The dollar stayed in the tight range in which it has been trading over the past week. The range of the dollar index over the past 5 days has been just 0.71%. Talk about stable markets! We had a plethora of data released here in the US yesterday, with most of the numbers coming in below expectations. The big number was third quarter GDP, which was reported at 2.6% compared to an estimate of 2.8%. While the number failed to reach economists upbeat estimates, it was slightly higher than the previous estimate of 2.5% growth. Personal consumption for the third quarter also came in below expectations with a 2.4% increase compared to predictions of a 2.9% rise. And the final piece of data in the GDP group, the GDP Price Index, rose 2.1% versus survey estimates of 2.3%.
[Read more...]Is Brazil For “Real?�
“We were received with a hospitality hardly to be equaled…for [Brazil] asks neither who you are nor whence you come, but opens its doors to every wayfarer.â€�
– Louis Agassiz and Elizabeth Cabot Cary Agassiz, A Journey in Brazil (1879)
I recently spent two weeks in Brazil on a four-city tour – in Campo Grande, Sao Paulo, Florianopolis and finally Rio de Janeiro. What can I say about the experience? I can say that the caipirinha – Brazil’s national drink – is a potent cocktail; Brazilian meats are very salty; Brazilian desserts are very sweet. This taste for the extremes of the flavor spectrum extends to Brazil’s monetary brand, as well.
[Read more...]US Data Releases Could Move the Markets
Good day… We had another fairly quiet day in the markets on Tuesday, and it looks like most of the currency desks have already been placed on autopilot. Every year we get a lull in trading activity toward the end of the year, as most of the currency investors square up positions and don’t take large bets at the end of the year. Many of the desks are manned by junior staff while the big bosses head out for their holiday vacations (EverBank WorldMarkets included). But for the first time this week, we will have a pretty good bunch of data releases here in the US, so we could see a bit more action in the markets. With thinner trading volumes, a rogue piece of economic data can have a major impact on the markets.
[Read more...]US Dollar Rallies on Safe Haven Buying and EU Debt Crisis
Worries over the sovereign debt crisis have pushed investors out of the euro (EUR) and into the US dollar. The “risk� trades have been pulled off the table, and investors are seeking shelter in the relative safety of the dollar. I had a reader ask me what I was looking at on Friday when I wrote that the euro had ticked higher versus the US dollar. Apparently I need to remind everyone that I write this at around 5 AM, so when I talk about the euro moving higher, it is in the early European trading. On Friday, the early euro strength was quickly reversed as the US trading desks took the dollar higher.
[Read more...]Euro Rallies After EU Summit Sgreement
Last time I sat in for Chuck, the markets took us on quite a ride; but with the end of the year within sight, and most of the trading desks short-staffed, I don’t think we will see a lot of big positions being put on the books. Should be a fairly quiet couple of weeks to end out 2010… (Chuck would tell me I just jinxed any hopes of lower volatility!!)
[Read more...]Strong US Retail Sales Equals Stronger US Dollar
A chill came over the currencies and metals yesterday, which was about right, when you take into consideration the trading patterns of the past month… Two days risk on; two days risk off, and so on… This time though, the risk off that began yesterday mid-morning, looked to me to be a fundamental move… What? Fundamentals driving currency movements? What, has the world gone crazy? Well… It certainly looked that way… And it all began with the printing of US retail sales…
[Read more...]Chinese Inflation and Economic Growth Soar
Well, the pause for the cause by US Treasury yields, lasted but one North American trading session on Friday… The 10-year yield has jumped higher once again this morning, all the way to 3.35%!!! WOW! Once again, I wonder aloud if the Treasury Bubble that I’ve cried wolf about for three years, is coming to fruition, or… Is this just another head fake, that will be corrected once the FOMC begins to really pull the trigger on their quantitative easing…
[Read more...]Global Currencies Rally Against the US Dollar
Well… I’ve spent a lot of time this week talking about the rise in Treasury yields… Apparently the rise in yields wasn’t confined to Treasuries, as municipal bonds are getting whacked too… I saw that my friend and former colleague, David Galland, had this to say about the problems with the municipal bonds…
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China Raises Interest Rates to Combat Inflation
Chris did a great job last week, keeping me up to date on what was going on… I thought he described it quite well, with the trading desks cut down to junior traders, and no one wanting to go far out on the limb with positions this close to end-of-the-year position squaring… I truly suspect that will be the case but only magnified to even slower movements and smaller volumes… But that doesn’t mean I won’t have anything to talk about!
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