Analysts at Rabobank point out that tn FX it was another wild session yesterday as the USD surged yet again despite weak durable goods orders yesterday, and again let’s make clear that this is a likely structural outcome from the US shaking up the global trading order.
Key Quotes
“In particular, we’ve seen CNH slide past 6.62 and it has now fallen for 10 straight sessions, the longest series of declines in its (short) history and the fastest pace since the infamous August 2015 drop – and this is still just a warm up, not in any way the main event.”
“Note that a leaked and rapidly-deleted report from a Chinese government think tank has just warned: “We think China is currently very likely to see a financial panic. Preventing its occurrence and spread should be the top priority for our financial and macroeconomic regulators over the next few years.” Against that backdrop AUD is also at the lows for the year at 0.7340: forget about any more Chinese RRR cuts – while CNH is going down, likely so is AUD. Plus, NZD is also lower at 0.6780 after the RBNZ left rates on hold at 1.75% and made clear it’s still ready to move in either direction if needed.”
“About the only thing other than the USD that did go up yesterday was oil, where fears over the US choking off Iranian supply ahead are leading to a price squeeze. Brent is at USD77.58 this morning in Asian trading and West Texas Intermediate at USD72.49. If you think that’s painful, try calculating it in another currency: for example, one barrel now costs 59% more in CNH than it did this time last year, and 116% more in Turkey.”
Share
