A Trade War Currency Play

Published on
February 4th, 2019
Duration
13 minutes

A Trade War Currency Play

Trade Ideas ·
Featuring Joseph Trevisani

Published on: February 4th, 2019 • Duration: 13 minutes

Joseph Trevisani, senior analyst at FXStreet, evaluates the political dynamic between the U.S. & China and considers two different ways to play the current setup. He notes two specific currencies that should benefit as trade tensions begin to ease, in this interview with Justine Underhill. Filmed on January 31, 2019.

Comments

  • RT
    Roy T.
    26 August 2019 @ 15:12
    I guess he was wrong on the AUD. Both Xi and Trump are overplaying their hands and neither will back down easily.
  • js
    jeffrey s.
    12 February 2019 @ 04:11
    The latest TIFF report confirms his fundamental analysis. However, given Trevisani's reasoning from the last show, I'm trying to figure out why he is not looking at a eur/cad short.
  • BH
    Bernard H.
    7 February 2019 @ 01:02
    Well notwithstanding the longer term outlook it looks like both his $AUD and Loonie trades are underwater. There are far more headwinds than tailwinds for the Aussie right now.
  • DR
    David R.
    6 February 2019 @ 01:13
    From a technical perspective, I agree with both of Joseph's trades! For added juice and conviction, I'd consider long some EM commodity currencies against USD. For example, if you can trade it, short USD/MYR, which is already down a big 11-cents recently. But easier and thus maybe better to choose, as he has, the AUD instead of MYR as a china proxy. But beware the deteriorating China-Oz relationship (see below). In contrast, Myr and China are friendly. Good luck!
    • DR
      David R.
      6 February 2019 @ 01:16
      Follow up... Note that AUD is big in metals like copper & iron. MYR is big in oils. I mean there's some correlation with those, so these FX can be effected by moves in the corresponding commodities.
    • DR
      David R.
      8 February 2019 @ 09:59
      FOLLOW-UP .... Short USD/MYR is working well as it's fallen 8 cents in the last 9 trading days. A technical breakdown below support plus follow-thru incl a substantial drop this week, despite USD having a broader recovery this week and oil softening. This has been among the best FX moves of late but will it continue?
  • TG
    Timothy G.
    5 February 2019 @ 20:32
    Short Term - 12-18 months - AUD and CAD should start to come under extreme pressure due to RE declines, over-indebted consumers causing consumers to pull back and loose confidence - Recession in both economies coming 2019. I think LONG USD vs CAD/AUD for a few years before getting back into AUD and CAD dollars as reflation of Commodities being in 2021/2022
    • DF
      Dave F. | Contributor
      5 February 2019 @ 20:51
      Sounds like real estate to me but when and at what price. It is hard to disagree and China is just a second order issue. John Taylor
    • DR
      David R.
      6 February 2019 @ 01:27
      RE in east Asia is expensive compared to Aus and Canada. The latter's price declines have been engineered by government measures, intentionally. If politics causes either gov't to reverse course like the flip-flop Powell, then Asian cash flows into RE in Canada or Oz could roar back and press RE prices back up. Much politics involved, thus hard to predict IMO.
  • BP
    Byron P.
    5 February 2019 @ 05:55
    thanks for your money Jo
  • CT
    Christopher T.
    5 February 2019 @ 05:24
    contrarian position. consensus is short CAD and AUD.
    • DR
      David R.
      6 February 2019 @ 01:05
      Really? But as you know, the retail consensus is usually wrong. COTs, DSI, etc.
  • SH
    Steve H.
    4 February 2019 @ 17:25
    Sold to you, mate.
  • DP
    Devraj P.
    4 February 2019 @ 16:33
    Don’t think that trade disputes were raised only for economic standpoint hence deal or no deal wouldn’t change long term output of business cycle. I would say more to do with dominance in global technology advancement and opening markets for US is a significant demand that impacts long term vision of CCP. Won’t come to any significant agreement even in March deadline. Time will be telling .
  • PB
    Paul B.
    4 February 2019 @ 15:42
    primary driver of Australia and Canada is all the laundered dirty money from corrupt chinese officials and secondary escape artist Chinese citizens. That dirty money could be cut off soon or already.
  • HO
    H2 O.
    4 February 2019 @ 14:47
    RV needs some new voices on FX.
    • PC
      Peter C.
      6 February 2019 @ 00:17
      second
    • DR
      David R.
      6 February 2019 @ 00:44
      Yes, but that's not a negative reflection on those currently. Just want more please.
  • LS
    Leigh S.
    4 February 2019 @ 10:22
    That is a very aggressive call. Most of us have been on the other side of the AUD and see 65 as the handle. He may be right about the US/China trade agreement but I am not convinced that will give the boost to the China economy that flows to Aust and Canada. Time will tell as always.
    • VD
      Viknesh D.
      4 February 2019 @ 12:51
      I agree. I’m on the other side too
    • DR
      David R.
      6 February 2019 @ 00:58
      China has already banned various commodity imports from Canada (grains, oil) due to the Meng kidnapping in Canada for extradition to US for allegedly selling an inconsequential amount of product to Iran, in violation of US sanctions on Iran that the UN and every country in the world (except the US) has officially rejected (thus Europe continues to do business-as-usual with Iran despite US sanctions). Should Australia ban Huawei, Chinese papers state China will respond as they have with Canada by banning Australian commodity exports to China, as well as possibly blocking passage of Australian shipments through the South China Sea, as arranged between China and its close ally & oil supplier, Malaysia (which owns the Straits of Malacca, the very busy key shipping route between the Pacific and Indian Ocean - Middle East - Europe). China has arranged alternative sources primarily from South America to replace Australian copper, iron and agricultural products.