EURUSD 1.1081 |
USDJPY 106.35 |
GBPUSD 1.2096 |
AUDUSD 0.6775 |
USDCAD 1.3326 |
GBPJPY 128.67 |
EURJPY 117.87 |
AUDJPY 72.06 |
CADJPY 79.80 |
Silver 17.00 |
After Theresa May
Now that PM Theresa May has announced stepping down from the Conservative Party leadership as of June 7, the ongoing political chaos will shift temporarily from striking a deal on the Withdrawal...
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Risk on as Germany Hints at Turning Taps
Germany is under increasing pressure to abandon a balanced budget but the hints so far only indicate a willingness to act after a recession is assured. By then it will be too late. What about the solution of talking down the euro? See more below. CFTC positioning data showed a shift into the yen (see chart below), with the highest net speculative net longs vs USD since autumn 2016 when USDJPY fell below 102. A new Premium trade has been issued today ahead of this week's highlights-- Wednesday's release of the FOMC minutes from the Fed meeting (7pm London) and Friday's Powell speech at Jackson Hole (3 pm London with the possibility text released 90 mins earlier). More detail on these in this week's Premium video coming up tonight.
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DAX Metamorphosis
The Daily DAX30 chart below may appear confusing at first, but it's worth taking some time to find the “clarity”.
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My earlier doubts about the US economic outlook have softened some, but not much. I still see slowing in the US equity sector and while 10-year treasury yields continue to fall, I expect the long bond to outperform. For 2016, modest dollar appreciation appears likely against the Euro and commodity currencies. I’m long precious metals, the long bond, and utilities. Short US financials.
Until ongoing worries about the Yuan subside, macro data improves, and credit spreads narrow, I would imagine that asset allocation models should favor cash, fixed income, and currencies.
In addition to short-term trading of FX spot and crosses, how would you feel about allocating capital to the USD and Yen via the ETFs UUP and FXY?
When I posted my comment, I was referring to the business cycle (as opposed to current stock market fluctuations). The econometric data is certainly mixed, but by and large the US appears to have reached a cyclical peak and is in a contraction.
Simply stated, I see a US recession, based upon contractions in industrial production and trade, reductions in full-time employment, and reductions in real personal income.