We are all in. Broad signals of increase momentum from global PMIs – both manufacturing as well as services, too the euro surface area divergences receding. Thus, no surprise, even amongst US, Great Britain 10Y authorities yields hitting 3% final week, stocks, commodity currencies, EMs caught breath. We tin afford to alive amongst the 3% nominal charge per unit of measurement in the 3% existent increase world, can’t we? (yes, but [insert here]).
Figure 1. 10Y sovereign yields
If nosotros tin alive with this see for a while, the commodity currencies could bounce more here. This applies too for EMs (ZAR, RUB). Note also, the macro information surprise indexes for commodity currencies are on the depression side, historically, spell the brusque positions are on the high side, giving room for sharper reversals. Hope you lot joined inwards my recommendation to brusque EURAUD inwards July (still real much valid). No secret, I switched to AUDUSD in August, which straight off it faces a technical 2nd of truth – brand it, or pause it (Figure 2). (Also, the AUDJPY straight off at a key juncture). Starting amongst a small on Thursday. Figure 4. Manufacturing – EMU vs US
Yep, can’t larn by it, Carney. The BoE frontwards guidance is powerless inwards the confront of manufacturing PMI at 57.2, as well as other figures which get got gone vertical recently. Finally the EURGBP made it lower where I liked it, as well as a pause of 0.8400 would open room for a freefall to the 0.8200-0.8250. I bet on it, but vs USD for now. This week’s highlight - the Great Britain unemployment charge per unit of measurement on Wednesday. Unchanged (7.8%) is a consensus, withal to a greater extent than or less means to 7% target. It volition get got the whole three years to larn there, according to BoE…meh. Pressure on the downside (Figure 5).
Figure 5. Great Britain unemployment rate
JPY…a exceptional case. The USDJPY did brand a break-out, to the upside final week, as well as straight off retesting (Figure 6). I withal gibe USDJPY short, equally a hedge for straight off against worsening see as well as a bet on a broad brusque term USD weakness. Note also, the EURJPY…still triangle…Nikkei…still triangle…and no argue for the US yields to rising to a greater extent than until FOMC meeting. And, pardon, but I turn down to see Olympics inwards 2020 inwards Japan as an explanation for JPY inwards the brusque term. Figure 6. USDJPY
P.S. Overall, rather dull calendar this week. The entirely matter left is deriving the probabilities of tapering scenarios for September 18th. (Kill. Me. Now…)