Dollar Strength – Market’s Kryptonite

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  • Investors diversify into safe haven assets as global equity rout continues, Chinese Yuan devaluation and falling commodity prices
  • Recent USD strength came from risk-off sentiment
  • A strong USD hampered the likelihood of an early Q1 rate hike from the Federal Reserve
  • We have seen some of this excess – giving strength to the Euro and Yen trade
  • Bernanke says USD rally may have already peaked – Forexlive.com
  • Our view is that the currency market may soon look at stabilizing the excess safe haven demand in the dollar
  • Our biased also confluence with the fact that positive commodity seasonality may see a pullback in the US dollar and offer a short term bounce relief on other currencies
  • Chinese economy is initiating a new phase of “Severe Re balancing” after enjoying many years of economic growth
  • Chinese central banks laying out plans to increase RRR deposits placed in Yuan clearing banks
  • Chinese economic data is out of the way but all eyes are on UK, Europe and US CPI numbers
  • ECB 2016 press conference may shed more lights – there were murmur among the camp for additional stimulus in March 2016

Currencies 

Dollar Index – Anticipate weakness in the next few days / weeks

Weekly

Daily

USD/JPY

Weekly

Daily

GBP/USD – A rebound in store for sterling? Quiet possible as it confluence with positive seasonality

Weekly

Daily

NZD/USD

Weekly

Daily

Equities 

Stoxx

Weekly

Daily

CAC

Weekly

Daily

SPX – The onslaught lower may or may not be over yet as the EW count remain unclear / Unless we break above 1960 then we cannot rule out lower

Weekly

Daily

Commodities 

US Oil – Short covering rally is possible here

Weekly

Daily

Copper – The ascending wedge is positioning price action to make a critical direction soon

Weekly

Daily

Platinum – Sellers remain in control but we cannot rule out short covering rally could be at works if China manage to stabilize

Weekly

Daily

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