Don’t Expect the Summer Doldrums this August

After such a tumultuous start to the year, it would be understandable if the market was even more diligent than usual in switching off this summer. Markets around this time are generally perceived to be quiet anyway, but the lack of liquidity most likely contributes...

Dollar to come under growing pressure

Our view on the USD for 2019 was that it would face modest downwards pressure. The pressure has been modest, but it has been to the upside. Nonetheless, overall the dollar (DXY) has been in a tight range this year (~4.5%). Every attempt to the upside has been met by...

Dollar Very Stretched to the Downside

The DXY index has fallen in a straight line this year, with the Sharpe ratio of the YTD move at almost 2.4. Although we have been bearish on the dollar from a macro point of view since last year, the dollar does look vulnerable at present to a short squeeze. The top...

Stronger Dollar Toxic for Emerging Markets

In the past few monthlies we’ve warned that a strong dollar has the potential to cause emerging market crises.  From a valuation standpoint, the dollar is very overvalued against almost all currencies, but rising interest rates and the appreciating momentum may drive...

Greatest Risk to EM is a Higher Dollar

(from our Tactical report of 8th November 2016) Flows to EM equities have been high lately (3m flows over last 2 years to EM ETFs are in their 80th percentile – chart below). Source: Macrobond, Bloomberg and Variant Perception The rise in the USD is a risk to these...