Tuesday, September 23, 2014

USD on a winning streak: DXY up 10 weeks in a row, 1st time ever

•     USD on a winning streak:  DXY up 10 weeks in a row, 1st time ever
–   One winning streak paused briefly, then carried on; another was followed by 9 consecutive weeks of decline! So we can’t forecast anything from that fact.
–   I think USD has begun a long-term rally, based on monetary policy divergence
•     Central Bank officials emphasize divergent views
–   Draghi says economy weakening, ECB stands ready to do more if necessary
–   Fed’s Dudley and Kocherlakota emphasize risks of US raising rates too early
•     Bank of Canada lowers estimate of long-term neutral level of rates
–   Fed and Bank of England have too, but CAD was hit anyway – maybe because of her comments that last week’s sharp rise in core inflation was within their forecast range
–   Fall in CAD may offer a good entry level for new longs, especially vs JPY
•     Today:
–   Globally:  September PMIs from Markit
–   China:  Manufacturing PMI unexpectedly rose slightly, vs expected fall to 50.0. AUD, copper gained as a result
–   Eurozone: Germany, France and overall Eurozone PMIs (manufacturing & service sector) due out. Germany, Eurozone expected to be lower; could be EUR-negative

–   US: Markit manufacturing PMI, Richmond Fed index, FHFA home price index. Kansas City Fed President George speaks; she’s hawkish, in contrast to Kocherlakota

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