Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

In this week’s Alpha Bites, we recommend buying the Malaysian ringgit (MYR) against the Chinese renminbi (CNY) in a beta-neutral ratio. PBOC’s surprise RRR cut indicates concerns about the economy losing momentum as evidenced by recent data and should thus prevent strong fixings for the currency. The ringgit, meanwhile, has underperformed due to rising coronavirus cases and political uncertainty. However, the rapid vaccination pace, higher oil prices, and a new fiscal stimulus package should counter the headwinds to growth in Malaysia in our view.

In this week’s Alpha Bites, we recommend buying the Malaysian ringgit (MYR) against the Chinese renminbi (CNY) in a beta-neutral ratio. PBOC’s surprise RRR cut indicates concerns about the economy losing momentum as evidenced by recent data and should thus prevent strong fixings for the currency. The ringgit, meanwhile, has underperformed due to rising coronavirus cases and political uncertainty. However, the rapid vaccination pace, higher oil prices, and a new fiscal stimulus package should counter the headwinds to growth in Malaysia in our view.

Alpha Bites: Long Malaysian Ringgit Vs Short Chinese Renminbi

Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Given the continued fall in long end yields, it is about time we saw a slightly lower USDJPY, even if the USD has remained stable to strong elsewhere. What that means is that JPY crosses remain vulnerable (including USDJPY itself albeit to a lesser extend)

Given the continued fall in long end yields, it is about time we saw a slightly lower USDJPY, even if the USD has remained stable to strong elsewhere. What that means is that JPY crosses remain vulnerable (including USDJPY itself albeit to a lesser extend)  

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Thematic (Sector/Industry)

*Mainland China Crackdown: Unsurprisingly, this past week mainland China has continued its steady official crackdown on cryptoccurency, reiterating its ban on providing cryptocurrency services, placing pressure on bitcoin miners, etc; and *Tether Flows: Given the mainland Chinese crackdown, it would appear that investors don't understand Tether’s systemic risks; and/or mainland Chinese-based investors are aggressively moving funds out of the country via this channel prior to it being shut down completely. If  authorities decide the shut the Tether channel over its use for moving large amounts of capital out of mainland China, cryptocurrency market liquidity would essentially dry up as Tether accounts for over 60% of global cryptocurrency daily trading volumes.

*Mainland China Crackdown: Unsurprisingly, this past week mainland China has continued its steady official crackdown on cryptoccurency, reiterating its ban on providing cryptocurrency services, placing pressure on bitcoin miners, etc; and *Tether Flows: Given the mainland Chinese crackdown, it would appear that investors don't understand Tether’s systemic risks; and/or mainland Chinese-based investors are aggressively moving funds out of the country via this channel prior to it being shut down completely. If  authorities decide the shut the Tether channel over its use for moving large amounts of capital out of mainland China, cryptocurrency market liquidity would essentially dry up as Tether accounts for over 60% of global cryptocurrency daily trading volumes. 

EM FX volatility has dropped to its lowest level since the start of pandemic, which is likely leading to a positive scenario for currencies. In this note, we highlight the currencies most likely to benefit in such an environment.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

EM FX volatility has dropped to its lowest level since the start of pandemic, which is likely leading to a positive scenario for currencies. In this note, we highlight the currencies most likely to benefit in such an environment.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Declining EM FX Volatility Foreshadows a Positive Environment

Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


Cross Asset Strategy

<ul>
<li>Asia forex market volatility falls to near 40-year lows</li>
<li>Notional Asian ‘Euro’ trading within narrow band since 2016</li>
<li>Yuan positioning like Deutschmark within the Euro ‘Euro’</li>
<li>China well-served by such arrangements</li>
<li>Implies as USD devalues Asia gains liquidity and Europe loses export competitiveness</li>
</ul>


Asia forex market volatility falls to near 40-year lows
Notional Asian ‘Euro’ trading within narrow band since 2016
Yuan positioning like Deutschmark within the Euro ‘Euro’
China well-served by such arrangements
Implies as USD devalues Asia gains liquidity and Europe loses export competitiveness
 

The Asian ‘Euro’ (¥¥): Does It Already Exist?

China

The Chinese renminbi (yuan) is the official currency of The People's Republic of China. 

Price Gauge
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CNY (USDCNY CURNCY)

Alpha Bites: Long Malaysian Ringgit Vs Short Chinese Renminbi

We recommend Long Malaysian ringgit/Short Chinese yuan as we expect yuan to underperform following the shift to an easing stance by PBOC while...

Gautam Jain, PhD, CFA

CNHJPY: On the Pivots

As JPY crosses continue to slide, one major pair that may now be on verge of breaking key levels is CNHJPY - Time for catch up?

Shyam Devani

Tether – Holding On By A String

TETHER: Mainland China is cracking down on crypto. If authorities decide to close Tether, the cryptocurrency market liquidity could essentially dry...

Thomas J. Monaco

FX Dashboard: Declining EM FX Volatility Foreshadows a Positive Environment

With EM FX volatility dropping to its lowest level since the start of pandemic, we highlight the currencies most likely to benefit in the likely...

Gautam Jain, PhD, CFA

The Asian ‘Euro’ (¥¥): Does It Already Exist?

An Asian 'Euro' may have already formed? If correct there are huge implications for asset allocation, such as buying Asian stocks and European bonds.

Michael J. Howell

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)