SGM-FX insights

International Monetary Fund With no sign of insouciance despite its 180 degree turn in a two month timeframe, the IMF yesterday reversed its downbeat if not disastrous forecasts for the UK and stated the UK is no longer heading for a recession and nor is it the weakest member of the G7 when it comes […]

A different Euro-vision  A late start to monetary tightening versus the rest of the world could deliver the some-what illusive stronger Euro to markets. A delay to hike rates in Europe has left the ECB playing catch up, with interest rates lagging noticeably behind their peers. Since its inception over 20 years ago, the Eurozone […]

De Dollarization Much being written about the demise of the USD, and for the sake of getting it out there in case you missed it, Iraq has just banned the use of USD to buy houses and cars which are normally the largest ticket items for the consumer. Mainly Iraqis have until now used USD […]

US Consumer Credit Back in 2000 US consumer credit stood at USD 1.6 Trillion. Clearly near zero interest rates for the past 10+ years plus easy credit conditions have lulled US consumers into a sense of borrow now repay tomorrow. Except that the repay tomorrow part seems to be getting lost with US consumer credit […]

What happens if the US defaults?  Whilst much of the financial world is focussed upon the potential for US default, it is hard to analyse the outcome of such an unprecedented event. The answer is that until it happens, we simply don’t know exactly what the outcome would be. However, there are many likely knee-jerk […]

IMF and Bank of England Readers will recall the poor report card that the International Monetary Fund gave the UK in March. The latest set of forecasts from the Bank of England set it at odds with the IMF: firstly no recession, instead modest +0.25% growth this year and +0.75% in the next two years. […]

Is the Rand’s decline isolated?  The South African Rand’s sizeable decline over recent trading sessions has spooked markets. During the peak of the sell off, beginning on Tuesday of last week and lasting into Friday’s trading session, the decline in the Rand appeared to spill over into some other emerging markets. With USD/ZAR trading close […]

US Debt Ceiling Crisis  As we have written in the past weeks, the USA may be unable to pay its bills under the current debt ceiling limit as soon as June 1st ie just over 2 weeks away. Apart from the safe havens of Swiss Francs (CHF) and Gold, there is another area of the […]

UK  Well signposted that interests rates would rise by 25bps yesterday which they duly did. However it was the year end inflation forecast that was raised from 4% to 5% that furrowed many brows. The previous promise admittedly from the Government rather than the Bank of England was to halve inflation from 10 to 5 […]

CPI passed, BOE up  US inflation data released yesterday caused volatility within the US Dollar. This was most widely observed within FX spot crosses, however, a deeper look into the forward and swap markets showed more significant price upheavals. Early on in yesterday’s European session forward points on many emerging market vs. US Dollar crosses […]

British Pound  Trading at a 1-year high, British Pound is buoyed by the market being pretty much unanimous on a 25 bp rise in rates tomorrow by the Bank of England. 98% of respondents to a survey have opined as such. The three choices are No Change, plus 25bps or plus 50bps so it is […]

Clockwork  In the weeks ahead expect to see continued focus upon the impending US debt ceiling. The phenomenon is something that rears its head periodically as the US government kicks the can down the narrow road of an increasingly unsustainable fiscal policy constraint. The provision of a legislative limit on the amount of debt that […]