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Admin iconPlatinum User
112 days ago
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As traders return from vacations, DXY had found its mojo. Investors await US economic data including some on manufacturing due today, services on Thursday and key non-farm payroll figures Friday to see if market pricing for Federal Reserve policy easing is justified. The swaps market is pricing in a one-in-four chance that the Fed will cut its benchmark rate by more than 25 basis points this month. We believe we are likely to see strong ISM manufacturing & services no along with above consensus NFP.
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Admin iconPlatinum User
117 days ago
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“China’s international use of renminbi surges to record highs” - FT, today
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Admin iconPlatinum User
119 days ago
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If Chinese savings in dollars roughly 1tn usd starts getting repatriated as Fed cuts rates & interest rate differentials between US & China fall, we might see CNH appreciating by 5-10% just like JPY.
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Admin iconPlatinum User
120 days ago
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USD/JPY traders are looking back to the last major swoon in late 2022 as a guide for the path ahead which suggests somewhere below 140 is a likely landing zone.
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Admin iconPlatinum User
124 days ago
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How long can RBA sustain status quo is a big question mark. AUD strength now looks overdone.
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Admin iconPlatinum User
133 days ago
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Goldman Sachs strategists last week recommended that clients sell the yuan against a basket of major currencies. This was after the recent unwinding of carry trades led CNH to 7.10. But the recent appreciation looks unlikely to sustain considering the weak economic indicators as well as sustained FPI outflows.
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Admin iconPlatinum User
134 days ago
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Ukraine’s incursion into Russian territory has taken its toll on the rouble. Russia’s currency has lost 4 per cent of its dollar value since the end of last week and is trading at 90.6 to the US dollar, its weakest level since late May.
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Admin iconPlatinum User
134 days ago
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Morgan Stanley: "We believe roughly 60% of JPY carry trades unwound, but acknowledge wide error bands around this estimate."
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Admin iconPlatinum User
135 days ago
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At the peak of the turmoil last Monday, the spread between the implied interest rate on the three-month USD/yen swap and the three-month dollar interest rate widened to as much as 35 basis points from 23 bps – suggestive of a modest liquidity squeeze in the offshore dollar market. But the stress was brief, and the dollar-yen cross-currency swap basis has already retraced more than half of the spike.
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Admin iconPlatinum User
136 days ago
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Hedge funds cut their wagers against the yen by 49,336 contracts to 20,243 in the week ended Aug. 6, CFTC data released on Friday show. That’s the fifth-largest boost to trader sentiment in data going back to 2006.
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Admin iconPlatinum User
139 days ago
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The dollar has held its first downside test of both the first and the second standard deviations just above 143.00 and below 146.00 (lower red lines) from the closing mean one-year average price of just above 150.00 (blue dotted line). For the carry trade to remain intact, if not rebuild, the dollar needs to trade back to and above its mean average. For the unwind to extend the two downside standard deviations need to give way.
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Admin iconPlatinum User
139 days ago
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Citi strategist Dirk Willer and Alex Saunders wrote in a note to clients that the yuan especially stands out in terms of market positioning. There are “more positioning worries on the funding side of the carry trade, and in particular the yuan, rather than on the long carry side,” the Citi team said. The Chinese currency was “swept up in the popular Trump trades, where the threat of tariffs was supposed to lead toward higher dollar-yuan.”
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Admin iconPlatinum User
141 days ago
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The Mexican peso fell as much as 2% against the dollar in Asian trading, extending its loss into a third straight day. The slump came as the yen surged more than 1% while China’s yuan strengthened 0.7%, two currencies used to fund the popular trading strategy.
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Admin iconPlatinum User
142 days ago
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The above chart shows the total return on a position that’s 50% BRL and 50% MXN against the Japanese yen. For much of the second quarter it was beating even the S&P 500 on a year-to-date basis. Those returns collapsed in the last couple of weeks amid sustained strength in the yen and weakness in its counterparts.
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Admin iconPlatinum User
144 days ago
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Some 68% of 41 economists see the Japanese policy rate rising to 0.5% from 0.25% by the end of this year, according to a Bloomberg survey. In contrast, traders are pricing for three Fed rate cuts this year, with a fourth priced for January 2025. Interest rate forecasts are a moving target and may not play out as currently priced. However, this is shaping up to be a watershed week for the yen which is changing the narrative in its favor for the first time since the pandemic.
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Admin iconPlatinum User
144 days ago
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EUR/JPY — A six-month rally ended with the cross posting its worst monthly decline in eight years, thus negating the need for further intervention from Japan’s Ministry of Finance in the process. After posting a record high the FX pair then closed the month below the June low with scope for further correction potentially down toward the ~150 level
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Admin iconPlatinum User
146 days ago
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Since our opinion piece on JPY on 13th July that Yen Shorts were an over crowded trade, JPY has appreciated by 8 biggies. Now at 150, we believe we are headed towards 142-145 levels by 15th August.
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Admin iconPlatinum User
146 days ago
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USD/JPY’s downward slide may resume now that the BOJ has delivered a rate hike and will start reducing the size of its balance sheet. But it’s up to Governor Ueda at the media conference to maintain a hawkish tone, offering clear forward guidance.
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Admin iconPlatinum User
148 days ago
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JPY positions liquidated by HFs big time.
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Admin iconPlatinum User
151 days ago
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Even if the BOJ does tighten policy on Wednesday, there is still a case for it to retain favor in carry trades, in which investors take advantage of Japan’s ultra-low interest rates to borrow in yen to then invest in currencies with higher yields. The yen’s implied yields would still be about 90 basis points lower after a hike than those for the Swiss franc, which is an alternative funding currency for carry trades.
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Admin iconPlatinum User
151 days ago
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USDJPY moment of reckoning will be on 31st July when both Fed & BOJ hold their meetings.
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Admin iconPlatinum User
152 days ago
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AUD has broken the 200DMA at .6585. Unwinding of AUDJPY trades and weakness in commodities & Chinese economic data implies a test of .65 is on hand.
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Admin iconPlatinum User
153 days ago
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The yen is up over 4% against the US dollar, with Fed easing bets coinciding with expectations that the Bank of Japan may hike rates further at the July meeting. This potential shift in yield differentials favors the yen.” JPY is also supported by local Japanese leadership now speaking out for containing JPY dep via rate hikes.
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Admin iconPlatinum User
153 days ago
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Today's BOC meeting might throw a surprise if it holds. 85% mkt probability is it will cut by 25bps. If it does not AUDCAD might plunge.
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Admin iconPlatinum User
153 days ago
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JPY is gaining strength ahead of boj meeting. Key support around 154.85 and 151.85.
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Admin iconPlatinum User
156 days ago
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The Trump Trade might start from Aug onwards. In fx, short Euro, short CNH and Short MXN.
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Admin iconPlatinum User
163 days ago
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With today's failed assassination attempt on Trump, his approval ratings have further increased. Mexican peso, CNH likely first casualties.
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Admin iconPlatinum User
166 days ago
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Was it an intervention today in JPY when it appreciated by 2% against USD post June CPI data. What ever it was, it was well planned. Now more tailwinds behind JPY as there is almost 13bn usd speculative non commercial wagers against jpy. Imagine if they start covering. Carry traders get ready to be carried over.
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Admin iconPlatinum User
169 days ago
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Euro for now is holding up. But we expect it to fall towards 1.0585 in coming days purely on French worries.
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Admin iconPlatinum User
170 days ago
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What ever be the outcome of today's 2nd round of French election, French fiscal deficit worries are only going to worsen from here. Leading to a weaker Euro in the medium term.
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Admin iconPlatinum User
177 days ago
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Dxy is likely to make new highs in H2CY24 as Biden odds reduce in US presidential elections.
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Admin iconPlatinum User
179 days ago
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Dxy looks likely to make new highs in fy25. With Trump likely to win, dxy might just rock the global risk on mode currently.
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Admin iconPlatinum User
180 days ago
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The risk of a Japanese intervention still remains limited even after the nation’s currency dropped to a fresh three-decade low. The yen’s slide is too slow to breach the guidance laid out by Japan’s top foreign-exchange official.
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Admin iconPlatinum User
181 days ago
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BOJ watchers see monthly bond buying being reduced to about ¥5 trillion ($31.4 billion) from the current ¥6 trillion starting in August, according to the median estimate of the analysts. In two years time, they expect it to be scaled down to ¥3 trillion. One-third expects the pace of bond buying to slow every quarter while 36% said it will be done every six months, according to the poll. Some 17% said the change will be every year. The BOJ owns about half of Japan’s outstanding public debt after more than a decade of the massive monetary easing program that finally came to an end in March. Its holdings stood at about ¥584 trillion as of Thursday last week. The size of the bank’s holdings magnifies the importance of every tiny step it takes.
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Admin iconPlatinum User
183 days ago
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JPY approaching 160. Might see some intervention here.
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Admin
236 days ago
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What a show by MoF's. Kanda. All the carry lovers will be hurting the way JPY keeps on appreciating. Can't find any dip buyers. The EM FX strength back with a bang. But can it last tomm's NFP & 15th US CPI
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Admin
237 days ago
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USDJPY might be tested tonight towards 160 levels after Fed meet. BoJ was very late in reacting to defend JPY. Now the market might test it continuously. At some point, interventions might prove futile & a monetary response might be warranted.
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