SGM-FX insights

On course for Warsh? The latest Federal Reserve decision concluded last night. Mirroring the prior decision, the FOMC voted to keep policy rates on hold within a band of 3.5-3.75%. Ordinarily, yesterday’s meeting could have been a lesser-event. After all, with the arrival of Chair Jay Powell’s successor on May 15th, this could have been […]

Central Bank Meetings In normal times Central Bank policy committees study their dashboards of indicators such as Inflation, Interest Rates, Employment, Economic Growth, Commodity Prices and a broad set of Confidence measures. So this week when the world’s Central Bankers meet, they will be confronted by both the immediate-a set of flashing red indicators on […]

The only way is $ The Dollar has served as the first-choice safe haven currency during this latest bout of geopolitical risk. Safe havens need to exhibit lower levels of volatility during times of elevated risk and, on balance, exhibit a negative price correlation with perceived risk. As geopolitical risk was on the rise over […]

UK Economy For the 3 months to January, the UK economy grew 0.2% i.e. unchanged since December which means that for all Chancellor Reeves’ talk of growth, the UK economy has not moved since June last year. Before the claim can be made that this is due to the geo-political forces affecting the global economy, it […]

US Dollar Yesterday saw USD reach its highest level this year up 1.5% against a basket of major currencies. The currencies that suffered the most are from those countries that are the biggest energy importers such as the Indian Rupee and the Japanese Yen as well as the EUR and the Korean Won. We are […]

Where’s the Beta Amongst FX, there exist currencies known as ‘commodity currencies’. This isn’t a fixed basket of currencies, however, particular candidates spring to mind when the group are mentioned. The foremost amongst the G10 are the Canadian, Australian and New Zealand Dollars. These currencies are so-called because they typically exhibit a positive correlation with […]

Relief Rally Without pouring cold water and stressing that we do hope that the reason for the relief rally that started on Monday evening and saw Bonds and Equities rebounding strongly is well founded, we remain to be convinced given the uncertainties on how the Iran war will be resolved. Given that Oil had spiked […]

Forgiven Even with an equity correction underway at the start of yesterday’s session, it still appeared that the market was under-pricing the risk of a protracted conflict in the Middle East. FX and fixed income asset classes had reacted more severely with stronger defensive bids into currencies including the Dollar and Franc, but still the […]

US Payrolls Consensus is a wonderful feeling for market analysts and the consensus among them leading up to Friday afternoon’s release was that there would be 60,000 new jobs in the US economy announced for February. As it turned out there was a certain safety in numbers in that those analysts were all wrong when […]

EU Exposure to Iran War With gas prices up 60% in the wholesale market this week and inventories depleted due to the winter months and standing at 30%, it is fair to say that the EU is exposed and it does not take a genius to see what will happen to domestic gas prices should the […]

Sell first, question later The jury is still out on whether the initial “sell everything” reaction to a sudden increase in geopolitical risk has concluded. Certainly, some volatility remains which serves as an indication that trading conditions have not calmed whilst markets continue to question how this chapter of US military intervention ends. Emerging markets […]

US Dollar One question at least has been answered by the crisis in the Gulf: USD is still the safe haven currency of choice. The Dollar Index rose 1% on Monday and again yesterday, reflecting the attributes of the Dollar market which as we have recently written are not enjoyed by other potential rival currencies such […]