Author: Win Thin

Articles, Emerging Markets

EM Preview for the Week Ahead

Win Thin

EM performance this week will hinge crucially on whether US equity markets can find some traction. If sustained, last week’s equity rout could lead to a deeper generalized risk-off trading environment this week that would weigh on EM FX and equities. As it is, markets are already digesting weaker economic data and rising virus numbers in countries that had crushed the curve. ECB meeting this week may hint at further easing to come, which could help risk assets recover a bit. Continue reading “EM Preview for the Week Ahead”

Articles, Developed Markets

Drivers for the Week Ahead

Win Thin
  • The dollar is likely to remain under pressure after Powell’s dovish message at Jackson Hole
  • August jobs data Friday will be the data highlight of the week
  • The Fed releases its Beige Book report Wednesday; Powell will face many questions about the Framework Review that he unveiled at Jackson Hole
  • Messy EU politics couldn’t have come at a worse time; Germany has a heavy data week; eurozone final August manufacturing PMIs will be reported Tuesday
  • The political landscape in Japan just took a big jolt; RBA meets Tuesday Continue reading “Drivers for the Week Ahead”
Articles, Emerging Markets

EM Preview for the Week Ahead

Win Thin

EM FX has taken advantage of broad dollar weakness, with most currencies gaining last week. ARS, TRY, and HUF were the exceptions, not surprisingly. Given the dovish message delivered by Powell at Jackson Hole last week, we expect EM and other risk assets to continue rallying. The US jobs data Friday may provide a gut check, but until then, the party continues. Continue reading “EM Preview for the Week Ahead”

Articles, Developed Markets

Drivers for the Week Ahead

Win Thin
  • House Democrats passed a package to support and protect the Postal Service Saturday; the Kansas City Fed holds its annual Jackson Hole symposium Thursday and Friday
  • We get the first revision US Q2 GDP Thursday; regional Fed manufacturing surveys for July will continue to roll out; Canada reports Q2 GDP Friday
  • Germany reports final Q2 GDP data and August IFO business climate index Tuesday; August Tokyo CPI will be reported Friday Continue reading “Drivers for the Week Ahead”
Articles, Emerging Markets

EM Preview for the Week Ahead

Win Thin

EM had a mixed week and we continue to believe divergences will remain in place. Please see our recent piece “Where Has All the Carry Gone?” for our most recent take in EM currencies. Continue reading “EM Preview for the Week Ahead”

Articles, Developed Markets, Emerging Markets

Where Has All the Carry Gone?

Win Thin

Despite broad-based dollar weakness, EM currencies have not fully participated in the risk on environment that’s now in place. The good news is that fundamentals matter again. The bad news is that there are a lot of EM countries with bad fundamentals, and the secular decline in carry no longer gives these weaklings any cover. Here, we posit that fundamentals will be the main driver for currencies in this new normal of near zero interest rates everywhere. Continue reading “Where Has All the Carry Gone?”

Articles, Developed Markets

Some Thoughts on Current FX Positioning

Win Thin

Once again, we thought it would be helpful to take a look at the CFTC Commitment of Traders report. Here, we focus on non-commercial positions up to the week ended August 11. While this data represents a small slice of the speculative community, it does provide a window into overall market positioning.

Continue reading “Some Thoughts on Current FX Positioning”

Articles, Developed Markets

Drivers for the Week Ahead

Win Thin
  • Markets are looking for more signs of life this week for the global economy; the dollar remains under pressure
  • A stimulus package is unlikely until September, if at all; Democratic lawmakers have been called back to Washington to address the postal service crisis
  • Regional Fed surveys for August will start to come out; FOMC minutes will be released Wednesday; weekly jobless claims will be reported Thursday; Canada has a big data week
  • EU and UK will hold a sixth round of trade talks in Brussels starting Tuesday; ECB releases the account of its July 15-16 meeting Thursday; eurozone preliminary August PMI readings will be reported Friday
  • UK has another heavy data week; Norges Bank meets Thursday and is expected to keep rates steady at zero
  • Japan has a heavy data week; RBA releases its minutes Tuesday Continue reading “Drivers for the Week Ahead”
Articles, Emerging Markets

EM Preview for the Week Ahead

Win Thin

We continue to see divergences within EM. CLP and TRY underperformed last week, while MXN and ZAR outperformed. Rather than seeing EM-wide buying, investors are being much more discerning and that is a good thing at this stage of the rally. Korea and Taiwan report trade data this week that should support our view that emerging Asia is likely to outperform, pulled up by the recovery in mainland China. Continue reading “EM Preview for the Week Ahead”