FX Update: USD shrugs off Fed’s balance sheet expansion
The USD weakened a bit further on Friday, but has stabilised again to start the week, even after the Fed announced a larger than expected expansion of its balance sheet aimed at rebuilding reserves. Meanwhile, the Trump announcement Friday of a first phase US-China handshake trade deal provided a modest boost in risk sentiment.
Macro Monday Week 42: "Phase One" - here we go again...
This week starts with equities rallying out of the gates on the euphoria of "Phase One" partial deal completion in the works between the US and China. Love it or hate it, believe or disbelieve it - respect the price action, our roles are to make money consistently over time. We could see a squeeze higher in risk-on assets and a pullback in risk-off assets over the near team.
FX Breakout Monitor: GBP whiplash, JPY rout
Over the last two days, sterling traders have been administered a case of whiplash, as apparent Brexit negotiation breakthroughs take sterling from weak to super-strong, with multi-month highs in most major sterling pairs. Elsewhere, the Brexit hopes and hopes that the US and China are heading toward some form of trade deal have risk appetite bid, and smaller currencies generally on the rise versus the USD and especially the JPY.
EM FX Carry Trade Update October 11, 2019
Select carry trades are ripping higher on the double whammy boost from hopes for a US-China trade deal, even if it proves one of narrow scope, and more concrete signs that Brexit negotiations have achieved a major breakthrough that will lead to a last-minute deal before the October 31 deadline. But there is quite a diversity of performance within the EM space that suggests EM plays not all being lumped together.