A Banker Named Ben

There once was a banker named Ben
When asked he said, never again
Would he take a role
That’s taken its toll
On quite a long list of good men

Now markets are somewhat concerned
The next chairman might not have learned
The lessons that showed
Why growth really slowed
Soon they’ll wish that Ben had returned

It seems to be official now, Chairman Bernanke will not be returning to the Fed when his term ends on January 31, 2014.  President Obama made it clear in an interview that Ben was ready to move on.  So what does this mean for markets in general and FX markets in particular?  I think we are likely to see an uptick in the level of nervousness across the board in markets.  Despite the controversy he courted, market response to Bernanke’s unprecedented monetary policies has been pretty impressive overall.  Concerns over newly inflating asset bubbles are growing, but for most people, who simply hold equities in their portfolios, the rally that has taken place over the past 4 years has been a welcome relief from so much of the overall economic anxiety that has accompanied life since the onset of the Financial Crisis in September, 2008.  During that same period, the dollar has been anything but stable, rallying sharply in 2010, falling sharply through 2011 and edging back higher since then.  I think the biggest uncertainty for market players is that whether or not they agreed with Bernanke’s policies, they grew to understand his behavior and were able to trade accordingly.  But with a prospective new Chairman coming on board, aside from all the speculation about who it will be, there will be the matter of learning a new communication style as well as determining if the new Chairman’s policy ideas are seen as positive for markets.  This is another factor that will, at the margin, increase volatility for the rest of the year.

As to the FX markets overnight, the dollar has had a better session than yesterday, rallying against most currencies, notably the JPY and AUD in the developed space, and the ZAR and INR in the emerging space.

The session started with worse than expected Japanese IP data, a rise of only 0.9% in April, and the initiation of weakness in the yen.  Moving on to Europe, EU auto sales fell to their lowest level in 20 years!  Both these items were sufficient to help boost the dollar in the G10 space.  The euro was able to shake off its early weakness after a combination of better than expected German ZEW figures (38.5 vs. 38.1 expected) and comments from Signor Draghi, repeating that they ECB will do “whatever it takes” to keep the euro in one piece, and that other nonstandard measures, whether negative deposit rates or further liquidity injections are all possible.  The euro reacted positively to these things and is the only currency in the developed space higher this morning.

Meanwhile, UK inflation data was released at a higher than expected 2.7% in May, up from 2.4% in April and higher than the 2.6% forecasts.  Inflation in the UK remains stubbornly above the 2.0% target and seems to be a hindrance to the BOE in its efforts to support the UK economy further.  Remember, Mark Carney will be taking over as the new BOE governor on July 1, and all eyes will be on him to see if there will be more stimulus coming regardless of the inflation situation.  At any rate, the pound is softer this morning, down from recent highs at 1.57, and I continue to believe it is a better sale than buy at these levels.

Perhaps more importantly, data on Chinese home prices continues to show they are rising sharply and are creating concerns that the PBoC will not be able to support the broad economy while inflation is so prevalent.  It was the latter story that helped undermine so many of the Asian currencies, including the AUD.  If China is embarking on a period of slowing growth and rising prices, then all those nations that rely on exports to China as a key part of their growth strategies, a.k.a. the rest of Asia, are going to find themselves in significant difficulty and their currencies are going to suffer for that as well.  Remember, one of the reasons that Asian currencies had performed so well over the past several years was the idea that most of these nations were growing rapidly, albeit in the shadow of China, but that they had learned their lessons from the Asian crisis in 1997-98 and fixed their fiscal issues.  This resulted in a combination of strong underlying fundamentals and rapid growth, drawing in lots of investment.  While their fiscal situations remain in good stead, the potential slowdown in growth is going to have very negative repercussions.  We continue to see investment funds flow out of the area and I see no reason for that to abate in the near future.  This large scale exiting of financial investments will certainly weigh on these currencies.  India seems in particular difficulty, with inflation still above target and growth below target.  Last night’s 1.5% decline was precipitated by a widening of the trade deficit, which has simply been adding to their problems.  We also saw significant weakness in ZAR (soft commodity prices combined with ongoing local labor strife) BRL (weaker Chinese growth restricting its exports) and HUF(declining bond yields discouraging investors).

Yesterday’s Empire Mfg number was much better than expected, and today we see Housing Data (Housing Starts exp 950K, Building Permits exp 975K) as well as CPI (exp 0.2% headline and core).  This is the area of the US economy that has performed best of late, and more strong numbers should translate into both higher yields and a stronger dollar.  I like the dollar from here, especially against the pound in the short term, but receivables hedgers need to be on their toes.

Good luck

Havoc No More?

The G8 is meeting this week
Bernanke, as well, gets to speak
Will either present
A good argument
That havoc they no more will wreak?

Bernanke will “want to emphasize that a tapering of asset purchases is not a tightening of policy and isn’t necessarily irreversible,” said Michael Feroli, a former researcher with the Fed board in Washington and chief U.S. economist for JPMorgan.

I had to start with the comment I read this morning, which I think highlights why economists have a reputation for being out of touch with reality.  If asset purchases by the Fed constitute their Quantitative Easing policy, designed expressly to loosen monetary policy despite interest rates at zero percent, then how can tapering asset purchases, the opposite of executing them, not be policy tightening?  It is this type of muddled speaking and messaging that leads to market volatility.  As an investor, my concern is that either the Chairman doesn’t understand what the word ‘taper’ means, which I doubt; or that he is afraid to describe what he believes the Fed will need to do going forward.  It is the latter concern that will continue to drive markets for the time being.

So after several weeks of pretty significant volatility across all markets, the G3 central bankers are starting to figure out that market participants will not simply do exactly what is needed on the back of verbal cues.  In fact, Bernanke, Draghi and Kuroda need to enact policies very clearly and carefully, a level of precision that has always been difficult to achieve in the monetary policy realm, and one made even more difficult because of the unprecedented situation in which they each find themselves each having previously committed to, and enacted, extreme policy measures.  Once again, I will remind you all that as the current set of policies gets unwound, markets will remain quite volatile.

So let’s look at the markets this morning.  The dollar is mixed, with the yen weakening a bit, the Aussie rallying a bit, and emerging markets all over the map.  Equity markets are feeling better, with the Nikkei regaining 2.75%, Europe largely higher by more than 1% and US futures pointing to a higher opening.  Bond prices are mixed as well, with Treasury yields edging lower, but yields in Europe mixed and JGB yields higher.  In essence, we have no trends on which to hang our hat this morning, with each currency and product trading to its own internal issues.  In many ways, I feel this is the healthiest thing for markets, if traders and investors react based on data and news for each product.  But that is the hardest for any analysis to capture because of the disparate stories that exist.

The likeliest market movers this week are, in order, the FOMC meeting and press conference on Wednesday, any one of a number of pieces of US data to be released, and finally the G8 making some meaningful comments.

Here is the week’s data:

Today Empire Mfg


Tuesday CPI


-ex food & energy


Housing Starts


Building Permits


Wednesday FOMC Rate Decision


Thursday Initial Claims


Continuing Claims


Philly Fed


Existing Home Sales


Leading Indicators


I would expect that the Housing data have the best chance of driving a market move, if it misses in either direction.  And what of the G8?  It is hard to believe that given PM Cameron’s stated focus on Trade, Transparency and Taxes, that they will be saying things that impact FX markets greatly.  The Fed, on the other hand, will have much to say about where things go later in the week, and I will discuss that tomorrow.  For today, unless the Empire number is a big miss, the markets appear to be taking a breather from the recent market volatility.  On the surface, I still think the euro has difficulty rallying from these levels, the yen has ample opportunity to decline sharply by the end of the summer, and the pound has seen about all the good news it can handle.

Good luck

Deflating His Massive Bond Bubble

The Chairman is having some trouble
Deflating his massive bond bubble
His stated intent
Is to circumvent
The market collapsing in rubble

The consequences of the recent market volatility are that it is very difficult to figure out what’s next.  In the past three sessions we have gone from concern over the end of the world to an all clear signal.  Yesterday started with serious concern as the Nikkei had tumbled further overnight and European markets were roiled.  US data was certainly better than expected, with Initial Claims falling and, more importantly, Retail Sales showing more strength than expected, but it seems that it was a Fed planted article in the WSJ by Jon Hilsenrath that was able to turn sentiment.  In it, he explained that any Fed reduction of QE would be verrrrrry gradual and anyway, even when they finally stop buying, there will still be no raising of short term rates for a long time thereafter.   In fact, this morning there seemed to be more articles discussing the concerns over falling inflation in the US, or at least falling inflation expectations, than on anything else.  And that would imply increasing the monthly purchases, not cutting them back.  What I do know is that the Fed finds itself in a very uncomfortable position.  It has followed a policy that has not directly addressed its targets (which in fairness are not directly addressable), but which has led to a significant distortion in price signals in asset markets.  And any attempt to unwind this policy is going to result in very severe market responses.  This, my friends, is why market volatility is high, and why it is likely to remain so for a while yet.  The Fed is not done in its attempts to force the market to respond as it sees fit, and that process is inherently volatile.

So what does this mean for the FX markets?  My thoughts go as follows:

1)   EUR – This remains capped by virtue of its internal flaws, which are playing out every day.  There remains no reconciliation over the need for a unified fiscal policy to complement the single currency and unified monetary policy.  Throughout history, nations in trouble like Spain, Greece, etc have always been able to devalue their currency, suffer early consequences but simultaneously realign their labor productivity with global competitors and get their economies growing again.  But this arrangement doesn’t allow for that, and so the tension of the German led core vs. the peripheral weak links is going to prevent substantive strength here.  Despite trading at 1.33, I continue to believe we will see 1.25 before 1.35.

2)   JPY – The recent strength in the yen is a consequence of the market correcting its massive move since last fall.  The Abe – Kuroda plan of doubling the money supply is still going to have the desired effect of weakening the currency.  To me, this remains a timing situation, with the Upper House election on July 21 a key date.  Once that is past, and assuming Abe gains a strong majority there, as currently forecast by the polls, the Japanese will take the next steps toward aggressive fiscal policy and double down on their monetary policy actions leading to a much weaker yen.  If you add in the idea that US rates are likely to move higher over the summer, it simply adds to the case for USDJPY to trade back above 100 before Labor Day, and still achieve my 110 target by year end.

3)   GBP – The pound has seen less activity lately for two reasons, I believe.  First, it has run into pretty strong resistance at the 1.56ish level, and needs another catalyst to take any further steps higher, and second, with so much ongoing in the euro and yen, traders’ propensity to be active in the pound, which is much less liquid than the big two, is diminished.  There is no story crying out for a significant move here, and I don’t foresee one upcoming.  While the recent trend has been higher, and the UK economy continues to perform modestly better, I expect that we are more likely to drift back toward 1.54 in the next weeks than rally further.  When Mark Carney chairs his first MPC meeting in July, we can look for some fireworks.

4)   Commodity currencies – Aussie continues to underperform on the weakness in commodity prices and the uninspiring Chinese economic picture.  Growth forecasts in China continue to be downgraded, and monetary policy there seems to be tightening, which will lead to still weaker growth.  (Last night the Chinese Finance Ministry had a 9-month bill auction with bids for less than 2/3 of the planned amount signaling there is a lack of available liquidity in the economy.)  If Chinese GDP doesn’t pick up, Aussie has further to decline.  CAD on the other hand has performed pretty well during the past month as it benefits from the better than expected US data that has been showing up.  While we have been trading between 1.00/1.04 for the past six months, it appears that we are going to test parity again, implying further modest CAD strength.

5)   EMG – For the past several years these currencies were traded en bloc as almost a single unit.  Yield seekers were willing to buy into virtually any market if the nominal returns were high, regardless of the fundamentals underlying things.  But these days, we have seen a pretty steady outflow of funds from these markets, with another $6.8 billion leaving EMG funds last week.  These currencies are having to live on their own merits, which some can do much better than others.  MXN has rebounded smartly from its weakest point on Tuesday, as has ZAR, while both BRL and INR have lagged that rebound a bit.  During periods of increased volatility like we are seeing currently, history shows that these currencies will underperform.  I see no reason for that to change.  Eventually, investment will flow back to these nations and the currencies will strengthen again, but for now, a trend toward volatile weakness seems the most likely outcome.

Good luck

What Now Abe-san?

Like stones in water
The Nikkei sinks lower yet
What now Abe-san?

Japan continues to lead the market, at least with regards to generating stories about why volatility is increasing.  Another awful night for the Nikkei, down 6.4%, has led to a more than 1% rally in the yen, an increase in yen implied volatility to its highest point in more than 2 years, and a general increase in fear that the world’s central banks may have run out of tools to manage markets as they see fit.  Perhaps it is a good thing if they stop trying to micromanage the global economy and focus only on managing inflation, but I doubt any central banker in existence can do that.

So we have a combination of two key factors driving markets right now; first the Fed and the question of whether they will begin to ‘taper’ their purchases in the near future; and second, Japan and whether PM Abe has the ability to capture control of the Upper House of the Diet and use that increase in political strength to launch the stimulus and efficiency drive he has discussed.  Right now the market is basically clueless on both subjects, although I would contend that most pundits would say both things will happen, eventually.  But in life, timing is everything, and just what the timing of these actions will be is the wildcard.  Think about it, we are discussing the Fed reducing its stimulus at the same time the World Bank (along with every other global institution) is cutting its forecast for global growth.  Last night they lopped another 0.2% from their 2013 forecast, down to 2.2%.  We have seen reductions in forecasts for Chinese growth, Eurozone growth and US growth.  Emerging market economies have seen substantial outflows from both their bond and equity markets and EMG currencies have fallen sharply over the past three weeks.  Is this really the best time for Berdudlen to cut back?

And what about Japan?  Equities there have fallen more than 20% from their recent peak on May 23, which many define as a bear market.  Of course it is a bit ridiculous in my mind to say that a 3-week correction to a 6-month trend is actually a bear market.  It is a correction, one that is both necessary and likely healthy for the longer term prospects for Japanese stocks.  But it is painful.  And you must remember that the FX market is notorious for its extremely short term thinking.  So despite the prospect of things improving significantly after the election on July 21, FX traders are in full-scale panic mode.

Let’s recap currency movements vs. the USD since that Nikkei peak:















Emerging market currencies have suffered, but more against the yen than the dollar.  This remains very much a yen story for now.  The latest data shows that Japanese money managers have been liquidating both foreign bond and equity positions, down a combined $6.4 billion last week.  One of the key drivers in my view of a weaker yen was the likely outflow of Japanese investment.  It can be no surprise that the reduction in that outflow is resulting in a stronger yen.  But the question you need to ask is, will this continue?  I firmly believe that while the current market volatility can be harrowing, the underlying story remains one where Abe and Kuroda will push their agenda more aggressively within months, and that the yen will suffer at that time.  So yen receivables hedgers, don’t miss this opportunity.  The yen is not going back to 88 or even 90, it will find a base in the near future.

As to emerging markets, I continue to believe that current levels offer hedging opportunities for payables hedgers.

Later this morning we will see US Retail Sales (exp 0.4%, 0.3% ex autos) and Initial Claims (346K).  Are they likely to move the FX markets?  I don’t think the market is paying much attention to this data right now.  For this session, equities will be the key driver (SPU’s are down 6 points as I write), but really, I expect to hear some comments from Fed officials soon, as they cannot seem to allow markets to simply trade without imparting their ‘wisdom’.  And we all know that if the stock market rallies irrationally, that is the benefit of Fed wisdom, but if it falls, it is evil short sellers and speculators profiting at your expense!

Good luck

Failures in Greece

That very poor nation called Greece
Continues to shrink, to decrease
Their state asset sales
Have largely been fails
Perhaps they can offer a lease!

Markets are rebounding this morning from yesterday’s poor performance with a bit less fear in the air.  Of course, this only means that market volatility continues to rise overall.  The dollar has fallen against most currencies this morning, led by AUD and NZD, which have recouped yesterday’s losses.  Although why that is the case remains unclear.

In the G3 space, the euro is little changed this morning despite the twin Greek blows of the MSCI dropping the Greek stock market from developed to emerging market status, and the failure of Greece to garner any bids for Depa SA, its national gas monopoly, as part of its asset sale program.  But the FX markets seem to be able to ignore the Greeks for now, or at least drew solace from the fact that IP in the Eurozone overall rose an unexpected 0.4% in May, much better than the expected flat reading.  With equity markets rebounding and bond markets not actually declining this morning, that seems to be enough to encourage euro holders to stand pat.

In the UK we saw a better than expected employment report, with employment rising by 24K, but no change in the Unemployment rate, still at 7.8%.  However, the body of evidence from England continues to show improvement in the economy and the pound continues to benefit, up another 0.5% this morning to 1.5650 or so.  If you recall, this is the level I expected to reach, but am not looking for any further appreciation of note.  I guess the accuracy of that forecast will be determined shortly.

The yen continues to strengthen moderately vs. yesterday’s close, although compared to where it was when I wrote yesterday morning, it is actually a bit weaker.  There was virtually no news from Japan overnight, and the Nikkei, while closing slightly lower, showed less overall volatility than we have been seeing lately.  With no comments from any talking heads, the market has been left to its own devices, which for now means no significant movements.

In the US, we have another marginal data day, with just the Monthly Budget statement (exp -$136.5 Billion) which is rarely, if ever, an FX market mover.  More importantly, the Treasury auctions $21 billion in 10yr notes today (and $13 billion in 30 yrs tomorrow).  The results of this are likely to have the biggest impact on the FX world, but they won’t be known until early this afternoon.  As such, my gut tells me that the FX market is likely to be fairly dull this morning at least.  The caveat here is if we get some comments from Fed or other central bank members.

Right now, all eyes are on the Fed as market participants try to discern whether there will be a change in policy very soon, or just sometime during the rest of the year.  I maintain that no matter how much discussion there is, when the Fed does actually move, volatility will increase, treasuries will sell off sharply and equities will probably sell off aggressively as well.  Is that a story for today?  Almost certainly not.  But it is the background noise that won’t go away, kind of like the Cicada invasion that continues to hum in the background of everyone in the Northeast right now.

Good luck

Hopes and Fears

Amidst hopes and fears
Kuroda remained sanguine
No changes were made

The FX markets are a mixed bag this morning, with the yen reacting to the lack of BOJ activity by rallying sharply, but Aussie and Kiwi having both fallen almost as sharply.

The yen story by now is well-worn, with the market hoping for (although no analysts were expecting) further action by the BOJ to help moderate the recent JGB volatility.  There were calls for increased purchases of ETF’s or a tenor  extension of credit lines that banks use to fund themselves.  However, despite a sixth consecutive month of upgrading their economic assessment, the BOJ made no policy changes.  The Nikkei gave up some of yesterday’s gains and the yen recouped all of yesterday’s losses.  Is this the end for the yen move?  Not the one that calls for a much weaker yen.  At this point, my belief is that there is little desire to do much ahead of the Upper House elections in July, after which PM Abe should command a much more powerful position and will be able to launch his third arrow a bit more accurately.  Until then, I expect that we will see more range games, with 100 remaining hard to breach, but solid support at 94-95.  Longer term, nothing has changed in my view for the yen to trade to, and through, 110, but for now, not so much.  The only caveat to this range trade is the US Treasury market.  If we see 10 year yields start to break out to 2.50% or beyond, which seems feasible to me, I think Japanese investors will start to become more aggressive in their international portfolios, taking advantage of the better yield environment.  And that will lead to a weaker yen regardless of any further BOJ activity.

As to AUD and NZD, I think we can look to their classification as commodity currencies for a rationale as to their declines overnight.  Looking at the screen, pretty much every commodity is lower with the exception of Sugar and Soybeans, both of which are barely higher and neither of which is a critical component of the export baskets for the two nations.  CAD, too, is softer, although not as aggressively, and emerging market currencies, like ZAR and MXN are much weaker.  This price action doesn’t seem to be love for the dollar, rather it appears to delineate a discomfort in holding assets in this space.  What has been the key driver in the strength of these currencies, both EMG and commodity over the past two years?  The hunt for yield!  It has helped that most of these countries were in better fiscal shape, and that most were showing better macroeconomic performance than the US and Europe, but in general, investors were just responding to the combined efforts of the Fed, BOE, ECB and BOJ, who drove interest rates to zero throughout the US, Europe and Japan.  However, recent price action in the interest rate space has been quite a change in these countries.  Bond prices are falling as investors get concerned that 1.5% to 2.0% may not be a sufficient return for 10 years, while short term traders try to prepare for the eventual exit of many of these extraordinary monetary policy measures.  So can we be that surprised that there is a shift from EMG or commodity currencies to the G3?  I think not.  The key to remember with emerging market currencies is that despite improvements in many markets, they do not have the underlying liquidity that is available in the G3.  So when investors are leaving en masse, the movements in these currencies can be quite exaggerated relative to what you might see in the euro or pound or yen.  For those of you who are payables hedgers in this space, we are likely to see some pretty good opportunities going forward.  MXN at 13.50-14.00, or BRL at 2.20, or INR at 59.00 can all be terrific levels to lock in low expense ratios.  And remember, in almost every case the points will be favorable as well.

Finally, looking at the US story today, the data is virtually nil, just Wholesale Inventories (exp 0.2%), and SPU’s are lower by about 1% so pointing to a weak opening.  European bourses have fallen across the board, so it is starting to look like a classic ‘risk-off’ day.  To me, bond prices are the key, giving us the best indicator of market sentiment, so as long as Treasuries continue to soften, look for the dollar to perform well, even against the yen.

Good luck

The IMF Cried

In Europe the fighting’s begun
With Greeks wailing, look what you’ve done
The IMF cried
Don’t blame us we tried
But Greece is just so poorly run

The ECB took great offense
Insisting their rules made much sense
But Europe still trails
As weakness prevails
And no one’s come to their defense

The dollar is rocking this morning, rallying against almost all currencies with some pretty large movements seen.  It looks like the catalyst for this was the revision higher in Japan’s Q1 GDP report, up to an annualized rate of 4.1%.  This has bolstered Abe and his policies, helped the Nikkei rally almost 5% and reinvigorated the idea that Japan may yet escape their morass.  USDJPY is back to 99.00, a rally of ~1.5%, and as you all know, I continue to look for that move to 110 by year end.  We continue to see significant volatility in Japan, but if Q2 growth can follow Q1, I believe that will help mitigate some of this price action.  There is a long way to go before that, however, with the BOJ finishing their meeting this evening, (no policy changes are expected), the Upper House election on July 21, and uncertainty prevailing over what is happening in both Europe and the US.  Receivables hedgers in Japan need to be taking advantage of this correction, for the long run trend remains for a much weaker yen.

In Europe, the biggest story has likely been the IMF’s mea culpa about how it handled the Greek bailout, now recognizing that perhaps their standard prescriptions were not so effective.  I’m sure the Greeks, mired in a 6 year Depression, feel much better about those comments!  To me, the interesting thing is that the Troika is being taken to task for its actions, yet the other two members are unwilling to admit any policy errors.  In fact, Signor Draghi has been adamant that everything the ECB has done has been splendid.  However, Europe is still in the grips of its longest recession since the EU was formed, 6 quarters and counting, and at best, the data remains mixed.  While French IP was a bit better than expected, Italian IP was worse than expected.  There is no consistent growth and thus far, no plans have been proffered that would change things.  While the euro has held up reasonably well overnight, I continue to expect 1.25 before 1.35, with there being no good reason for the euro to rally on its own, and with talk of the Fed ‘taper’ likely to underpin the dollar for now.

So let’s discuss the taper.  The Fed planted a John Hilsenrath article in the WSJ over the weekend to encourage more market discussion on the subject.  What seems to be clear is that the Fed has become somewhat uncomfortable with just how large their balance sheet has become.  The Krugmanesque idea of printing money ad infinitum may be reaching its conclusion.  Certainly the Fed hawks; Plosser, Fisher and Bullard have been consistent in their criticisms, but it is the doves’ comments that lead one to believe there will be action this year.  I have maintained that unless Berdudlen changes their tune, nothing will change, but Dudley seems open to an adjustment before the end of the year, and even Chairman Ben seems to have hinted at that in his last testimony.  If Yellen makes any comments this month about tapering purchases, then I think we will need to re-evaluate the situation, but so far, despite some obvious misgivings on the FOMC, it seems they will continue to sop up $85 billion /  month of paper.  And Treasuries are still falling!

The dollar is benefitting in general from the taper discussion, with only CAD and NOK modestly stronger on the day in the G10 space, and pretty much the entire EMG space weaker vs. the USD.  In fact, we have seen some pretty large moves, with ZAR down more than 2% and INR falling just under 2%, to a record low.  The INR story is one of continued concern over its economic fundamentals, a growing C/A deficit, no budget control and rising inflation hindering the RBI’s room for maneuver to address the macroeconomic problems in country.  ZAR seems to be responding to the consistently weaker commodity prices that we have seen since China released weaker than expected data over the weekend. (Exports were soft, Imports fell and IP was soft).  Concerns over a continued slowing of Chinese growth are going to hit most EMG currencies, so keep that in mind for now.  Longer term, I believe we see a rebound, but the market view for now is bail out and be happy.

With no US data today to drive things, and the week pretty light overall, I expect a modest continuation of USD strength.

Good luck