Foreign Exchange
Macro Research
Tech Wreck 2.0
It’s quite clear certain parts of the market such as crypto, saas and other duration linked assets in Tech has recently had a fall from grace reminiscent of the .com bust. How deep this goes will depend purely on central bank policy, of which I’ve tried to argue a fall in risk assets is actually…
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Cromwell FX Market View
The Fed Continues to Rule
The week that was so anticipated finally arrived. The Fed raised interest rates by 50bps ruling out the possibility of 75bps. However by the end of the week, fed fund futures are still pricing in 82.9% chance of a 75bps hike in at the June 15 FOMC meeting, to 1.50-75% Most pairs found some level…
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Macro Research
What To Expect from The Fed This Week?
This Wednesday the Fed will be announcing its next rate hike. Reading over some of the commentary from fed speakers we can see that 50BPS looks to be on deck. This has also been priced in by the market as we can see below in the Fed watch tool by the CME. We will also…
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Cromwell FX Market View
Dollar Continues Its Dominance; Risk Assets Fall
The US Dollar ended the week the strongest, having the best week since 2015 and with Dollar index hitting a two-decade high. The index moved to 103.92 its highest since 2002 as expectations of aggressive rate hike by the Fed in June. The Euro although performed better earlier in the week as Macron won a…
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Cromwell FX Market View
Big Gains for the US Dollar
The US Dollar was the overall winner last week making impressive gains across the board. A further firming of yields and speculation of further Fed tightening propelled the USD. The market is now expecting a 50bps rate hike in May and could end the year between 2.5% and 3.5% depending on incoming data and developments…
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Cromwell FX Market View
US Dollar Grinds Higher
Last weeks rising yields continued. This led to a week of further downward pressure in bonds and interest rate rises. The Box and RBNZ both moved 50bps higher which caused risk assets to move lower. The shortened week for the 4 day easter holiday saw the US Dollar grind higher. The flight from risk…
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Cromwell FX Market View
Sleepy Start, Explosive End
The week started as the following had ended. Markets were relatively quiet. The war in Ukraine had continued to ebb away from headlines and the markets were able to begin to focus on other factors. The US Dollar ended the week the strongest despite the mixed start. The markets waited until the Fed minutes…
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Macro Research
After Inversion Comes?
In my first note, I asked the question, will the yield curve invert? With 5s30s and more importantly the 2s10s inverting on 31/03/22, the guessing game is over! The inversion although an important part to start a countdown on a risk off set up. It’s a steepening of the yield curve that comes after an…
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Cromwell FX Market View
Quieter Week – But Eye of The Storm?
The week was quieter on many fronts. The continued war in Ukraine has now seems to have completely stalled for the Russians. The announcement of a more focused approach on the Donbas region seemed to indicate that a move for total control over the control had failed. Continued talks did not prove to garner any…
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Cromwell FX Market View
Rising Yields a Cause for Concern
The war in Ukraine seemed to move from the spotlight as any developments continued to stall the main themes for the week was the continuing rising yields. The Yen was the biggest loser as global yields surged except the JGB. The BoJ has clearly put a cap on 10-year yields and the resulting widening…
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Macro Research
The First Warning Signs
The bond market and in particular certain yield curves are starting to flash warning signs: 5s-30s inverted this week for the first time since 2006. This information is useful and not so useful depending on your time horizon. Let’s answer why it’s useful first, it’s telling you in simple terms that growth will slow, and…
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Cromwell FX Market View
War Stalls and Fed Hikes
The week saw the current war in Ukraine stall. With this we saw the Euro gain slight momentum GBP gained as the BoE again raised rates by 25bps. However this was not enough for the currency to gain any real upside momentum. The market had eyed a potential 50bps rise and with less than…
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Cromwell FX Market View
Markets Remain Stable Ahead of Fed
The week saw some level of stabilisation after the previous 2 weeks of roller coaster markets. Ukraine continued to dominate the headlines but with no further escalation the markets sought to remain calmer than previous weeks. The USD which had seen safe haven status over the last 2 weeks gave up some ground to…
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Macro Research
Don’t Fight the Fed
The phrase “Don’t fight the Fed” is normally attributed to the reaction function of central banks once a crisis is underway. What does it mean? Simply put, once risk assets have been sold off, normally the Fed would step in and buy bond, i.e., quantitative easing plus cut interest rates, this would provide liquidity therefore…
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Cromwell FX Market View
War Continues to Take Its Toll
The week was once again dominated by the continued invasion in Ukraine. Euro was the worse performer of the week as the attack on the Zaporizhzhia nuclear power station brought the real issues of the conflict into focus. The war in Ukraine has generated two clear effects in FX markets: The European currencies most…
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Cromwell FX Market View
Putin’s War Begins
The week was dominated by the build up of forces and eventual invasion of Ukraine. Though not unexpected by the markets the actual event still took them by surprise. Risk assets initially tumbled on Thursday as reports of the invasion broke but by late on Thursday staged a complete comeback and had turned positive…
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Macro Research
Will The Fed Hike in March?
With the war between Russia and Ukraine dominating headlines inflation numbers not seen since the early 80s and what could be the first Fed rate hike this month. I want to break down how different Fed speakers are looking at how much to hike by. At a very basic level we can say that…
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Cromwell FX Market View
Ukraine / Russia Continues to Dominate
The ongoing military build-up in eastern Europe continued to dominate the market headlines. In the early stages of the week there was general optimism about the situation, with risk rallying on hopes of the situation getting diffused. However, in the latter part of the week the fear of escalation returned, and risk assets got sold.…
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FX Market View #39
Inflation and Potential of War Driving Markets
The currency markets have been simultaneously driven by two themes as of recent, however independently the duration of these market motives vary significantly. Firstly, there are the concerns of inflation which have been felt globally since the middle of last year, and more recently accelerating in tandem with higher energy costs. It appears though that…
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Cromwell FX Market View
Ukraine in Focus
It seems not a week goes by without some level of event driven volatility. Late in the week rumours of Russia / Ukraine escalation saw Euro move lower. Oil surged to a new 7 year high and Equities lost ground. In the background we still see the Fed tightening rates ahead. Investors were concerned that…
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