Global Markets Slide as AI, Crypto, and Precious Metals Face Heightened Volatility 
Japan Economy Poised for Q4 2025 Growth as Investment and Consumption Hold Firm 
RBI Holds Repo Rate at 5.25% as India’s Growth Outlook Strengthens After U.S. Trade Deal 
Trump Signs Executive Order Threatening 25% Tariffs on Countries Trading With Iran 
Vietnam’s Trade Surplus With US Jumps as Exports Surge and China Imports Hit Record 
Russian Stocks End Mixed as MOEX Index Closes Flat Amid Commodity Strength 
South Africa Eyes ECB Repo Lines as Inflation Eases and Rate Cuts Loom 
Asian Stocks Slip as Tech Rout Deepens, Japan Steadies Ahead of Election 
U.S. Stock Futures Slide as Tech Rout Deepens on Amazon Capex Shock 
Dollar Steadies Ahead of ECB and BoE Decisions as Markets Turn Risk-Off 
U.S.-India Trade Framework Signals Major Shift in Tariffs, Energy, and Supply Chains 
Gold Prices Slide Below $5,000 as Strong Dollar and Central Bank Outlook Weigh on Metals 
Dow Hits 50,000 as U.S. Stocks Stage Strong Rebound Amid AI Volatility 
South Korea’s Weak Won Struggles as Retail Investors Pour Money Into U.S. Stocks 
Silver Prices Plunge in Asian Trade as Dollar Strength Triggers Fresh Precious Metals Sell-Off 
India–U.S. Interim Trade Pact Cuts Auto Tariffs but Leaves Tesla Out 
Gold and Silver Prices Slide as Dollar Strength and Easing Tensions Weigh on Metals 
The strategy for trading EMFX encompasses a mixed bag. It is generally pro-risk through exposure to high yielders but with a modest long dollar bias by shorting low yielders that offer little value either from a carry or fundamental perspective (complete list of trade ideas in Trade Monitor). This balanced approach remains prudent.
China: January FX reserves fell a touch below US$3 trillion. China’s FX reserves declined by US$12.3 billion in January to$2.998 trillion, a touch below the psychologically sensitive US$3 trillion threshold to mark the lowest level since February 2011, down from aUS$3.993 trillion peak in June 2014.
While January trade report points to benign near-term exports trend.
Taiwan trade activity eased in January, partly on seasonal factors.
Risk on price action in EM FX overnight; for now (and absent a catalyst), it is hard to fight the trend, especially in high yielding space. It seems like any risk premium related to Trump is evaporating and there is no longer any concern about the Fed, Chinese growth, or CNY.
Reduction in risk premium is being supported by improving fundamentals – growth dynamics improving across an EM aggregate and return on assets perking up from the mid-2016 low.
While South Korean Housing market indicators softened.
Household lending likely accelerated further in Q4’16.
Next week: Trade prices and unemployment rate.
Trade recommendations:
The long dollar risk is selective and focused on low yielders (except CNH) and mostly via options.
Long USDKRW via 1x2 call spread: Good entry point with 61.8% retracement level from the September low to December high coming in around 1136. 1x2 structure improves max leverage to 9 times from 3 times in a 1x1.
Long USDSGD: via a one-touch: Worried about French elections and EUR parity? SGD 3m implied vol about 40% cheaper than EUR vol.
Long USDCNH via a 1yr seagull: Expensive to bet against the CNH. Seagull provides upside exposure that is cheapened significantly by selling expensive 1-year vol.
Long USDTWD: Tactical position to fade YTD strength in TWD; could face more formidable support above the May 2015 low (30.39).
