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Tag Archives: JPY

October Monthly

Trade,  central bank policy, and Brexit dominated the investment climate in September. The US-Chinese trade conflict stopped escalating.  Although face-to-face talks are planned in October and the list of exemptions from the punitive tariffs has increased (US soy and pork, for example, are now exempt as are 10 components of Apple’s Mac Book Pro from China), the tensions remain high.  The conflict is more than about more than trade.  It is also about market access, unfair subsidies, and...

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Great Graphic: Views Distill to Short Sterling Long Yen Opportunity

We have argued that the road to an orderly Brexit remains arduous and that sterling had entered an important technical area ($1.2500-$1.2530).  At the same time, see the dollar as having approached the upper end of its broad trading range against the yen.  One of the important drivers lifting the dollar was the dramatic rise in US yields.  We thought that move is countertrend and that yields are headed lower again.   These views could be expressed in a short-sterling long yen...

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Investors Remain on Edge

Overview:  The confrontation in Hong Kong and the fallout from the Argentine primary over the weekend join concerns the conflict between the two largest economies and slower growth to force the animal spirits into hibernation.  Global equities remain under pressure.  Japan's Topix joined several other markets in the region to have given up its year-to-date gain.  The MSCI Emerging Markets equity index is not from doing the same.  European shares are faring better, and with today's...

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Making Sense of the Dollar: Ten Years Later

My first book, Making Sense of the Dollar, was published by Bloomberg Press ten years ago this week.  It was named a Bronze medal winner by Independent Publishers.  It sought to counter the declinists of the period who, understandably, if even mistakenly, thought the dollar was on an exorable path that had been carved by sterling as it lost numeraire status a century earlier.   In 2008, as the book was being written, the euro reached a record high near $1.60, and sterling was still...

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Cool Video: CNBC Asia and Thoughts on the CNY/CNH and JPY

A few hours after President Trump tweeted the end of another tariff truce with China, I had the privilege of talking with CNBC's Asia anchors Mary Hungerford and Sri Jegarajah on the outlook for the yuan and yen.  The 2.45-minute video clip can be found here. The new tariffs on China will likely further reduce its exports and act as a headwind on growth.  It increases the likelihood of a policy response to blunt the drag.  For these reasons, the yuan was marked down.  If anything, the...

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The FOMC and US Jobs Headline the Week Ahead

There is little doubt that the Federal Reserve will ease monetary policy at the conclusion of the FOMC meeting on July 31.  We never thought the chances of a 50 bp move were anything but negligible, though even at this late stage, the market appears to be pricing in about a one-in-five chance.  Although a minority, and maybe worth a dissent or two (Rosengren? George?), we are sympathetic to those Fed officials that do not see the urgency to ease monetary policy.  Even though Q2...

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Macro Summary: Japan and the Yen

The Japanese yen is the best performing currency so far here in May.  It has appreciated by roughly 1.25% against the dollar.  The same forces that lift it are also boosting the Swiss franc (mtd 1%).  The investment climate has turned in a decidedly less supportive direction following the end of the US-China tariff truce, heightened tensions between the US and Iran, and miscue after miscue in the UK raising the possibility of a disorderly exit from the EU.   Here is a thumbnail...

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CNY, Its Doom Sisters, And Chinese Threats

It’s a tell-tale sign of someone who doesn’t know what they are talking about. In the realm of global currency systems, anyone who brings up China’s massive stockpile of US Treasury assets inevitably they assign all the power to the Chinese. Xi could destroy Trump if he wanted, bringing down the US in a righteous fit of trade war anger. Not only is this totally wrong, it is ignorant of history. Recent history. Toward the end of November 2013, out of nowhere a report appeared in Chinese State...

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April Monthly Currency Outlook

Poor economic data and soft inflation saw several central banks, including the Federal Reserve and European Central Bank, take a dovish turn in March. Contrary to expectations that interest rates would rise as the G3 central banks were no longer adding to their balance sheets on a combined basis. The sharp drop in interest rates and the flattening of curves in March is one of the key factors shaping the investment climate. The fall in yields has occurred even as oil prices...

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Equities Bounce While Bonds Pullback to End Q1

Overview:  The global growth scare may be subsiding.  It had been fanned by the ECB and Fed statements and projections.  Poor US jobs growth reported in early March and the poor flash EMU PMI late in the month contributed.  The slowdown in China and the flurry of measures to combat it also had a role.  The economic soft patch, late in the business cycle, spooked investors and policymakers but better data has already begun, and more is likely in the coming days.  These...

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