SGM-FX insights

Political Risk Trade   With the unrest succeeded by the wave of rioting in South Africa, markets are looking at ZAR but also other emerging market currencies that are vulnerable to similar political risk. As a strategy it involves buying CHF or USD or EUR against emerging market currencies in anticipation of those emerging markets […]

China   The world’s second largest economy has bounced back from the pandemic supported by pent up export demand and policy support, however there is a suggestion in recent data releases that momentum has slowed. The expectation is growing therefore that the PBOC may cut the all important prime lending rate which will give an […]

Italian Government Bonds   Traditionally, Italian Government Bonds BTP’s have been volatile and often de-linked in their movements with the benchmark German Government Bonds. Interestingly this has changed markedly for 3 reasons in the past months: first the ECB bond buying programme, second the European post pandemic EUR800 billion fund of which EUR200 billion is […]

Chinese Yuan   The People’s Bank of China yesterday pledged to keep the Yuan stable and will make adjustments to its policy tools to help China’s struggling exporters. For example the amount of cash reserves that banks need to hold could be reduced which will feed through to and assist small firms that have been […]

EU2   There have been significant developments in the monetary and therefore currency outlook in both the Eurozone and the United States. Unfolding and gathering pace during the US and Asian trading sessions, the price output has been limited with major crosses largely unchanged from their median price yesterday. It has been reported that policy […]

German investor sentiment   The ZEW economic research institute reported that June investor economic sentiment fell from 79.8 to 63.3 despite Reuters having forecast it to only drop to 75.2. If this sounds to be an imprecise science, it is. Germans, it appears, at least according to these polls have quite sharp mood swings. Never […]

US Employment   With 9 million jobs remaining unfilled and less than 10% of unemployed actually looking for work, the USA is only too aware of why Covid plus the various Covid support schemes are not successful in getting Americans back to work. Despite nearly 60% of the adult working population and 46% of the […]

Oil   With WTI oil up almost USD1 and now at USD 74.98 prices are likely to firm more in the second half of 2021 as demand increases with economies returning to pre-pandemic conditions and travel restarting. The other determinant is the OPEC Meeting yesterday which having deliberated on the supply volumes for H2, decided […]

Eco Warriors   Those motorists who buy electric cars based on burnishing their green credentials might be interested to learn that the Chicago based Argonne National Laboratory has completed a study on how far one has to drive before the benefits of an electric car outweigh the harm done to the environment of a conventional petrol […]

Australia   A country that has a small population for its size-26 million at present-Australia has just pared back its forecasts for both economic and population growth. By 2061, so in 40 years time, the population is forecast to grow to 38 million. The economy had been slated to grow by 3% a year, but […]

Germany   Was it the fact that the national team clawed back to draw with Hungary on Wednesday night that cheered them up? No matter, German business morale rose more than expected in June as companies’ assessment of conditions improved and optimism was up according to the Ifo Institute. The Bundesbank is forecasting German growth […]

VW   Despite the global chip shortage affecting not just VW but all car manufacturers, VW is sticking to its 2021 profit forecast. Despite lower production, VW will be able to make up the deficit by selling off inventory and still produce 800,000 vehicles which will deliver an operating profit margin of between 5.5% and […]