Know What's Happening in Currencies
Know What's Happening in Currencies
Yen emerges as world’s cheapest funding currency, fueling a $435B carry‑trade
The Bank of Japan’s ultra‑loose stance has turned the yen into the cheapest source of funding globally, underpinning a massive carry‑trade that amassed roughly $435 billion between 2022 and 2024. A modest rate hike in March 2024 barely dented the trade, but markets remain wary of a sudden, aggressive tightening that could compress spreads and force borrowers to unwind yen‑denominated debt.
China’s latest five‑year plan emphasizes a shift from property‑driven growth to technology, targeting near‑5 % GDP expansion in 2026 and projecting tech to account for 18.3 % of output by 2026. The renminbi has appreciated past the 7.0 per dollar mark, indicating reduced central‑bank intervention and a more market‑driven exchange rate. Chinese equities rallied 31 % in 2025, with the MSCI China Index now trading at a forward P/E of 12.7×, while AI and internet stocks remain relatively cheap. Global expansion by BYD, Pop Mart and Baidu underscores the broader internationalization of Chinese firms.
This isn’t a victory lap, and it isn’t a doom story. The U.S. economy is closer to a soft landing than it’s been in some time, and there are real risks that could undo it from multiple directions. I try...
The ECB will raise interest rates at least once this year, significantly boosting the euro against the dollar, according to Capital Group, the $3.3 trillion asset manager https://t.co/CFxgbQlz0Q via @Sujata_markets https://t.co/6EBSHD6SYI
India's foreign exchange reserves slipped by $6.7 billion to $717.064 billion in the week ending 6 February, after a record high of $723.774 billion the week before. The decline was driven mainly by a $14.208 billion drop in gold reserves, which fell to $123.476 billion, while...
There's lots of commentary that US inflation will overheat, but there's no sign of that. My proxy for core services inflation was very well behaved in all of 2025 (purple) and the Jan. '26 data point (pink) was much more...
Macro: MOEX flat as oil steadies and gold spikes; RUB strengthens (USD/RUB 76.65). Key drivers: commodity moves, stable RVI (24.9). Risks: commodity volatility, sanctions. Trade: buy selective energy exporters on RUB resilience. — Viktor Kopylov, PhD, CFA More insights: t.me/si14Kopylov
On 14 February 2026, the ECB’s Governing Council approved an overhaul of the Eurosystem repo facility for central banks (EUREP). The revised framework introduces standing access for a broad set of non‑euro‑area central banks, provided they meet anti‑money‑laundering and sanctions...
The Yen will keep falling in trade weighted terms in 2025 and make new lows. Two reasons: (i) Japan remains in denial on the scale of its debt and what's needed to fix this; (ii) the Yen will be falling...
Buckle up! Its going to be a VERY Busy Data Week ahead👇 🇺🇸 US -FOMC Minutes -Q4 GDP -Empire State & Philly Fed 🇪🇺 EZ -IP -ZEW -PMIs 🇬🇧 UK -Jobs -Retail Sales -CPI -PMIs 🇯🇵 JP CPI & GDP 🇨🇦 CA -CPI -Retail Sales -Trade 🇳🇿 NZ -RBNZ -PSI -PPI 🇦🇺 AU -RBA MINUTES -JOBS -PMIS
USDJPY fell 450 pips last week after Japan’s finance minister Sanae Takaichi signaled stricter fiscal discipline. The drop reflects bearish momentum in the pair, prompting Elliott Wave analysts to pinpoint a critical support level that must be broken for bears...
My forecast is for the Warsh Fed to cut policy rates by 100 bps in the 4 meetings after he takes over (June, July, September, October) ahead of midterms. Markets are moving in this direction, but still price only 63...
Deep dive into Chinese Foreign Exchange Reserves in today's version of the Chartbook Top Links. https://t.co/Yc09wNGpPK
The U.S. Supreme Court announced three decision days—Feb. 20, 24, and 25—when it will issue opinions, though it has not disclosed which cases will be decided. Lawmakers in the House have voted against new tariffs and the Senate is expected...
The best macro trade of the past 5 years was Warren buffet’s Japanese bond issuance imo. Got him short the currency, short rates all while he was long the equities (trading houses).
Russia’s inflation comes in at 6.0%/yr in January. That's ABOVE RU's 4%/yr target. RU's M2 money supply is growing at 10.6%/yr, ABOVE Hanke's Golden Growth Rate of 8.4%/yr, a rate consistent with hitting its inflation target of 4%/yr. THE INFLATION STORY =...
Chicago Fed President Austan Goolsbee highlighted a mixed CPI report, noting a modest 0.2% month‑over‑month rise in headline inflation and a steady 2.5% year‑over‑year rate. While core inflation matched expectations, services inflation remains elevated, keeping overall inflation around 3% and...
ECB revamps euro liquidity offer to boost the common currency’s appeal https://t.co/w17qKKKWLo via @jrandow https://t.co/FlhSjhqFkD
After jobs and CPI, mkt has ~2.5 Fed rate cuts discounted this year. 2-10 yr curve flattened back-to-back weeks for first time since Oct. 10 yr yield 3-month low. Be prepared for next week. See...
In this episode, J.P. Morgan Global Research analysts Arindam Sandilya, James Nelligan, and Patrick Locke examine the current foreign‑exchange (FX) outlook, focusing on how recent US equity stress and the relative underperformance of US stocks are influencing currency markets. They...
Week Ahead: SCOTUS Decision on Tariffs? 8 Fed Officials Speak as the Market Discounts almost 65 bp of Cuts this Year: Last week began with the LDP's stunning victory in Japan. However, rather than sell-off as the market expected, the...
Great piece by @katie_martin_fx in the @FT on the correlation break happening for the Dollar. As Trump leans more and more on the Fed, positive data surprises like payrolls no longer lift USD. The US will boom this year. But...
Stable Money reported record transaction volumes in gold and silver ETFs as Indian investors gravitate toward SEBI‑regulated products amid near‑record precious‑metal prices. The platform now handles over 95% of mutual‑fund trades on the Open Network for Digital Commerce (ONDC), reflecting...
A lot of economic commentary is inflected by anti-Trump sentiment. That's why so many forecast the Dollar would go into a death spiral last year (it didn't) & why there's so much focus on inflation overheating now (it isn't). Yesterday's...
Switzerland’s inflation rate is on the low end of its TARGET RANGE at 0.03%/yr. Switzerland’s money supply (M3) has been growing below Hanke's Golden Growth Rate of 4.40%-6.40%/yr since 2020 & is now only at 4.58%/yr. THE INFLATION STORY =...
Ashraf Laidi notes recent Trump administration comments that imply a deliberately weaker US dollar ahead of today’s non‑farm payroll (NFP) release. He suggests the labor data could fall far short of the 68,000 consensus, echoing a pattern of "benign neglect"...
The 2-year Treasury yield (blue) fell sharply at 8:30 am today, a sign markets think today's CPI was benign and so the Fed cuts more. Bloomberg's XAU/$ gold price (white) rose around the same time, which is consistent with that...
Forex analyst Ashraf Laidi unveiled a long‑awaited EUR/GBP chart, showing the pair’s daily price breaking out of a three‑month descending channel while the weekly chart preserved an 11‑month trendline support and is now bouncing higher. He suggests the breakout could...
Retail traders often sacrifice profits by exiting positions too early, driven by a desire for constant action rather than market fundamentals. Ashraf Laidi illustrates this with the USDJPY reaction to the February NFP surprise, where the pair swung more than...
In this brief episode, J.P. Morgan analysts Francis Diamond and Frida Infante examine the current state and near‑term outlook for Swedish and Norwegian sovereign and corporate rate markets. They highlight that both countries are entering a prolonged period of low‑rate...
The CPI data came in cooler than expected, which is always welcome. The headline is obscuring some of the underlying inflation due to the loss in data associated with the government shutdown. The overall index posted its coolest reading since...
After this week's employment & inflation data it is starting to look like the elusive soft landing may finally happen. Would be the first indisputable US post-WW II soft landing. We've had false hopes before dashed by the underlying economic dynamics &...
President Iliana Iotova appointed suspended Bulgarian National Bank deputy governor Andrey Gurov as interim prime minister, invoking a constitutional rule that limits caretaker‑PM candidates to ten senior officials. Gurov’s selection follows an anti‑corruption finding that barred him from his central‑bank...
One by product of China's exploding external surplus (goods surplus of $1.2 trillion, q4 current account surplus annualized is close to $1 trillion) is that it creates the raw material for some massive intervention numbers h/t @Mike_Weilandt for the chart https://t.co/PMvhatfgWh
And net reserves are still negative -- Argentina survived 2025 thanks to a $14b loan from the IMF and a willingness on the part of the IMF and the US to ignored missed reserve targets. Indeed, Argentina got another $20b backstop...
The Central Bank of Egypt cut its policy rate by 100 basis points, bringing it down to 19.0% as inflation eases to 11.9% after a peak of 38% in 2023. The Bank of Russia trimmed its key rate by another...
There's a general and logical correlation between money supply and capital markets. But what about money supply relative to GDP? Here's $SPX overlaid with the ratio of US M2 / real GDP: https://t.co/UA5X14bWEk
Resilient labor. Cooling inflation. Duration rallying. Yen surging. 130K jobs. CPI at 2.4%. 10Y yields sliding. Dollar down on the week. This isn’t a clean cycle — it’s macro crosscurrents. Full breakdown: https://t.co/vNAZw80IbE
Economists spot early signs of recovery in the US labor market, with private payrolls accelerating, yet underlying job quality remains thin. The Federal Reserve is expected to deliver two 25‑basis‑point cuts, likely in June and September, as inflation stays modest....
Remember, every utterance from BRICS & Global South regarding potential new system to bypass USD is to be treated as if already operational & making material difference. And every piece of evidence that USD system isnt going anywhere is to be...
Notably, market-implied FOMC cuts through 2026 have been increasing. Through February, Fed Fund futures have priced in another -14bps of cuts for the year - and now the most dovish outlook after CPI since Dec 3rd: https://t.co/NZF2YksrWV
U.S. consumer price inflation in January eased to 0.2% month‑on‑month, with core CPI matching expectations at 0.3% and both headline and core year‑on‑year rates falling to four‑year lows of 2.4% and 2.5%. Goods prices excluding food and energy were flat,...
US #CPI inflation figures came in line with expectations of a pace cooling. Headline dropped from 2.7% to 2.4% while core eased 2.6% to 2.5%. This does shift priority towards employment in the Fed's dual mandate but the jobless rate...
US's CPI inflation rate comes in at 2.4%/yr in January. The US money supply (M2) has been growing BELOW Hanke's Golden Growth Rate of ~6.3%/yr, a rate consistent with hitting the Fed's 2%/yr inflation target, since April 2022. THE INFLATION STORY =...
Eurozone preliminary GDP showed a 0.3 % QoQ rise in Q4 2025, matching expectations and nudging annual growth to 1.4 %. The United Kingdom posted a weaker 0.1 % QoQ increase, missing forecasts and pulling annual growth to 1 %. The data lifted the...
Yesterday, Bloomberg reported that Russia is considering a re-entry into the US dollar system. Bloomberg's report created quite a stir. RELAX, HANKE'S 95% RULE = 95% OF WHAT YOU READ IN THE PRESS IS EITHER WRONG OR IRRELEVANT. https://t.co/8E7OK7Zm1t
Ever since COVID, the start of the year has seen hot inflation prints, because residual seasonality pushed up inflation in the first quarter. That isn't the case in Jan. '26 and I think that holds a warning for those forecasting...
U.S. consumer price index for January rose 2.4% year‑over‑year, missing the 2.5% consensus, while month‑over‑month inflation eased to 0.2% against an expected 0.3%. Core CPI, which excludes food and energy, held steady at 2.5% y/y and 0.3% m/m, in line...
🚨 Inflation just missed expectations. Again - Dollar dumping - Gold buying the dip - Stocks pumping on rate cut hopes ⚠️ But don't get comfortable - the labor market is the real story https://t.co/hpBwuiWtK4
📉 Softer US Inflation - Markets React 🔻 Softer US inflation numbers 🔻 USD tumbling 🔻 10-year yield falling ⬆️ Gold rising ⬆️ Stocks rallying 📊 CPI Breakdown: • MoM: 0.2% actual vs 0.3% forecast • YoY: 2.5% actual vs 2.5% forecast (2.7% previous)
🚨 @the5erstrading releases details for @The5ersFutures On my panel at @iFXEXPO they said big things were coming… Only futures prop to allow overnight holds Looks like the evolution is here. What do you think - strong proposition or not competitive enough?👇
