Oct 14, 2020

Thomas Thornton

Some quick thoughts before the open

As noted on Sunday, weakness in the oil market has helped send US treasuries bid, led by the long end.

All eyes on the us dollar

China has lowered its FX reserve requirement to zero from 20% in an effort to stop the Yuan appreciation on Monday. Yesterday they also announced that they were going ahead with a $6B USD bond offering. Clearly, they are facing a USD shortage, and they are not the only country. If we look at the USD futures chart, we have formed a classic bullish cup and handle pattern. If the dollar starts to gain strength, likely 94 resistance will be broken and this could put some headwinds on the broader markets. A move back to 92 would negate this pattern.