LiveWire

The euro-franc pair has “tracked the move lower in European real yields very closely, as the SNB has not intervened in FX markets to counter the CHF appreciation trend,” Morgan Stanley strategists including John Kalamaras said. “Overall, the market seems under-positioned for a move lower in the franc if U.S. and global yields start moving higher again.”

Weakness in the US dollar over the past year has been an extra boost to US corporate Q2 results thanks to overseas earnings

The Australian dollar, the Canadian dollar and Britain's pound retreated, while the dollar gained as investors doubts over the reflation trade are growing. Sterling hit a 3-month low against the dollar of $1.3712. The Canadian dollar hit its lowest at C$1.207 against the U.S dollar. Source: Reuters

In general, when the USD/CNY spot rate went up, the CSI 300 Index tended to drop. We are now experiencing a similar situation where the dollar is strengthening while Chinese equities are starting to shake. “Some portfolio managers buy foreign equities on an unhedged basis to benefit from the upside in the currency. When there is no clear view that currency appreciation is at hand, that could be a big headwind for Chinese equities.”

Latest #IMF COFER data show global FX reserves (ex-#China) allocated to #RMB continues to rise hitting all time high of 3.1% in Q1 2021. I expect RMB share head towards a 4-6% range, putting it closer to GBP and JPY allocations. That would see more inflows into onshore bonds.