Macro Cheat Sheet

Key considerations and price for selected currencies distilled into four bullet points.

US Dollar  

  • The dollar's recovery ahead of the weekend was aided by the stabilization of the stock market, where the S&P 500 managed to close back above the psychologically important 200-day moving average.
  • Interpolating from prices, the market does not expect the President's criticism to alter the Fed's course.  
  • US data highlights this week include retail sales, industrial output, TIC (capital flows), housing starts, existing home sales, and minutes from last month's FOMC meeting. The earnings season is just beginning.  
  • Bullish flattening of the 2-10 year curve took place while the equity market eclipsed other drivers.  In calmer markets, bearish steepening may be dollar-positive through the widening of differentials and reducing the cost of a one hedging strategy.  


  • Italy's fiscal challenge to the EC is the most significant immediate challenge. Pressure on Italian assets leads to flows into Germany, depressing yields and widening the interest rate discount to the US.  It also boosts the existential risk of EMU in the eyes of many.  
  • Moody's upgraded Portugal's credit rating ahead of the weekend (to Baa3) citing the stronger than expected growth and fiscal consolidation.  It is a catch-up move as S&P was already there, and Fitch sees it as a BBB credit. The Socialist government anticipates eliminating the budget deficit by 2020.  
  • It is a light economic week for the EMU.  August trade data at the beginning of the week and the current account data at the end of the week will be scrutinized for signs of tariff distortions. The CPI report will most likely confirm the flash September reading (2.1% headline, 0.9% core). German ZEW may be more interesting after an unexpected decline in August industrial output. The improvement in both the current assessment and expectation components over the past two months likely came to an end in September. The DAX had fallen in both August and September by a combined ~4.5%. It was off another 1% in the first week of October before last week's (almost) 5% slide.  
  • The euro appears capped around $1.1650, and support is seen ahead of last week's low (~$1.1430).
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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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