Combination of important events/data and large move in last two weeks, the dollar may pullback/consolidate in the days ahead.
With HFT algos now firmly entrenched in FX markets we weren't surprised to learn that volatility is rising, bid-ask spreads are blowing out, and liquidity is vanishing. Expect things like last October's algo-driven, Fed-assisted Treasury flash crash to become par for the course in FX markets as well, with harrowing USD, EUR, JPY, [fill in the blank] ramps and flash crashs becoming the norm and leaving panicked central bankers desperately trying to figure out what happened after the fact.
It looks like US dollar's two-month downside correction ended. Is the bull market resuming?
Dollar downmove still seems corrective in nature. Fed hike in September still seems most likely scenario. Taalk of US recession is over the top when unemployment, broadly measured is falling and weekly initial jobless claims are at new cyclical lows.
A straightforward analysis of the near-term outlook for the dollar, oil, 10-year US and German yields and the S&P 500.
Yogi Berra, one of the keenest observers of the human condition, is said to have once remarked "It is tough to make predictions, especially about the future." And so it is.
Dollar weakness continues (after weak US Services PMI) which has sent stocks to new record highs but it is the China-QE-driven commodity complex (along with Aussie and Canadian Dollar) that is in outright vertical panic mode...
On the surface, Canada's 1.2% inflation is negligible, and barely enough to keep up with the pace of overall growth as mandated by a few central bank academics. It is below the surface, however, that one finds the scary truth. Because when stripping away the sliding energy prices (which at the recent pace of short covering among oil speculators are about to surge) some scary numbers emerge, such as a 3.8% monthly jump in food prices, primarily as a result of a whopping 30-40% increase in select meat prices in the last 8 months. So how do ordinary people survive in an environment of soaring food prices?
Trying to make sense of the global capital markets.
After trending sharply higher in recent months, the US dollar has entered a consolidative range against most of the major currencies.
The US dollar has been even stronger than this bull thought let alone the perma-bears. Here's why,
Even before the disappointing US jobs data, we anticipated a downside correction in the dollar after a sharp advance in Q1.
* Silver surges 6.5% in dollars and 19% and 12% in euros and pounds *Oil and most commodities declined on economic concerns in the quarter (see table) *U.S. stocks eked out minor gains to new record highs and look toppy *Gold performance impressive given strength of dollar and equities, oil collapse and negative sentiment
A non-bombastic look at the week ahead in the capital markets.
At first glance, the title to this commentary seems facile, especially to those readers in higher income brackets. The reality, however, is that “investing in food” is a risk-free means of generating an annual return on one’s investment that would likely exceed the return one could earn on almost any other investment – despite the fact that nearly all other asset classes carry significant risks.