It seems to be more about capital preservation here right now. At a time when it's hard to find places to hide. How are you
reading into this. Yeah I do agree with Marc's perspective. In a sense also in the
affects market I think nobody really wants to stand in front of dollar strength. Given how hawkish the Fed is and
very similar to the perspective from Mark is that we know the Fed is going tough at least for the next two to three meetings
May June fully priced in for 50. The language is actually not going to soften until they get to a point somewhere in the
quarter tree that after say two tree steps or 50 you get inflation finally easing into the second half. You get a bit of
growth decelerating as well. Then we can perhaps talk about an inflection point in the US dollar when the Fed softens the
hawkish message and that the attention then turns into Europe being a better place. Tensions being on the subsiding trend. So
I think it is still a year of two halves in the next three months. We will still be looking for more dollar strength but
the this safe haven demand for the dollar is likely to actually gradually through the second half and into the later part of
this year. And this week really has been that breakout in China that
everyone seems to worried about. I know we're seeing a big stabilization here today tech. I have to wonder though what
gauges what what indicators do you look at to ensure that this yen depreciation that we have been seeing is inspiring out of
control. I think the most important concern from the markets is that is
this an active devaluation by the officials. Or is this simply a reset of the exchange rate. Given how dire the economic
situation is in China the key question is that
as long as it is not Chinese officials actively pursuing currency weakness in an attempt to boost exports or boost growth
trade US auto markets in general will be quite relaxed about the magnitude of the challenge and precision. And I think of
conflict as earlier this week when we saw that BPP Yossi lean against the weakness order to speed up the weakness of the
Chinese yuan by lowering the foreign reserves to release a bit of the dollar liquidity back into the
market. So that is actually a sign that it is. They are not intending to weaken the currency. It is probably just weakening
for four or five reasons and it would be quite moderate. That's right and above all else China wants a stable currency.
They'll let Mr. Yuan weakness. What's what's fair value for the yuan.
Well I think it is pretty fair already just from a bigger perspective. Covid account is in the low single digit and they
are they did they have transition from a dollar peg regime to a tree with Egypt since 2015.
They are not overly controlling the currency because fixing pattern seems to be in line with what the market is expecting
based on trade weighted movements. So I think the answer to that question is that it is actually pretty fairly valued. Now
obviously the fair value changes alongside economic dynamics. And on that note I think the downside risk is that if they were
to prolong the lock down into the second half of the year then you have to talk about further weakness and a lower fair value.
So I think as long as our base case remains that the dynamic Covid zero policy will not be too harsh. We can expect the
quarter to to be maybe the trough in China's growth and a better second half and the dollar CNY should actually stabilize about 6
5 6 6. Ted talk to us about your conviction calls versus the yuan.
Liking the singer dollar. Yeah so I think one way to express the expansiveness of the
Chinese yuan. Given how much it has already done over the past two years be it a consequence of EU advantage which is now
pretty much evaporated that is that there is some weakness that is very justified from the Chinese Shery Ahn on a trade with
that perspective. One way to very cleanly position for trade with the dollar. So the Chinese yuan weakness is versus the sing
because the single dollar is a trade with a basket essentially. So if you were to be long seeing and short Chinese Shery Ahn you
do capture a fair bit of pure Chinese you entry way. That weakness and on the other side of the trade off cost sink
dollar. We know MERS is keeping strengthening currency policy given of the local dynamic is a bit different. So this is a
trade that you do like within the Asian space.