The BOE Meets This Week, but Likely Won't Help the Pound

A subdued Chinese session, with the yuan, little changed and local equities securing minor gains, let market participants look elsewhere for directional cues.  The new lows in oil, near $30 a barrel, and the bankruptcy filing of Glencore's US subsidiary Sherwin Alumina seemed to weigh on the dollar-bloc currencies. 

However, sterling has the distinction of being the weakest of the majors.  It is off about 0.4% near midday in London following disappointing BRC sales (0.1 vs. 0.5% expectations) and then a dreadful industrial production report.

When Currency Manipulation is not the Answer

The broad measures of the US dollar are trending higher, and former Fed Chair Bernanke recently refuted claims the US was engaged in a currency war. Many observers had thought that with its unprecedented asset-purchase program, the BOJ was engaged in a currency war.  However, the yen has been the strongest major currency over the past six months, and its export volumes are contracting on a year-over-year basis.

China's Equity Market Form and Function

Developments in China seemed to overshadow other considerations as investors returned from the New Year.  The offices were open and desks manned, yet many did not appear to be prepared to re-deploy resources.  The lack of participation helps explain last week's drama. Sellers showed up or were forced through money management practices (e.g. stop-losses or options triggered). 

Speculators Surprisingly Add Exposure

Due to the holidays, the CFTC has been releasing its Commitment of Traders report late.  With this week's report, the normal Friday release schedule resumes.  The latest report covers the shortened week through January 5.  It is not surprising to find that speculative position adjustments were minor.

There was only one gross position adjustment of more than 8k contracts, and that was the long yen. Speculators increased their holdings by half to 67.5k contracts from 45k. 

China's Latest Rocky Road

Recent market volatility is neither entirely warranted nor unexpected. In China, it reflects a confluence of forces; but in the US and internationally, international worries are fueling the volatility.  On Monday, January 4, China's A-shares plunged by about 7%, whereas the renminbi (RMB) weakened to 6.52 relative to US dollar. 

Yeah, I'm the (Bitcoin) Taxman

Bitcoin enthusiasts have recently been roiled by claims that an Australian named Craig Wright and his deceased partner are the mysterious founders behind the cryptocurrency.

The Shanghai Stock Market's Wild Ride

The Shanghai stock market has had a rough start to the New Year. Bourses are down and trading was halted on its opening day after the market plunged, triggering the new circuit-breaker mechanism designed to limit volatility. It looks as though 2016 will be no less turbulent for China’s stock market than 2015.

Could Gold be Forming a Bottom?

With equity markets tumbling, escalating tensions between a Saudi-led Sunni bloc against Iran, ongoing hostilities in Syria, North Korea testing what it claims to be a hydrogen bomb, the once precious yellow metal is looking perky. 

Gold recorded a six-year low in early December (on the same day the euro fell to $1.0525 when the ECB met).  That low (~$1046.45) retested a fortnight later (~$1047.75).  Between the two lows, gold reached almost $1089. If this is a double bottom, the minimum measuring objective is near $1132. 

The Yen Flexes Some Muscle

Last year was the fourth consecutive year that the yen fell against the dollar.  However, obscured by this factoid is that over the past six months, the yen has been the strongest of the major currencies, rising almost 3.2% against the US dollar.