Currencies Archive

Buy signal?

Mr. Draghi said at the time that “there is no going back to the lira or the drachma or to any other currency. It is pointless to bet against the euro. It is pointless to go short on the euro.” ...Read More

Euro update and anecdotal econ news

This gives you a pretty good idea of the magnitude of euro selling by central banks. The question is when are they finished, and perhaps, when foreign exporters again pressure their cb’s to increase holdings to target the euro zone for exports, which is the reason the cb’s originally bought the euro. ...Read More

US macro update, FX update

US macro update: So looks to me like it’s all gone bad since the oil price crash, exactly as feared, and the Atlanta Fed most recently lowered it’s Q1 GDP estimate to 0. First, a quick review of the accounting. GDP = spending = sales = income. An increase in spending = ...Read More

trade anecdotes, CPI, FHFA House Price Index, New home sales, Richmond Fed, PMI

It’s the net exports, paid for by non residents selling their currency to buy euro to spend, that drives up the euro until the net exports cease and trade goes negative. And with the rigidities/J curve/etc. the move up could be extreme, with the ECB unable to dampen it due to ideological ...Read More

Chicago Fed, Existing home sales

More bad new, and, again consumption down even with lower gas prices: Chicago Fed National Activity Index Highlights The economy has indeed gotten off to a slow start this year, confirmed by the national activity index which came in at minus 0.11 in February vs minus 0.10 in January. The 3-month average ...Read More

QE, the dollar, and the euro, jobless claims, US trade deficit, Philadelphia Fed survey

So my story is that traders and portfolio managers worried about inflation and currency depreciation from QE caused the depreciation during those periods, covering shorts and restoring dollar weightings after QE ended, returning the dollar to where it was. And now the latest spike is largely from the ECB’s QE announcement which ...Read More

trade and the dollar/euro- supply and demand doing their thing

Note how the portfolio shifting that caused the dollar to appreciate has also caused the US trade deficit, excluding petroleum, to likewise increase. That is, it’s not wrong to say that the global portfolios shifting to dollars are getting more and more of those dollars from US resident’s growing net purchases of ...Read More

consumer credit, trade deficit chart

Nothing good happening here either. Looks like the jobs report was about 100,000 people taking menial jobs out of desperation again. :( Consumer Credit Highlights Consumer credit rose $11.6 billion in January vs an upwardly revised gain of $17.9 billion in December. Consumers did go to their credit cards in December, when ...Read More

Jobs, Currency wars, etc.

Heaps stronger than expected: Employment Situation Highlights Today’s employment situation was heavily positive even though the unemployment rate edged up. Payroll jobs gained 257,000 in January after strong increases of 329,000 in December and 423,000 in November. December and November were revised up a net 86,000. With the revision, November is the ...Read More

flow news in 2014 is bad for the Euro

So I still see all the fundamentals/trade flows favoring the euro vs the $US, with the EU running a trade surplus and the US a deficit, and low oil prices ‘helping’ the EU trade balance while ‘hurting’ the US’s. But the portfolio shifts continue to go the other way, including this report ...Read More