In the past 25 years that I have been investing, there have only been two days when currency movements had a huge impact.
I remember vividly where I was on January 15, 2015. I was working and saw the S&P 500 futures lose several percentages in just a few ticks. This was the moment the Swiss National Bank said, "We will no longer use the printing press to maintain a fixed exchange rate between the Swiss Franc and the European Euro."
The second time was also in 2015, on August 11, when the Central Bank of China said it would not further stimulate the economy with interest rate cuts, but with a devaluation. I don't remember where I was then because the market reaction was less severe, but the market reaction over a week was huge: the S&P 500 lost about 10%.
Switzerland has nothing to do with China, but both countries deal with the global reserve currency, the dollar. In 2015, the dollar was strong, and financial markets were pricing in multiple interest rate hikes, which led to money flows towards the American dollar.
The same is happening in 2024. It is priced in that interest rates in the United States will remain high for longer. This is leading to money flows towards the dollar, and it seems as if, like in 2015, things are starting to break. The chart shows the CNYJPY. The movement last Friday in this currency pair is nothing short of shocking.
