Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

In our monthly recap note, we provide a performance update for our weekly trade recommendations in currencies and rates. We also discuss the new recommendations as well as those that we closed over the past month. We have made a total of 23 trade recommendations so far, of which 17 are in the money.

In our monthly recap note, we provide a performance update for our weekly trade recommendations in currencies and rates. We also discuss the new recommendations as well as those that we closed over the past month. We have made a total of 23 trade recommendations so far, of which 17 are in the money.

Alpha Bites: Performance Summary of Trade Recommendations – September 2021

With the US dollar and EM currencies on aggregate trading in a range for much of the year, their volatilities have dropped to the lowest level since the start of the pandemic. Since a drop in volatility engenders a carry-trade environment, we test this hypothesis on EM currencies and conclude that indeed currencies with high risk-adjusted carry have been outperforming, and vice versa. A currency that we continue to like from the perspective of improving carry is the Chilean peso.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

With the US dollar and EM currencies on aggregate trading in a range for much of the year, their volatilities have dropped to the lowest level since the start of the pandemic. Since a drop in volatility engenders a carry-trade environment, we test this hypothesis on EM currencies and conclude that indeed currencies with high risk-adjusted carry have been outperforming, and vice versa. A currency that we continue to like from the perspective of improving carry is the Chilean peso.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Are EM Currencies in a Carry-Trade Environment?

Founder

Olivier Desbarres

Exacting. Excellent. Exceeding. Exemplary.

4X Global Research

4X Global Research was founded in 2017 to provide institutional and corporate clients with the substantive research, high-quality analysis and thoughtful insight on Emerging and G20 economies and financial markets they need to make informed and timely decisions and gain an edge in their investments.

In the past couple of months governments in Asia-Pacific have materially accelerated the administration of Covid-19 vaccines.But because of low starting points, vaccination rates remain low compared to the EU, US and UK and even a number EM economies (including Turkey). The exceptions are Korea, Malaysia and Japan which have now administered a similar number of doses per capita as the US, while Singapore has pulled further ahead. In countries where governments started to vaccinate early such as the US and in particular the UK, vaccine roll-outs have slowed materially in the past nine weeks. These countries are taking additional measures to encourage those not yet vaccinated to do so and there is talk of jabs for under-18s and of booster jabs at least for the most vulnerable.The picture for the increase in Covid-19 deaths since early July is even more granular. In countries where governments started vaccinating early and now have high rates of vaccination, including the UK, US and EU, the number of deaths has perhaps unsurprisingly increased only marginally. The rate of increase and total number of deaths remain negligible in New Zealand despite a sill modest vaccination roll-out. It has to varying degrees been a similar situation in Australia, Korea, Japan, Singapore and Taiwan.The increase in deaths has also been modest in India and Philippines, albeit from a higher starting point. The increase in deaths has been far higher in Indonesia, Malaysia and in particular Thailand.  Vaccination rates are a critical variable from a health and economic perspective but their direct impact on currencies has been mixed.New Zealand Dollar has outperformed but is not particularly expensive in our view. Going forward we would expect it to remain well supported even if still vulnerable to pull-backs.

In the past couple of months governments in Asia-Pacific have materially accelerated the administration of Covid-19 vaccines.But because of low starting points, vaccination rates remain low compared to the EU, US and UK and even a number EM economies (including Turkey). The exceptions are Korea, Malaysia and Japan which have now administered a similar number of doses per capita as the US, while Singapore has pulled further ahead. In countries where governments started to vaccinate early such as the US and in particular the UK, vaccine roll-outs have slowed materially in the past nine weeks. These countries are taking additional measures to encourage those not yet vaccinated to do so and there is talk of jabs for under-18s and of booster jabs at least for the most vulnerable.The picture for the increase in Covid-19 deaths since early July is even more granular. In countries where governments started vaccinating early and now have high rates of vaccination, including the UK, US and EU, the number of deaths has perhaps unsurprisingly increased only marginally. The rate of increase and total number of deaths remain negligible in New Zealand despite a sill modest vaccination roll-out. It has to varying degrees been a similar situation in Australia, Korea, Japan, Singapore and Taiwan.The increase in deaths has also been modest in India and Philippines, albeit from a higher starting point. The increase in deaths has been far higher in Indonesia, Malaysia and in particular Thailand.  Vaccination rates are a critical variable from a health and economic perspective but their direct impact on currencies has been mixed.New Zealand Dollar has outperformed but is not particularly expensive in our view. Going forward we would expect it to remain well supported even if still vulnerable to pull-backs.

Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Cross Asset Strategy

For some time one of the favourite trends here has been the bullish one on the Nifty Index. There were numerous targets in mind including 17,400 on the Nifty Index itself and 240 on the Nifty in USD termsThis week we met the 17,400 target. At the same time the bulk of the move down on USDINR looks to be behind us. Looking at the relevant charts below it is prudent at this stage to expect a consolidation or correction down and possibly opportunities to re-engage in the Nifty Index at better levels later.Charts: Nifty Index | USDINR | Nifty in USDs | Nifty Index versus S&amp;P 500 Ratio

For some time one of the favourite trends here has been the bullish one on the Nifty Index. There were numerous targets in mind including 17,400 on the Nifty Index itself and 240 on the Nifty in USD termsThis week we met the 17,400 target. At the same time the bulk of the move down on USDINR looks to be behind us. Looking at the relevant charts below it is prudent at this stage to expect a consolidation or correction down and possibly opportunities to re-engage in the Nifty Index at better levels later.Charts: Nifty Index | USDINR | Nifty in USDs | Nifty Index versus S&amp;P 500 Ratio

India’s Nifty Target Met - Time for a Consolidation

In Asia the market that still looks attractive is India’s Nifty as it trades near the trend highs. Previous examples of a rally and breakouts on the Nifty Index saw the market move more than 10% from the base. Since we started from a recent low of 15,513, we could expect at least 17,064 if not the 17,400 area before seeing a consolidation or a meaningful pullback.Such a move coupled with USDINR looking like it could make it to the base of the range - approximately 72.50 - would put the Nifty in USD terms at 240 which is still 7% above current levels.Indeed, it might even be in India’s interest to see a slightly stronger currency given the trade deficit and the rising Oil price.

In Asia the market that still looks attractive is India’s Nifty as it trades near the trend highs. Previous examples of a rally and breakouts on the Nifty Index saw the market move more than 10% from the base. Since we started from a recent low of 15,513, we could expect at least 17,064 if not the 17,400 area before seeing a consolidation or a meaningful pullback.Such a move coupled with USDINR looking like it could make it to the base of the range - approximately 72.50 - would put the Nifty in USD terms at 240 which is still 7% above current levels.Indeed, it might even be in India’s interest to see a slightly stronger currency given the trade deficit and the rising Oil price.

India

The Indian rupee is the official currency of India. 

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

INR (USDINR CURNCY)

Alpha Bites: Performance Summary of Trade Recommendations – September 2021

We provide a performance update of all our trade recommendations along with discussing the new trades from last month. We have made a total of 23...

Gautam Jain, PhD, CFA

FX Dashboard: Are EM Currencies in a Carry-Trade Environment?

As the volatilities of the US dollar and EM currencies have dropped, we test the hypothesis and conclude that EM FX is in a carry-trade...

Gautam Jain, PhD, CFA

Vaccination and Currency Immunity

Vaccination rates matter but for some Asia-Pacific countries, economies and currencies they are not proving to be a panacea.

Olivier Desbarres

India’s Nifty Target Met - Time for a Consolidation

India's Nifty Index has met the topside target in Rupee terms and almost in USD terms. Recent price action suggests it is prudent to step back and...

Shyam Devani

India Markets Refreshed

India's Nifty is still in an uptrend and looks even more attractive in USD terms as USDINR threatens to take out supports.

Shyam Devani

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)