Insights

The US dollar came back swinging in September, outperforming all its major counterparts amid bets that the Fed will begin its rate hike campaign next year and as investors looked for shelter from the storm in stock markets. A global energy crisis, raging supply chain disruptions, and worries around the Chinese property market also provided ammunition to the defensive Japanese yen.

Both the euro and sterling struggled in this environment of risk aversion, with the pound in particular unable
to capitalize on expectations that the Bank of England will raise rates early next year. Gold suffered some losses as well, thanks to a simultaneous rally in the US dollar and real Treasury yields. Volatility in the FX market has been sporadic and weak for the better part of 2021, however the spell of increased volatility in the second half of September, offered our strategy the opportunity to capitalize more gains.

The month started weak with losses, which were subsequently recovered by mid-September. The scene was completely reversed towards the end of the month where volatility kicked in and the Fund’s algorithms produced robust signals that led to significant profits, ending the month in positive territory.