Tag: u.s. dollar

Bank Earnings To Impact Dollar Sentiment

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


Generally, Wall Street earnings have no direct impact on how we view the dollar outlook. Yet, there are exceptions and this week is one such notable example. What types of earnings are significant enough to shed light on the dollar’s future; you might wonder. The simple answer is this: Bank earnings, which are abundant this week.

Why do Bank Earnings Matter?

As we all know, the Federal Reserve has the greatest impact on the dollar. Outside of the Fed, bank earnings impact the dollar’s outlook because they reveal the credit supply. Of course, the supply of credit in the US economy affects the American consumer. In turn, the American consumer impacts inflation. And that brings us full circle since the inflation outlook typically helps shape Fed policy. Continue reading "Bank Earnings To Impact Dollar Sentiment" →

Year To Date Dynamics: Metals Versus Top Assets

Posted on by Aibek Burabayev

Aibek Burabayev - INO.com Contributor - Metals


Today I prepared for you the year-to-date comparative dynamics of the metals versus the top financial instruments including the Dollar Index, crude oil and the S&P 500 index.

Gold Comparison Chart
Chart courtesy of TradingView.com

As seen in the above graph, half of the instruments started the year on an upbeat tune, lead by Silver and followed by Gold, Platinum and the Dollar Index. The other half started with a nose-diving fall, especially crude oil followed by Copper, Palladium and the S&P 500 bringing up the rear. Continue reading "Year To Date Dynamics: Metals Versus Top Assets" →

Has China Lost Control?

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


This morning's newswires are filled with stories of yet another dramatic intervention by China in the Yuan exchange rate. This time, though, it's in favor of the Yuan. That news, more than any, has investors alarmed as it seems to suggest that China has lost control. To that, I say how can you lose something you never had?

China Never Had Full Control

China and its financial authorities, namely the Peoples Bank of China, are viewed as the effective forces controlling the Chinese money market. That means not just the currency but also the financial markets and inflation. Hence, the state of alarm currently dominating markets makes sense. But the fact is that China never really had the control that investors believed it had. Because simultaneously controlling monetary policy and the currency is like "trying to hold the stick at both ends;" it's just not possible. Continue reading "Has China Lost Control?" →

China Devalues The Yuan: Now What?

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


It was less than a week ago that we pinned down the growing possibility that China would move to devalue the Yuan. Then – Bang! Since this morning, it's a done deal. Or is it? While China's move to devalue the Yuan (by roughly 1.9%) in a single day is the most aggressive Yuan devaluation since the "roaring" nineties, chances are this is only the beginning.

China Must Regain its Competitiveness

The core of the matter here is that China is trying to maintain the facade that this was a one-shot deal. However, it really has more to do with the government's attempt to free the Yuan rate. Beijing, it seems, may have finally bowed to the realities of market economics. Even as it enacts reforms to liberalize its financial markets and change its economic model, China must regain its competitiveness when it comes to exports. Continue reading "China Devalues The Yuan: Now What?" →

Dollar's Fate To Be Decided In Beijing?

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


Last week's GDP growth figures proved that US economic performance is still pretty mediocre, bordering on mildly tepid. While the Hawks were eyeing a 2.6% growth figure, actual GDP fell short of expectations and posted a rather dismal growth rate of 2.3% annualized.

Yesterday, we got the Fed's favorite inflation indicator, Core PCE, the inflation barometer that's extracted from the GDP release. And what we got was a dismal 1.3% inflation rate (YoY). This validated, once again, that the US economy failed to reach escape velocity that would necessitate several rate hikes a year. Rather, it suggested that anything beyond one or two rate hikes was unnecessary. Hardly a hawkish sign, yet Dollar demand keeps on rising while US yields move lower. It is this very combination that suggests that Dollar demand is being stirred by the demand of US Treasuries. Some say that this is investors moving into safety amid the rout in Chinese markets. Well, that's probably true, at least, in part. But the rest? There's a big bet on what China will do next. Continue reading "Dollar's Fate To Be Decided In Beijing?" →