Sunday, July 22, 2018

True Price Reflection: A Classic Divergent Trend - SP500 RUT2000 DAX Vs. HSI

A clear cut 'DIVERGENT TREND' for the past (11) consecutive trading days between US Equity Indices, NK225 compared with CHINA's Hang Seng Index HSI reflects the, true sentiments where prices had a bigger impact from the trade spat. Other Asian countries have followed the price action from the 2nd largest economy with the exception from those that are well ALIGNED with US POLICY. On the other hand, tactical investors & traders do know what and how to take advantage of these market conditions where a defined trend along with price action have been moving prices in similar direction. But the fact remains is how well other traders perception sees it that way or believes otherwise would take action with US equities already on record levels.

Russel 2000 small-caps and German DAX would benefit more from these market conditions as it paces major indices to another record highs. For now US investors although concerned would still back US equities at this time which can only signal who wins in this tit-for-tat but rather the fact remains US growth is on track. 

Friday, July 20, 2018

Weighing on the USD Correction: USD RUBLE & YUAN

The issues where investors in the markets are concerned driving the USD softer for now, as Trump considers additional tarriff on China that could total $500B.

Which could lead to a possible legislative confrontation between President Trump; and GOP senators making a stance through its Senate Finance Committee Chairman Orrin Hatch to reconsider a change in the President's overall protectionist trade policies. On top of his disagreement towards the FED's rate hike policy that may put him at odds with the Fed Chairman Jerome Powell. However, what is backing US President Trumps confidence is actually his confidence in 'US Equities, Technology & USD Repatriation' in full force, so to speak.

On the other side of the globe, Russia unloading US Treasuries in the amount of $81B over a two month period simply to protect its own assets from US sanctions. Likewise a possible hedge strategy for Russia Central Bank against a foreseeable decline of the USD value from the tit-for-tat trade war with China and other countries involve. As of the current session, for as long as the DXY would hold its ground and recover from these trade jitters expect that such a corrective move is healthy.

Impeccable timing, as we call it, and see that this has been quite a welcome treat for those who actually see the price reaction across the board, where we consider the market will benefit more from rate adjustments. Especially so for both the Chinese Yuan at 6.78 USDCNH and the Ruble currently trading at 63.51 respectively. And without saying, what this have proven to be felt across the forex market at this time is nothing really new. As the European currencies have likewise taken a breather for now.

The question is ...for how long would these issues be up in the air?
The market shall in turn provide us the answer! 

Correlated Analysis: Chinese Yuan Vs. Japanese Yen 
Trade War Analogy