ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
The U.S. Senate approved the U.S.-Mexico-Canada Agreement (USMCA) trade agreement on Thursday, January 16th. That timing may mark a major milestone and turning point for the Mexican peso against the U.S. dollar (USD/MXN). The following day, USD/MXN sliced through the low of 2019 and hit a 17-month low. I have been bullish on the Mexican … Read more
My now wavering bullish case for the Canadian dollar (FXC) took a major hit with the November, 2019 Labour Force Survey. Statistics Canada reported worsening unemployment rates both sequentially and year-over-year. November’s 5.9% unemployment rate was an increase from October’s 5.5% and the 5.6% in November, 2018. The chart below suggests an end to the … Read more
The Bank of Canada changed its tune from the its last pronouncement on monetary policy. At that time, the Bank was very confident about the Canadian economy even as it mapped out the downside risks of the U.S. vs China Trade War. The Trade War remains unresolved three months later, and the Bank of Canada … Read more
With the U.S. dollar index (DXY) last tested its 200-day moving average (DMA) support, I pondered the possibilities for a breakdown. The U.S. dollar index typically sustains moves through its 200DMA, whether a breakout or a breakdown, so I braced myself for the need to jettison my long dollar positions. Instead of follow-through, the U.S. … Read more
The U.S. Federal Reserve is set to cut interest rates by 25 basis points in the coming week (July 31). The odds for at least another 50 basis points by next January are around 61.9% according to the CME FedWatch Tool. Yet, the U.S. dollar index (DXY) has regained new life. After breaking critical support … Read more
“It would be a difficult place for policy, and my sense is that the markets are not really onto the complexity of it. It seems a little too easy that ‘Oh. Interest rates could decline and that will make everything OK.’ That may be true for the small kind of shocks that we’ve had so … Read more
The Bank of Canada released its latest pronouncement on monetary policy on the heels of a rapid rally for the Canadian dollar (FXC). USD/CAD was down 5 straight days going into the release of the January, 2019 Monetary Policy Report. Four of five of those days delivered substantial declines. The Bank provided a truncated summary … Read more
It was a simple headline from the Wall Street Journal but enough to turn the tide for trade-sensitive plays: “U.S. Proposes New Trade Talks With China to Avert Tariffs.” The reported talks are proposed for later this month, but the market wasted no time in responding. In the world of foreign exchange, the U.S. dollar … Read more
I completely missed how the Bank of Canada (BoC) was deftly tempering its rate hike designs with a claim that the Canadian economy still needs more accommodation. For example, in April’s statement on monetary policy, the BoC said the following (emphasis mine): “Some progress has been made on the key issues being watched closely by … Read more
Last June, 2017, Senior Deputy Governor of the Bank of Canada (BoC) Carolyn A. Wilkins stepped onto the stage with a surprisingly bullish message about the Canadian economy. This speech set the stage for the BoC’s rollback of “emergency measure” rate cuts that responded to the past collapse in oil prices. At the time, the … Read more