Hugh Hendry's latest thoughts, Heading into August, we retain a short bias toward China and EM currencies. However, the troublesome dollar leg has been replaced by a 'good EM' (positive CA balance, modest foreign borrowings etc.) versus 'bad EM' FX basket. We continue to favour a long stance towards the S&P against EM indices and we are bullish curve steepeners in Australia and South Korea where overnight rates remain relatively high, giving the authorities considerable leeway to cut.