EUR/USD
Ended the week up a fraction after expectations of a Fed rate hike in September faded and both economies reported mixed economic numbers. The week began on a strong note, with the rate making its weekly high of 1.1128 on Monday after German Ifo Business Climate printed at 108.0 compared to an expected reading of 107.6. Also out on Monday were U.S. Durable Goods Orders, which increased +3.4% m/m versus +3.2% anticipated, while Core Durable Goods increased +0.8% m/m versus +0.4% expected. The pair then declined on Tuesday after comments from ECB Executive Board member Benoit Coere in a press interview, where he said that, “In truth, the question is not whether to restructure Greece’s debt but rather how to do it so that it would be really useful for the country’s economy,” adding, “that’s why it’s important to make this restructuring, whatever form it takes, conditional on the application of measures that reinforce the economy and ensure the sustainability of Greek public finances”.

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EUR/USD
Reversed direction, trading higher last week after the Greek Parliament voted in favour of a second package of prerequisites to obtain further financial assistance, while both economies reported mixed economic data. The week began with the rate consolidating after making its weekly low of 1.0808 on Monday after Greece begun repayment of €6.35B to the ECB and IMF. Greeks were allowed to withdraw up to €420.00 from banks per week instead of €60.00 per day.
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Overnight Range 1.3020-1.3103

USDCAD took off like a viral video when early New York/Toronto traders found their desks. One look at the overnight FX markets was enough for traders to pull the Loonie from the sidelines and put it in the game. USDCAD grabbed the ball and took off, streaking down field, touching 1.3103 from a 1.3033 start. It has since retreated but if the 1.3040-50 area holds, 1.3350 will soon be trading.

A big part of the story is China. The move started in Asia with the release of worse-than-expected Caixin (formerly HSBC) Manufacturing PMI which dropped to 48.2 in July, down from 49.4 in June and well below the 49.7 that had been forecast. That news sparked chatter of a PBoC rate cut. Shortly after, headlines came out stating that “China to expand CNY trading band”. Fears of a worsening Chinese slowdown gave the US dollar a bit of a bid and commodity markets got nervous.
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EUR/USD
Traded sharply lower last week as the Greek government and creditors arrived at an agreement, the ECB left rates unchanged and Fed Chair Janet Yellen testified before the House Committee on Financial Services. The week began with the rate dropping sharply on Monday after making its weekly high of 1.1196 after an agreement was arrived at between Greece and creditors at the Euro Summit. Donald Tusk, President of the European Council said, “One can say that we have ‘agreekment’. Leaders have agreed in principle that they are ready to start negotiations on an ESM programme, which in other words means continued support for Greece. There are strict conditions to be met. The approval of several national parliaments, including the Greek parliament, is now needed for negotiations on an ESM programme to formally begin.
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USDCAD Overnight Range 1.2307-1.2377

USDCAD popped higher in early New York trading when traders returning from their long weekend took note of WTI prices pushing through the 38.2% Fibonacci level of the March-June range ($54.44) and trading at $54.22.Wti has since bounced back to $54.60/bbl but the Loonie has ignored the move. Last week’s reports of rising crude inventories combined with the looming possibility of the end of sanctions on Iran increasing oil supplies and renewed economic growth concerns for China, has put downward pressure on oil and the Canadian dollar.
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EUR/USD
Reversed direction, trading lower last week as the Greek debt negotiations continue without resolution and despite mostly positive numbers out of the Eurozone. The United States reported mixed data overall last week. The week began with the pair declining after making its weekly high of 1.1409 on Monday after Donald Tusk, President of the European Council stated at the Eurogroup meetings that, “I can say that since I called this informal meeting, some promising things have happened, including today’s talks and meeting. But the most important thing is that the leaders take full responsibility for the political process to avoid the worst case scenario, which means uncontrollable, chaotic Graccident.” Continue reading


USDCAD Overnight Range 1.2307-1.2377

The Greek PM cries referendum, the Eurozone Finance ministers cry no extension and Greek citizens just cry. News that the Greek government implemented capital controls and shuttered banks until July 7th spooked FX markets in early Asian trading. A bout of risk aversion in a thin market saw EURUSD plunge to 1.0955 from Friday’s close at 1.1170. USDJPY also gapped lower, dropping to 122.20 from 123.80. EURUSD recovered almost all of its losses in Europe while USDJPY has not.

Lost in the tossed salad that was Greek, was news of a 0.25 bp rate cut in China. The one year benchmark deposit rate is now 2.00% while the lending rate fell to 4.85%.
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EUR/USD
Extended its gains last week despite the Greek drama entering its final phase and as the FOMC released a Statement that was perceived as dovish. The week began with the rate gaining after making its weekly low of 1.1188 on Monday after debt negotiations with Greece collapsed after only 45 minutes on Sunday. German Bundesbank President Weidmann said that if Greece failed to make payments it “would have consequences for Greece that are difficult to control.” For his part, ECB President Draghi said that, “The situation in Greece reminds us again that the Economic and Monetary Union is an unfinished construction as long as we do not have all tools in place to ensure that all euro area members are economically, fiscally and financially sufficiently resilient. To complete the Economic and Monetary Union, we need a quantum leap towards a stronger, more efficient institutional architecture.” The pair then lost ground on Tuesday after German ZEW Economic Sentiment printed at 31.5 compared to 37.5 expected, while EZ ZEW Economic Sentiment showed a reading of 53.7 versus 60.3 anticipated.
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EUR/USD
Extended its gains last week as the European Commission upwardly revised EZ economic forecasts and optimism over the situation in Greece supported the rate with both countries reporting mixed economic data. The week began with the pair consolidating on Monday after Spanish Manufacturing PMI printed at 54.2 versus 54.6 expected, while German Final Manufacturing PMI printed at 52.1, in line with expectations. The rate then lost ground on Tuesday despite an upward revision from the European Commission on EZ GDP growth. The agency revised GDP growth for 2015 from +1.3% to +1.5%. Continue reading


USDCAD Overnight Range 1.2048-1.2142

The highly anticipated US (and Canadian) employment reports were greeted with a resounding “meh”. NFP was right on consensus and the unemployment rate is 5.4%. EURUSD rose and fell and is currently back to its pre-release level. The Canadian report was worse than expected, which was actually expected, shedding 19,700 jobs. The details revealed that the data isn’t as bad as it looks with full-time gaining 46,900 jobs. All the losses were part-time. USDCAD trading was erratic but has settled close to where it was before the news.
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EUR/USD
Continued its rally last week as both economies reported mixed economic numbers. The rate was supported by a neutral FOMC Statement and confidence that Greece was nearing an agreement with creditors. The week began with the pair making its weekly low of 1.0818 on Monday in the absence of any significant data out of either economy. The pair extended its gains on Tuesday after Greek Prime Minister Alexis Tsirpas expressed confidence that Greece would reach an outline deal with creditors before EZ finance ministers meet on May 11th, one day before a repayment of €700 million is due to the IMF. Also, U.S. CB Consumer Climate came out with a reading of 95.2 versus 102.6 expected. Continue reading


EUR/USD
Extended its previous week’s gains last week as asset flows favoured the Euro over the Greenback and despite continued concerns over Greece. The rate gained with mostly lower than expected economic data out of both economies. The week began on a soft note, with the rate declining on Monday in the absence of any significant economic data from either the Eurozone or the United States, and after ECB President Draghi said that, “growth projections, as well as inflation expectations – reflected both by outside observers and by ECB staff projections -have been revised upwards. And confidence overall has increased.” Continue reading



USDCAD Overnight Range 1.2223-1.2323

The US dollar is Mr. Toad and it has been on a wild ride this morning. Another bout of weak US economic data (Jobless Claims rose, Housing Starts and Building Permits fell) revered hard won US dollar gains in Europe. USDCAD which had scraped back above 1.2310 prior to the data plunged and is now 1.2228, below the overnight low. The break of major support at 1.2330 combined with a re-evaluation of the Canadian economic landscape and the prospect of higher oil prices have triggered a wholesale bail-out of stale Long USDCAD positions.

The overnight session was entertaining. AUDUSD took over where Canada left off in a lively Asian session. Short AUDUSD traders scrambled to cover positions when Australia announced a whopping 37,700 jobs increase and a drop in the unemployment rate to 6.1% from 6.3% and AUDUSD soared. Kiwi followed AUDUSD higher. USDJPY traders saw the carnage in AUDUSD and USDCAD and sold dollars as well. In Europe, EURUSD traders bought dollars and then reversed course just ahead of the New York opening. The US dollar has been offered ever since.
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EUR/USD Reversed direction, trading sharply lower last week as continued uncertainties for Greece and a possible Fed rate hike in June pressured the rate. The week began with the pair declining after making its weekly high of 1.1035 on Monday despite Spanish Unemployment Change showing a drop of -60.2K, significantly higher than the anticipated -18.3K, while U.S. ISM Non-Manufacturing PMI came out in line with expectations at 56.5. The rate continued its decline on Tuesday despite Spanish Services PMI printing at 57.3 versus 56.6 expected and German Final Services PMI, which printed at 55.4, in line with expectations.
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EUR/USD Continued its rally last week as the Eurozone reported mostly better than expected economic data and the United States reported the lowest Non-Farm Payrolls number since December of 2013. The week began on a soft note, with the pair declining despite German Preliminary CPI increasing +0.5% m/m compared to +0.4% expected and Spanish Flash CPI, which declined -0.7% versus -1.0% expected. U.S. data had Pending Home Sales increase +3.1% m/m, significantly higher than the +0.5% that was expected. The rate extended its losses on Tuesday, making its weekly low of 1.0712 as uncertainty over Greece — which is due to make a payment to the IMF on April 9th — pressured the Euro. Continue reading


EUR/USD Extended its previous week’s gains last week as the United States reported mixed economic numbers while Eurozone economic data was for the most part better than expected. The week began with the rate gaining ground on Monday after making its weekly low of 1.0766 after ECB President Draghi in a speech stated that, “We expect inflation in the euro area to remain very low or negative in the months ahead, because the recent fall in oil prices will continue to influence the figures until later in the year. However, inflation rates are expected to start increasing gradually towards the end of the year. They will be supported by aggregate demand, by the impact of the lower euro exchange rate and by the recovery of oil prices from their current troughs in the years ahead.” Also on Monday, US Existing Home Sales came out at 4.88M compared to an expected 4.91M. Continue reading


EUR/USD Reversed direction, trading sharply higher last week as the FOMC Statement was interpreted by the market as more dovish than expected, and with mostly lower than expected economic data out of both economies. The week began on a positive note, with the rate gaining after making its weekly low of 1.0479 on Monday after ECB President Draghi stated in a speech that, “We are meeting against the backdrop of a steadily recovering economic situation in the euro area. Most indicators suggest a sustained recovery is taking hold. Confidence among firms and consumers is rising. Growth forecasts have been revised upwards. And bank lending is improving on both the demand and supply sides.” Continue reading


America’s influence is waning in the world, militarily, economically, and culturally. The global financial structure which has been in place for decades is unraveling and it will not end well for the United States’ currency and economy. This change is being driven by a desire of many nations with totalitarian capitalism to rid themselves of a reliance on the US Dollar which gives the U.S. power over them through threats to remove a country or institution from the dollarized financial system.

We’ve discussed the consequences to the dollar and America in previous posts as far as reserve currency status and interest rates are concerned and the severe problems they could bring. What I’d like to get across right now is the level of uncertainty which is building up across the global financial architecture.
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I learned from my years on the “street” to buy on the rumor, sell on the news. Well, the news for weeks now has been the European Central Bank (ECB) starting its quantitative easing program and the Federal Reserve Bank of the United States possibly raising interest rates to ward off inflation and bring America out of its free-money bliss. In fact, it seems that this sentiment has become a very crowded trade, pushing the dollar to levels not seen in over a decade.

However, this is now maybe an old story and judging from the PPI data today, the conventional wisdom could very well be wrong. The numbers that came out this morning showed a decline in the Producer Price Index when the consensus estimate was for an increase of 0.3%. Of even more importance is the fact that this was the fourth monthly decline in a row. The PPI is down over the last year where economists expected a flat reading.
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EUR/USD Continued its sharp decline last week as the ECB started its government bond purchase program and the market continued pricing in anticipated guidance for the Fed’s interest rate policy. The rate started the week consolidating at a slightly higher level after making its weekly high of 1.0906 on Monday after the ECB began purchasing bonds under its recently expanded QE program. Also, the Sentix Investor Confidence Index printed at a 7 year high of 18.6, significantly higher than the reading of 15.3 that was expected. The pair then began selling off sharply on Tuesday after speculation in the market that the Fed would remove the word “patient” from their upcoming statement next Wednesday, which would set the stage for a rate hike this summer. Economic numbers had U.S. JOLTS Job Openings at +5.0M, in line with expectations and French Industrial Production, increasing +0.4% m/m versus -0.2% expected. Continue reading


ephesus

Dictators don’t have a good track record of financial management. Just look at Russia, Venezuela, Argentina, etc. if you don’t believe me. Okay, China may be the exception but I don’t think the fat lady has sung there yet. Turkey is channeling Russia big time right now and this will not end well. Stay away from the lira.

The problem is the same tired old scenario that we are unfortunately seeing too many times around the globe these days. Of course the situation in Turkey has the special circumstance that we are dealing with the old Ottoman Empire right next door to the Islamic State and a rising Iran, but that’s another story altogether.
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EUR/USD Extended its previous week’s losses, closing at a level not seen since September of 2003 last week. The loss in the rate was in large part due to a better than expected U.S. Non-Farm Payrolls release and the ECB leaving rates unchanged and reiterating its stimulus program which begins this month. Then pair began the week making its weekly high of 1.1240 on Monday after Eurozone CPI Flash Estimate declined -0.3% y/y compared to an expected decline of -0.5%, while U.S. ISM Manufacturing PMI printed at 52.9 versus an expected reading of 53.4. The rate then consolidated on Tuesday after Spanish Unemployment Change declined -13.5K versus -10.5K expected and German Retail Sales increased +2.9% m/m compared to +0.5% anticipated. Continue reading


AUD/EUR Fundamental Outlook

AUD/EUR extended its previous month’s gains adding another +1.8 percent overall in February. The increase was in part due to the ECB beginning its QE program, the four month extension to Greece’s bailout loan, the interest rate differential and mixed numbers out of both economies. Australian numbers showed improvement in the Trade Balance, which showed a deficit of -0.44B compared to an expected deficit of -0.85B. Also, the Australian housing sector improved last month, with Home Loans increasing +2.7% m/m compared to an expected +2.5%, while Building Approvals showed a decline of -3.3% m/m versus an expected decline of -4.8%.
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EUR/NZD Fundamental Outlook

EUR/NZD lost significantly in February, declining an impressive – 5.4% for the month overall. The decline in the cross was in part due to asset flows favouring the Kiwi over the Euro, Greece accepting a four month extension to its bailout loan and the ECB’s unveiling of their QE program. Economic numbers in Europe were mostly mixed last month, with some improvement in Spanish and Italian PMI numbers, German Factory Orders and German and Eurozone Preliminary and Flash Quarterly GDP data. On the negative side were German Ifo Business Climate and German and French Flash Manufacturing PMIs.
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