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THE FOREIGN EXCHANGE MARKET is the most liquid market of all. The market is always on and is largely organic [unlike for example the Gold and Crude Oil markets where we witness inorganic moves with some frequency] except for the early hours when liquidity is thin and Gremlins stalk the fx markets.
Forex markets had a daily turnover of $6.6 trillion dollars in 2019, up from $5.1 trillion in 2016.
The total value of the forex industry increased from $1.934 quadrillion dollars in 2016 to $2.409 in 2019
The United States Dollar (USD) is on one side of 88% of all forex trades.
$2 trillion worth of spot transactions traded daily in foreign exchange markets. After spot fx,
the instruments with the largest daily turnover are:
Forwards $1 trillion
Foreign Exchange Swaps $3.2 trillion
Currency Swaps $108 billion
Options and others $294 billion
Andy Warhol's 200 One Dollar Bills sold at @Sothebys in 2009 for $43.8 million.
I include andy Warhol because he managed to monetize the FX Market as effectively as the likes of George soros and Stanley druckenmiller amongst others.
There is a marvelous song by Deee-Lite – called Good Beat
And it begins
Depending on [how] you see a thing
Deee-Lite - Good Beat
Depending on you see a thing
The ship is free, or is it sinking?
Depending on how you see it
You cage your mind, or you free it.
Depending on how you see the times
The world divides or it closely binds
AND ITS CLEAR THAT THERE ARE MANY MOVING PARTS. LETS START WITH THE UBIQUITOUS DOLLAR.
AS I WRITE THIS PIECE THE DOLLAR INDEX $DXY IS TRADING JUST BELOW 103.50.
I AM EXPECTING THE INDEX TO RALLY TOWARDS 110.00 BECAUSE WE HAVE UNDERGONE A REGIME CHANGE
$ REGIME CHANGE
THE PRINTER HAS BEEN SHUT OFF
THIS IS A BIG DEAL THERE IS A GREAT DEAL OF SCEPTICISM AROUND THE LONGEVITY OF THIS SHUTDOWN BUT THE UNANCHORED INFLATION RATE HAS BROUGHT POWELL TO HIS VOLCKER MOMENT.
MORE IMPORTANTLY FROM A GEOECONOMIC PERSPECTIVE THERE IS A STRONG CASE FOR THE US TO FLEX THE $ ESPECIALLY IN AN ENVIRONMENT WHERE THE UKRAINE SITUATION WILL REMAIN UNRESOLVED FOR THE FORSEEABLE FUTURE AND COMMODITY PRICES AND COMMODITY INFLATION ELEVATED.
FED goal of $95 billion per month of balance sheet runoff will be. split between $60 billion of Treasuries and $35 billion of MBS
The Federal Reserve signalled it will likely start culling assets from its $9 trillion balance sheet at its meeting in early May and will do so at nearly twice the pace it did in its previous "quantitative tightening" exercise as it confronts inflation running at a four-decade high.
This time, the annualized monthly rate of reduction works out to more than $1.1 trillion a year in balance sheet roll-offs. That means it will likely surpass the total of the entire 2017-2019 QT cycle by the end of this year or early 2023.
Many economists see officials targeting about $3 trillion in total balance sheet shrinkage over a three-year span
US Inflation REMAINS ELEVATED @mrmike7
CERTAINLY INFLATION SHOULD TAPER SOME BECAUSE OF BASE EFFECTS AS JOHN AUTHERS HAS NOTED BUT THE OVERARCHING POINT INFLATION IS OFF THE CHARTS.
a trimmed mean measure prepared by the Dallas Fed, excluding the biggest outliers in either direction, shows month-on-month inflation dipping back to conscionable levels after an extreme spike earlier in the year:
However, there’s at least one solid reason for hope that we’ve seen “Peak Inflation” — base effects are about to get very favorable. Year-over-year inflation numbers for each of the next three months will see a month of very bad inflation from last year drop out of the equation. Therefore, the eye-catchingly high numbers of late should soon moderate. The peak should be in.
I EXPECT $TNX YIELD TO TARGET 4%+ @ZeroDarkTradin1
THEREFORE, I EXPECT THE $ TO CONTINUE TO RALLY AND TO BROADEN OUT. I DON’T THINK YEN AT 150. 00 IS BEYOND THE REALMS OF POSSIBILITY WHICH IN TURN WILL PUSH THE YUAN LOWER AND THE CROSS CONTAGION EFFECTS ACROSS THE BOARD ARE VERY HIGH, PREDICTED AND PREDICTABLE
I ALSO EXPECT THE RUBLE TO CONTINUE ITS RALLY. @sudyk
russian Ruble Euro @JONATHANSAYEB
I REFER YOU TO MY ARTICLE
Sunday, April 10, 2022 Apocalypse Now
‘’You can print money, but not oil to heat or wheat to eat’’ wrote @CreditSuisse’s Zoltan Pozsar.
Russia essentially gave the Euro the very same exorbitant privilege that King Abdul Aziz Ibn Saud of Saudi Arabia gave President Franklin D Roosevelt aboard the USS Quincy in Great Bitter Lake in February 14, 1945 when the petro dollar economy was symbolically born.
By insisting payments are made in Russian Rubles for Russian commodities Vladimir Putin has withdrawn that exorbitant privilege.
The Russian Ruble rally is real and has much further to go.
I EXPECT parity $eurusd imminently
$EURUSD Wkly Chart: Euro, has pushed through the 2008 crash trend-line and is about to break through that very LARGE descending triangle wedge. If I do a measured move off that wedge pattern, the projected move down is CRAZY. That measured move is saying, there is no market. @FXPIPTITAN
Emerging and frontier market currencies are at the bleeding edge.