Don’t Even Blink And Don’t Look Down – IDR, MYR, PHP

We are reminded of our own insignificance when we see wonders in nature and gaps in the USD/IDR, USD/MYR and USD/PHP charts like these ones.




usdmyr gap


usdphp gap

Is the world is rushing back to Indonesia et al. ?

Quite a challenge to imagine that happening even as we see gaps in the fx charts as broad based buying across all EM currencies is the strongest for the 6 weeks of 2014.

This sort of support would typically lead to re-benchmarking for end Feb by the mutual funds which could translate to a 5% rally in the S&P 500 and up to 10% rally in EM equities, according to Citibank.

A friend reminded me that we are in this for the short term and its useless to consider issues like Chinese shadow banking problems or current account deficits because they are simply noise that do not warrant the immediate attention of a typical trader.

So lets focus on the good things for now.

We have the G20 finance minister’s meeting this weekend in Sydney which is starting to look like a deadlock and finger pointing game, a highly understandable outcome when there is no common enemy left to fight. Given that Europe is looking peakish and about to erupt into political fracas with the recent German court comments on the illegality of the ECB’s bond buying activity that is now deemed by Moody’s to be credit negative, we have China saving the day with record new credit growth and poor economic numbers out of the US to help keep our hopes alive. As for Japan ? Let’s not imagine too much.

The gaps are not caused by us, its them – US, Europe, UK, Japan and China.

And as long as the attention is kept on the G10 or 20 (till this month end), USD/IDR, USD/MYR and USD/PHP will hang in there.

I would be taking profits for now. You may miss it if you keep looking down.