Currencies

Why and How Greece Must Exit the Euro

twocents@thestreet.com (Peter Morici) — Wed, 16 May 2012 15:54 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheStreet) -- Austerity is imposing intolerable unemployment and political chaos in Greece and won't permit it to repay its debts. Athens must abandon the euro and reintroduce the drachma.

After the euro was adopted in 1999, productivity growth was slower and prices rose faster in Southern Europe than in Germany and other northern states. The more competitive north enjoyed growing trade surpluses while the Mediterranean states ran deficits. ...

Break Up the Eurozone: The Only Workable Option

twocents@thestreet.com (Elliott Morss) — Mon, 14 May 2012 21:01 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheStreet) -- For some time, I have argued the eurozone is not a viable economic entity. In a recent piece, I predicted that until it is broken up:

The French and German governments, working on behalf of their banks, will squeeze all they can out of the "weak sisters". Unemployment rates will continue to increase with accompanying civil disorder/riots becoming more intense. The leaders of the "weak sisters" will commit political suicide by continuing to support the ECB/IMF mandates. ...

Socialism Sells

twocents@thestreet.com (Debra Borchardt ) — Mon, 07 May 2012 15:07 GMT

Socialism sells -- or at least brings out the sellers.

Little Reason to Hold U.S. Dollars

twocents@thestreet.com (Andrea Tse) — Wed, 02 May 2012 14:37 GMT

No one wants to hold U.S. dollars unless they can't help it, says DailyFX Strategist David Rodriguez.

Bulls Cherry-pick News: Dave's Daily

twocents@thestreet.com (Dave Fry) — Fri, 27 Apr 2012 23:30 GMT

U.S. GDP Data was worse than expected (2.2% vs 2.6% expected & prior 3%). There's nothing good about this data unless you believe spring weather caught up with a warm winter. Is that the spin? Perhaps. Others might just return to the previous mantra from the past few years: "bad news is good, good news is better" cynically meaning the Fed will launch another round of QE. It's the belief by bulls that no matter the data the Fed has your back until its QE effect exhausts itself. Nevertheless the weaker GDP data confirms what we're seeing globally--economic contraction. ...

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Pending Home Sales Trump Poor Jobless Claims: Dave's Daily

twocents@thestreet.com (Dave Fry) — Thu, 26 Apr 2012 23:41 GMT

Jobless Claims (388K vs 375K expected & prior revised higher 389K) allowed for a beat with (ahem) revisions. Pending Home Sales (4.1% vs 1% expected & prior at -.5%) is what bulls seized on shrugging off poor employment data. Bulls see claims data as just more of the same. But people are also losing their benefits with 700K expected to be out of luck by next month.

Earnings continue to come in beating expectations which is typical frankly. With housing data stronger the charge higher was led by Homebuilders (ITB) and REITs (IYR) was still trending higher with hotels doing better. Tech (XLK) continued to build on Wednesday's gains. Consumer discretionary (XLY), retail (XRT), financials (XLF) and energy (XLE) also trended higher. ...

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EUR-USD Biased to the Downside

twocents@thestreet.com (Mohammed Isah) — Wed, 18 Apr 2012 11:55 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- Our outlook on EUR-USD remains lower for a likely return to the 1.3003-to-1.2975 levels. This view remains valid as long as the pair continues to hold and trade below the 1.3387 level and its long-term falling trendline.

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USD-CHF: More Weakness Likely

twocents@thestreet.com (Mohammed Isah) — Tue, 17 Apr 2012 17:23 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- The risk remains for the dollar-Swiss franc currency pair to weaken further.

As long as the 0.9331 level remains as resistance, the pair's weakness that started at the 0.9591 level remains intact. ...

GBP-JPY: On a Slippery Slope

twocents@thestreet.com (Mohammed Isah) — Mon, 16 Apr 2012 18:34 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- GBP-JPY: With GBP-JPY selling off and following through lower on the back of its Friday losses, the risk is for it to weaken further. It looks as if it is heading toward its key support located at the 126.53 level.

...

China's Widening of Yuan Trading Range Is Meaningless Gesture

twocents@thestreet.com (Peter Morici) — Mon, 16 Apr 2012 14:18 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheStreet) -- Sunday, Beijing announced it was widening the daily trading range for the yuan to 1% against the dollar.

Some are heralding this news as another indication that China is liberalizing its currency and that the yuan may now be fairly valued. ...

Iran, Big Powers Agree to Meet Again

twocents@thestreet.com (The Associated Press) — Sat, 14 Apr 2012 23:50 GMT

By George Jahn

ISTANBUL -- In a rare show of unity, Iran and the world's big powers on Saturday hailed their first nuclear meeting in more than a year as a key step toward further negotiations meant to ease international fears that Tehran may weaponize its nuclear program.

The one concrete reflection of progress was an agreement to meet again on May 23 in Baghdad, a venue put forward by Iran. ...

China Eases Currency Controls Slightly

twocents@thestreet.com (The Associated Press) — Sat, 14 Apr 2012 15:45 GMT

BEIJING -- China's central bank announced Saturday a slight easing of its controversial currency controls. It says it will allow the country's yuan to rise and fall by a slightly wider margin against the dollar in daily trading.

The change could allow a faster rise for the yuan, which Washington and other trading partners complain is undervalued. But any increase will likely be too small to satisfy many critics, and Beijing already has warned that future gains will be limited.

...

GBP-USD Keeps Risk to the Upside

twocents@thestreet.com (Mohammed Isah) — Thu, 12 Apr 2012 11:22 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- We continue to retain our upside bias on GBP-USD while it trades and holds above its trendline support at 1.5803. As long as this continues to hold, GBP is likely to return to its key resistance at 1.6059 level.

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GBP-USD: Remains Above Rising Trend Line

twocents@thestreet.com (Mohammed Isah) — Wed, 11 Apr 2012 13:51 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- The pound-dollar currency pair may be hesitating and threatened by the bears, but it continues to trade and hold above its trend-line support (at 1.5803).

As long as GBP-USD holds above this line, it's likely to rise and return to its key resistance at 1.6059. ...

GBP-JPY Extends Bearish Momentum

twocents@thestreet.com (Mohammed Isah) — Tue, 10 Apr 2012 12:58 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- With continued bearishness seen, GBP-JPY looks to weaken further toward 128.15. A breach there will permit it go still lower, to the 126.53 level.

...

EUR-JPY Breaks Key Supports, Heads Lower

twocents@thestreet.com (Mohammed Isah) — Mon, 09 Apr 2012 11:55 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- Having broken and held below key supports at the medium-term trendline of 107.75 and the daily exponential moving average of 106.79, the risk is for EUR-JPY to weaken further in the days ahead.

This development will leave the cross targeting the 105.63 level, its March 6 low. A breach of here will pave the way for a push further lower toward the Dec. 9 high of 104.49, and then the 103.27 level. Its daily and weekly RSI are bearish and pointing lower supporting this view. ...

Record ETF Inflows in First Quarter

twocents@thestreet.com (Kevin Baker) — Mon, 09 Apr 2012 10:50 GMT

NEW YORK (TheStreet Ratings) -- Each month, the ETF Industry Association) analyzes the assets under management and the net cash flow data for a growing list of U.S. exchange-traded funds. The net cash inflow of $55.9 billion in the first quarter of 2012 set a new record high above all other first quarter results.

The popularity of exchange-traded products continues to grow with both long-term investors and speculative traders. At $1.21 trillion as of March 31st, the assets under management in exchange-traded products, including both exchange-traded funds and exchange-traded notes, has grown by 12% over Mar. 2011. All of the asset and flow data included in this article was released on Wednesday, Apr. 4th by the ETF Industry Association.

In Mar. 2012 alone exchange-traded net inflows topped $13.2 billion. Of that total, $7.5 billion flowed into long U.S. equity funds with $251 million flowing out of short U.S. equity funds. Global and international equity ETFs were also strong in March with $1.6 billion in inflows. This was topped by the $4.1 billion flowing into long fixed income ETFs. Real estate fund flows remained positive at $443 million. Recent strength in the U.S. dollar sent $216 million out of long commodity ETFs and $484 million out of long currency ETFs. ...

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5 ETFs to Watch This Week

twocents@thestreet.com (Don Dion) — Mon, 09 Apr 2012 10:00 GMT

NEW YORK (TheStreet) -- Here are five ETFs to watch this week.

Financial Select Sector SPDR

Earnings season will get underway on Tuesday when aluminum giant Alcoa steps up to the plate. Throughout the opening months of 2012, global macroeconomic factors have dominated discussions. In the coming weeks, however, some of this attention should shift to the various companies slated to release their performance numbers and outlooks. ...

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EUR-GBP: Further Weakness Likely

twocents@thestreet.com (Mohammed Isah) — Fri, 06 Apr 2012 16:44 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- The euro-pound cross currency pair broke through the 0.8263 level on continued weakness, so further declines cannot be ruled out.

EUR-GBP likely will target its August 2010 low at 0.8141. A loss there will pave the way for more declines toward the pair's 2010 low at 0.8066. ...

Euro Pushes Lower Against GBP

twocents@thestreet.com (Mohammed Isah) — Thu, 05 Apr 2012 11:30 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- With a follow-through lower and a test of its key support at 0.8263 on Wednesday, risk of further declines for EUR-GBP cannot be ruled out. In such a case, below the 0.8263 level will set the stage for move further lower toward its August 2010 low at 0.8141.

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7 Observations About the Euro

twocents@thestreet.com (BBH FX Strategy) — Wed, 04 Apr 2012 15:09 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Marc Chandler

NEW YORK (BBH FX Strategy) -- ...

Less Dovish Fed Sends Yields, Dollar Higher

twocents@thestreet.com (BBH FX Strategy) — Wed, 04 Apr 2012 12:58 GMT

NEW YORK (BBH FX Strategy) -- The U.S. dollar is trading broadly higher in response to the less dovish Fed. The yen is the exception.

The rise in U.S. Treasury yields has led to a shakeout of positioning, with stocks declining. The FOMC minutes underscored that further policy easing would require a loss of economic momentum or a sharp drop in inflation. It appears to be a less dovish message than that delivered by Bernanke in last week's speech. On the growth outlook, the committee's views were more upbeat, as the Fed staff upgraded its near-term forecasts "a little."

Yet most members did not interpret the recent developments as a catalyst to upgrade their 2013-to-2014 outlook. Furthermore, the FOMC staff trimmed its estimate of the level of the potential output gap. This suggests that the FOMC estimates a lower level of "slack" in the economy. However, the minutes showed that significant downside risks to economic activity persist even though the strains in the financial markets have eased since January. The Federal Reserve ...

USD-JPY Stages a Shaky Recovery

twocents@thestreet.com (Mohammed Isah) — Wed, 04 Apr 2012 11:46 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- A sharp recovery saw USD-JPY closing higher on Tuesday but it continues to hold its downside vulnerability. Unless we see a return above its key resistance at the 84.17 level, the risk is for USD-JPY to return to the 81.86-to-81.55 levels.

...

Spain, Italy Face Continuing Risks

twocents@thestreet.com (BBH FX Strategy) — Tue, 03 Apr 2012 16:05 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Marc Chandler

NEW YORK (BBH FX Strategy) -- The more Spanish officials talk about the budget, the less credible it seems. The 10-year yield fell 11 basis points on Friday when the budget was first presented before the weekend. Now as more detail emerges as it goes to parliament, 10-year yields are rising. ...

Hungary's News Means Pressure for HUF

twocents@thestreet.com (BBH FX Strategy) — Tue, 03 Apr 2012 15:07 GMT

NEW YORK (BBH FX Strategy) -- There were two notable events for Hungary since the start of the week: The results of Hungary's first auction under the new two-year loan facility, and the resignation of President Pal Schmitt, a supporter of the ruling Fidesz party. Neither event had an initial market impact, but both could have potential consequences for Hungarian assets going forward.

The take up for the first auction of the Hungarian mini-Long Term Refinancing Operation facility was lower than expected at HUF 56 billion (expectations were for as much as HUF100 billion). As widely reported, the weak demand was attributed to the comfortable cash position by local banks and their reluctance to accept the conditions associated with using the facility. The Hungarian capital, Budapest

Recall that banks borrowing from the facility must keep gross outstanding loans to the corporate sector at or above the December 2011 levels during the two-year term of the loan. That said, we think the establishment of this facility was an important gesture that will be much appreciated if funding conditions tighten once again. ...

10 Takeaways From the IMF's COFER Report

twocents@thestreet.com (BBH FX Strategy) — Tue, 03 Apr 2012 14:33 GMT

By Mark McCormick

NEW YORK (BBH FX Strategy) -- The International Monetary Fund recently released its report on the composition of official foreign exchange reserves (COFER). Here are 10 key takeaways from the report:

1. The pace of reserve accumulation increased in the fourth quarter, rising 0.3% to $10.196 trillion from $10.163 trillion in Q3. However, the pace of reserve accumulation declined from Q3, which increased 0.9%. From the end of 2010, total reserves increased nearly $500 billion. ...

Dollar Remains Range-Bound

twocents@thestreet.com (BBH FX Strategy) — Tue, 03 Apr 2012 12:55 GMT

NEW YORK (BBH FX Strategy) -- The U.S. dollar is trading within Monday's ranges against the major foreign currencies Tuesday. The main exception is the Australian dollar, where the central bank kept rates on hold, but encouraged the market to look for a rate cut next month.

The unwinding of long AUD cross positions helped lift the yen after the Bank of Japan reported the first decline in its monetary base in three years. The dollar fell to its lowest level against the yen in nearly a month, with reported purchases by Japanese importers helping to steady the greenback near JPY81.50. This, in turn, helped the other main yen crosses recover from earlier losses.

...

EUR-USD Biased to Upside

twocents@thestreet.com (Mohammed Isah) — Tue, 03 Apr 2012 11:22 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (fxtechstrategy.com) -- The immediate upside target for EUR-USD is 1.3387, where a violation will call for further strength toward the 1.3484 level.

...

Commitment of Traders Report: The Long and Short of It

twocents@thestreet.com (BBH FX Strategy) — Mon, 02 Apr 2012 15:54 GMT

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Marc Chandler

NEW YORK (BBH FX Strategy) -- Most observers who look at the weekly Commitment of Traders report in the currency futures market focus on the net noncommercial, or speculative, positioning. ...

Dollar Begins Week Softer

twocents@thestreet.com (BBH FX Strategy) — Mon, 02 Apr 2012 12:11 GMT

NEW YORK (BBH FX Strategy) -- The U.S. dollar is marginally softer as North American players return to their posts.

The better-than-expected official Chinese manufacturing purchasing managers' index (53.1 from 51.0 in February and consensus for 50.5) saw steeper losses in the greenback. The disappointing eurozone manufacturing PMI however (47.7 same as the flash but weak details) helped cap the euro in front of last week's highs, ahead of 1.34, and weighed on European equities.

The UK Chartered Institute of Purchasing and Supply survey of manufacturing surprised on the upside (52.1 vs 50.7 consensus) and sterling extended recent gains, though we suspect it will struggle to extend those gains in North America Monday. ...