ridethepig | OPEC, CAD and Everything In-Between...
Updated
The OPEC theatre was an event for the masses, attended by unimaginable liquidity. Packed into enormous press conferences and expensive photoshoots so that the masses would be amused by the raucous discourse or moved by the collaboration. The plot seemed to contain the essence of desperation from Trump, in its concentrated and dramatic form all in attempt of saving US producers rather than saving lives... (sadly) Global Equities turning down is a faster way to get things through congress these days.
Consider the following swing, which arose after the Aramco attacks last year:
As the main battleground for which China, Russia and Saudis chose to swing in an attempt to play US shale. Remember it essentially boils down to the Gold:Oil ratio being a gauge of the health in petrodollar. A simple cheatsheet... lower gold:oil ratio = a healthy petrodollar structure. On the other side, if ratio rises it shows that the petrodollar market is under pressure (which has been the case for the last few years).
It has found a floor at +/- 15 and now moves up towards 86 !!!! ... This is sending loud loud alarm signals that something is rotten from within. Once Saudis began selling Oil in CNY this exploded, it's a buyers market and the seller (Saudis) will always do what it takes to keep the buyers (China) happy...Sure all sounds interesting ridethepig, So what does this mean for CNY, USD and CAD?
I highly recommend digging deeper into how PBOC and CNY has responded since "The Great Lockdown"
In warfare, PBOC are playing the leading role with gusto! They are skilled horsemen and took pride in setting a hard floors across Chinese Equities, always positioning in value areas which we traded together here live 4 or 5 times since the crash. This bravery (if you can call it that) has flooded their FX reserves and combined with the composition restructuring we spoke about earlier in their biggest expense (Energy) towards the lows it effectively adds stability to their current account...meaning after all the dust settles from Covid-19, it's game, set and match for China:
After understanding the 'why' and 'how' behind the devaluation of Oil, you will notice how the OPEC meetings (or chariot races as I now like to call them) have become more and more extravagant. The renewed organising of longs in USDCAD dips is coming from a weak medium term outlook for CAD and the increased probability of USD taking charge once more of the haven flows, should we see another sell-off in stocks.
It has been a difficult chapter but one that has seen a lot of light thrown on the subject thanks to the dissections we've performed live here together. As can be seen in the long-term Oil chart, a test of $15 eventually looks organic although we are entering in the final stages of the drama so I prefer to play this in USDCAD.
You will find further considerations of the swings in the related ideas. As usual thanks for keeping the likes, comments and charts coming. Jump in with your views below!
Consider the following swing, which arose after the Aramco attacks last year:
As the main battleground for which China, Russia and Saudis chose to swing in an attempt to play US shale. Remember it essentially boils down to the Gold:Oil ratio being a gauge of the health in petrodollar. A simple cheatsheet... lower gold:oil ratio = a healthy petrodollar structure. On the other side, if ratio rises it shows that the petrodollar market is under pressure (which has been the case for the last few years).
It has found a floor at +/- 15 and now moves up towards 86 !!!! ... This is sending loud loud alarm signals that something is rotten from within. Once Saudis began selling Oil in CNY this exploded, it's a buyers market and the seller (Saudis) will always do what it takes to keep the buyers (China) happy...Sure all sounds interesting ridethepig, So what does this mean for CNY, USD and CAD?
I highly recommend digging deeper into how PBOC and CNY has responded since "The Great Lockdown"
In warfare, PBOC are playing the leading role with gusto! They are skilled horsemen and took pride in setting a hard floors across Chinese Equities, always positioning in value areas which we traded together here live 4 or 5 times since the crash. This bravery (if you can call it that) has flooded their FX reserves and combined with the composition restructuring we spoke about earlier in their biggest expense (Energy) towards the lows it effectively adds stability to their current account...meaning after all the dust settles from Covid-19, it's game, set and match for China:
After understanding the 'why' and 'how' behind the devaluation of Oil, you will notice how the OPEC meetings (or chariot races as I now like to call them) have become more and more extravagant. The renewed organising of longs in USDCAD dips is coming from a weak medium term outlook for CAD and the increased probability of USD taking charge once more of the haven flows, should we see another sell-off in stocks.
It has been a difficult chapter but one that has seen a lot of light thrown on the subject thanks to the dissections we've performed live here together. As can be seen in the long-term Oil chart, a test of $15 eventually looks organic although we are entering in the final stages of the drama so I prefer to play this in USDCAD.
You will find further considerations of the swings in the related ideas. As usual thanks for keeping the likes, comments and charts coming. Jump in with your views below!
Note
...and we got the break Note
All eyes on USD day after the historic collapse in Oil that we traded live together here... Note
Time to start trailing stops for all those who are long from 1.40xx and below...
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