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Corporate profits as a leading indicator for stocks: January 2015 update

By: New_Deal_democrat

This is an update as to a relationship I have written about several times in the past year. The relationship is straightforward: if corporate profits (deflated by unit labor costs) are a long leading indicator for the economy, and stock prices are a short leading indicator, then logically corporate profits should lead stock prices at least in terms of direction, if not necessarily in terms of volatility. Read more

XE Market Analysis: North America - Jan 15, 2015

By: XE Market Analysis

EUR-CHF collapsed after SNB gave up the 1.2000 franc cap. This sent the cross to a 1.0236, which is a massive price action. With the ECB set to pursue QE, it was always going to be a tall order for the SNB to defend 1.2000, while the central bank stated that "while the Swiss franc is still high, the overvaluation has decreased as a whole since the introduction of the minimum exchange rate," and that "the economy was able to take advantage of this phase to adjust to the new situation." The EUR-CHF nosedive caused chaos in forex markets. Read more

XE Market Analysis: Europe - Jan 15, 2015

By: XE Market Analysis

The dollar traded slightly firmer against the yen and euro, while lost ground to an outperforming Aussie dollar following a much better than expected Australian employment for December. AUD-USD rallied to a three-day peak of 0.8220, extending the recovery from yesterday's low at 0.8068 and contributing to a pretty choppy price action that's unfolded over the last 10 days. Read more

XE Market Analysis: Asia - Jan 14, 2015

By: XE Market Analysis

The dollar took a hit in N.Y. trade on Wednesday, with the selling kicking off after a very weak December retail sales report. EUR-USD had posted new trend lows of 1.1727 in London trade, though shot up from near 1.1775 to over 1.1845 after the data. USD-JPY was slammed again, trading into 116.05 before rallying back on reported carry trade activity. Read more

Copper Also Hitting Multi-Year Lows

By: HaleStewart

While the drop in oil prices has garnered all the press attention over the last few months, other commodities are also dropping. Case in point: the above chart of copper shows that prices are at a five year low. According to the Financial Times, there are several reasons for the drop: overall negative trading sentiment regarding commodities, oil contagion and seasonal weakness. Read more

Ruble Falling Vs. Dollar (Again)

By: HaleStewart

For obvious reasons, the drop in oil prices has been the primary financial story over the last few weeks. This has overshadowed the problems faced by Russia, where dropping oil prices have increased inflation, triggering a spike in interest rates. Read more

XE Market Analysis: North America - Jan 14, 2015

By: XE Market Analysis

The dollar has remained the currency of choice. EUR-USD made a fresh nine-year low at 1.1727 on developments that suggest ECB quant easing is all but a certainty now, and the dollar bloc units making fresh lows amid a copper-led decline in commodity prices and equity markets following a world growth downgrade by the World Bank. Read more

XE Market Analysis: Europe - Jan 14, 2015

By: XE Market Analysis

A big fall in copper prices drove the AUD and dollar bloc lower today. LME copper futures were showing 8%-plus losses at one point, apparently triggered by the World Bank cutting its 2015 global growth forecast. This also affected other commodity prices and equity markets, which in turn underpinned the yen, as per the currency's usual inverse correlation to big swings in risk appetite. Read more

XE Market Analysis: Asia - Jan 13, 2015

By: XE Market Analysis

Crude oil's move to trend lows of $44.19 threatened to wash out equity market gains into the N.Y. session on Tuesday. It was not to be however, as a rebound in crude back over $46, resulted in a sharp Wall Street rally in morning dealings. The dollar was mixed however, as EUR-USD matched last week's trend low of 1.1754 before moving back into 1.1800, while USD-JPY could not match overnight highs of 118.85, and later slipped under 118.00. Read more

XE Market Analysis: North America - Jan 13, 2015

By: XE Market Analysis

The dollar has retained a generally firm tone today. EUR-USD decline from the mid-1.18s to a 1.1789 low. While the dollar has lost some traction as expectations of Fed tightening turn somewhat tentative, the market is still not keen on buying euros with the ECB expected to announce a QE program at the approaching Jan-22 council meeting. Read more


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