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Marc Chandler

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  • A Range Affair In Forex?
    Sun, Jun. 22 FXE, FXB, FXY 3 Comments

    Summary

    • Sterling appears stretched, but buying on a pullback strategy remains intact.
    • Euro held key support near $1.35, but appears in a new range with an initial cap near $1.3650.
    • USD broke below CAD1.08 and closed below its 200-day moving average for the first time since Q1 13.
  • A Word About The Price Action In FX
    Thu, Jun. 19 FXE, FXB, FXY 1 Comment

    Summary

    • What was resistance should now be support--$1.36 and $170 for euro and sterling respectively.
    • US Treasury gains are helping yen firm.
    • The Dollar Index is breaking down.
  • What The Fed Did And Did Not Do
    Wed, Jun. 18 FXE, FXY, EEM 25 Comments

    Summary

    • Fed stays on course set by Bernanke.
    • No surprises from statement, forecasts or press conference.
    • Conditions still require assistance, now at the rate $35 bln a month.
  • On The Way To The FOMC Meeting
    Wed, Jun. 18 UUP, UDN, FXE 1 Comment

    Summary

    • FOMC statement, forecasts and press conference are the main events.
    • BOE minutes show few surprises; sterling moves lower on profit-taking.
    • Japan's trade deficit was smaller than expected as both imports and exports fell.
  • 4 Dimensions To The FOMC Meeting
    Tue, Jun. 17 1 Comment

    Summary

    • Composition - Seeing a change to a slight dovish tilt, maybe.
    • Statement - Economy has progressed as expected in April.
    • Forecasts - GDP and unemployment to be cut and PCE deflator could be tweaked up.
    • Press Conference - Expect Yellen to stay on message. No Carney here.
  • The Pound Remains Sterling
    Tue, Jun. 17 FXE, FXB, FXA 1 Comment

    Summary

    • Sterling fully recovers from quick drop on softer inflation.
    • Euro remains in a 5-6 day range.
    • Aussie weighed down by RBA minutes.
  • 3 Developments In China
    Mon, Jun. 16 GOVT, FXI Comment!

    Summary

    • China has provided fiscal support for the world's second largest economy.
    • The PBOC has increased the number of banks who have their required reserves cut.
    • Capital inflows into China appear to have slowed dramatically in May.
  • The Federal Reserve And ECB's Balance Sheets
    Mon, Jun. 16 FXE 4 Comments

    Summary

    • The Fed's balance sheet has not peaked.
    • The ECB's balance sheet shrinkage may slow or actually expand when new TLTROs are made available.
    • The euro-dollar exchange rate does not track the divergent balance sheets very closely.
  • Quiet Though Nervous Start To The Week
    Mon, Jun. 16 FXE, FXB, UUP 1 Comment

    Summary

    • Major currencies are little changed.
    • Sterling poked through $1.70 and was pushed back.
    • Oil and gas prices are firmer.
  • Investment Climate And Geopolitics
    Mon, Jun. 16 UDN, UUP, FXE Comment!

    Summary

    • Economic data this week is likely to be of secondary importance.
    • The Fed and BOE's FPC meeting trump the data.
    • Geopolitical factors are also critical.
  • Forex: Divergent Performances A Key Characteristic
    Sat, Jun. 14 FXE, FXY, FXB 2 Comments

    Summary

    • Dollar-bloc was strong and the euro bloc was weak.
    • For different reasons sterling and the yen trade more like the dollar-bloc.
    • The gross long sterling position in the futures market is larger than the gross long position of euros, yen and Swiss francs put together.
  • Carney Excites Sterling Bulls
    Fri, Jun. 13 FXB, FXE, FXS Comment!

    Summary

    • Carney's warning on rates sends sterling higher.
    • Euro is finding support.
    • Best weekly advance for the Chinese yuan in a few years, supported by evidence the economy has stabilized.
  • U.S.-German 2-Year Rate Differentials And The Euro-Dollar
    Thu, Jun. 12 FXE, EU, EWG 3 Comments

    Summary

    • US premium over Germany has widened to multi-year highs and is re-coupling with the exchange rate.
    • The wider premium is a result of both ends moving, US yields rising and Germany's falling.
    • The full effect of the negative deposit rate has not yet been seen.
  • Dollar Bloc Stands Out
    Thu, Jun. 12 FXE, FXA, FXB Comment!

    Summary

    • New Zealand dollar leads dollar bloc higher on hawkish RBNZ.
    • Sterling remains best-performing European currency.
    • Q1 US GDP vulnerable to sharp downward revision, but May retail sales will confirm Q2 recovery.
  • Oil Update
    Wed, Jun. 11 OIL, FXC, FXA 2 Comments

    Summary

    • Several factors driving up oil prices.
    • Geopolitics is playing an important role.
    • Correlations with currencies are not stable or strong.
  • Euro-Yen Breaks Down
    Wed, Jun. 11 FXE, FXY 1 Comment

    Summary

    • Euro has convincingly broken its 200-day moving average against the yen.
    • A break of JPY138 would target JPY136.
    • Some of the euro bears may be getting ahead of themselves.
  • Sterling Shines
    Wed, Jun. 11 FXE, FXB, UUP Comment!

    Summary

    • Strong UK employment data, but earnings dry up.
    • MSCI says SKorea and Taiwan to remain in EM not DM indices and China A-shares not ready for prime time.
    • RBNZ may hike rates late in the North American afternoon, but risks cited.
  • Scottish Referendum 100 Days And Counting
    Tue, Jun. 10 FXB 5 Comments

    Summary

    • Scottish referendum will be held on September 18.
    • Those opposed to an independent Scotland consistently are polling ahead.
    • Volatility of sterling is likely to increase.
  • Euro Sheds More Post ECB Gains
    Tue, Jun. 10 FXE, FXB, FXY Comment!

    Summary

    • Euro is heavy though peripheral bond market rally continues.
    • The euro is falling through the 200-day moving average against the yen.
    • Sterling resilience underpinned by robust manufacturing data and hawkish MPC comment.
  • What The ECB Did And What It Means
    Mon, Jun. 9 FXE Comment!

    Summary

    • ECB took five steps last week that investors continue to get their heads around.
    • The most important are the negative rate and the TLTRO.
    • While important, we do not think these are game changers.
  • Animal Spirits Are Subdued, But They Are There
    Mon, Jun. 9 FXE, FXY, FXB Comment!

    Summary

    • Narrow trading ranges in fx dominate.
    • Some preference for higher volatile instruments and currencies evident.
    • Mexican peso performance may be counter-intuitive after unexpected 50 bp rate cut before the weekend.
  • Theme For The Week Ahead: Digestion
    Mon, Jun. 9 FXE, FXY, UUP Comment!

    Summary

    • The impact of last week's ECB moves will be monitored.
    • US Treasuries are at important levels.
    • UK employment data will feed the ongoing debate about the magnitude of economic slack.
  • Forex: As You Were
    Sun, Jun. 8 FXE, FXY, FXB Comment!

    Summary

    • Euro was sold on rumor of ECB action and bought on the fact, further gains are likely.
    • Provided 10-year yield stay above 2.5%, rates may have bottomed.
    • The Canadian dollar may be the laggard.
  • Jobs Data Out Of The Way, Euro Advance Continues
    Fri, Jun. 6 FXE, FXC, FXB 1 Comment

    Summary

    • US data as expected.
    • Fed course remains intact.
    • Canada jobs data disappointed. CAD to under perform.
  • It's About The Jobs Report, Isn't It?
    Fri, Jun. 6 FXE, FXB, FXC Comment!

    Summary

    • US jobs data may not be the big driver that it used to be.
    • German trade and current account surpluses illustrate a reason why the euro is resilient.
    • Canada reports employment too; look for a recovery after the drop in April.
  • Draghi Does Everything But QE
    Thu, Jun. 5 FXE 4 Comments

    Summary

    • ECB cuts rates. Negative deposit rate. As expected.
    • Other measures, including expediting preparation for ABS purchases sends euro to almost $1.35.
    • Euro finding some good bids.
  • D-Day For ECB: Decision Day
    Thu, Jun. 5 FXE, FXA, FXC 1 Comment

    Summary

    • ECB is key event.
    • Risk is for the euro to drop on the knee-jerk reaction and then recover.
    • Aussie has remained resilient despite unexpected trade deficit.
  • Inflating Deflation: Confusing Symptoms With The Illness
    Wed, Jun. 4 FXE 4 Comments

    Summary

    • ECB is focused on cutting rates to arrest low inflation and reduce risk of deflation.
    • The cause of low inflation is not too high of interest rates.
    • Insufficient aggregate demand is boosts unemployment and weighs on prices.
    • Monetary policy may be the wrong tool Fiscal policy and structural reforms are needed.
  • European Borrowing Costs
    Wed, Jun. 4 FXE Comment!

    Summary

    • Spanish and Italian SMEs pay more to borrow than SMEs in France and Germany.
    • There has been some convergence of last.
    • We remain concerned about the impact of negative deposit rates, which could be contractionary rather than stimulative.
  • Before We Get To The ECB...
    Wed, Jun. 4 Comment!

    Summary

    • Better than expected Australian and Swedish data leads to their currencies outperforming today.
    • Euro remains range bound despite softer services PMI.
    • US ADP data is the key in North America.
  • Washington State's Minimum Wage Experience
    Tue, Jun. 3 175 Comments

    Summary

    • Economists abstract labor to treat it like a commodity.
    • Raising the minimum wage does not always reduce the demand for labor (cause unemployment to rise).
    • Washington State's experience does not fit economic theory.
  • Thoughts On The Mysterious Low Volatility In The Capital Markets
    Tue, Jun. 3 FXE, VXX, SPY 13 Comments

    Summary

    • Volatility is low throughout the capital markets.
    • Many observers are worried because low volatility preceded the global crisis.
    • Many blame government policies for low volatility and when volatility is high governments are blamed.
    • Volatility is not neutral vis-a-vis market direction.