Trying to hear what's not being said
June 26, 2025 Leave a comment
The Euro is trading at a rare pricing extreme (according to my metrics and work) compared to the U.S. Dollar, seen for the 7th time in 25 years.
Inversely, the U.S. Dollar is at a monumental low against the EUR.
Europeans should be buying American assets, should they think their capital is either welcomed or will be treated well there…….
June 26, 2025
rob@karriasset.com.au
April 24, 2025 Leave a comment
Enough for the Euro, for now.
Here are the 5 moments over the past 10 years when the Euro has traded at particular extremes against the U.S. Dollar.
April 24, 2025
rob@karriasset.com.au
January 19, 2025 Leave a comment
The #Swiss Franc versus the USD has traded down to its lowest point since March 2023.
That’s just a price point fact, nothing more.
The Swissie is in a downtrend and it still has strength. It’s out of favour.
‘We’ love to sell the Swissie when risk is ‘on’,
but I think the medium low is near if it doesn’t make a new ‘lower low’.
If it does, we should see a quick visit to the 1.0680 region and that would be an attractive buying point.
but also, I’m observing some divergence in the #Swissie compared to other assets.
January 19, 2025
rob@karriasset.com.au
September 27, 2022 Leave a comment
This chart updates the percentage which the DXY Index is trading above its 200 Month moving average.
Rare air indeed !
This may be the 7th inning, 8th or 9th….but it’s not the top of the 1st.
Incidentally, We are days away from closing the quarter and U.S. corporate earnings will be reported soon after. A reminder to look for management commentary in their earnings call about the effect the strong U.S. Dollar is having on their results.
The strong dollar is something the United States needs to be wary of because prolonged strength is adding to the probability of sustained inflation.
Commercial and military aircraft are costing the rest of the world let alone other U.S. goods and services.
More importantly, the majority of the major commodities are priced and traded in U.S. Dollars.
Rather than the Bank of Japan intervene and spend $21 billion (which is slightly more than the $15bn in U.S. aid sent to Ukraine) to buy and support their Yen…..
and rather than wait for the U.K. government or the Bank of England to crank up rescue packages to support the British Pound…
perhaps the U.S. Treasury (Janet Yellen) should start making announcements designed to weaken their currency?
Such action may possibly help your ‘friends’ in the G-10; help your own bond market (your cost of capital) and make the world a better place.
Keep in mind that a U.S. 10 year bond yielding 3.85% in isolation isn’t a concern until you ponder that the bonds of other nations are seemingly trading a ‘better creditworthiness’ of 3%.
But then again, the market may end up fixing it all for you.
September 27, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 27, 2022 Leave a comment
The Bearish USD ETF is exhibiting extremes including being at the higher quintile of historical percentages which it’s trading below its 200 week moving average.
Anecdotally, all I am hearing is about U.S. Dollar strength. Now (the financial media) are calling referring to it as “King Dollar”.
Remember when 2 years ago, they were calling the demise of the U.S. Dollar?
September 27. 2022
by Rob Zdravevski
rob@karriasset.com.au
September 15, 2022 Leave a comment
This week’s note highlighted USD currency headwind risk.
So, Oracle’s ‘currency headwind’ equated to nearly 15% of its quarter’s earnings.
No small change and it is a factual effect that the U.S. Dollar’s strength is having on American corporate earnings.
An extract from Oracle’s Q1 Fiscal 2023 earnings transcript is,
“The currency headwind this quarter was much higher than the 3% headwind that was present when we gave guidance. It was actually 6 points, even though due to rounding, it may look like 5%, and that’s a currency headwind to total revenue. It was, in fact, 6 points. And yet, we still exceeded our forecast on a reported basis, and we beat our constant currency revenue forecast by $200 million. We saw similar currency headwinds in EPS, which had an $0.08 negative effect, much worse than the $0.05 headwind present at the time of guidance in June.”
But with present USD strength being extended and stretched, in the spirit of positioning for ‘where the puck is going to be’, I’ll look for the contrarian effect to company earnings in the coming quarters.
In the meantime, well run Japanese companies should be ‘minting’ profits from their increasing competitive position of having a monumental weaker Yen.
September 15, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 14, 2022 Leave a comment
The chart below shows the U.S. Dollar at a historically stretched moment of strength.
Such extreme percentages above its 200 week moving average coupled with weekly overbought readings also coincide with a peak in the Australian 2 year bond yield and a trough in the CRB (commodities) index, to only mention a couple.
September 14, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 12, 2022 Leave a comment
And the corporate effect of what todays earlier currencies post translates to…..
Aussie companies selling products into Europe, the UK and Japan have been seeing weaker receipts, while those selling to U.S. customers or in USD denominated products (commodities) are booking handsome profits on favourable currency differentiation.
Japanese and European assets are considered cheap for holders of Australian Dollars while Americans (and their corporations) may see Australian assets as being ‘on sale.
Expect those respective benefits to wane while these ‘extreme’ currency movements correct and consolidate.
On a side note, the almighty strength of the U.S. Dollar seems to be a surprise……
2 years ago, I wrote this note when I remember reports of the pending death of the U.S. Dollar to be palpable.
Today, there doesn’t seem to be an opposite case against the bullish prospects of the U.S. Dollar.
September 12, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 8, 2022 Leave a comment
Peaks in the USD/AUD have corresponded with troughs in the CRB Index (give or take 1-3 months)
Keep in mind that the Commodity Research Bureau (CRB) Index calculates the pricing of a basket of 19 commodities with energy contracts comprising nearly 40% of the weighting.
In my recent writings and observations, the energy complex is the last holdout in the current mean reversion in commodity prices.
This and the markets are currently telling me……
1) the USD strength is closing in on a peak, while allowing for one more surge higher (read: probability that AUD sympathetically moves a little lower too)
and
2) I expect energy prices to have one more lower leg or wave (RBOB Gasoline has nearly completed its)
So, I am preparing for another moment where this peak and trough synchronise.
September 8, 2022
by Rob Zdravevski
rob@karriasset.com.au
September 8, 2022 Leave a comment
Adding to last week’s post about the extreme move in the U.S. Dollar’s pendulum…….
…..the chart below reiterates moments when the U.S. Dollar Index (DXY) hits a Monthly RSI Overbought reading along with a 2.5 standard deviations above its rolling monthly mean……
but I have also added a notation to the chart showing the percentage amount that the DXY was/is trading above its 200 MONTH moving average.
The emphasis in this study is that it’s on a Monthly basis, being much longer than my usual ‘weekly’ observations. Day traders need not apply.
September 8, 2022
by Rob Zdravevski
rob@karriasset.com.au
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