Updated May 17, 2013 2:00:00 PM
Highlights
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Updated May 10, 2013 2:00:00 PM
It was a wild ride for FX markets at the end of last week. The dollar surged, the yen slumped and some G10 crosses breached key technical levels. Volatility also picked up, 1-month implied volatility in JPY jumped from 11.98% on 2nd May, to 12.95% on 10th May. Other currencies that were notably more volatile last week versus the dollar include NZD and the AUD. The dollar has been by far the strongest performer [...] Continue Reading ...
Updated May 3, 2013 12:00:00 PM
Last week was extremely data heavy, including an FOMC meeting, an ECB meeting and culminating with a payrolls report from the US on Friday. So it’s worth taking a look at where the G10 currencies stand versus the dollar. Below we take a look at monthly returns and year-to-date returns. Figure 1: Monthly returns: Figure 2: Year-to-date returns: • The past month has seen a notable decline in [...] Continue Reading ...
Updated Apr 26, 2013 2:30:00 PM
Initial estimates of first quarter GDP figures released so far have caught markets by surprise and currencies have responded accordingly. In the past couple weeks, there have been a downside surprises to Chinese and US 1Q GDP while UK GDP surprised to the upside. A close examination of the reaction in FX to the surprises underscores the importance of economic growth on currencies. To be sure, this is just one of many factors influencing currency [...] Continue Reading ...
Updated Apr 19, 2013 2:00:00 PM
This week is a crucial one for Europe and the UK. April PMI and German IFO data out of Europe will be scrutinized to see if the previously resilient core is also buckling under the weight of low consumer and economic confidence. We will also be watching to see if the UK made history with a triple-dip recession. The PMI data for the Eurozone is the first reading of April figures, and could set [...] Continue Reading ...
Updated Apr 12, 2013 2:20:00 PM
The meeting of EU finance ministers at the end of last week was not meant to focus on Cyprus; in fact the Irish finance minister (and host of the meeting) said that the Cyprus issue was resolved. However, the tiny nation kept creeping up in headlines on Friday, suggesting that a lot of time was spent discussing the funding needs of the island nation. Firstly, the bailout has been extended to EUR 23 billion [...] Continue Reading ...
Updated Apr 5, 2013 1:00:00 PM
For yet another month the ECB sat on its hands and made no change to current policy at its April meeting. However, President Mario Draghi’s tone was noticeably more downbeat, as he said that the risks to the economic recovery, slated for the second half of this year, are to the downside. He also sounded concerned about the lack of credit for small and medium-sized businesses, particularly in the hard-hit south. However, so far the [...] Continue Reading ...
Updated Mar 22, 2013 2:00:00 PM
Cyprus, the tiny island that accounts for a mere 0.2% of GDP in the Eurozone and even makes Greece look sizable, has dominated headlines this week. And as European markets edge into the weekend a bailout deal for the country remains in the balance. The clock is ticking: a deal has to be agreed by Monday (time not specified) otherwise the Cypriot banks will lose their access to the ECB’s Emergency Liquidity Assistance (ELA) financial [...] Continue Reading ...
Updated Mar 15, 2013 2:40:00 PM
European officials could learn a thing or two from the Vatican who elected a new Pope last week. If you want EU officials to make a decision rather than just be a talking shop, lock them in a room and don’t let them out until agreement has been reached. They didn’t take this approach – probably some egregious health and safety law prevents them from doing so – thus we come away from another EU [...] Continue Reading ...
Updated Mar 8, 2013 12:00:00 PM
The February non-farm payroll report ended up being the main event of last week after smashing expectations and rising by 236k, which brings the number of jobs created by the US economy since November to more than 800k. The unemployment rate also edged down to 7.7% from 7.9% in January. This has reinforced a theme that has been threatening to break into the FX market: could the dollar become a growth currency? There have [...] Continue Reading ...
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