UPDATE: Every dip is to be bought...
After a week of punishment, precious metals are kneejerking higher this morning on the heels of a Citi FX note explaining they are cutting all USD longs - "This is an opportunistic exit as we feel we may be due for a squeeze of USD long positions similar to what happened at this point in the cycle last year." The USD Index is sliding quickly and Treasury yields inched higher (but remain -1.5bps despite equity strength).
As Citi notes,
US assets have significantly outperformed overall, with the US MSCI index outperforming all its G10 counterparts, while US fixed income outperformed all but European bonds (EUR-, GBP- and SEK-denominated).
Therefore the notional on currency hedges should be increased proportionately more on US assets, which may be USD negative.
Signals are between half and one historical standard deviation.
The USD Index is slding..
and PMs are moving higher...