Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

FX & Rates

Tables seem to be turning as German yields look to be on the rise while US yields struggle to breakthrough (at least so far)This seems to be a combination of adjusting central banks and possibly also market positioning/assumptions.

Tables seem to be turning as German yields look to be on the rise while US yields struggle to breakthrough (at least so far)This seems to be a combination of adjusting central banks and possibly also market positioning/assumptions.

Germany and US Yields Point to Higher EURUSD

Technical Analysis

One of the worst performing Asia currencies this year has started to reverse.Is today’s break below the 55 day moving average important?If previous examples are any guide, then the answer is a firm yesUSDTHB towards 31.25 area?

One of the worst performing Asia currencies this year has started to reverse.Is today’s break below the 55 day moving average important?If previous examples are any guide, then the answer is a firm yesUSDTHB towards 31.25 area?

USDTHB Gives Another Signal for Further Losses

Cross Asset Strategy

Commodities are on the rise again with the clearest sign coming from Oil which posted a strong bullish weekly reversal and is expected to go back to the highs. US breakevens have also rebounded and further gains along with commodities are likely to unfold.The expectations of US data points remain high which is keeping a lid on US nominal yields in the short term.Combining the above, lower negative real yields in the US should be seen in the short term just as we saw in late July when Oil rallied from similar levels. This mix is undoubtedly helping precious metals. The month end’s closing price on Gold is the next important development to watch, especially if we close above $1,834. Silver is also on the up towards $25. In the end the USD remains on the back foot.

Commodities are on the rise again with the clearest sign coming from Oil which posted a strong bullish weekly reversal and is expected to go back to the highs. US breakevens have also rebounded and further gains along with commodities are likely to unfold.The expectations of US data points remain high which is keeping a lid on US nominal yields in the short term.Combining the above, lower negative real yields in the US should be seen in the short term just as we saw in late July when Oil rallied from similar levels. This mix is undoubtedly helping precious metals. The month end’s closing price on Gold is the next important development to watch, especially if we close above $1,834. Silver is also on the up towards $25. In the end the USD remains on the back foot. 

Lower Real Yields with Higher Oil Supports Gold

It is sometimes the case that Gold and the USD are inverted. That is not always true, but it is often.It is with this in mind following the note <a href="https://www.smartkarma.com/insights/gold-positive-price-action" target="_blank" data-smartkarma-citation="insights:56598" rel="noopener">Gold: Positive Price Action</a> that the chart below of the USD Index is particularly interesting…

It is sometimes the case that Gold and the USD are inverted. That is not always true, but it is often.It is with this in mind following the note Gold: Positive Price Action that the chart below of the USD Index is particularly interesting…

Sometimes it is not what the market does but rather what the market does not do that can be more telling.The USD is down almost across the board following concerning sentiment data from the US which also took yields lower. BUT…Why is USDCNH unchanged?It brings us back to the conversation of ‘currency wars’The Renminbi basket has been trading near its multi year highs for several weeks. It is perhaps why the Chinese changed their RRR policy a few weeks ago. Recent data reflects a more relaxed recovery in China as it is worse than expected – see retail sales and industrial production as latest examples. The Covid situation in China is far from over as news, including partial closure of ports, clearly shows. In basic terms China is uncomfortable with its current situation and needs support. Given the rise of the Renminbi in broad terms over the past year, it appears now might be the time for that support to come in the form of a weaker currency.It is with this in mind that we must pay further attention to EURCNH which is turning from the covid panic lows of 2020. What business does it have trading around 7.60? The price action developments suggest we move higher. The technicals on the chart suggest the same. The logical path following the height of the Renminbi basket also points to the same, especially if this is the start of a decent enough short term move down on the USD.This possible tactical ‘rotation’ or ‘USD diversification’ on part of China (if indeed that is what we are seeing) could add further support to EURUSD, which once again has held on to good levels at 1.17.

Sometimes it is not what the market does but rather what the market does not do that can be more telling.The USD is down almost across the board following concerning sentiment data from the US which also took yields lower. BUT…Why is USDCNH unchanged?It brings us back to the conversation of ‘currency wars’The Renminbi basket has been trading near its multi year highs for several weeks. It is perhaps why the Chinese changed their RRR policy a few weeks ago. Recent data reflects a more relaxed recovery in China as it is worse than expected – see retail sales and industrial production as latest examples. The Covid situation in China is far from over as news, including partial closure of ports, clearly shows. In basic terms China is uncomfortable with its current situation and needs support. Given the rise of the Renminbi in broad terms over the past year, it appears now might be the time for that support to come in the form of a weaker currency.It is with this in mind that we must pay further attention to EURCNH which is turning from the covid panic lows of 2020. What business does it have trading around 7.60? The price action developments suggest we move higher. The technicals on the chart suggest the same. The logical path following the height of the Renminbi basket also points to the same, especially if this is the start of a decent enough short term move down on the USD.This possible tactical ‘rotation’ or ‘USD diversification’ on part of China (if indeed that is what we are seeing) could add further support to EURUSD, which once again has held on to good levels at 1.17.

United States

The US dollar is the official currency of the United States of America.

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USD (USD CURNCY)

Germany and US Yields Point to Higher EURUSD

There are early signs that yields in Germany are diverging from the US just as we saw in April this year. Is this the start of a decent rally for...

Shyam Devani

USDTHB Gives Another Signal for Further Losses

USDTHB is reversing and today's break should be taken seriously. Further losses down to the 200 day (appx. 3.5% lower) are expected

Shyam Devani

Lower Real Yields with Higher Oil Supports Gold

The bullish reversal in Oil combined with lower nominal yields gives rise to trends that were seen in late July. Lower 'real' yields, higher Gold...

Shyam Devani

USD Index - A Repeat?

Indications on the USD Index chart point towards the possibility that it may well have topped out. The 4.7% rally is almost exactly the same as...

Shyam Devani

What About the Renminbi?

Latest developments across FX markets lead us to ask questions about recent Renminbi strength and if that is about to change. Watch EURCNH

Shyam Devani

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