(Previous week in brackets)

22 January 2021: Looking at the different risk weight time scales Euro is likely to move higher and it makes sense to enter a full hedge short term contra risk position until Daily risk meets Weekly. If there will be a Yellen effect it will likely be a long term trend. History tells us such a trend could overshoot. For now we stay with the current formal 50% dollar hedge and wait for Daily risk to meet Weekly and see if that is going to be the direction for the next few years. With monthly at overbought levels we need to check how that pens out in the next few weeks or months. This is a low risk strategy approach in a very fragile world economy.

15 January 2021: The relative quick drop of Euro vs USDollar against what appeared to be a main trend was expected as we removed some potential short term technical risk from the dollar receivable hedge (70%-50%). The steep drop in risk weight is close to bullish divergence and confirmed as soon as hourly risk turns up which at 15/1 close is that a very low risk 2%. I.e a rally on Monday morning seems on the cards and that may also push Daily risk weight into an uptrend. However this is potentially tricky as the high risk longer term risk weight time scales could push the dollar higher for a while due to a medium bearish divergence in its own timeframe. A potential intermdiate objective could be 1.16. Given the general economic uncertainty we strongly advise no more than 50% cover on dollar receivables. No Change.

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22 January 2021: Cable looks more vulnerable short term and medium term in all technical tools which makes GBP looking potentially weaker than other major currencies. The market still appears to adopt a strong future for Sterling. Our tools tell a different story, although GBP may eventually turn stronger than USD if the latter sets in a late cyclical downtrend. No Change for now.

15 January 2021: We are changing our hedge recommendation on Cable to 30% max hedge on perptetual dollar transaction receivables, from 50%. This technically appears a low risk change from the 50% position we have adopted for much of 2020. Even though GBP has been relatively strong against other majors this past week, it doesn't look very appealing in our analysis.

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22 January 2021: No Change from last week. GBP looks weak in a one year phase of consolidation around 1.10. We stronly hold on to the outlook of a sub par GBP to Euro fully supported by technical risk analysis. No Change

15 January 2021: GBP receivables to remain covered at 80% perpetual forward inflow. Even though GBP/EUR rallied by 1.5% last week, the picture doesn't look at all low risk and very speculative. Maybe some unwinding of position ahead of the US inauguration or the 'incredible positive news' following Brexit. The UK economy also looks extremely frail at the moment. No Change.

22 January 2021: Dollar Yen is unchanged for the week and looks to see a bit more pressure as trading starts on Monday morning. 102.50 still looks a hard fence to break. The best techn ically driven risk position is to maintain 50% cover until the market decides otherwise. We are now hovering around current levels for 3 months without clear direction. No Change.

15 January 2021: Dollar Yen has hardly moved an inch during the dollar advance last week and confirms our long term view that is is likely to largely move with the dollar, although the dollar/Yen downtrend again appears hesitant to want to continue on that downtrend. Technicals are looking for a minor correction north towards 105.00 perhaps. No Change.8 January 2021: As we have been expecting throughout 2020, the Japanese Yen continued to follow the dollar on its slightly weaker path versus the other major currencies, Euro, CHF, GBP. The 1% strengthening dollar/yen into 8 January to 104.00 from 102.60 is consistent with the general short term dollar direction last week. A 103.50-105.00 range is likely before we may see some very short term hourly divergence. Any move is likely to be fairly limited. No Change.

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