Conspiracy theories have run amok. After several years of claiming countries were engaged in currency wars or attempts to drive their currencies down to achieve export advantage, many reporters and analysts announced a volte-face. At the late February G20 meeting in Shanghai, a secret accord has been concocted that declares a truce in this made up war.
This Great Graphic, created on Bloomberg, depicts the CRB Index, a basket of commodity prices. The technical picture has deteriorated, and the price action in the coming sessions is particularly important in determining outlook.
The most extreme speculative positioning, judging from the futures market is the long yen position. The bulls added another 3.4k contracts, lifting the gross long position to 82.8k contracts. The record was set in 2008 at 94.7k contracts.
The gross short position was trimmed by 4.5k contracts, leaving 29.5k. It is the smallest gross short position since before Abe was elected in Prime Minister in 2012. The net long yen speculative position rose to 53.3k contracts. The record was also set in 2008 at 65.9k contracts.
The US dollar rose against all the major and most emerging market currencies last week. After selling off following the ECB and FOMC meetings, the dollar found better traction. It was helped by widening interest rate differentials. Regional Fed manufacturing surveys for March suggest the quarter is ending on a firm note. With new orders rising, it is reasonable to expect the momentum to carry into Q2.
We have been looking for a bottom in the US dollar against the Canadian dollar. It is been difficult, but now it appears that the technicals are turning. This Great Graphic, from Bloomberg, shows that the US dollar is moving above a trend line down off the January 20 high just below CAD1.47.
Helicopter money is the rage. Central banks are talking about it. Economists are debating it. The media is rife with coverage. While it sounds important, it is not precisely clear what helicopter money means.
The UK referendum is three months away. Three-month options are a common benchmark for various market segments from speculators, to fund managers to corporations. Events over the past week have raised the risks that the UK votes to leave the EU.
Until last September, the Federal Reserve seemed to play down the market-based measures of inflation expectations, preferring the surveys that showed views were anchored. At the September 2015 FOMC meeting where the Fed had been expected to tighten until the August turmoil, officials cited among other considerations, the decline in market-based measures of inflation expectations.
After a relatively quiet period into the run-up to the ECB, speculative activity markedly increased in the CFTC reporting week ending the day prior to the conclusion of the FOMC meeting.
