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.

  1. Global Economic Momentum remains approximately around its mean of 50%. The most notable incremental development is US NFP today, which was a mixed report. Private payrolls continued to be strong, but government hiring remained muted, potentially reflecting constraints imposed by the debt ceiling and seasonality.
  2.  Global Policy remains tilted marginally hawkish, as many central banks move towards tighter monetary conditions. The most recent NFP is unlikely to deter the Federal Reserve from its path. However, the Bank of Japan recently downgraded its outlook on the Japanese economy, cementing the case that they might be in “QE forever. “ This is likely to exacerbate the policy divergence between USD and JPY (which we highlighted starting January), implying that JPY could continue to weaken much more as the Fed begins to remove accommodation starting next month.
  3. Global Market Trends continue to favor risk-on exposures, albeit favoring inflation-linked assets versus others- i.e., commodities currently have strong market trends supporting them.

Here is our updated monitor & models. Let us start with our tracking of global economic momentum:

To add to this picture, here are our global economic cycle, forecast models. A level of 50 implies growth at the local mean, above 50 indicates accelerating economic growth, and below 50% indicates slowing growth:

Next, we offer 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 significant regions or Blocs. We offer the evolution of these Currency Blocs over time:

Finally, we look at our Trading Tools Report to analyze whether commodity positions are attractive in the immediate term. We find an asymmetric opportunity to the upside here:


  • Trading Range:  These ranges represent a trading bank within which a currency should trade based on multiple market factors. If we are long- prices above the upside range indicate the asset is expensive, and prices below the downside range suggest that they are cheap and vice versa if we are short.
  • Year-to-Date Returns: This is the price performance of a given currency over the current calendar year, in percentage terms. We also compare the current price to the 52-week high and low for reference.
  • Price Momentum: This looks at cumulative rolling returns for a selected lookback period.  Positive momentum is good if we are long and bad if we are short. 
  • Implied Volatility Discount/Premium:  This tells us what the market expects in volatility relative to the history of volatility. If we are long a currency, we typically want market implied volatility to be higher than historical volatility and vice versa if we are short.

Until next week!