Concerns about the US dollar are intensifying, and the demand for hedging against the depreciation of the US dollar has surged to a 5-year high
Due to the potential weakening of American economic exceptionalism and the dollar by Trump's tariff policy, demand for hedging against potential depreciation of the dollar has surged to a five-year high. Institutional data shows that the three-month risk reversal index measuring the dollar against 12 major currencies (i.e., the spread between call and put options) has dropped to its lowest level since March 2020 when the global pandemic was at its worst.
This indicator fell below zero for the first time in five years last Friday, indicating that demand for put options benefiting from a weaker dollar is greater than demand for call options benefiting from a stronger dollar. "The market's aversion to holding dollars still dominates," said Chris Weston, research director at Pepperstone Group Ltd. in Melbourne. "The questions people are raising about the dollar are not an overnight issue but potentially significant structural changes."
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Mizuho is bullish on the yen: year-end target is 153; intervention should be monitored if it approaches 159 or falls below 160.
Kengo Suzuki, Senior Strategist at Mizuho Investor Relations' Investment Analysis Department, stated that the U.S. economy is mainly supported by the artificial intelligence (AI) boom, but signs of slowing have already appeared. He expects the yen to strengthen to around 153 against the U.S. dollar by the end of the year. Suzuki also remarked that the current strength of the dollar is "excessive," and projects that by the end of March 2027, the yen will rise to around 150 per dollar. Given that U.S. mortgage rates are above 7%, the U.S. economy may gradually start to slow within the next six months, thereby limiting the dollar’s upside. If the yen exchange rate approaches 159, the bullish outlook for the yen may need to be re-evaluated, and the 158.5 level, which corresponds to the 200-day moving average, will draw attention. The consensus between Japan and the U.S. to prevent the yen from depreciating significantly is of great importance; if the yen continues to weaken and falls below 160, expectations of intervention are likely to suppress further short-selling of the yen.
Indian Oil Corporation invites bids to purchase 3 million barrels of Middle Eastern and West African crude oil for November delivery
(1) This week, several market traders reported that Indian oil companies purchased 3 million barrels of Middle Eastern and West African crude oil through tenders, which will be delivered to multiple ports in India in November. (2) Trafigura sold 1 million barrels of Abu Dhabi Murban crude oil at a premium of $13-14 per barrel over the Brent spot price, with delivery to Vadinar. (3) Macquarie sold 1 million barrels of Iraqi Basrah Medium crude oil at approximately the Brent spot price, with delivery to Chennai. (4) Chevron sold 1 million barrels of Angolan Nemba crude oil at a premium of $18 per barrel over the Brent spot price.
Indian oil companies purchase 3 million barrels of crude oil, delivery to multiple ports in November
This week, several market traders reported that Indian oil companies procured 3 million barrels of Middle Eastern and West African crude oil through tenders, to be delivered to multiple ports in India in November. Trafigura sold 1 million barrels of Abu Dhabi Murban crude at a premium of $13–14 per barrel over Brent spot prices, with delivery to Vadinar; Mercuria sold 1 million barrels of Iraqi Basrah Medium crude at roughly flat to Brent spot prices, with delivery to Chennai; Chevron sold 1 million barrels of Angolan Nemba crude at a premium of $18 per barrel over Brent spot prices.
AMD CEO Lisa Su to meet with Samsung Semiconductor Vice Chairman Jun Young-hyun
According to insiders, AMD (AMD.US) CEO Lisa Su plans to meet on Wednesday with Jeon Young-hyun, Vice Chairman in charge of Samsung Electronics’ key semiconductor division. This is another recent face-to-face exchange between two major figures in the AI industry. In March this year, AMD reached a supply agreement with Samsung to procure next-generation high-bandwidth memory and advanced memory chips.
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