Don’t sell the Dollar in Asia just because the PBoC is

Let’s be clear — the PBoC is selling dollars, but this isn’t some bottomless FX firehose. It’s measured. It’s controlled. And crucially — it’s not endless.

Sure, it feels like they’re cracking open vault after vault to cap USD/CNH under 7.40. But that’s not a permanent fix — it’s a tactical bleed, not a structural shift. And ironically, that’s exactly why staying long USD in Asia still makes sense.

If they had unlimited firepower or the will to burn reserves at scale, we’d be having a different conversation. But they don’t — and they won’t. This isn’t intervention, it’s calibration. And when calibration runs out, the path of least resistance is back up.

Bottom line: Don’t sell the dollar just because the PBoC is selling. That might be the reason to stay long.

First off — if Beijing has to defend the Yuan this aggressively, it’s a flashing red warning light that capital is still bleeding out. The dollar isn’t being rejected — it’s being chased. Hot money is still heading home to safety. The PBoC can intervene all they want, but it’s like bailing water out of a leaking ship — the pressure is structural, not tactical.

Second — don’t forget the geopolitics. We’re knee-deep in a full-spectrum trade war, and global capital isn’t exactly keen on “diversification” into centrally managed economies. Europe’s too close to the fire, and Japan? Not enough yield to offset the risk. The USD still holds the reserve crown, and that means when the tape gets nasty, the buck still gets bought.

And finally — market memory. Traders have been conditioned to fade rallies, chase USD strength, and hedge EM pain through long-dollar proxies. That behavioural flow isn’t unwinding overnight just because the PBoC's FX desk is going DEFCON 1. Or your inbox was littered with the dollarization banter this weekend. If anything, it’s reinforcing it. The PBoC’s actions don’t scream confidence — they scream containment.

So yeah — I’m still long USD. Asia ( back in again today): Not blindly, not max size, but barbelled ( still long EUR, which means long EURO/ASIA FX)and opportunistic. Until the Fed slams the rate cut accelerator or we see real reflexivity restored in U.S. markets, the dollar is still the best-looking house in a very shaky Asia neighbourhood — even if the plumbing’s groaning.

Let them throw dollars at the fire. I’ll keep catching them on the bounce.

No drama in the fix — But that’s the tell

Nothing flashy in today’s fix — no shocker print, no overt signal from the PBoC. But that’s the point. They’re letting it drift. Not aggressively, not abruptly, but with that slow-burn, economically justified slide that signals they’re totally fine with a gradual depreciation.

It’s not a green light for a one-way break in USD/CNY — but it’s definitely not a line-in-the-sand defense either. The takeaway? China’s not fighting the tape — they’re steering it. Traders should watch for that grind lower in the fix to quietly continue as part of a broader macro easing strategy.

No fireworks, but the path of least resistance still points weaker.

G-10 early trade

As I flagged over the weekend, every inbox on the street was about to get flooded with the de-dollarization gospel. Sure enough, EURUSD opened higher — but let’s not conflate de-dollarization with dollar weakness. Two different beasts. And frankly, the U.S. Treasury might be quietly welcoming a softer greenback for now.

Now, I’ve been ramping up my long EURUSD narrative since last week. Still love the trade. But here’s where it gets fun — I actually sold some EURUSD today, and I will slowly over the next 72 hours unless it moonshots +1.1480 Totally contradicts the core view, right? Not exactly.

Here’s why: I’ve got multiple accounts, and one of them is a big-label “hedge” book. Ahead of this ECB meeting — where I fully expect them to hold, not cut (despite Bloomberg’s macro tea-leaf readers screaming otherwise) — I’m running one of my favorite setups. Into major risk events, especially when there’s a bit of symmetry on the tape, I’ll hedge the tail risk even if I’m directionally bullish elsewhere.

Why? Simple. The market’s already leaning long. Risk managers are trimming exposure into the event. That means 60% odds we trade lower into the ECB, regardless of outcome. But I’m still long in size on my other book. This is just classic gap-risk compression — reduce now, re-engage after.

And here’s the alpha: once the event passes, the real move can finally rip. Often, the event is a nothingburger — but clearing it gives the market permission to play catch-up. If there’s a strong consensus view that wasn’t positioned for due to volatility fears, the post-event impulse is often explosive.

So yeah — I sold some EURUSD today. Doesn’t mean I flipped bearish. It means I’m getting paid to hedge, and waiting to buy it back from the weak hands once the dust clears. Classic playbook stuff.

Thought for the day

Plan 9 from Outer Space is peak “so-bad-it’s-brilliant” cinema. Ed Wood unintentionally created a masterpiece of unintentional comedy. The cardboard sets, the stiff acting, the plot holes you could fly a UFO through — it all adds up to something kind of magical in its own weird way. You can’t help but admire the sheer commitment to the chaos. It’s like watching someone try to juggle flaming swords while riding a unicycle… blindfolded.

You rewatch it, not for the sci-fi, but for the experience — like a rite of passage for anyone who loves camp and cult cinema. Ever catch it at a midnight screening or with a live commentary track? That’s where the real fun begins.

At times, it does feel like Donald Trump is playing the role of a modern-day Ed Wood — passionately pitching his vision for an American economic renaissance, only to deliver a set built out of cardboard, duct tape, and soundstage bluster.

Just like Plan 9, the plot twists are wild, the script gets rewritten mid-scene, and half the cast (read: markets, allies, and multinationals) are left staring at each other like, “Wait… are we supposed to clap now, or panic?”

The result? Utter market confusion. One moment it’s “tariff Armageddon,” the next it’s “90-day reprieve and let’s make a deal.” Investors are left trying to hedge a script that hasn’t even been written yet.

It’s economic policy by improv — and while the performance is never dull, it’s also impossible to price in.