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The Dollar can Build on the Pre-Weekend Gains

The US dollar traded heavily most of last week but rebounded ahead of the weekend, with some month-end flows impacting.  The Japanese yen was a notable exception.  The rise in US yields helped lift the greenback nearly a percent against the yen.  The…

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3 years ago

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The US dollar traded heavily most of last week but rebounded ahead of the weekend, with some month-end flows impacting.  The Japanese yen was a notable exception.  The rise in US yields helped lift the greenback nearly a percent against the yen.  The Fed's standpat stance in light of the surging economy and signals the Norwegian central bank and the Bank of Canada seemed dovish.  The contrast carried the Norwegian krone and Canadian dollar to new three-year highs last week.  Even if the greenback's pre-weekend advance was exaggerated, it looks to be turning after trending lower in April.  

The Federal Reserve's broad trade-weighted nominal dollar index fell by about 7.5% in the last three quarters of 2020 after rising by 4.6% in Q1 as the pandemic struck and the dollar was bought partly as a safe haven. In addition, it was partly a function of unwinding structured positions that used the greenback as a funding currency.  It gained 1.3% in Q1 21 but traded with a heavier bias in April and surrendered most of the Q1 gains, falling over 1%. Moreover, the technical indicators for the dollar have been stretched by its persistent decline in recent weeks. Frequently, it seems that the short-term trends in the dollar are reversed or consolidated around the US employment data.  The April report is released on May 7, and another strong report is anticipated.  

Our broad macro view is that given the large US fiscal and trade deficit (the March goods balance reported last week widened to a new record high deficit of a little more than $90 bln) requires higher yields or a weaker dollar, or some combination thereof.  The fact that the US 10-year yield rose nearly 83 bp in Q1 and the dollar strengthened, and the yield fell in April, and so did the dollar is not coincidentally.  We do not want to overstate the link between exchange rate and yields. The long-term relationship does not appear linear but cyclical.  However, when trying to discern the recent broad trend, the foreign exchange market seems particularly sensitive to US rates. 

Dollar Index:  The Dollar Index fell by about 2.5% in April, essentially unwinding the March gain. The pre-weekend advance, helped apparently by month-end position adjustments, was the most since early March. Tentative support was found near 90.40.  The MACD looks poised to turn higher, but the Slow Stochastic has flatlined in overextended territory.  The close above 91.15 may help stabilize the tone. To signal a correction to April, the 91.55 area may be overcome.  Above there, 92.00 comes back into view.  

Euro:  The dovish Fed lifted the euro to $1.2150, its highest level since the end of February.  Sellers greeted it and pushed it back to around $1.2015 ahead of the weekend.  The move seemed exaggerated by month-end adjustments. Follow-through selling will likely test support is likely in the $1.1980-$1.2000 area. The momentum indicators are stalling. In the near term, we are more inclined to sell into strength than buy dips. Three-month euro volatility (implied) slipped below 5.5% before the weekend, its lowest level since March 2020, but closed near session highs.    

Japanese Yen:  The dollar bounced smartly against the yen last week.  It had finished the previous week below JPY108, but the rise in US yields seemed to fuel the greenback's recovery.   After falling in nine of the past ten sessions, the dollar rose at the beginning of last week and recorded higher highs until consolidating ahead of the weekend and month-end.  The MACD and Slow Stochastics have turned up, suggesting the dollar's recovery will continue.  The dollar rose above JPY109.30 before the weekend to push and closed above the (50%) retracement of April's decline.  The next retracement target (61.8%) is near JPY109.65, and then the JPY110 level beckons.  Implied vol trended lower in April alongside the dollar.  The dollar's recovery is likely to see higher implied vol, which at a little below 6%, is also near its 20-day moving average.   

British Pound: A five-day advance rally was halted before the weekend as it pulled back and slipped below the 20-day moving average (~$1.3850).  Once again, the market was reluctant to push it above $1.40.  Sterling has not closed above that threshold since the end of February, though it has flirted with it several times.  The pre-weekend drop succeeded in turning sterling lower for the week after threatening to extend its weekly advance to three.  The momentum indicators stalled.  Many observers see the local elections, and the election in Scotland, in particular, as a risk to sterling.  On the other hand, the Bank of England is expected to be upbeat as the fiscal stimulus and vaccine will spur a recovery sooner and stronger than previously projected.   If $1.40 is the upper end of the range, then the $1.3670 area has been the lower end of the range. Initial support is seen around $1.3800.  Three-month sterling vol fell below 7% last week to make a marginal new low since last March.  

Canadian Dollar: The Canadian dollar was easily the strongest currency last week, gaining 1.5% against its US counterpart.  It the fourth consecutive weekly advance, and it was the biggest of the year. The central bank has begun tapering, rising commodity prices is seen as constructive, and its 1.6% expansion in Q1 matches the US. However, a note of caution is generated as the US dollar closed below the lower Bollinger Band every day last week and finished the week on its lows.  Another note of caution comes from the market that may be getting ahead of itself as it prices in three rate hikes by the end of 2023. The momentum indicators are still falling, and the Slow Stochastic is stretched, and the US dollar still made new three-year lows ahead of the weekend.  Initial resistance is seen near CAD1.2335 and then CAD1.2400.  The low from 2018 is about CAD1.2250, and below there, chart support is sparse until the 2017 low of almost CAD1.2060.  Implied volatility has begun rising.  It had briefly fallen below 6% near-mid April, its lowest level since last July, but finished above 6.5%.

Australian Dollar:  Rising commodity price, including industrial metals, and a dovish Federal Reserve failed to sustain an Aussie rally above $0.7800.  While it flirts and penetrates it on an intraday basis, it has failed to close above it since the end of February.  Indeed, it finished the week close at its lowest level in about two and a half weeks, a tad above $0.7700, briefly dipping below it in a thin NY Friday afternoon.  The momentum indicators a mixed.  The Aussie spent April mostly in the $0.7600-$0.7800 range and largely above $0.7700 since mid-monthly.  A break warns of a return to the lower end of the range.  The RBA meets on  May 5 in Sydney.  It may be a bit early for it to signal that it too wants to pull back from its extraordinary monetary support, but it seems like a good candidate for later Q3. The central bank will publish new economic projections at the end of the week, ahead of the government's budget announcement the following week.  Three-month vol is trading in its trough below 9.0%. It reached 8.75% last week, its lowest level since last March.  

Mexican Peso:  The peso had its worst week in a couple of months, falling in four of the five sessions.  It snapped a four-week advance with a 2,1% decline,  making it the second-worst performing emerging market currency after the Colombian peso (~-2.4%).  Higher global interest, including a modest rise in US yields and the prospect of another 75 bp hike in Brazil in the week ahead, encouraged some profit-taking.  News of a large and unexpected trade deficit ($3 bln in March) was not helpful, but the surprising expansion in Q1 (0.4% quarter-over-quarter GDP) did not prevent the peso from extending its losses.  The US dollar finished the week around MXN20.2460, its best level since April 16.  The MACD and Slow Stochastic have turned up. It met the (38.2%) retracement objective of the decline since late March high near MXN20.2350.  The halfway mark is about MXN20.3730.  

Chinese Yuan:  The broad dollar gains ahead of the weekend halted the yuan's four-day advance.  It was only the second session that the greenback gained over the redback in three weeks. Still, the dollar fell for the fourth consecutive week, which followed a six-week advance. Over the four-week streak, the yuan rose by 1.6%, making it the second strongest currency in the region after the Taiwanese dollar (~2.1%).  If the dollar strengthens in the near term, as it looks likely against a range of currencies, it can return to the CNY6.50 area.  The yuan and the euro remain highly correlated.  On a purely directional basis, the correlation over the past 30 and 60 days is slightly more than 0.85. The onshore market will be closed the first part of next week to celebrate the May Day holiday.  



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John Lewis relies too heavily on its heritage – here’s what it could do instead

The company has returned to profit by making cuts, but there are things it could do to reinvent itself.

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41 mins ago

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March 20, 2024

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Road to recovery? Jevanto Productions/Shutterstock

In a tricky economic climate, the British department store John Lewis has managed to deliver some good news. The retail partnership – owned by its 80,000 employees – posted pre-tax profits of £56 million after a £234 million loss the year before.

The positive announcement was somewhat tarnished by the fact that those employees (known as partners) would not receive a bonus for the second year in a row. There were also hints of job cuts.

But what more could this giant of UK retail, which also owns Waitrose supermarkets, do to endure its survival? Does its increasing reliance on grocery sales mean its own brand has become less valuable?

For over 160 years on the high street, John Lewis has worked hard on that brand. Its slogan (scrapped in 2022) about being “never knowingly undersold” was well known, it remains a trusted supplier of an extensive range of household hoods, rates highly for customer service, and runs Christmas TV adverts which have became a media event in themselves.

In doing all of those things, John Lewis seemed to be in a much better place than its rivals. BHS (founded in 1928) and Debenhams (1778) have disappeared from the high street. House of Fraser (1849) was taken over and has a much-reduced physical presence.

John Lewis’s nearest rival, Marks & Spencer (1884), is now doing well, but only after it underwent a fairly brutal restructuring which involved cutting thousands of jobs during the pandemic, closing 67 stores, and slashing its operations in France.

So John Lewis’s “brand heritage” – its history, tradition and pedigree – has worked pretty well for a pretty long time. But its recent return to profit was the combined effort of reinvesting and streamlining, according to some reports.

Also known as “trimming the fat” in the business world, the retailer’s streamlining endeavours consisted of cutting more than 1,500 jobs, and closing underperforming stores, such as the branch in Sheffield, which had served residents for nearly 80 years and was much mourned, including by my own mother-in-law.

It has also been reported that more job cuts are imminent, with up to 11,000 jobs to go in the next five years.

And perhaps these measures highlight some of the harsh realities of running a department store in the always-open and effortless world of online shopping. Maybe employees (even those considered partners, as under John Lewis’s employee-ownership model) have become expendable.

Maybe physical stores, where consumers go to explore and seek advice, have become expendable. Maybe all traditions are expendable when they are not commercially viable.

People first

Yet the world of retail is filled with examples of heritage brands reinventing themselves to stay relevant, buoyant and competitive.

John Lewis will need to do the same if it wants to retain its legacy on the British high street. And it could do worse than taking a leaf out of Waitrose’s playbook.

For the company’s return to profit was largely due to the buoyant sales generated by Waitrose supermarkets, which increased by 4%. The department store business meanwhile, suffered a 2% fall.

Part of Waitrose’s success comes from providing a sense of indulgence and enjoyment – including healthy food – through carefully curated and often locally sourced products. It works closely with local farmers, supports regional suppliers (an approach that has also contributed to M&S’s success), and reinvests in stores and product offers.

Essentially, as part of UK’s grocery sector, Waitrose extended its partnership ethos to include people and groups beyond the shop walls – to build a “local retail ecosystem” that promotes and leverages a community spirit around their stores.

M&S shop front.
Appealing to appetites. Simon Vayro/Shutterstock

John Lewis department stores could try and do something similar. They could focus more on products that help customers live healthier and more active lives, and which are relevant to their interests. They could sell products created by local small businesses, and make a determined approach to be a supportive presence in the regions they serve.

Research suggests that heritage brands benefit from having a moral standing – when they show they care about the people they make money from, the local communities they operate in, and the people they employ.

So perhaps John Lewis should make moral values a part of its evolving heritage. It needs to show it cares not just for the people who work for the company directly, but also the people on whom it relies for success – the customers – and people it can build new relationships with. All of them could prove critical to its future success.

Kokho Jason Sit is affiliated with the Chartered Institute of Marketing.

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AI can help predict whether a patient will respond to specific tuberculosis treatments, paving way for personalized care

People have been battling tuberculosis for thousands of years, and drug-resistant strains are on the rise. Analyzing large datasets with AI can help humanity…

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5 hours ago

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March 20, 2024

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Tuberculosis typically infects the lungs but can spread to the rest of the body. stockdevil/iStock via Getty Images Plus

Tuberculosis is the world’s deadliest bacterial infection. It afflicted over 10 million people and took 1.3 million lives in 2022. These numbers are predicted to increase dramatically because of the spread of multidrug-resistant TB.

Why does one TB patient recover from the infection while another succumbs? And why does one drug work in one patient but not another, even if they have the same disease?

People have been battling TB for millennia. For example, researchers have found Egyptian mummies from 2400 BCE that show signs of TB. While TB infections occur worldwide, the countries with the highest number of multidrug-resistant TB cases are Ukraine, Moldova, Belarus and Russia.

The COVID-19 pandemic set back progress in addressing many health conditions, including TB.

Researchers predict that the ongoing war in Ukraine will result in an increase in multidrug-resistant TB cases because of health care disruptions. Additionally, the COVID-19 pandemic reduced access to TB diagnosis and treatment, reversing decades of progress worldwide.

Rapidly and holistically analyzing available medical data can help optimize treatments for each patient and reduce drug resistance. In our recently published research, my team and I describe a new AI tool we developed that uses worldwide patient data to guide more personalized and effective treatment of TB.

Predicting success or failure

My team and I wanted to identify what variables can predict how a patient responds to TB treatment. So we analyzed more than 200 types of clinical test results, medical imaging and drug prescriptions from over 5,000 TB patients in 10 countries. We examined demographic information such as age and gender, prior treatment history and whether patients had other conditions. Finally, we also analyzed data on various TB strains, such as what drugs the pathogen is resistant to and what genetic mutations the pathogen had.

Looking at enormous datasets like these can be overwhelming. Even most existing AI tools have had difficulty analyzing large datasets. Prior studies using AI have focused on a single data type – such as imaging or age alone – and had limited success predicting TB treatment outcomes.

We used an approach to AI that allowed us to analyze a large and diverse number of variables simultaneously and identify their relationship to TB outcomes. Our AI model was transparent, meaning we can see through its inner workings to identify the most meaningful clinical features. It was also multimodal, meaning it could interpret different types of data at the same time.

Microscopy image of rod-shaped TB bacteria stained green
Mycobacterium tuberculosis spreads through aerosol droplets. NIAID/NIH via Flickr

Once we trained our AI model on the dataset, we found that it could predict treatment prognosis with 83% accuracy on newer, unseen patient data and outperform existing AI models. In other words, we could feed a new patient’s information into the model and the AI would determine whether a specific type of treatment will either succeed or fail.

We observed that clinical features related to nutrition, particularly lower BMI, are associated with treatment failure. This supports the use of interventions to improve nourishment, as TB is typically more prevalent in undernourished populations.

We also found that certain drug combinations worked better in patients with certain types of drug-resistant infections but not others, leading to treatment failure. Combining drugs that are synergistic, meaning they enhance each other’s potency in the lab, could result in better outcomes. Given the complex environment in the body compared with conditions in the lab, it has so far been unclear whether synergistic relationships between drugs in the lab hold up in the clinic. Our results suggest that using AI to weed out antagonistic drugs, or drugs that inhibit or counteract each other, early in the drug discovery process can avoid treatment failures down the line.

Ending TB with the help of AI

Our findings may help researchers and clinicians meet the World Health Organization’s goal to end TB by 2035, by highlighting the relative importance of different types of clinical data. This can help prioritize public health efforts to mitigate TB.

While the performance of our AI tool is promising, it isn’t perfect in every case, and more training is needed before it can be used in the clinic. Demographic diversity can be high within a country and may even vary between hospitals. We are working to make this tool more generalizable across regions.

Our goal is to eventually tailor our AI model to identify drug regimens suitable for individuals with certain conditions. Instead of a one-size-fits-all treatment approach, we hope that studying multiple types of data can help physicians personalize treatments for each patient to provide the best outcomes.

Sriram Chandrasekaran receives funding from the US National Institutes of Health.

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IVI starts technology transfer to Biological E. Limited to manufacture oral cholera vaccine for India and global markets

  Credit: IVI IVI will complete the technology transfer by 2025 Oral Cholera Vaccine to be manufactured by Biological E. Limited for India and international…

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12 hours ago

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March 20, 2024

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Credit: IVI

  • IVI will complete the technology transfer by 2025
  • Oral Cholera Vaccine to be manufactured by Biological E. Limited for India and international markets

 

March 20, 2024, SEOUL, Republic of Korea and HYDERABAD, India — The International Vaccine Institute (IVI), an international organization with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health, today announced that it has commenced a technology transfer of simplified Oral Cholera Vaccine (OCV-S) to Biological E. Limited (BE), a leading India-based Vaccines and Pharmaceutical Company.

 

Following the signing of a technology license agreement in November last year, IVI has begun providing the technical information, know-how, and materials to produce OCV-S at BE facilities and will continue to support necessary clinical development and regulatory approvals. IVI and BE entered this partnership during an unprecedented surge of cholera outbreaks worldwide and aim to increase the volume of low-cost cholera vaccine in India as well as the global public market.

 

IVI will complete the technology transfer by 2025 and the oral cholera vaccine will be manufactured for India and international markets by Biological E. Limited.

 

Dr. Jerome Kim, Director General of IVI, said: “In an era of heightened risk of poverty-associated infectious diseases such as cholera, the world needs a sustainable source of high-quality, affordable vaccines and committed manufacturers to supply them. We are pleased to partner with Biological E., a company with a proven history of making life-saving vaccines accessible globally, to address this supply gap and protect communities from this deadly, though preventable, disease.”

 

Ms. Mahima Datla, Managing Director, Biological E. Limited, said: “We are glad to be in collaboration with IVI for the manufacture of simplified Oral Cholera Vaccine. Our efforts are aimed to not only combat the disease but to also be part of a sustained legacy of innovation, collaboration, and health stewardship. Together with IVI, we are happy to be shaping a healthier and more resilient future by making this vaccine accessible globally.”

 

This technology transfer and licensing agreement is the sixth of its kind for IVI, transferring such technology to manufacturers in India, the Republic of Korea, Bangladesh, and South Africa. All these partnerships have led to or seek to achieve, pre-qualification (PQ) from the World Health Organization, a designation that enables global agencies such as UNICEF to procure the vaccine for the global market. BE already has 9 vaccines with WHO PQ in its portfolio, and IVI and BE will pursue WHO PQ for OCV-S as well, following national licensure in India.

 

Dr. Julia Lynch, Director of IVI’s Cholera Program, said: “The cholera situation is dire, and the availability and use of oral cholera vaccine is an essential part of a multifaceted approach to cholera control and prevention, especially as outbreaks increase and the global vaccine supply remains strained. With more manufacturers like BE entering the market, the future supply situation looks strong. IVI remains committed to ensuring the availability of the oral cholera vaccine and to developing new and improved vaccines that are equally safe, effective, and affordable and made around the world, for the world.”

 

OCV-S is a simplified formulation of OCV with the potential to lower production costs while increasing production capacity for current and aspiring OCV manufacturers. IVI’s development of OCV-S and ongoing technology transfers are part of an institutional strategy to confront cholera with 3 main goals: 1) Ensure supply of OCV 2) Improve cholera vaccines 3) Support OCV use and introduction. The Bill & Melinda Gates Foundation has been supporting IVI’s cholera program since 2000 and is funding this latest technology transfer to BE.

 

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About the International Vaccine Institute (IVI)

The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO), and developed a new-generation typhoid conjugate vaccine that also achieved WHO prequalification in early 2024.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, an Africa Regional Office in Rwanda, a Country Office in Austria, and a Country and Project Office in Kenya. IVI additionally co-founded the Hong Kong Jockey Club Global Health Institute in Hong Kong and hosts Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

 

About Biological E. Limited

Biological E. Limited (BE), a Hyderabad-based Pharmaceuticals & Biologics Company founded in 1953, is the first private sector biological products company in India and the first pharmaceutical company in Southern India. BE develops, manufactures and supplies vaccines and therapeutics. BE supplies its vaccines to more than 130 countries and its therapeutic products are sold in India, the USA and Europe. BE currently has 8 WHO-prequalified vaccines and 10 USFDA approved Generic Injectables in its portfolio. Recently, BE has received Emergency Use Listing (EUL) from the WHO for CORBEVAX®, the COVID-19 vaccine. Recently, DCGI has approved BE’S 14-Valent Pneumococcal Conjugate vaccine.

In recent years, BE has embarked on new initiatives for organizational expansion such as developing specialty injectable products for global markets as a means to manufacture APIs sustainably and developing novel vaccines for the global market.

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MEDIA CONTACTS

IVI

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int

 

Biological E. Limited

K. Vijay Amruth Raj
Email: Vijay.Kammari@biologicale.com
www.biologicale.com/news

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