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EGB Supply For W/C Sep 20, 2021


Familiar Lines In the Sand In Play For USD/JPY


Bearish Cycle Still In Play


Late on Friday Goldman Sachs noted that the wide margin in current 2020 U.S. Presidential election polls "reduces the risk of a delayed election result, and the prospect for near-term COVID-19 vaccine breakthroughs may provide a backstop for risky assets. Lower-than-expected vaccine efficacy is also a risk, although this would probably push the recovery timeline back only about one quarter, due to the large number of additional vaccines under development. We therefore see the risk/reward as leaning strongly Dollar-negative into year-end, and are issuing two new USD short recommendations: (i) long a roughly vol-weighted basket of MXN, ZAR, and INR, and (ii) long an equally-weighted basket of EUR, CAD, and AUD (initial total return targets of 8% and 5%, respectively; the EM trade carries +4% per annum). We also keep open long recommendations in CNY (through our unhedged CGB trade) and KRW (through our long Kospi trade). In our view, a "blue wave" U.S. election and favorable news on the vaccine timeline could return the trade-weighted Dollar and DXY index to their 2018 lows."

MNI London Bureau | +44 0203-865-3809 |