EURUSD 1.1137 |
USDJPY 108.63 |
GBPUSD 1.3204 |
AUDUSD 0.6882 |
USDCAD 1.3164 |
GBPJPY 143.44 |
EURJPY 120.98 |
AUDJPY 74.76 |
CADJPY 82.50 |
Silver 16.84 |
GBP Pares Poll Losses, Fed Next
The pound is paring its losses following a 100-pip drop caused by an update to a highly-influential election poll. US CPI is due next, followed by the FOMC decision later in the evening --widely expected to keep rates on hold. The Fed has succeeded in keeping itself out of the conversation (for now) as the countdown to US elections starts. Market emphasis shifts towards the Fed's rising purchases of repos and the onset for possible QE4 (more below).
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My earlier doubts about the US economic outlook have softened some, but not much. I still see slowing in the US equity sector and while 10-year treasury yields continue to fall, I expect the long bond to outperform. For 2016, modest dollar appreciation appears likely against the Euro and commodity currencies. I’m long precious metals, the long bond, and utilities. Short US financials.
Until ongoing worries about the Yuan subside, macro data improves, and credit spreads narrow, I would imagine that asset allocation models should favor cash, fixed income, and currencies.
In addition to short-term trading of FX spot and crosses, how would you feel about allocating capital to the USD and Yen via the ETFs UUP and FXY?
When I posted my comment, I was referring to the business cycle (as opposed to current stock market fluctuations). The econometric data is certainly mixed, but by and large the US appears to have reached a cyclical peak and is in a contraction.
Simply stated, I see a US recession, based upon contractions in industrial production and trade, reductions in full-time employment, and reductions in real personal income.