ridethepig | Coronavirus Retrace LegThe underlying USD devaluation seems little changed on the whole despite the Coronavirus hijack. Volatility is subdued as seen in the diagram below, which is making it very simple for large sizings to enter as was the case in 2007.
The USD weakness (which is a lot clearer on the Monthly chart) is a significant component in the reflation trade, growth projections in the US (in terms of GDP) are slowing and this remains ongoing despite Kudlow et al on the wires. The path of least resistance for Powell is to cut, while the Yield curve (below) shows the recession risks are still there and prevalent.
The titanic takes a long time to turn around, I am sitting tight in the Dollar sell-side for the mid and long term. You can see the picture clearly here that the 2017 highs are holding:
...my forecast is for a gradual decline in the next Q before significantly weakening towards the back-end in the year.
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