|Day's Range||22.183 - 22.283|
|52 Week Range||18.5062 - 25.7653|
The Commitments of Traders reports highlight speculators positions and changes made during the week to May 12 in FX, bonds and stocks. Overall a week that only saw small changes with the S&P; 500, the dollar and U.S. 10-year Notes trading close to unchanged
The thing is, it’s very tempting to buy oil for around 5 USD per barrel but it’s also a highly risky move and best left to traders who can handle exceptional volatility.
Mexico's central bank, the Banco de Mexico, cut its key interest rate by half-a-percentage point on Tuesday to 6%. Policy makers in Mexico also rolled out a more than $30 billion stimulus package to "foster an orderly behavior of financial markets, strengthen the credit channels and provide liquidity for the sound development of the financial system," according to a statement by the five-member governing board, which voted unanimously in Tuesday's policy action. At last check, the U.S. dollar bought 24.4573 Mexican pesos , up 1.7% in Tuesday afternoon action. Meanwhile, the iShares MSCI Mexico ETF was down 3.2% in late-Tuesday trade, along with declines for the Dow Jones Industrial Average and the S&P 500 index . In addition to the COVID-19 pandemic, Mexixo, a major oil producer, has been facing headwinds from the collapse in crude-oil markets lately.
The Federal Reserve and Treasury oppose issuing digital currency to ordinary citizens. That burdens the economy, handicaps fiscal policy, and threatens the international status of the dollar.
The Euro rally during the day on Thursday, reaching towards the 1.09 level and even breaking above there. Ultimately, this is a market that has continued to be very difficult to deal with the times.
(Bloomberg Opinion) -- The financial fallout from the coronavirus is spreading rapidly and that’s ugly news for many developing countries. The risk of contagion, where the collapse of one currency triggers a global panic, is very real.Outflows from emerging market funds totaled more than $83 billion in March ($53 billion in bonds, $31 billion in equities), according to data from the International Institute of Finance. The last thing the world needs is an emerging markets crisis, yet all the conditions are there: collapsing commodity prices, a sudden economic shock, over-indebtedness and fragile currencies.The persistent strength of the dollar, despite plentiful liquidity, has pushed major emerging currencies such as the Mexican Peso, the South African Rand and the Brazilian Real to depreciate by about 25% this year. The U.S. Federal Reserve has acted swiftly to extend dollar swaps, which give foreign central banks the capacity to deliver U.S. dollar funding to their institutions, but the attractiveness of dollar cash outweighs all in a crisis. The oil price crash couldn’t have come at a worse time as it drags down commodity prices (on which many developing economies rely) generally and halts business investment. The G20’s energy ministers may meet this week to discuss the slump. They might want to encourage their finance ministers and central bank colleagues to try to find a mutual response for pegging back the dollar as well.One radical approach would be joint action from central banks to sell dollar reserves in favor of other currencies. The G7 countries did something similar to halt the rise of the yen after Japan’s earthquake and tsunami in 2011. More important is that the developed world has a financial response at the ready if this pandemic causes havoc among the weaker developing countries.A global safety net is needed to keep funding available for low-income countries. The International Monetary Fund will need a major injection of capital. Its existing $1 trillion firepower is inadequate with more than 80 countries already sounding it out for help. Confidence is low in the IMF after last year’s failed $57 billion bailout of Argentina, but it remains the best vehicle for the G20 to use in a 2009-type response to a global financial crisis.This might require new issuance of the only truly global currency, the IMF’s so-called “special drawing rights” (an international reserve asset whose value is based on the price of a basket of currencies: the dollar, the euro, the yuan, the yen and the pound). Wealthier countries could help by forgoing some of their own quota to let the IMF roll out much more comprehensive aid to countries that need it.Speed and flexibility will be critical if the virus and its economic effects hit vulnerable markets as hard as they have major western economies. More than half of the world’s lowest-income countries were in distress before the pandemic. But borrowing has been rising fast with dollar debt in the “frontier markets” (the tier below emerging markets) now exceeding $200 billion. More than one-quarter of local currency debt in emerging markets is owned by foreigners, so it’s especially vulnerable to capital flight. Emerging market corporate debt has ballooned to more than $2.3 trillion.China propped up much of the developing world during the last financial crisis but it doesn’t have the same firepower now with so much more credit leverage in its own financial system. The stability of the Yuan to the dollar is paramount for Beijing. It cannot risk another capital outflow crisis as happened in 2015 and 2016. Countries without oil and other big natural resource assets have also seen their currencies plunge, including those with large current account deficits (such as Turkey) or those that rely heavily on dollar funding (many Asian countries). Angola (oil), Ecuador (oil) and Zambia (copper) are close to defaulting. Argentina and Lebanon have already. South Africa, which relies heavily on overseas funding, lost its last investment-grade rating recently. Its already stricken state-owned power company Eskom is facing a big hit to revenue from the coronavirus lockdown.Indonesia — whose virus death toll has surged to become the highest in Asia after China — managed to raise several billion dollars in a record bond sale on Monday at interest rates of between 3.9% and 4.5% (compared to 2.5% a month ago), showing that the debt capital markets remain open for at least the stronger emerging nations. Being able to fund yourself is always better than relying on international support.But not all countries are as fortunate as Indonesia. The G20 needs to think now of a joined-up financial response for the rest of the world before it’s too late.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The greenback advanced against the Australian and New Zealand dollars, sterling, and most emerging market currencies as fresh selling in global shares highlighted growing risks from the pandemic that has shown little sign of abating. The Australian dollar dropped 0.35% to $0.6115 and the New Zealand dollar fell 0.3% to $0.5945 while The British pound shed 0.4% to $1.2376. Emerging market currencies were hit harder, with the Mexican peso falling more than 1% to 23.960 to the dollar, while the South African rand gave up 0.7% to 17.952 per dollar.
There’s just no stopping the U.S. dollar. That means more pain for emerging markets and the world economy until the global market panic over the COVID-19 pandemic subsides.
The U.S. dollar was hit hard Monday by aggressive moves from the Federal Reserve overnight to try and buttress the U.S economy, as the coronavirus disrupts global activity ever more deeply. The U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 98.177, down 0.7%. USD/JPY fell 1.3% to 106.56, after the Bank of Japan kept interest rates unchanged but increased its asset purchases, while GBP/USD traded at 1.2329, up 0.4%.
The Mexican peso's plunge to a historic low on Monday was exacerbated by speculators selling the currency to cover losses from peso investments made through derivatives, analysts said. Later it pared losses to trade about 5.5% down against the dollar. It was one of the best performing emerging market currencies in 2020 until mid-February.
U.S. dollar positioning was derived from net contracts of International Monetary Market speculators in the Japanese yen, euro, British pound, Swiss franc and Canadian and Australian dollars. In a wider measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the U.S. dollar posted a net long position valued at $11.183 billion, up from $9.694 billion a week earlier. On Friday, the U.S. dollar fell across the board after a survey of purchasing managers showed U.S. business activity in the manufacturing and services sectors stalled in February and as investors fretted over the fast-spreading coronavirus.
Mexican cement producer Cemex SAB de CV on Wednesday reported a bigger quarterly loss, hurt by declining sales in all its markets, except the United States. The company's net loss widened to $238 million in the fourth quarter, from $37 million a year earlier, while total net sales were flat at $3.3 billion. The Monterrey-based company said it was also hurt by the Mexican peso's fluctuation against the U.S. dollar.
Yesterday’s FOMC did not bring much to the global trading activity. That should not surprise us as FED didn’t change anything and met the traders’ expectations. With the FOMC being uneventful, traders focused again on the Coronavirus and the rising number of cases.
On Thursday, the U.S. Senate overwhelmingly approved the new free-trade agreement between Canada, the United States and Mexico. The deal, which covers the biggest free-trade zone in the world, should boost the economies of all three countries.
After months of difficult negotiations, the USMCA is on the verge of replacing the NAFTA accord, which has regulated free trade between the U.S., Canada and Mexico. The new free-trade agreement is a major achievement for U.S. President Trump.
The Canadian dollar edged lower against its U.S. counterpart on Friday but held near an earlier five-week high as the reduction of some global investment risks weighed on the greenback. "I think CAD was caught in this broader U.S. dollar move," said Simon Côté, managing director, risk management solutions at National Bank Financial. Historically cheap rates for the market's pricing of expected volatility showed that investors were not prepared for a major move in the U.S. dollar, even though it was testing key support levels against a number of major currencies, including euro <EUR=>, sterling <GBP=> and the Mexican peso <MXN=>, Côté said.
Yesterday evening we found out that we should not expect any interest rate rises in 2020, which of course was a rather negative information for the American Dollar.
Speculators raised their bullish bets on the U.S. dollar in the latest week to the largest position in four weeks, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the dollar's net long position, derived from net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars, was $15.70 billion in the week to Nov. 12. In a wider measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the U.S. dollar posted a net short position valued at $14.323 billion, up from $12.219 billion a week earlier.
Donald Trump’s tweet ignite the markets again. This time, POTUS was optimistic about the future deal with China, which on some markets, caused and euphoric buying frenzy.
It has been an uneventful Wednesday session, with the Canadian, Mexican and British currencies showing little movement. With no major U.S. events on the schedule, traders can expect the lack of activity to continue in North American trade.
Recent rotation in multiple foreign currencies hints at the fact that a new stage of the “Capital Shift” process is taking place and that skilled technical investors need to pay very close attention to how these currencies continue to react over the next 3 to 6+ months. In the recent past, most of the world’s foreign currencies were declining in value while the US Dollar continued to strengthen. In fact, we authored many research articles about these trends and how weakness in foreign currencies will drive new foreign investment into the US stock markets for two simple reasons; strength and security.
The Mexican peso could fall almost 9% to 21.30 per dollar next year if U.S. President Donald Trump again threatens the country during his re-election campaign, Mexican financial group Banorte said on Tuesday. Trump has repeatedly sent the Mexican currency and stock market tumbling after attacking Mexico over immigration and trade, mostly on Twitter, threatening to impose tariffs on Mexican goods or close the countries' shared border. Banorte's forecast would represent an 8.7% depreciation for the currency from its current level of about 19.60 pesos per dollar.
The pound continues to lose ground on Tuesday and has fallen close to the 1.22 line. The Canadian and British currencies are showing little movement.