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XE Market Analysis: Asia - Dec 07, 2016

By: XE Market Analysis

The FX market was fairly quiet in N.Y. on Wednesday, with the dollar largely trading sideways, with the exception of USD-CAD, which fell following the BoC policy announcement, and despite oil price losses. EUR-USD ranged between 1.0726 and 1.0768 through the session, as USD-JPY slipped briefly under 113.50, before rallying over 113.90 on the back of a surge higher on Wall Street. Read more

XE Market Analysis: Brexit Timetable Tumbles Sterling

By: xemarketanalysis

OVERVIEW US factory orders rose 2.7% in October, the largest gain since June 2015 and the fourth straight month of gains. UK industrial output suffered its biggest monthly drop in more than four years in October after the temporary shutdown of a major oilfield, while factory output also fell unexpectedly. German industrial production rose just 0.3% in October, less than the market forecast for a 0.8% increase. Australia's economy contracted unexpectedly in the third quarter, the first time growth fell since 2011. HIGHLIGHT The Pound fell from a 2-month high against the US Dollar yesterday following the government agreeing to a Labour party motion to provide details on their plans for Brexit. Read more

XE Market Analysis: Asia - Dec 06, 2016

By: XE Market Analysis

The dollar firmed up some in N.Y. trade on Tuesday, though only by a bit overall. The dollar index was up about 0.4% to 100.60, after briefly dipping under the 100 mark in London. Incoming U.S. data was USD positive, with factory orders hitting a 1.5 year high. Read more

2017: a late-cycle year of inflation?

By: New_Deal_democrat

It appears that 2017 is setting up as a typical late cycle year of inflation. That's certainly what the long bond seems to expect: But there are other reasons to think that inflation may be about to hit a recent high. To begin with, over the last 8 months, prices have increased 1.7%, or roughly a 2.5% annualized rate: To a large extent, this is about oil and gas prices normalizing as shown on the below graph of gas's YoY% change: Additionally, CPI for shelter has been increasing at over 3% a year: Since house prices tend to follow sales, and house sales have made new highs in the last few months, that suggests that house price inflation might also accelerate: As I wrote several weeks ago, we may be coming in for a good spate of employment numbers, including a decline in the unemployment rate, and this will add to some wage pressure: So there is good reason to believe that the inflation rate is going to increase significantly over 2% next year. Read more

XE Market Analysis: German Industrial Orders Surge

By: xemarketanalysis

OVERVIEW Last month the U.S. service sector saw activity growth increase at its fastest pace in over a year with the PMI jumping to 57.2 from 54.8 in October. The U.S. trade deficit widened to $42.6 billion in October as exports fell. Australia's central bank kept interest rates on hold at 1.5% as expected. South Africa's economy grew just 0.2% in the third quarter as manufacturing declined more than expected. Read more

XE Market Analysis: Asia - Dec 05, 2016

By: XE Market Analysis

The dollar struggled through the N.Y. session on Monday, posting highs early in the session before fading lower into the close. EUR-USD appeared to benefit from a fairly pronounced short-squeeze, making its way to highs just under 1.0800. USD-JPY meanwhile, failed to breach last week's trend high, and fell to 113.16 lows from highs over 114.77. Read more

XE Market Analysis: Euro Rebounds After Italian Referendum Defeat

By: xemarketanalysis

OVERVIEW Italians voted 'no' by a larger than expected margin, with 59% of votes siding against Prime Minister Renzi's proposed reforms, leading to him resigning. Markets initially reacted negatively to the news, but have since recovered their losses. The Eurozone services PMI dipped slightly to 53.8, but combined with the strong manufacturing PMI, it pointed to the fastest pace of growth this year. Read more

XE Market Analysis: North America - Dec 05, 2016

By: XE Market Analysis

The euro dove in early Asia before rebounding strongly during the European AM. EUR-USD was showing 0.4% gain after declines of more than 1% at the lows, while EUR-JPY has gone from a 1%-plus loss to a 1.0%-plus rise. While markets are cementing in expectations for the ECB to extend its QE program following the resounding "No" vote at Italy's referendum on constitutional reform, markets are also anticipating that the Fed will go easier on the tightening pedal, which tipped the dollar lower. Read more

XE Market Analysis: Europe - Dec 05, 2016

By: XE Market Analysis

The euro pared losses after diving by over 1% versus the yen and euro in early Asia. News that Italian PM Renzi suffered a resounding defeat in the weekend referendum on constitutional reform spooked markets, though in Austria the far right and with it anti-EU forces suffered an equally convincing defeat in the weekend's presidential election, with the new President elect Alexander Van der Bellen stressing that he would be an "a pro-European president" and a signal that the populist wave may have a limit in Europe (a by-election in the UK last week hinted at this too). Read more

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