Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

<ul>
<li>I reiterate the risk that the dollar can strengthen in the near term by being on one of the two ends of the dollar smile, thus weighing on EM currencies.</li>
<li>On the positive side, the dollar strengthening should not last since the currency is already expensive in REER terms. Also, long speculative positions in the dollar are already quite heavy.</li>
<li>Since positions tend to follow dollar moves, whenever the dollar starts weakening, the unwinding of long positions can exacerbate the move, making it a supportive environment for EM currencies.</li>
</ul>


I reiterate the risk that the dollar can strengthen in the near term by being on one of the two ends of the dollar smile, thus weighing on EM currencies.
On the positive side, the dollar strengthening should not last since the currency is already expensive in REER terms. Also, long speculative positions in the dollar are already quite heavy.
Since positions tend to follow dollar moves, whenever the dollar starts weakening, the unwinding of long positions can exacerbate the move, making it a supportive environment for EM currencies.


Speculative Long Dollar Positions Highest Since 2019

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>
 US Fed is ‘behind the curve’ on inflation: More importantly, the US Fed is ‘behind the crowd’ in tightening policy </li>
<li>World bond markets seem to believe there will be a sharp policy shock. We question whether the current US Fed has the fortitude to do this?</li>
<li>The 'likely' fudge will create volatility, but it should present another 'buy the dip' opportunity</li>
</ul>



 US Fed is ‘behind the curve’ on inflation: More importantly, the US Fed is ‘behind the crowd’ in tightening policy 
World bond markets seem to believe there will be a sharp policy shock. We question whether the current US Fed has the fortitude to do this?
The 'likely' fudge will create volatility, but it should present another 'buy the dip' opportunity


The US Fed Is ‘Behind The Crowd’ And Not Just Behind The Curve

<ul>
<li>The volatility of the US dollar has risen sharply in recent weeks with the dollar appreciating strongly starting in early November but coming off the highs on the Omicron variant.</li>
<li>I expect the dollar's volatility to stay high whether the Omicron variant turns out to be as big a threat to the economic recovery as feared or not.</li>
<li>For EM currencies, the environment is therefore likely to be less supportive and it's best to hedge exposures with the euro and consider beta-neutral relative-value trades.</li>
</ul>


The volatility of the US dollar has risen sharply in recent weeks with the dollar appreciating strongly starting in early November but coming off the highs on the Omicron variant.
I expect the dollar's volatility to stay high whether the Omicron variant turns out to be as big a threat to the economic recovery as feared or not.
For EM currencies, the environment is therefore likely to be less supportive and it's best to hedge exposures with the euro and consider beta-neutral relative-value trades.


Implications of Higher Dollar Volatility for EM Currencies

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Lvmh Moet Hennessy Louis Vuitton / Technical Analysis

<ul>
<li>Select regions such as the US, Europe, Japan, and India are bullish, while others are not -- namely Hong Kong and China.</li>
<li>Relative strength (RS) for MSCI ACWI Technology is breaking out to new highs while RS on the MSCI ACWI Discretionary Sector is on the cusp of a breakout. </li>
<li>We highlight several buy opportunities within global Technology and Consumer Discretionary.</li>
</ul>


Select regions such as the US, Europe, Japan, and India are bullish, while others are not -- namely Hong Kong and China.
Relative strength (RS) for MSCI ACWI Technology is breaking out to new highs while RS on the MSCI ACWI Discretionary Sector is on the cusp of a breakout. 
We highlight several buy opportunities within global Technology and Consumer Discretionary.


Add To Global Technology and Consumer Discretionary

Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Provide Comprehensive Analysis & Commentary

SAV Markets

SAV Markets aims to provide comprehensive analysis & commentary on foreign exchange and asset markets. The approach is multi asset as markets are typically interlinked. Cause and effect are always at work, even if those effects take time to manifest. As nothing is permanent we strive to get ahead of the curve in an ever changing world.

Crypto

<ul>
<li>Price action over the past month has seen a failure to sustain new trend highs</li>
<li>Momentum is the other way reflecting weakness in the uptrend just as we saw in April</li>
<li>A move down towards the 43k area (25% lower) again appears to be the risk now</li>
</ul>


Price action over the past month has seen a failure to sustain new trend highs
Momentum is the other way reflecting weakness in the uptrend just as we saw in April
A move down towards the 43k area (25% lower) again appears to be the risk now


United States

The U.S. Dollar Index(USDX) indicates the general int'l value of the USD. The USDX does this by averaging the exchange rates between the USD and major world currencies. The ICE US computes this by using the rates supplied by some 500 banks. FOR REAL TIME SEE EIS ICEA<GO>.

Price Gauge
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Dollar Index (DXY CURNCY)

Speculative Long Dollar Positions Highest Since 2019

Long speculative positions in the dollar are quite heavy implying that whenever the dollar starts weakening, the unwinding of long positions can...

Gautam Jain, PhD, CFA

The US Fed Is ‘Behind The Crowd’ And Not Just Behind The Curve

Fed is serious 'behind the curve' on fighting inflation, but as worryingly it is also 'behind the crowd' in tightening liquidity. Expect a 'fudged'...

Michael J. Howell

Implications of Higher Dollar Volatility for EM Currencies

With the US dollar volatility rising, the environment for EM currencies has turned less supportive and it's best to hedge exposures with the euro...

Gautam Jain, PhD, CFA

Add To Global Technology and Consumer Discretionary

Relative strength (RS) for MSCI ACWI Technology is breaking out to new highs while RS on the ACWI Discretionary Sector is on the cusp of a...

Vermilion Research

Bitcoin’s Repeated Failure

Price action on Bitcoin suggests further short term losses as it failed to sustain new highs and is losing momentum just like we saw in April

Shyam Devani

Price Gauge

52-week Range

Market Cap (USDm)

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