I am targeting 82 as a possible level in the near-medium term, with a stop around 79.46 level. (almost 4:1 risk reward)
Tuesday, February 25, 2014
Go Big or Go Home - Long DXY at 80.10, Target: 82, stop @ 79.46
The DXY is sitting just above a big trendline coming from mid 2011, and given how worried the market is about a potential slowdown in the US economy (more likely it is just about weather effects), the risk reward looks attractive. On the other hand, EUR is more than 50% of the Index, and being the case that the ECB is very behind the curve, especially because medium-term inflation expectations have been coming down (5 year inflation swaps are trading at multi-years low), the currency should find a hard time breaking the 1.3800-50 level. Finally, positioning in the currency looks relatively clean, specially vs low yielding currencies (most of which are in the DXY).
I am targeting 82 as a possible level in the near-medium term, with a stop around 79.46 level. (almost 4:1 risk reward)
I am targeting 82 as a possible level in the near-medium term, with a stop around 79.46 level. (almost 4:1 risk reward)
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Hola Jaime,
ReplyDeleteThe US $ has been flat to marginly lower against its majors - save the commodity currencies which are absorbing a meager sell off as it’s a risk off day in all commodities. The PBoC has been engineering the fall of its currency to 2010 lows to change the perception of the one-way bet on Yuan gains. The PBOC may also be introducing two-way volatility as it prepares the Yuan for a wider trading band and requires less reserves when hot money leaves a cooling GDP host with growing shadow banking issues. PBoC tightening has been on and mezzanine financing for real-estate are becoming mom existent there. I like being long the $ vs everything as the growing portfolio of global political economy issues is growing…..money flows to the US are increasing as such and this could be the theme of 2014....
I enjoy your blog. Saludos desde Chicago!
Alain
Thanks Alain! Good to know someone enjoys it. Keep in touch!
DeleteBest,
A