Problems in China
The early August somnolence has been rudely interrupted by the extreme fallout in Chinese equities that we have witnessed over the past 9 trading days. The market that was already looking weak was totally spooked when the Chinese authorities allowed the Yuan to devalue by 2.3% last Monday and the wheels have been off since.
Malayan Ringgit hit hard
The effect on the FX market has been predictable with weakness in both commodities and commodity linked currencies with the Malayan Ringgit hardest hit but even more mainstream casualties including the South African Rand and the antipodean pair. On the other hand the flight to the Euro and Japanese Yen out of the dollar was not so easy to see.
Good call Mr. Tsipiras?
Charts would indicate further progress for both currencies unless and not impossibly the China syndrome suddenly rights itself and proves to have been a mild case of midsummer madness. Back in Europe Mr. Tsipiras has taken a gamble with his call for a General Election. Looks a good call; he should win and this will put another plank under the resurgent Euro. The opportunity for long starved Euro sellers is nigh and some hedging should be considered at current levels.