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Macroeconomic Analysis And Trading Ideas

Factors currently influencing the CHF and opportunitiesThe Swiss Franc has seen some crazy moves since April. In the last quarter, we saw the CHF weaken on the onset of the Russian invasion. Then the SNB raised rates by whooping 50 bps for the first time in years. This led the Swiss government bond yields to spike with USDCHF weakened in days. Since then, speculators have pulled back rate hike bets in the face of an economic growth slowdown in Europe. with the Swiss 2 year bond yields back below 0%. So what does this mean for Swiss Franc crosses? USDCHF I expect the currency to weaken against the USD as traders bet that the Fed will maintain their tightening policy until inflation is below their 2% target. AUDCHF The RBA is also on a tightening cycle with the RBA expected to hike rates further to the end of 2022. In addition to this, the Australian economy seems to be resilient with data coming out of the country being strong. China's PBOC and CCP support for the economy is expected to provide support for the Aussie. CADCHF The oil linked Loonie is having support from higher energy prices and a BoC that is also on a rate hiking cycle. Technically speaking, the pair has gone back above the 100Day moving average and I expect it to test the cluster resistance level 0.769xx from 2014-2019 Other pairs that are interesting are: CHFJPY Major risk to short-selling the pair is that bond yield differentials are expected to remain high hence JPY strength looks like a long shot for Q3 NZDJPY Recovery of the Chinese economy is going to support the commodity-linked Kiwi. However, strength of the pair is not expected to be higher than that of the AUDCHF Summary CHF weakness brings a lot of opportunities. However, it's important to note that tailrisk to these trades exist. In the current environment, FX volatility is high and could wipe you out. Be safe out there
Long
by GrizzlyBearBee
3
EURCHF breaks below parity. A further drop expectedThe last time this pair dropped below parity, investors chose the CHF over the Euro. However, the SNB was worried about the deflationary aspects of such a move and acted to reverse the move. This time, the fundamentals are more or less the same or different depending on how you interpret it. The Euro zone investors are worried about the block tipping into a recession due to high energy costs. In Germany, for example, regulators have warned that entire industries could come to a halt should Russia fail to reopen the Nordstream 1 pipeline gas flows. The Yamal pipeline has also seen huge drops in gas supplies. With this in mind for Euro fundamentals, the question remains whether the SNB is going to do anything. A stronger CHF is definitely going to the reduce inflationary pressures for Switzerland. In my opinion, I expect the pair to head lower toward the Jan '15 bottom. Risks to trade Historically, strong moves in one direction tend to reverse with similar momentum. The EURO - SWISS bond yield spreads show that the downward move may not be sustainable since FX tends to move in lockstep to spreads The SNB raised rates by a whooping 50bps for the first time in a long time. In typical fashion, Swiss bond yields jumped, some out of negative territory. However, the yields have retraced most of their earlier moves. This may imply that the markets are pricing that the SNB will not raise rates as much in the face of a recession in Europe. This might reduce the strength of the CHF with weakness showing up in the USDCHF. PS: I already have an open position ( This is not trading advice) With that in consideration, I'll be short the Euro for Q3.
Short
by GrizzlyBearBee
AUDJPY breaks 50 Day Moving averageThe pair has been pivoting to reverse May - June gains. The pair has been printing lower highs forming a descending triangle. A confirmation of the break on the daily timeframe will warrant a short-sale. Fundamentally, the AUD is struggling in the face of a global economic slowdown. The currency, a bellwether for global risk sentiment, weakened after the RBA raised rates further to 1.35%. The commodity linked currency is falling as commodities prices dip in the face of a possible global recession. The JPY safe-haven properties are starting to show up following risk-off sentiments as traders weigh in on recessionary fears making this the ideal pair to trade for the rest of the year. Risks to this trade remain in the back of my mind. Australia, as opposed to other major economies, is doing a lot better. China's recovery could support the currency. Further inflationary economic releases could push global bond yield higher lifting the interest rate differentials the therefore the the pair. Trade with caution
Short
by GrizzlyBearBee
Henry Hub Natural Gas futures showing slowing momentumHenry Hub Natural Gas futures showing slowing momentum across the futures curve up to Jan 2024 ($NGF2024). Recent geopolitical risks i.e. The Russian invasion of Ukraine, have pushed the prices of both spot and futures of commodities higher. Natural Gas futures across the curve are tracking each other with a tighter spread till Jun 2023 implying that the market participants expect the prices to remain elevated for a longer time. However in the short-term, the price action shows an exhaustion by bulls forming a ranging pattern with a possibility of a reversal. Central banks around the developed world highlighted in their Monetary Policy Statements this May that they expect energy prices to remain elevated for the next 18 months. I'll definitely be watching out for the impact of the policy tightening regime - which we are in now - to the demand side of the economy, and it's second-order effects on gas prices.
NYMEX:NG1!
by GrizzlyBearBee
Bitcoin Bear Market ScenarioFollowing macroeconomic environment, with inflation reporting this week followed by upcoming central bank FOMC meeting in early may (rate hikes & balance sheet reductions)... the following high-level SR zones are key levels to watch. Assuming broader markets are going to experience a significant correction as the Fed loses ability to leverage QE & stimulus in propping up markets without hyperinflation risk, BTC as a risk-on asset will face significant headwinds. Without a changing economic environment, the markets will continue to realize bearish sentiment with more speculative assets (tech stonks & "digital asset technologies") realizing the most severe of pullbacks. FOMC in early May will attempt to reign inflation in, while June's FOMC meeting will include a more nuanced summary of economic projections given assessment of Q1 results as well as Q2 winding down.
INDEX:BTCUSDShort
by R0MM3LL
3