Nixon cut the last lifeline of Bretton Woods 47-years ago today. The world will never be the same, but could there be another such agreement in the foreseeable future?
Crude oil has been climbing a trendline for the past year. This chart depicts this trend on a weekly bar chart. Depending exactly the line is drawn, it comes in now near $65 a barrel. The technical indicators are consistent with further losses.
The dollar is consolidating in a large triangle against the yen. Below we discuss the technical implications. We also note that if pressure on EM returns after today’s respite, the yen is likely to strengthen.
Our technical analysis supports our medium-term bearish euro outlook, while at the same time, is consistent with a potential limited bounce near-term. Continue reading “Possible Head and Shoulders Top in Euro”
US tariffs are ostensibly to reduce the trade deficit, but we are skeptical that it will work, due to rising input costs, retaliatory tariffs and ongoing growth differentials. At same time, the funding of the US imbalance is still smooth and has actually improved.
Turkey’s response to the pressure on it currency fell well shy of what is needed to stabilize the situation. This continues to encourage risk-off activity, which seems, among the major currencies to be exaggerated.
The recent price action confirms the dollar’s break out of the spring and early summer ranges against most of the major currencies. While our understanding of the macro drivers anticipates additional dollar gains, we are concerned that the technical condition is stretched and the markets may be exaggerating the systemic risk posed by Turkey.
The US-China relationship sits at the center of the global political economy. We fear that the narrative in the press and among economists locate China as the main threat to the world order. We offer this non-consensus macro view.
The withdrawal of the US from the Trans-Pacific Partnership trade agreement left it exposed on two fronts. First, the TPP was going to modernize the NAFTA. Without, the US remains locked in protracted negotiations. A breakthrough in talks with Mexico has been reportedly imminent for weeks. Talks with Canada have apparently not progressed very far in recently, and the US insistence on a sunset clause remains a deal-breaker.