RBS throw the towel in on longs USD against MYR, TWD, NZD, CAD and AUD
The hard part of trading is admitting you were wrong. It's hard but a necessary thing to do to help you move on
RBS have just written that they were wrong about US dollar longs against emerging market and commodity currencies
"We have been caught on the wrong side of what is effectively one large, cross asset correlated, position squeeze.We square long USD against commodity and Emerging Asia FX (MYR, TWD, NZD, CAD and AUD). We also square short EUR/USD exposure.
They were hoping to profit not only from the Fed hiking but on;
"China-led falls in global FX reserves and the vol-inducing QT implications; fallout from the explosion in total debt levels in lagged response to the earlier surge in the USD; and continued very weak demand and oversupply in commodity markets."
We suspect that these anxieties return strongly to the fore and our multi-month views are unchanged. But position squeezes like this early October one are painful."
They were targeting 1.05 in EURUSD back in July
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