We start the week after a long holiday weekend in the States with a quick review of key macro charts and themes for markets. 

 FX volatility means much higher volatility for markets.  We think markets are too complacent here:

 chart1

 The USD once again is a wrecking ball for EM, Commodities and seemingly for risk if the pace of the move continues to be this brisk.  Watching for breakout signals.  Out call for the last month remains.  UDSD to test 98.50 before pullback.  We remain long EUO$ short Euro:  The DXY is back above the 20dma which has been the arbiter of its path trend.  Still on long term upward trajectory.

chart2

The most interesting move this AM is the move in the JPY:  Now 8.5yr lows

 chart3

 Japanese Equities remain on fire:

chart4

 Euro:  in line, moving lower on Greece panic and Dollar move.  1.065-1.075 range to watch.  Nothing to do until then…

 chart5

EM currencies are blowing out in sympathy to the USD move higher.  No better poster child of risk than the Brazilian Real: After fighting though the 50dma through the 50mda in April and breaking lower we have seen a major reversal:

 chart6

 Look at the breakdown this AM at the onset of trading…

 chart7

 Take profits in Turkey we say.  You will be back:  TRY blowing out.  

 chart8

China continues to trade to fresh highs.  So many doomsayers on China yet sooooo much liquidity.  Have you missed owning the $PEK ETF that tracks local CSI300? 

chart9 

 FXI was our trade to BUY no the test lower in mid-May.  We expect will trade through $53.40 highs

 chart10

 …  underlying components may be better plays including $CHL

 chart11

 EM Equities trading better than expected considering the currency moves.  Part of this is China. Watching $42.00 on EEM as key level to sell if we break….

 chart12

Rates are moving lower almost as a flight to quality day of sorts…  UST yet to establish new trading range…. 

 chart13

 Bund yields showing their place as the one beacon of safety in Europe on a day where Greece is more noise than usual…

 chart14

 Therefore you see an actual “credit reaction” in the periphery we were NOT seeing when rates were moving higher across Europe and US last month….

 chart15

 We close with its still “May” and June is often no better than May or even worse when we are in a seasonal volatility warp.  Stay close to the screens next day or so….

 

 

Leave a Reply