Macro Strategist, Saxo Capital Markets

Kay Van-Petersen

Macro Strategist

Saxo Capital Markets

Thematic (Sector/Industry)

<ul><li>Key close on DXY above 94.50 on a Friday, liquidating my thesis on a tactical USD liquidation phase. Seems like we’ve now had a very sharp V-shaped bounce from the pullback 2 wks back</li><li>If the strong USD trend continues, we’d expect risk-off to be the flavour of the moment with EM, Commodities &amp; equities in general set to decline</li><li>Check out the long NOKSEK SaxoStrats idea flagged by our Head of FX Strategy John Hardy – I like the thesis, it definitely worth doing some heavy lifting on this</li><li>Plus a few links to the Sohn Investment Conference where movers &amp; shakers such as Chanos &amp; Druckenmiller were talking their views </li></ul>

Key close on DXY above 94.50 on a Friday, liquidating my thesis on a tactical USD liquidation phase. Seems like we’ve now had a very sharp V-shaped bounce from the pullback 2 wks backIf the strong USD trend continues, we’d expect risk-off to be the flavour of the moment with EM, Commodities &amp; equities in general set to declineCheck out the long NOKSEK SaxoStrats idea flagged by our Head of FX Strategy John Hardy – I like the thesis, it definitely worth doing some heavy lifting on thisPlus a few links to the Sohn Investment Conference where movers &amp; shakers such as Chanos &amp; Druckenmiller were talking their views 

Global Macro Take: WK 20 – The US Dollar Just Won't Die

Asia Economist and CEO, Centennial Asia Advisors

Manu Bhaskaran

Asia Economist and CEO

Centennial Asia Advisors

At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way. With over 30 years experience covering Asia’s political economy, you can be sure our conclusions and analyses are based on the unadulterated facts. Through years of fine-tuning our research methodologies, we deliver a quality of macroeconomic analysis few other houses can match.

Centennial Asia Advisors is an independent research and advisory firm that works with governments, multilateral institutions, financial firms and leading MNCs.

Economic Policy and Strategic Advisors

Macroeconomics

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We were wrong about BOJ policy action: The BOJ kept its monetary policy unchanged last week despite the desultory economy. Consequently, the Yen surged, which was the last thing that the economy needed.</li>
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Economic data almost uniformly bad: Industrial production rose 0.1% y/y in Mar 16, after falling 1.2% in Feb 16, with the earthquakes that struck Kyushu likely to depress production in 2Q16. Retail sales fell 1.1% y/y in Mar 16, following a 0.4% y/y gain in Feb 16. And deflationary pressures…</li>
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We were wrong about BOJ policy action: The BOJ kept its monetary policy unchanged last week despite the desultory economy. Consequently, the Yen surged, which was the last thing that the economy needed.

Economic data almost uniformly bad: Industrial production rose 0.1% y/y in Mar 16, after falling 1.2% in Feb 16, with the earthquakes that struck Kyushu likely to depress production in 2Q16. Retail sales fell 1.1% y/y in Mar 16, following a 0.4% y/y gain in Feb 16. And deflationary pressures…


FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

The non-policy decision by the BoJ, creates considerably uncertainty over when the BoJ will consider easing policy further.  Kuroda suggests he simply needs more time to assess the effects of NIRP, in the order of six months or more, which pushes action out until at least late-July.  It seems he and other policymakers are willing to live with a stronger JPY and a lull in economic conditions over coming months.  In consideration of the rising trend in JPY this year, the risk is high that it continues to rally sufficiently to put pressure on the BoJ and government to act, and this may be closer to a USD/JPY level near 100.  A stronger JPY has tended to spill over to a weaker USD more generally in the immediate wake of the non-policy easing.  However, the sharp rise in JPY in early-February tended to add to global risk aversion and delayed the recovery in emerging market assets and currencies.  Perhaps this time the shock value of a stronger JPY is less, and commodity markets are on a firmer footing, such that a stronger JPY may not dampen risk appetite as much.  Nevertheless, the tendency for JPY to rally is likely to accentuate other possible global disturbances to risky assets, such as renewed concerns over China or Brexit vote.  As such we might expect non-dollar risk havens, such as gold, to remain underpinned with upside risk.

The non-policy decision by the BoJ, creates considerably uncertainty over when the BoJ will consider easing policy further.  Kuroda suggests he simply needs more time to assess the effects of NIRP, in the order of six months or more, which pushes action out until at least late-July.  It seems he and other policymakers are willing to live with a stronger JPY and a lull in economic conditions over coming months.  In consideration of the rising trend in JPY this year, the risk is high that it continues to rally sufficiently to put pressure on the BoJ and government to act, and this may be closer to a USD/JPY level near 100.  A stronger JPY has tended to spill over to a weaker USD more generally in the immediate wake of the non-policy easing.  However, the sharp rise in JPY in early-February tended to add to global risk aversion and delayed the recovery in emerging market assets and currencies.  Perhaps this time the shock value of a stronger JPY is less, and commodity markets are on a firmer footing, such that a stronger JPY may not dampen risk appetite as much.  Nevertheless, the tendency for JPY to rally is likely to accentuate other possible global disturbances to risky assets, such as renewed concerns over China or Brexit vote.  As such we might expect non-dollar risk havens, such as gold, to remain underpinned with upside risk.

AmpGFX - Lack of BoJ Action to Support JPY and Other Non-Dollar Risk Havens like Gold

Japanese Yen: The weakening has only just started <ul><li>
Both domestic and external demand weakening: Tertiary industry activity fell 0.1% m/m sa in February after +0.7% gain in January. The Nikkei-Markit Manufacturing PMI fell to a new low in April, with production and new orders falling sharply. Exports contracted 6.8% y/y in Mar 16, down from a 4.0% y/y decline in Feb 16. The even more precipitous import decline of 14.9% showed the dismal state of domestic demand. The earthquake in southern Japan is…</li></ul>

Japanese Yen: The weakening has only just started 
Both domestic and external demand weakening: Tertiary industry activity fell 0.1% m/m sa in February after +0.7% gain in January. The Nikkei-Markit Manufacturing PMI fell to a new low in April, with production and new orders falling sharply. Exports contracted 6.8% y/y in Mar 16, down from a 4.0% y/y decline in Feb 16. The even more precipitous import decline of 14.9% showed the dismal state of domestic demand. The earthquake in southern Japan is…

Weaker Yen Bad News for Asian Currencies; Brexit Risks Fall

The BoJ’s deep throat policy makes sense this time around after the shock tactics back-fired in January.  The market is being massaged to expect comprehensive easing including a further rate cut aimed at a weaker JPY.  This time around expect most of the action ahead of the BoJ meeting next week.  JPY may weaken near term, but will face significant resistance toward 115 and may be volatile after the meeting with little net new direction.  We continue to see market risks building in China; weak corporate bonds, rising yields, steadily declining CNY against its basket, steady capital outflow and lagging equities.  AUD has been boosted by iron ore and oil, but is diverging recently and may also be reflecting constrained confidence in China, notwithstanding recent improvement in economic activity.  We had returned our focus to long gold in recent days, but it may work better against a short JPY position.

The BoJ’s deep throat policy makes sense this time around after the shock tactics back-fired in January.  The market is being massaged to expect comprehensive easing including a further rate cut aimed at a weaker JPY.  This time around expect most of the action ahead of the BoJ meeting next week.  JPY may weaken near term, but will face significant resistance toward 115 and may be volatile after the meeting with little net new direction.  We continue to see market risks building in China; weak corporate bonds, rising yields, steadily declining CNY against its basket, steady capital outflow and lagging equities.  AUD has been boosted by iron ore and oil, but is diverging recently and may also be reflecting constrained confidence in China, notwithstanding recent improvement in economic activity.  We had returned our focus to long gold in recent days, but it may work better against a short JPY position.

AmpGFX - BoJ's Deep Throat and China Market Risks Make Way for Higher Gold/JPY

Japan

iShares MSCI Japan ETF is an exchange-traded fund incorporated in the USA. The ETF's objective seeks to provide investment results that correspond to the performance of the Japanese market, as measured by the MSCI Japan Index. The ETF invests in a representative sample of index stocks in a variety of sectors using a market cap weighted "portfolio sampling" technique.

iShares MSCI Japan ETF (EWJ US)

Global Macro Take: WK 20 – The US Dollar Just Won't Die

Key close on DXY above 94.50 on a Friday, liquidating my thesis on a tactical USD liquidation phase. Seems like we’ve now had a very sharp...

Kay Van-Petersen

Japan: Huge Policy Dilemma Raises Risks

We were wrong about BOJ policy action: The BOJ kept its monetary policy unchanged last week despite the desultory economy. Consequently, the Yen...

Manu Bhaskaran

AmpGFX - Lack of BoJ Action to Support JPY and Other Non-Dollar Risk Havens like Gold

The non-policy decision by the BoJ, creates considerably uncertainty over when the BoJ will consider easing policy further. Kuroda suggests he...

Greg Gibbs

Weaker Yen Bad News for Asian Currencies; Brexit Risks Fall

Japanese Yen: The weakening has only just started Both domestic and external demand weakening: Tertiary industry activity fell 0.1% m/m sa in...

Manu Bhaskaran

AmpGFX - BoJ's Deep Throat and China Market Risks Make Way for Higher Gold/JPY

The BoJ’s deep throat policy makes sense this time around after the shock tactics back-fired in January. The market is being massaged to expect...

Greg Gibbs