SGM-FX insights

One more risk As we wrote yesterday, a New York Times report that the US and Israel may have drawn up plans for military action against Iran following the mid-terms has continued to dominate markets. Energy commodities remain bid thereby sustaining significant headwinds against currencies including, but not limited to: ZAR, EUR, GBP, INR, JPY. […]

British Pound At present Sterling looks firm against EUR and as ever it is a US Dollar story which will dictate where GBP goes this week. As outlined below, the domestic picture will be dominated by Chancellor Healey’s Autumn Budget Statement, events in the Gulf and the Oil price will drive USD and France, its […]

France With a further increase in French Government Bond yields yesterday, the benchmark 10 year is now at 5.11% which means that markets are demanding a 15-year high premium of 173 basis points over German Bunds to take French risk. This premium is driven by three issues: political uncertainty(leadership weakness), France’s indebtedness (119% of GDP) […]

Playing it safe The void created by the Euro’s retreat must be filled by other currencies somewhere. The foreign exchange market, unlike virtually every other global market, does not have the luxury of seeing one asset quoted in terms of a monetary value. Instead, one nation’s money is quoted in terms of another nation/region’s money. […]

UK Prime Ministers When it comes to wealth creation after holding the office of UK Prime Minister, there are no hard and fast rules and it is certainly not dependant on the leadership of one’s political party. Winston Churchill managed to increase his wealth from USD10m to 15m for example while recently departed Sir Keir […]

Unkind history Sure, a day might be a long time in politics. But, in markets,10-years is a long time too. That makes the fact that net-short Euro positioning has now hit a 10-year high all the more impressive. Whilst France and Macron struggle with mounting problems, short-Euro positioning continues to build. As of the last […]

European banks With more of a whimper than a fanfare, on Thursday evening the ECB cleared UniCredit to increase its direct equity stake in Commerzbank with no upper limit from below 30% which, together with its derivative contracts means that by the end of the year that bastion of the German mittelstand or midmarket will […]

EUR In case you missed it, EUR has weakened by 5%+ since late August versus USD. The EUR has been beset by high fuel prices feeding through to a 3-year high inflation rate of 3.8%, the French debt crisis and a muscular USD which reached an 18-month high on Wednesday night. All the EUR strength […]

A look down under The Australian Dollar has attracted deserved attention in recent weeks. Thanks to a weak jobs report in the early hours of this morning, that scrutiny may be set to continue. This morning’s data showed that the unemployment rate in Australia jumped unexpectedly in September. The headline release saw unemployment notch up […]

UK Growth A fillip for the UK and Chancellor John Healey when the IMF marked up its report card for the UK with anticipated 2026 growth of 1.3%. Glossing over the stubborn consumer price inflation of 3.3%, pundits and politicians were swift to declare it as being good news. The Bank of England expects inflation […]

Positioning for Juxtaposition If these economic times feel unusual to you, it’s probably because they are. Two of the defining characteristics of the market at the moment are rock-bottom confidence in the real economy and sky-high costs of borrowing. This is perhaps best exemplified in the United States. Borrowing costs and confidence levels aren’t necessarily […]

Sterling Regular readers will have been following the almost spooky positive performance of GBP versus EUR. This is down to EUR being undermined by political and economic news from France-firstly the riots and secondly the poor debt position of France that has seen Italian Government Bond Yields at 30bps less than French Government Bond Yields. […]