Rising Pressure on BCB for FX Intervention

The BCB reportedly stepped into the FX market last week with a spot sale of dollars that was not accompanied by a repurchase commitment or other intervention measures – the first time this has happened in a decade. The move to stem the slide in the BRL has been...

Buy the USDCNH Dip

VP’s China leading indicator has shown few signs of rebounding and remains in negative territory, presenting a persistent headwind to the RMB. Historically a negative China LEI has led capital outflow by about 6 months and points to further outflow pressures (top-left...

PBoC to take CNHKRW Higher

This post is taken from our August 7th weekly report. USDCNH breached the 6.90 mark last week, having been under 6.30 just four months ago. This 10% depreciation has come against a backdrop of slowing Chinese growth and escalating US trade tensions. Although there...

Short AUDCAD As Proxy China Trade

Although both AUD and CAD are commodity currencies, given Australia’s outsized exposure to China, AUDCAD can be used as a proxy trade on the Chinese economy. AUDCAD is approaching the top of its range just as Chinese liquidity is rolling over. In our March Leading...

China: the Capital Leak Grows

A pivotal theme for 2017 will be capital outflows from China leading to contraction of domestic liquidity. Policymakers in China managed boost domestic liquidity earlier this year by state-directed lending, but there are signs capital is leaking out at an accelerating...

Tactical Buy on NZD

(from our Tactical from 2nd of June) We only have one tactical signal this week, a buy on NZD.  The VP Divergence Signal looks at correlations to detect when an asset is trading out of sync with other related global macro assets.  This provides a good short-term proxy...

Warning shot across the bow for long USD speculators

One of the points that we have emphasized to clients in our most recent reports has been the risk of a reversal in the USD. Fundamentally, the USD looks better than most, but nothing goes up in a straight line and speculators have been complacently long. With the...