ridethepig | USDCNH Market Commentary 2020.09.22It is a well known phenomenon that the darling of 2020 has been the Yuan. An important difference operationally for China has allowed the sharp speculators to ride the flows in the endgame of an economic cycle.
We must first take a look at the outpost we spotted earlier in the year, the start of sellers activity. There are signs of some short-term dollar strength via risk which means the flows are becoming less simplistic in nature and will start to aggressively shake out the late retailers with awful entries.
The continuation from this position is also down to Fed. As US continue to print and finally artificially devalue the dollar we must also track the speed of which inflation returns. Those who believe in 2% inflation making a return will be tracking the supply side chains, rather than the demand side. Less tech advancements, a pullback in globalisation and increased government intervention are bearish for US and Chinese Equities.
