Welcome back to On the Daily, FXDD’s daily research blog. Recently we took a brief break to reorganize some of our internal models and methods to enhance our research process. In addition to updating our models, we are updating our content delivery services. In the coming weeks, On the Daily will be migrating to Substack. You can find the link by clicking here.

In the meantime, here are our latest updates:

  1. Global economic momentum trended upwards over the last week further, after a worrying flirtation with lower levels. This retracement has come primarily due to US economic momentum edging higher.
  2. With regards to global monetary policy, recent developments have been decidedly hawkish. The Bank of England has opened the door to a potential rate hike this year, and the Federal Reserve has lined up its taper initiation for as early as November. In this environment, we have typically seen the dollar bid, and today is no different.
  3.  Looking at the global market monitor, despite the current turmoil, our indicator tells us that the trend continues to favor “risk-on” assets, predominantly a global basket of stocks. Despite difficulties in performance on a month-over-month basis, we continue to think that US stocks are likely to be a strong performer during global liquidity withdrawal.

Stay tuned for updates on our Substack launch! In the meantime, here are our data monitors. Let us start with our tracking of global economic momentum:

Next, we show our Market Environment Monitor, which aggregates the growth and inflation signals from major global investment markets to tell us what the current market environment is, i.e., expansion, inflation, deflation, or stagflation:

Finally, we show our proxy for capital flows using our Currency Bloc Monitor, which aggregates exchange rate moves across 20+ currency pairs into major regions or Blocs. We show the evolution of these Currency Blocs over time:

Until tomorrow!