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The Collapse Of This Historic Correlation Suggests A Major Crisis Is Imminent
The Collapse Of This Historic Correlation Suggests A Major Crisis Is Imminent A lot of digital ink has been spilled in recent days over the perplexing reversal of the Yen, which for years was seen by the market as a “flight to safety” trade (as unexpected crisis events would prompt capital repatriation into Japan or […]
Dethroning the King: Five ways Trump could weaken the dollar
Dethroning the King: Five ways Trump could weaken the dollar Can President Trump instruct the US Treasury to intervene in FX markets and weaken the dollar? Twelve months ago, we wouldn’t have even considered this question. But under this new mercantilist US regime, who knows? We identify five ways in which Washington could try to engineer a weaker […]
Rand Tumbles As Government Warns Of “Catastrophe” Unless ‘Land Reform’ Allowed
Rand Tumbles As Government Warns Of “Catastrophe” Unless ‘Land Reform’ Allowed In a barrage of headlines that sparked chaos in FX algo markets, The South African government proclaimed proudly that it is opposed to illegal land grabs (sparking a rally in the rand) before humans realized that this is mere statement of fact and that […]
“EM FX Never Lies” – BofA Warns As Brazilian Real Is Routed
“EM FX Never Lies” – BofA Warns As Brazilian Real Is Routed Mohamed El-Erian warned overnight that Brazilian policy makers are “in quite a tricky position — and there’s little room for error,” and judging buy this morning’s rout in the real, he is dead right. Crippling nationwide trucker strikes, which prompted the resignation of […]
EM FX Plunges: Argentine Peso Re-Crashes, Turkish Lira Tumbles To Record Low
EM FX Plunges: Argentine Peso Re-Crashes, Turkish Lira Tumbles To Record Low Just hours after Fed Chair Jay Powell implied that ’emerging markets are on their own’, EM FX is re-collapsing… with Argentina (despite a 1275bp rate hike) and Turkey both crashing to new record lows… “There is good reason to think that the normalization […]
If Currency Wars Have Indeed Started, This Is What Comes Next
If Currency Wars Have Indeed Started, This Is What Comes Next Even as overall volatility remains tame, things are rapidly changing in the world of currency trading where FX vol has spiked to the highest level since early October after this week’s dramatic FX rollercoaster which saw the US Treasury Secretary get this close to […]
Another shoe drops in the FX fraud manipulation conspiracy
Another shoe drops in the FX fraud manipulation conspiracy FX is quite literally, a rigged game. Not like the stock market, well not exactly. FX has been, a game of ‘how many numbers am I holding behind my back?’ and the guess is always wrong! As we explain in Splitting Pennies Understanding Forex – FX […]
The FX Mexican Standoff
The FX Mexican Standoff Theodor Horydczak Lincoln Memorial 1925 There has been quite a bit of talk lately over the need for a new Plaza Accord, something several parties saw happening during this weekend’s G20 summit in Shanghai -hence the term ‘Shanghai Accord’-. (On September 22, 1985 at the Plaza Hotel in New York City, France, West […]
When Currency Pegs Break, Global Dominoes Fall
When Currency Pegs Break, Global Dominoes Fall When a currency peg breaks, it unleashes shock waves of uncertainty and repricing that hit the global financial system like a tsunami. The U.S. dollar has risen by more than 35% against other major trading currencies since mid-2014: If all currencies floated freely on the global foreign exchange […]
Financial Time Bombs Hiding In Plain Sight
Financial Time Bombs Hiding In Plain Sight The bear will soon be arriving in earnest, marauding through the canyons of Wall Street while red in tooth and claw. Our monetary central planners, of course, will once again—for the third time this century——be utterly shocked and unprepared. That’s because they have spent the better part of two decades deforming, distorting, denuding and destroying what were once […]
Bank Of Russia Calls “Emergency” Meeting To Address Ruble Rout
Bank Of Russia Calls “Emergency” Meeting To Address Ruble Rout Earlier today, we highlighted a dramatic plunge in the Russian ruble which has crashed to record lows against the dollar after staging its steepest two-day decline in nine months. The sharp (and seemingly inexorable) decline in crude prices combined with Western economic sanctions and geopolitical turmoil have […]
Is This How the Next Global Financial Meltdown Will Unfold?
Is This How the Next Global Financial Meltdown Will Unfold? In effect, a currency crisis is simply the abrupt revaluation of the currency to reflect new realities. I have long maintained that the structural imbalances of debt and risk that triggered the Global Financial Meltdown of 2008-2009 have effectively been transferred to the foreign exchange […]
Don’t Forget China’s “Other” Spinning Plate: Trillions In Hidden Bad Debt
Don’t Forget China’s “Other” Spinning Plate: Trillions In Hidden Bad Debt To be sure, there’s every reason to devote nearly incessant media coverage to China’s bursting stock market bubble and currency devaluation. The collapse of the margin fueled equity mania is truly a sight to behold and it’s made all the more entertaining (and tragic) […]
Fallout From Petrodollar Demise Continues As Qatar Borrows $4 Billion Amid Crude Slump
Fallout From Petrodollar Demise Continues As Qatar Borrows $4 Billion Amid Crude Slump Early last month in “Cash-Strapped Saudi Arabia Hopes To Continue War Against Shale With Fed’s Blessing,” we noted the irony inherent in the fact that Saudi Arabia, whose effort to bankrupt the US shale space has blown a giant hole in the […]
Why QE4 Is Inevitable
Why QE4 Is Inevitable One narrative we’ve pushed quite hard this week is the idea that China’s persistent FX interventions in support of the yuan are costing the PBoC dearly in terms of reserves. Of course this week’s posts hardly represent the first time we’ve touched on the issue of FX reserve liquidation and its […]
