The elements of Macro strategy 📍 On the JPY side... It is well known the vulnerability of Japanese corporates in this environment, they are particularly exposed because of the demographics and sector exposures. Restaurants, bars, entertainment etc all are looking very feeble, and with...
EURUSD exploding to the topside as USD comes under further pressure from domestic issues. While I am bullish on the euro more broadly, these latest moves are starting to look stretched above 1.12xx given all the cards that are on the table. Well done all bulls riding what has been so fat a very fast move; we are coming to the end of this initial ‘expectation...
A quick update to the DXY chart which is essentially intended to cast some light over G10 FX as we prepare for NFP. In order to understand the dangers of pursuing a weaker dollar too energetically, we shall in what follows begin to point out the inner wave flows in which short-term moves become indicated. The process of short-term swing trading is automatic for...
A timely update to the US Equities chart after a month of consolidation/chop. The energy building up here is immense, before you tackle what follows, you should quickly check that you are well versed in the notions concerning the retrace leg, the ABC sequence and passed crashes. If not you should refresh your ideas on these, because both of the following legs are...
Swings and position building We have witnessed a tremendous amount of profit taking after clearing the 7.23 targets in USDTRY and are arriving back into major support territory. The pick-up in local activity was notable as banks were forced to defend the TRY. Many clients I speak to are happy to continue buying USDTRY , the picture looks gloomy for Turkey and...
It is evident that a general round of profit taking for buyers is called for, it will act as a catalyst to kickstart a fresh leg into USD and provide a helping hand from markets to put -ve rates back on the table for Fed. One more time it is all eyes on Equities, if those betting on a quick V-shaped recovery lose their tempo we can see blood on the streets. ...
On the commodity currency front, looking for risk markets to reject the move quickly this week and trigger the flows towards USD. I recommended standing aside last week, and here I have been actively adding full sized AUDUSD shorts in the 0.660x handle. The healthy cleanse of USD longs in the antipodeans will make things a lot easier to trade with the next leg...
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...
Fundamentally there is a rush into dollars because of new swap lines to other countries and government handouts. Another supply issue imminent?
All eyes on risk markets and the recent rebound reaching its final stages of exhaustion. USDTRY not giving any gains back, continuing to attack the 7.00 important psychological resistance. Buyers calmly finishing their preparations for an appropriate welcome of the next risk headline, while local banks try everything they can to defend. Happy to sit long...
This week is full of news and speeches by Powell. Last week, he said: "With interest rates at ZLB and no desire to use negative interest rates, the Fed will rely heavily on existing tools such as forward guidance and balance sheet policies." It will be interesting to see what happens this week. Technically the DOW bounced back from 22800 and now we expect a rise...
Based on what we can see either on technical and fundamental perspective, the DXY is set to rise breaking the consolidation that it has been hold for a while. Yesterday's comment from the FED chairman has sent the Dollar back to sessions top, via a liquidity injection that formed a tweezer bottom pattern, signalling that momentum is charging up towards the...
Dxy pulling in bullish divergence to 100.10-40 can bring EU down major to that loving 1.082 level. FED spoke today further driving EU bearish. EU bounced off my r3 at beginning of FED speaking and looks like it wants to end its journey at s1. we are now hovering under my r1 upcoming on 11 AM EST.
All eyes on RBNZ tonight, Equities globally are running out of steam and high beta FX looks set to suffer badly... the Governor has been very vocal around negative rates and protection via debt monetisation if necessary. Markets have quite the habit of unpinning Central Bank promises of late by choosing to apply maximum pressure. RBNZ will have to satisfy the...
Hey. I'd like to talk about the effect of lower interest rates on something called 'net interest margin'... In other words, how banks make money. The chart attached shows US commercial banks' net interest margin (blue) versus the target Fed Funds range (white). Net interest margin (NIM) is a measure of the difference between the interest income generated by...
We have not reached the top yet. The S&P will rise due to unprecedented liquidity and serious retail FOMO will kick in for a parabolic rise to SPY 400 (S&P 4000) by labor day 2020. This is the end of a 30+ year secular bull market. Once the fed signals slowing of quantitative easing due to rising S&P and economy showing signs of recovery, the bust will reach its...
Across the commodity block, NZD is looking the weakest and most vulnerable with negative rates entering into the picture. This looks unavoidable now and makes NZD the more preferred short across G10 crosses. The resistance is weakly protected as we enter into FED fact territory, the market was a little too long USD and I understand the need for a healthy cleanse,...
In this positional chart, the INR is entering back into the game, whilst USD is nearer the end and thus already well-developed. That is decisive. So the more distant EM currencies like INR actually will act as a trump card and assist in diverting flows from the king, but like all trumps we must use them sparingly: do not jump the gun is the rule. The diverting...