Brown Brothers Harriman - "In the first part of next week, ahead of the FOMC meeting, we expect a generally firmer dollar. It seems to be a much more forgivable to be long dollars ahead of the decision that has been awaited for a third of the year than to be short dollars. That said, we suspect the dollar may weaken after the FOMC decision. The Fed is more likely to do less rather than more relative to market expectations.
That sell-off can extend into the end of the week. However, we…
Brown Brothers Harriman: "We continue to identify four main macro issues shaping the investment climate:
1. The tapering anticipation in the US
2. the stabilization of the Chinese economy
3. a cyclical recovery in Europe
4. and the long awaited Japanese purchases of foreign bonds."
Added by Francesc Riverola on August 12, 2013 at 4:43pm — No Comments
Brown Brothers Harriman - "Euro: The euro managed to push through the Bernanke-induced high set on July 11 just above $1.3200 and raced to $1.33 before running out of steam. After posting a seemingly bullish outside up day on Thursday (July 25), the euro consolidated in less than half a cent range before the weekend.
The euro has approached a downtrend line drawn off the 2011 high near $1.4940, the Feb 2013 high just above $1.3700, and June high a little above $1.34. It…
Added by Francesc Riverola on July 28, 2013 at 9:02pm — No Comments
Brown Brothers Harriman - "Euro: After recovering from $1.2755 on July 9 to $1.3200 on July 11, the single currency has been consolidating. In that consolidation, it has been carving out what appears to be a flag, which is understood as a continuation pattern. However, we are skeptical of the pattern's validity as it is getting too close to the apex. Nevertheless, the relative strength index and the MACDs are constructive and the 5-day average crossed above the 20-day…Continue
Brown Brothers Harriman - "BBH: Japanese voters to the polls on July 21 to elect half of the upper chamber of parliament. With the Prime Minister Abe and his cabinet enjoying strong support and the economy recovering, even if deflation has not been completely eradicated, the coalition government is widely expected to secure a majority. This will end the split in the Diet and ensure Abe has the legislative support for his economic program.
(...) There is a potential down trend line for…
Added by Francesc Riverola on July 18, 2013 at 2:29pm — No Comments
Brown Brothers Harriman - "Our longer term bullish dollar outlook has not been impacted by the near-term volatility or the possibility that the Fed's exit strategy is more prolonged than the market had come to anticipate. We have argued that the tapering may begin later than the consensus expected. This view was based on 1) ideas that the economy would stay weak in Q3 and that underlying employment growth was not accelerating; 2) that low core inflation might not be able to be ignored if…Continue
Added by Francesc Riverola on July 15, 2013 at 4:29pm — No Comments
Brown Brothers Harriman - "The euro has taken out the trend line objective we have been highlighting that came in near $1.2850. That area, and perhaps extending toward $1.2900 may offer fresh selling opportunities on corrective upticks. Our next target is the $1.2680-$1.2750 area. The euro-dollar exchange rate continues to track the US-German 2-year rate differential. That spread has widened sharply from about 8 bp on June 20 to nearly 29 bp before the weekend, a new high for the year.…Continue
Added by Francesc Riverola on July 7, 2013 at 6:09pm — No Comments
Brown Brothers Harriman - "Before the weekend, the Dollar Index set new highs for the move, while sterling and the Australian dollar recorded new lows. The euro and Canadian dollar came within ticks of the lows set earlier in the week. While there may be some consolidation ahead of the key events next week, which include several central bank meetings (RBA, Riksbank, BOE and ECB), the monthly PMIs and US employment data, the US dollar is likely to continue to strengthen.
Added by Francesc Riverola on July 1, 2013 at 12:15pm — No Comments
Brown Brothers Harriman - "Observations on the speculative positioning in the CME currency futures:
1. In the CFTC's reporting week, the gross short currency futures positions were cut across the board. Gross long position adjustment were more mixed; the euro, yen, sterling and Swiss franc longs expanded, while the Canadian and Australian dollars and Mexican peso were reduced.
2. There were four significant gross position adjustments (more than 10k contracts): Both the gross euro…
Added by Francesc Riverola on June 17, 2013 at 11:36am — No Comments
Brown Brothers Harriman - "Last week, we warned that although the technical factors looked constructive for the dollar, the fundamentals, in the form of the ECB not delivering on the negative deposit rate (that Draghi said he had an open mind about) and additional aid for small and medium size businesses, were less supportive. We also anticipated that the jobs data would not support notions from some Fed officials (and market participants) that tapering of the purchases of long-term assets…Continue
Added by Francesc Riverola on June 10, 2013 at 8:57am — No Comments
BBH - "The main development in the foreign change market over the past week has been the short squeeze of the yen, and to a lesser extent, the Swiss franc.
The move coincided with a backing up in JGB yields, with the 10-year approaching the 1.0% threshold, a nearly three-fold increase since the BOJ announced its more aggressive monetary stance in early April. The Nikkei took it on the chin, falling 12.5% between Thursday's high near 16k and Friday's low just below 14k.
Many of the…
Added by Francesc Riverola on May 27, 2013 at 9:44am — No Comments
Brown Brothers Harriman - "The dollar is mixed against the majors heading into the US holiday weekend. The euro firmed a bit after the stronger than expected German IFO confidence reading, but has been unable so far to breach the $1.30 area. The Swiss franc and the yen are up on the day as well, while the dollar bloc is underperforming and lower on the day. EM currencies are mostly firmer, but remain largely within recent ranges.
(...) The euro has bumped up against the week's high near…
Added by Francesc Riverola on May 24, 2013 at 11:05am — No Comments
Brown Brothers Harriman - "Euro: A large head and shoulders pattern is being carved out. The neckline is seen near the late March and early April lows around $1.2740. Below there is the low from last November near $1.2660, which is just below the $1.2680 retracement objective ($1.2680) of Draghi's OMT induced rally. The measuring objective of the head and shoulders pattern would carry the single currency below $1.20, our year-end target. The euro's 50-day moving average has…Continue
Added by Francesc Riverola on May 20, 2013 at 5:20pm — No Comments
Brown Brothers and Harriman - "The dramatic sell-off of the Australian dollar is the latest of a series of price developments that have surprised the market. (...) The Australian dollar was the market's darling. It was an accessible even if not perfect way to get exposure to China and its vociferous demand for commodities. It was one of the few triple-A rated countries left standing after the financial crisis. Its interest rates were relatively higher in an environment in which there was a…Continue
Added by Francesc Riverola on May 16, 2013 at 1:55pm — No Comments
Brown Brothers Harriman - "1. The gross short yen positions increased by 10.4k in the week ending May 7. This is consistent with ideas that the speculators were anticipating a break out after the Golden Week holidays ended. Some cast conspiratorial allusions to the fact that the dollar broke above JPY100 prior to news that Japanese investors had bought (a relatively small amount) foreign bonds in the past two weeks. Anticipation more than malfeasance is the more likely explanation.
Added by Francesc Riverola on May 13, 2013 at 9:18am — No Comments
Brown Brothers Harriman - "The Dollar-Index did rally in the second half of last week, but ran into a wall of offers near 82.50 a key retracement objective of the previous week's drop. Provided this area holds, we are more inclined to see it fall toward 81.20 and maybe 80.70.
The decline in the euro in the second half of last week largely held a trend line drawn off the April 4 and April 24 lows. The trend line comes in near $1.3070 on Monday and $1.3125 by the end of next week. Initial…
Brown Brothers Harriman - "Looking forward, the bad news is that the technical outlook has been not clarified by the price action in recent days The good news is that there are a number of key fundamental developments in the coming days that will help strengthen or crystallize the underlying trend. These events include the euro area PMIs , the US employment data and the ECB and FOMC meetings.
Our near-term bias is for a stronger euro, but the price action itself has been poor.…
Added by Francesc Riverola on April 29, 2013 at 10:25am — No Comments
Brown Brothers Harriman - "Nippon Life, Japan's largest lifer insurers, provided some broad details of its investment strategy in the new fiscal year. Meiji Yasuda Life Insurance and Sumitomo Life Insurance will hold a briefing Wednesday. The market is arguably paying more attention to the plans of the insurance companies, one of the institutional investors in Japan (along side pension funds and the banks), given the BOJ's announcement of aggressive purchases of JGBs this year and next.…Continue
Added by Francesc Riverola on April 22, 2013 at 9:08pm — No Comments
Brown Brothers Harriman -
"- There were three developments from late Friday that will impact the investment climate this week.
. First, the G20 was not critical of Japan's efforts to reflate its economy
. Second, Fitch cut the UK's credit rating to AA+ from AAA
. Third, Italy took an unprecedented step this weekend to give the current president another term
- Meanwhile, PD leader Bersani resigned after he failed to carry a substantial number of deputies in support of…
Added by Francesc Riverola on April 22, 2013 at 4:22pm — No Comments
Brown Brothers Harriman - "The krona is poised to correct higher against the US dollar in the week ahead. We look for the dollar to be pushed lower from the SEK6.50 area currently to SEK6.41-SEK6.43 in the near-term. The euro is looking more resilient against the krona. The euro-SEK chart has a downtrend line drawn off the mid-Dec high and the highs from the second half of January that comes in now near SEK8.50. This offers initial support but additional support is seen near SEK8.48…Continue
Added by Francesc Riverola on April 19, 2013 at 3:26pm — No Comments