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Emfx

Brazilian real is a buy here. Buy a basket of EMFX vs the USD Coming into the new year, the reflationary trade was working quite well. In January, we saw a period of heightened volatility that stressed emerging markets. Brazil was no exception. That said, the weak dollar trend looks likely to resume in the next few months, after the positioning shake-out that we saw in January. Many hedge funds are still on the sidelines and scared to commit capital to risk-assets. They will be forced to do so in March when performance benchmarks come out. EMFX and commodity exporters should continue to perform strongly as the US pursues the largest stimulus package in history. Recently, the USD looks on the verge of breaking out to the upside, though I would much rather fade this move with a tight stop. In Brazil specifically, the likelihood of Selic rates being raised increases the chance of currency appreciation. There are no real organic sellers above 5.40. The risk/reward is for the BRL to rally significantly from here.
Short
by MT-Macro
6
ridethepig | Dovish SARB On Deck!We are reaching the lows in the range right on time for SARB today. Markets are expecting a 50bps move, a little bird tells me that we are set for more... Remember the domestic story in South Africa is only going one way; sadly it's the same outcome as Turkey. On the technical side, tracking closely the 18.00 support to build longs outguessing a dovish SARB. Look to target the 18.5x and 19.0x highs and lighten up below 17.7x. Good luck.
Long
by ridethepig
1
ridethepig | RUB Market Commentary 2020.03.02Fed rate cuts taking full control of the FX board as virus disruptions start to fade - it's time to go shopping in G10 and EM FX and the intervention policies will provide some USD relief. Here looking for a rebound into previous ranges in USDRUB as a pro-cyclical currency. A test of the previous range we were trading looks around the corner: The spread of the virus is naturally impacting global growth, and tipping OPEC towards intervention in Oil as well as a number of CBs. Markets now price Fed to cut 75bps by June - similar story in Australia with RBA, UK with BOE and BOC in Canada. Tracking closely for risk to find a temporary floor this week. As usual thanks for keeping the likes and comments coming .. jump into the conversation below with your views on RUB!
Short
by ridethepig
Shanghai Composite / S&P 500 ratio & The USDHKD PegUnsurprisingly, similar to the currency, the outperformance of the Chinese stock market vs. the S&P 500 falters when the Chinese currency can't be sustained. Not quite as direct of a relationship, but this clearly affects emerging markets, which are highly indebted to the dollar. This is visible if you go back further as well - the broad rolling emerging market problems all occurred starting when the USDHKD peg was hit in April 2018. April 18th, 2018 was a pivotal day in that regard. Also, it's no surprise that EM currency problems are starting to suddenly become problematic once again....
by GTStockmaster