Putting the use of the word ‘crisis’ in context

Last Friday September 23rd, the British Pound started seeing accelerated weakness against various currencies and most prominently against the U.S. Dollar. The ‘noise’ of calling it a crisis continued on Monday September 26th.

Readers of the September 24th edition (last week’s) of ‘Macro Extremes’ would have seen the GBP was already featured in the Oversold section.

From its close of 1.1256 on Thursday September 22nd it has fallen to an intra-day low of 1.04. Albeit a 7.5% move within 2 days is worthy of note.

Today, the GBP/USD is almost back to its price seen (1.1168) on that Thursday. Quite a roundtrip but hardly a crisis and more appropriately a reminder to taking a look if prices were already at an extreme and understanding if this is a continuation of an existing downtrend or an exhaustive move which catches the ‘noise-worshippers’ out?

On the week, the GBP/USD rose 2.8%.

Yet….we don’t hear the word ‘crisis’ being bandied about.

Some FX traders have lost 6% in a week, shorting the British Pound against the USD, at its lowest ever level.

Cleverly, I hope there were many bought Sterling at Sterling at what was nearly a 4-sigma event.

The previous all-time low vs USD was 1.0545 seen in March 1985.

Inversely, this past week we saw the Australian Dollar fall 3.1% against the Euro, it sank 4.7% versus the British Pound, declined 1.9% compared to the USD and has fallen 5.2% against the Yen in the past 3 weeks.

Once again, perspective and context is advised.

October 2, 2022

by Rob Zdravevski

rob@karriasset.com.au

AUD high against Yen, Euro and Sterling

It is an appropriate and strategic moment for Australian Dollar importers and/or speculators to sell (a tranche of their intended or required) AUD and use it to either buy Euro (EUR), British Pounds (GBP) or Japanese Yen (JPY).

The (multi-timeframe) bullish trend for the AUD (against these currencies) remains intact as they register 5-7 year highs against these crosses.

It’s more perverse that the AUD is weak against the USD….and whilst it finds a floor, a rise in the AUD/USD (DXY is Overbought) will aide a few more percentages for an additional tranche of buying more EUR, GBP or JPY.

September 12, 2022

by Rob Zdravevski

rob@karriasset.com.au

Cheaper UK equities coming

I am bullish on UK equities

Today, the UK’s FTSE 100 Index is trading at 6,189 while the

the British Pound (GBP) against the US Dollar is at 1.2260.

At this moment, I am anticipating lower prices in both.

However, I’m not interested in shorting anything but instead preparing to acquire some favoured UK stocks at cheaper prices.

So, I’m taking excess GBP, converting it to USD and waiting while the UK market becomes cheaper in GBP and USD terms.

Odds are increasing for a pullback to 5885 in the index which is 5% below current levels.

Failing that, I’d then look for a test of 5510.

30 June, 2020

by Rob Zdravevski

rob@karriasset.com.au

#GBP #FTSE100

This is not personal advice. Seek your own advice.

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