Another quiet day in Asia ahead of Fed Governor Yellen’s speech in Jackson Hole. The USD has moved asymmetrically in last 24 hours. Rallying against some pairs and falling against other. Today we take a look at some of the most “interesting” moves and ponder whether positioning, Jackson Hole or other “forces” are at play.
The degree of resurgence very much depends on against what. It has had a very strong run in the last few days against oil, precious metals and commodities in general. A reasonably strong rally against Emerging Market currencies today, a negligible rally against most G10 and continues to fall against GBP and NZD.
From a technical perspective, it has made some significant inroads into some of the above that we will look at shortly. The question here is, does this mark a period of renewed USD strength? Or is this just a “faux” rally ahead of Yellen’s speech driven by position squaring? The honest answer here is I doubt anyone truly knows. Certainly not me.
My instinct tells me this is positioning squaring but until the details of the speech come out I don’t feel there is a lot of point getting tied up in conjecture. I won’t tie myself up in knots second-guessing the will she/won’t she, hawkish/dove, wax on/wax off; I will prefer to observe the post-speech price action. That will tell the truth.
Nevertheless, some of the divergent short term price action makes for compelling viewing…
