Simple review of technical condition of the capital markets. Light on polemical zeal, and heavy on technical analysis.
We have recently noted the increasing pressure on the Swiss National Bank (SNB) over its peg to the EUR in the midst of a capital flood from Europe. The slow bleed strengthening of CHF against EUR had many concerned the SNB would be forced (by exogenous factors) to adjust the peg. But, this morning, it appears they tried to draw a red line... CHF has plunged after SNB's Mosler said negative interest rates remain an option should its minimum exchange rate (peg) come under threat. So, first NIRP in Europe, then in Japan (as per our overnight discussion), and now the Swiss warning NIRP is coming there next...
The euro has fallen an unprecedented eight weeks in a row. The dollar set new five year highs against the yen before the weekend. Here is an overview of the near-term technical outlook.
The chance of EURCHF breaking the peg at 1.2000 have increased from 10% to 25-30% based on European Central Bank monetary policy, geopolitical risk and a lack of policy choices for the Swiss National Bank. This means that being long EURCHF no longer is a safe bet and although the 70% chance of the floor being both defended and protected is still high, the tail-risk involved is becoming too concerning.
Overview of the technical outlook for the major currencies, bonds, Treasuries, stocks, CRB and oil.
Overview of the technical conditions of the major markets.
Overview of the price action in various currencies, S&P 500, Treasuries and the CRB Index
Gold Breaks Out As Tensions In Middle East, With Russia Intensify - Technicals and Fundamentals PositiveSubmitted by GoldCore on 08/08/2014 16:06 -0500
Gold is nearly 2% higher this week and its technical position has further improved (see key charts). On Wednesday, gold broke out of bullish descending wedge chart pattern that has formed in recent months. Another buy signal for gold came when gold rose above the 20 EMA and 50 EMA (exponential moving averages). Also positive is the fact that the price momentum oscillator (PMO) has turned up, indicating that a positive momentum shift has occurred.
A few years ago, the definition of "strong banking" was Switzerland; now, not so much. But eager to restore some of its former banking luster, Switzerland has taken note of this and is rapidly positioning itself to become a major center of European RMB trade. Continuing to believe that the dollar is going to maintain its global reserve status is now not only foolish, but financially hazardous. To countries, businesses and individuals. Those who ignore the trend do so at their own peril.
Outlook of the foreign exchange market in the week ahead, with some observations about equities and bonds.
A look at the price action in the major currencies, US Treasuries and the S&P 500.
Near-term outlook for the dollar, without resorting to inflammatory and unproven claims.
Overview of the price action in the forward exchange market and a look ahead.
As the US spreads its message of cheer around the world, it appears an increasing number of trade 'partners' are more than willing to consider alternatives to the hegemony. As AFP reports, China's Yuan usage in global trade and finance has more than doubled this year. While still notably below USD usage in international payments it remains firmly in second place for trade finance and according to a recent survey by HSBC, the number of US companies planning to use Yuan has almost tripled this year (from 8% to 22%). De-dollarization continues...
Overview of the price action in the foreign exchange market and a short word on US 10-year Treasuries.