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Tag Archives: GBP

Cool Video: CNBC-Asia–Brexit, Sterling, the Euro, and Dollar

I had the privilege to join Sri Jegarajah at CNBC Asia at the start of today's Asia Pacific session.  We had a broad chat about the dollar, Brexit, and the euro.  He gave me the opportunity to sketch out my views:1.  The dollar's entered a cyclical decline, and the "twin deficit" issue will likely frame the narrative.  Many observers do not use that particular phrase now, but their arguments seem to rest on one if not both of the legs.  2. Sterling gains appear to be more short-covering than...

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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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Sterling Sparkles in Dollar Setback

Overview:  Investors have not let the surge of the virus or uncertainty over the UK-EU talks or US fiscal stimulus to stand in their way.  Sterling is leading the major currencies higher, returning to the $1.30 area, while global equities are trading higher.  In the Asia Pacific region, Chinese shares, and Thailand, where large-scale protests continue, bucked the move higher, led by more than 1% gain in Japan and Taiwan.  Europe's Dow Jones Stoxx 600 is pushing higher (~0.5%) for the second...

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The Critical Week Ahead

Many macroeconomic and geopolitical issues remain open and are unsettling.  Europe is wrestling with the Turkey-Greece dispute over territory of potentially significant value in the Mediterranean.  The trade negotiations between the UK and EU have deteriorated, and the window of opportunity for an agreement is closing quickly.  Meanwhile, the poisoning of a Russian opposition leader, apparently using the same nerve agent that has been used on other "enemies of the state," is threatening...

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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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Cool Video: Forces Driving the Dollar and Downplaying Claims Sterling is an Emerging Market Currency

From my remote location in Ocean Grove (next to Asbury Park of Bruce Springstein fame), I joined Martin Soong and Sri Jegarajah for a brief interview as the Asia session was about to begin the new week. A three-minute clip of the interview can be found here. I suggest that there are two main drivers of the markets now.  There is the fear of the new surge in Covid cases and the economic implications, on the one hand, which discourages risk-taking.  On the other hand, the vast sums of...

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Brexit Update

Three and half years after what was initially a non-binding referendum, the UK has seen its way to leave the EU.  The House of Commons passed the necessary legislation last week as Tories enjoys a parliamentary majority.  The House of Lords takes up the measures now. Although the Conservatives do not have a majority and a vigorous debate is expected, the unelected body is most unlikely to block Brexit.   What happens next?  The UK will formally exit the EU at the end of the month. ...

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Is Conventional Wisdom Too Optimistic? The Week Ahead

There have been three general issues that the macro-fundamental picture has revolved around this year:  trade, growth, and Brexit.  On all three counts, conventional wisdom seems unduly optimistic, and this may have helped dampen volatility. A series of signals suggest that the US and China remain far apart in trade negotiations.  The US wants China to promise to increase agriculture imports from American farms to more than twice the 2017 peak.  Not only is China understandably...

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Fed’s Mid-Course Correction to be Challenged while ECB Resumes Bond Purchases

The week ahead will help shape the investment climate for the remainder of the year.  The highlights include three central bank meetings (Federal Reserve, Bank of Japan, and the Bank of Canada).  Among the high-frequency data, the US and the eurozone report the first estimates of Q3 GDP, and the US October jobs data and auto sales will be released.  Investors will also get the preliminary Oct CPI for EMU. A few hours before the FOMC meeting concludes on October 30, the US will...

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Brexit High Drama

Before Prime Minister Johnson submitted the withdrawal bill that he had negotiated with the EU, a Tory-backed bill to not consider it until the implementation bill is approved, carried by a 322-306 margin.  The disgruntled Democrat Unionist Party's 10 votes made the difference, but there were also 10 independent Conservative MPs, who had lost the whip or voluntarily surrendered that also voted against the government.  A few have indicated that they do in fact support the agreement...

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