SGM-FX insights

Two speed recovery The start of this week brought with it a catastrophic breakdown in risk sentiment. A global spillover was triggered by a disastrous overnight trading session in Asia as local equity markets reacted to the risk adjustment that had taken place during Friday’s European and US trading sessions. Whilst widespread regional weakness played […]

Currency Markets It may be 13 years since he stepped down from the European Central Bank but previous Governor Jean Claude Trichet is still closely listened to by financial markets. So when he spoke yesterday lunchtime and pronounced the recent JPY 10 move in the Japanese Yen versus USD as being a needed and likely […]

Monday Meltdown If you had any faith in a newfound depth and functioning to modern markets, yesterday’s session should have been more than enough to destroy it. As we highlighted early on in the session in our daily brief yesterday, the path of the Fed was in focus over the weekend. More than that, despite […]

USA The question being posed over the weekend is whether the Federal Reserve has left it too late to engineer a soft landing for the US economy by not cutting interest rates last week. July’s unemployment has risen to 4.3% the highest level for 3 years. Having said that GDP has seen growth of an […]

UK Interest Rates Unusually there were almost as many pundits calling for the Bank of England to hold off cutting interest rates yesterday as there were for an immediate reduction. In the event the 25bp cut from 5.25 to 5.00% had initially been discounted by the FX market but that did not prevent a further […]

A hold a hike and a.. Well, that’s to be determined at midday today when the Bank of England presents its latest decision. This week’s significant rate hold came from the Federal Reserve. It was in Japan where an interest rate hike left traders scrambling to revalue exposed assets including the Yen. On the docket […]

German Inflation Nothing to do with zeppelins this time, but more to do with German Consumer Price Inflation coming in higher than expected yesterday at up 2.6%. This was a set back for those calling for a cut in EUR interest rates as the mood swung towards the likelihood of the European Central Bank holding […]

British Pound Even optimists on interest rate cuts have been wobbling over the weekend as to the likelihood of a UK interest rate cut in August from the current 5.25%. While it is still expected that rates will be down to 4.75% by year end, the rhetoric has moved to higher for longer. That means […]

Germany The German business climate was slated to rise in July but instead it fell in terms of both current and also future expected business conditions as reflected in the IFO Index made up of manufacturing, services, trade and construction sectors as submitted by 9000 firms. Germans wishing doubtlessly that they could be as strongly […]

British Pound GBP is currently in fashion: with a record number of long positions and currently at the top of the G7 currency performance charts and after a period of being deeply unfashionable GBP is wanted-in a good way. The reasons for this are diverse: first off is the Bank of England’s caution on cutting […]

UK Borrowing The Office of Budget Responsibility predicted that the UK would borrow GBP11.6 billion in June. As it turned out the UK did in fact borrow GBP 14.5 billion in June. All sorts of questions arise about the OBR and just how such a large overshoot in borrowing could occur given the already eye […]

British Pound With weekly earnings coming out at up 5.7% in the 3 months to the end of May compared to the same period a year earlier which is a key indicator for inflation and closely watched by the Bank of England, the feeling in the market yesterday was that the likelihood of a rate […]