Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Cross Asset Strategy

The recent bounce in Gold has taken us to a sell zone at a time when yields are stabilising again. A refreshed weekly chart may be able to distinguish the 'wood from the trees' in what has sometimes been a noisy market

The recent bounce in Gold has taken us to a sell zone at a time when yields are stabilising again. A refreshed weekly chart may be able to distinguish the 'wood from the trees' in what has sometimes been a noisy market

Founder

Olivier Desbarres

Exacting. Excellent. Exceeding. Exemplary.

4X Global Research

4X Global Research was founded in 2017 to provide institutional and corporate clients with the substantive research, high-quality analysis and thoughtful insight on Emerging and G20 economies and financial markets they need to make informed and timely decisions and gain an edge in their investments.

FX & Rates

The US Dollar Nominal Effective Exchange Rate (NEER) traded in a narrow range of 1.8% between late-2020 and early March, according to our estimates. The Dollar then embarked on a 3-4 week rally, driven by rising US Treasury yields, the stretched valuations of other major currencies and still tepid global economic activity. Since end-March the Dollar NEER has depreciated 1.8% to a 7-week low. Stronger US economic growth – fuelled in part by the government’s $1.9 trn coronavirus relief package – alongside lower US yields across the maturity spectrum and rising US and global equities have weighed on the “safe-haven” Dollar’s relative attractiveness. Global FX volatility has remained subdued and well below its 10-year average. However, the performance of major currencies has, unlike in November-December, been far from even. In particular, Non-Japan Asian currencies have underperformed which we attribute in part to NJA central banks’ more pro-active management of their currencies.This timeline, its drivers and the relative performance of the Dollar and major currencies, including in the emerging market space, have been in line with our expectations (see <a href="https://www.smartkarma.com/insights/forecast-review-usd-cny-em-global-growth" target="_blank" rel="noopener">Forecast review: USD, CNY, EM &amp; global growth</a>, 21st December 2020, Dollar – <a href="https://www.smartkarma.com/insights/dollar-diversification-rotation-and-valuations" target="_blank" rel="noopener">Diversification, rotation and valuations</a>, 18th January 2021, <a href="https://www.smartkarma.com/insights/dollar-s-recent-weakness-blip-not-new-trend" target="_blank" rel="noopener">Dollar’s recent weakness – Blip, not new trend</a>, 12th February 2021 and <a href="https://www.smartkarma.com/insights/us-and-uk-the-comeback-kids" target="_blank" rel="noopener">US and UK: The Comeback Kids</a>, 5th March 2021).Further US Dollar depreciation in weeks ahead, in our view, remains conditional on both:<ol style="list-style-type: lower-roman;">
<li>The ability of a dovish Federal Reserve and FOMC members to further jawbone lower or at the very least cap US Treasury yields; and </li>
<li>Global macro indicators continuing to point to a pick-up in economic growth. </li>
</ol>Our core scenario is that the Dollar will indeed lose further ground but that the performance of other major currencies will be conditioned by powerful, often inter-related domestic factors and thus remain far from uniform.

The US Dollar Nominal Effective Exchange Rate (NEER) traded in a narrow range of 1.8% between late-2020 and early March, according to our estimates. The Dollar then embarked on a 3-4 week rally, driven by rising US Treasury yields, the stretched valuations of other major currencies and still tepid global economic activity. Since end-March the Dollar NEER has depreciated 1.8% to a 7-week low. Stronger US economic growth – fuelled in part by the government’s $1.9 trn coronavirus relief package – alongside lower US yields across the maturity spectrum and rising US and global equities have weighed on the “safe-haven” Dollar’s relative attractiveness. Global FX volatility has remained subdued and well below its 10-year average. However, the performance of major currencies has, unlike in November-December, been far from even. In particular, Non-Japan Asian currencies have underperformed which we attribute in part to NJA central banks’ more pro-active management of their currencies.This timeline, its drivers and the relative performance of the Dollar and major currencies, including in the emerging market space, have been in line with our expectations (see Forecast review: USD, CNY, EM &amp; global growth, 21st December 2020, Dollar – Diversification, rotation and valuations, 18th January 2021, Dollar’s recent weakness – Blip, not new trend, 12th February 2021 and US and UK: The Comeback Kids, 5th March 2021).Further US Dollar depreciation in weeks ahead, in our view, remains conditional on both:
The ability of a dovish Federal Reserve and FOMC members to further jawbone lower or at the very least cap US Treasury yields; and 
Global macro indicators continuing to point to a pick-up in economic growth. 
Our core scenario is that the Dollar will indeed lose further ground but that the performance of other major currencies will be conditioned by powerful, often inter-related domestic factors and thus remain far from uniform.

As we see yields slip this week, especially over the past 24 hours, the question now is whether there is more to this move or is it already over?Technically we have clear levels and points of reference to watch.From a cross market perspective, there are more doubts than answers at this stage…

As we see yields slip this week, especially over the past 24 hours, the question now is whether there is more to this move or is it already over?Technically we have clear levels and points of reference to watch.From a cross market perspective, there are more doubts than answers at this stage…

Thematic (Sector/Industry)

As a lot of focus is placed on broad equity indices like the S&amp;P 500 and Nasdaq 100 as well as bond yields, one of the more fascinating markets beneath the surface is that of HousingThe latest developments from the US confirm earlier indications that a bull market is well set in Housing. The March close is a clear indication that higher prices will be seen in both short and medium term horizons.

As a lot of focus is placed on broad equity indices like the S&amp;P 500 and Nasdaq 100 as well as bond yields, one of the more fascinating markets beneath the surface is that of HousingThe latest developments from the US confirm earlier indications that a bull market is well set in Housing. The March close is a clear indication that higher prices will be seen in both short and medium term horizons.

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.


<ul>
<li>A new currency regime in Asia?</li>
<li>Wildly inaccurate media reports wrongly suggest large-scale capital outflows from EM</li>
<li>Rather EM enjoying best forex reserve growth for a decade</li>
<li>
De facto Asian Currency Unit, a ‘Euro-like’ policy, allowing monetization</li>
<li>Loose US fiscal and monetary policies are more likely to spill-over into EM</li>
</ul>


A new currency regime in Asia?
Wildly inaccurate media reports wrongly suggest large-scale capital outflows from EM
Rather EM enjoying best forex reserve growth for a decade

De facto Asian Currency Unit, a ‘Euro-like’ policy, allowing monetization
Loose US fiscal and monetary policies are more likely to spill-over into EM


Could The New Asian ‘Euro’ Mean A Coming Decade of Outperformance From Emerging Markets?

United States

The euro is the official currency of the European Economic & Monetary Union.  The US dollar is the official currency of the United States of America.

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The Sell Zone in Gold?

After a decent short term bounce on Gold we now see the sell zone that should be watched. A refreshed weekly chart may reveal how low we could go

Shyam Devani

Dollar and the Three Bears

in past 4 months Dollar has range-traded, rallied then weakened, driven by US yields, domestic and global economic activity and relative...

Olivier Desbarres

Make or Break for Bonds

Is the move down in yields the start of something or is it already over? The levels identified and highlighted in this note will help

Shyam Devani

Housing on the March

One of the most interesting closes at the end of March was the one seen in Housing. It adds to the conviction that further gains will be seen.

Shyam Devani

Could The New Asian ‘Euro’ Mean A Coming Decade of Outperformance From Emerging Markets?

Asian cross-currency volatility is at its all-time low. A de facto Euro-like unit is forming. This could be hugely bullish for Emerging Markets

Michael J. Howell

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