After an intraday bearish cycle, price is now sitting at an area of potential high liquidty near the low od December 2020. Price is also sitting on a H4 OB with the potential of a bullish reversal around this price level. Entry at 1768.50 with 3 profit targets: 1810.900; 1844.500 and 1898.000.
Coming into the new year, the reflationary trade was working quite well. In January, we saw a period of heightened volatility that stressed emerging markets. Brazil was no exception. That said, the weak dollar trend looks likely to resume in the next few months, after the positioning shake-out that we saw in January. Many hedge funds are still on the sidelines and...
We are reaching the lows in the range right on time for SARB today. Markets are expecting a 50bps move, a little bird tells me that we are set for more... Remember the domestic story in South Africa is only going one way; sadly it's the same outcome as Turkey. On the technical side, tracking closely the 18.00 support to build longs outguessing a dovish...
Fed rate cuts taking full control of the FX board as virus disruptions start to fade - it's time to go shopping in G10 and EM FX and the intervention policies will provide some USD relief. Here looking for a rebound into previous ranges in USDRUB as a pro-cyclical currency. A test of the previous range we were trading looks around the corner: The spread of...
2018 saw a rolling bear market in emerging markets, with a lot of EM currencies getting crushed vs. the dollar. Why has everyone forgotten about this? The issues are systemic, and the buy-down of the USDHKD peg only kept the eurodollar market functioning for long enough to forestall some further pain. Now that the peg has been hit again, we are starting to yet...
Unsurprisingly, similar to the currency, the outperformance of the Chinese stock market vs. the S&P 500 falters when the Chinese currency can't be sustained. Not quite as direct of a relationship, but this clearly affects emerging markets, which are highly indebted to the dollar. This is visible if you go back further as well - the broad rolling emerging market...
Unsurprisingly, right as the USDHKD Peg hit it's 7.85 limit, China lost its ability to prop up the Yuan, and the Yuan started to fall once again. This is further confirmation that the Yuan is subject to dollar pressure, and Hong Kong is China's "release valve" for dollar funding pressures. When the peg gets hit, the CCP has a difficult time keeping the RMB afloat.