollar extended its recovery that began on May 3.  Its technical condition remains constructive, even though up until now, the gains are still consistent with a modest correction rather than a trend reversal.   The details of the employment report, if not the headline, coupled with the 1.3% increase in retail sales, have boosted confidence that the US economy is rebounding in Q2 after a six-month slow patch.   The average of the Atlanta Fed (2.8%) and NY Fed GDP trackers (1.2%)...

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Dollar’s Technical Tone Improves, but No Breakout (Yet)

The US dollar continued the recovery begun May 3 and rose against most of the major currencies over the past week.  A nearly 3.5% rally in oil prices, the fifth weekly gain in the past six weeks (a $9.5 advance over the period), helped the Norwegian krone turn in a steady performance.  The Canadian dollar's 0.2% decline put it in second place.   With the strongest rise in US retail sales in a year, prompting the Atlanta Fed's GDPNow tracker to rise to 2.8% for Q2, many observers are...

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Yen Recovers After Being Thrown for 2%

The Japanese yen is recovering from two-day two percent decline.  The yen is the strongest of the majors today, rising about 0.6%.   The greenback initially extended its gains marginally in early Tokyo before the selling pressure emerging.  The price action reinforces the importance of the JPY109.50 resistance area.   The Nikkei initially moved higher and filled the gap created by the sharply lower opening on May 3, following disappointment with the BOJ lack of action at the end of the...

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A Few Thoughts from Asian Business Trip

Sometimes the mountain looks clearer from the plain the summit to paraphrase a American-Lebanese poet.   The dollar appears to have entered a new phase on May 3.  On that day, it reversed higher against the euro, yen, and sterling for lows not seen in a while.     It is tempting to construct a fundamental narrative for the change.  However, the usual drivers are noticeable by their absence.  The US economic data has been mixed, including the employment report that often sets the tone...

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Dollar Drivers in the Week Ahead

The key issue facing the foreign exchange market is whether the modicum of strength the US dollar demonstrated last week is the beginning of a sustainable move.  It is possible that the market is again at a juncture in which the price action will drive the narrative rather than the other way around.  A move above JPY108 and a decline in the euro below $1.1350 signal a start to a broader dollar recovery that may have begun last week with impressive gains against the dollar-bloc. The RBA’s...

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Key Dollar Developments Include Bottoming against the Dollar-Bloc

The US dollar rose against all the major currencies last week. The importance of the price action does not lie with the magnitude or the breadth of the advance. Instead, the two takeaway technical observations are 1) the seemingly one-way market for euro and yen ended and 2) the dollar-bloc currencies appear to have put in at least a medium-term top. We hasten to note that the fundamental developments have not shifted a more dollar-friendly near-term direction.  Investors,  judging...

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