Once again the 'fake' FX stability of pre-geopolitical-events has ben shattered now that the G-20 meetings ended with their usual un-fanfare of nothingness (and rising discord). After exuberant status-quo-supporting weakness in the Yen and stability in the Yuan (against the dollar), that's all coming unglued rapidly in the last 36 hours as USDJPY tests back to a 104 handle and Yuan resumes its weakening trend…
As Bloomberg notes, history shows that the Chinese currency usually strengthens ahead of major political or economic events, such as President Xi Jinping’s state visits to the U.S. and the Boao Forum.
And sure enough, as soon as G-20 is overm Yuan starts to weaken again…
And USDJPY has tumbled back to a 104 handle… (down 3 handles from pre-G-20 highs), back below Brexit levels…
As a reminder, geopolitical risks are surging…(and not priced in)
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