When the President speaks, everybody listens

Last week as we wrapped up our analysis for the year, we noted that with the euro buying $1.40 at the time, its reversal from $1.4719 signaled a drop to $1.35 “for the first week of January” ...

A Message to the Dollar Bears

A sea-change seemingly swept the fortunes of the dollar right back onto the rocks Tuesday following the Fed’s de facto adoption of a zero-interest rate policy...

And now the good news

The good news is that investors are finally getting used to bad news. In turn that makes it possible for counter-intuitive rallies especially in equity markets, which is leading intraday moves in currency markets and mitigating somewhat the strength of both the dollar and the yen...

Time and Change

The economic mood turned pretty morbid over the course of the past several days. Collectively investors continue to realise how little they knew six months ago let alone three months ago. Confirmation of recession in the United States along with some of the worst readings on record for manufacturing...

IB FX View
Demand for U.S. fixed income keeps dollar buoyant

The dollar is heading into Thanksgiving Thursday, which marks the onset of the holiday season in the United States, on a firm footing snapping back losses incurred on the back of additional quantitative easing earlier in the week...

Is Ackman tinkering with Target’s call options?

Today’s tickers: VIX, TGT, C, JPM, GE, HPQ, PRU & FDO

VIX – CBOE VIX Index - Implied option volatility as measured by the VIX or so-called market fear gauge rose back to those uncomfortable levels associated with a complete evaporation of investor confidence. Fatigued by relentless selling, led by intense pressure on key financial stocks, option sellers . . . .

IBFX View
British transparency underscores sterling's value

Wednesday November 19, 2008

The forex story has become a subsidiary one to the performance of the equity market, which in turn is playing second fiddle to the day two “we need – more money” discussions on Capitol Hill. Rest assured that currency implied volatility still remains just as does the elevated reading of the VIX. Selling volatility these days in the expectation of a sea-change anytime soon has been eradicated from many currency investors vocabulary...

IB FX View
A race to zero
 

Wednesday November 12, 2008

We know that the Chinese economy has allegedly been growing at a double-digit clip for several years now. The greatest shadow of doubt that lurks over the statistics appeared at the start of the week when we heard news of a gigantic $586 billion economic stimulus package for the Chinese economy. For sure that’s great news, but hot on the heels of 9% growth makes one wonder, “why?” The vigor with which the stock market began the session with quickly folded and before investors could regain their footing, indices were once again in freefall. Two currencies remain investor favorites in this groundhog day era with one weak report following another from month to month, while the repetitious story of weakness in company earnings is feeding on the external environment well beyond a joke. The dollar and the yen remain currencies in chief. The fact that monetary policy in both nations stands at practically zero creates an unusual deflection, which runs counter to the typical yield argument.

IB FX View
What next for the US dollar?

Wednesday November 5, 2008

The dominant theme and increasingly apparent over the closure of the Obama victory has been the decline in implied volatility across all asset classes. It seems that investors are increasingly confident that the breakdown in the global financial system can’t get much worse given the measures put into place. 

Wednesday October 29, 2008

Last week we raised the notion in this column that currency intervention might not be a bad idea to help ease the pain inflicted on emerging market economies in round about fashion following the fallout from a collapsing U.S. housing market. A subsequent round of further currency market volatility allowed for at least three central banks to step in and support their domestic currencies