Crowded US dollar trade getting flushed
– Anticipation about further CNY strength is creating the sense that China will export deflation
– Jittery markets make for a jittery Fed. Market pricing for a Fed Sept hike has fallen to below 40% from 54% a few days ago
None of this is particularly new information compared to this time yesterday but it’s a confused market and that’s leading to some tail-chasing and exaggerated momentum.