SGM-FX insights

CPI and the US Dollar In recent sessions, EURUSD has found what appears to be an increasingly comfortable perch above 1.10. Yesterday, a CPI inflation reading in the USA helped to secure that fortune, at least in the short run. Despite headline inflation year on year only just scraping in below expectations, the reading was […]

Sell everything? Let’s hope not. But a return to the ‘sell everything’ mentality was unmistakably present in markets last week. Traders were blindsided by US jobs data on Thursday, with data recording in at nearly double the consensus estimate. Bond prices across virtually all of the Western hemisphere fell alongside stock indices. Despite being more […]

US Economy More over the weekend about good prospects for H2 in the US economy: talk now of a rolling expansion rather than a rolling recession. Positive house prices, strong labour markets and the resilience of the US economy to absorb the recent succession of interest rate rises have given rise to this latest positivity.EUR/USD […]

US Jobs That’s the thing about the weekly employment numbers: for every few times that they correspond to what the market broadly expects, there is a big surprise. Yesterday was just such an occasion: 220,000 new private sector jobs expected but 497,000 was the actual figure. Conclusion: US interest rate rises are not having much […]

What to expect from the Dollar this week Trading conditions within the greenback, or to you and I the US Dollar, often set the tone for the wider market. In fact, due to the dollarisation of global trade, trading conditions and the outright value of the Dollar often set the tone for markets further afield. […]

Where will further volatility come from? We have once again entered into a period characterised by data-driven market moves. Markets until only recently seemed comfortable with how future dated contracts had been priced. This was true of most assets from FX forwards, volatility indices including the VIX, equities and treasuries. Despite most developed economies having […]

US Equity Markets With the US S&P Index up 13% half way through the year, statisticians have been out over the weekend and have pronounced that there should be further positive news in H2 2023. In the 22 instances that the S&P has managed 10%+ gains in HI since 1950, the median gain for H2 […]

Federal Reserve Chairman Powell yesterday spoke at the Bank of Spain conference on financial stability in Madrid and set out what sager minds had been expecting: US interest rates will need to rise two or more times before the end of 2023. There are 4 more FOMC meetings this year, the next being July 25/26. […]

Antipodean weakness  Many of the currencies that would have in years gone by been described as high beta, high yielding currencies, are now carving the way for monetary normalisation. The weakness seen in the Kiwi and Aussie Dollars since the start of the year is further emphasising the changing role of AUD and NZD within […]

UK Food Inflation Such is the state of affairs regarding UK inflation that the news that annual food inflation has fallen from 15.4% in May to 14.6% in June was greeted with enthusiasm. Food has taken up the baton from energy when it comes to eye watering levels of UK inflation and despite reassuring words […]

Sterling and the Bank of England On Wednesday the BoE Monetary Policy Committee will, having braced itself for the release of the latest cost of living figures, have to vote on a change in UK interest rates. Most observers believe that the split in the committee will be a sizeable majority for a rise of […]

Hawkish Pause  Jargon used when discussing central bank decision making and communication normally involves the words ‘dovish’ or ‘hawkish’. Descriptions of a dovish decision or attitude refer to the central bank steering away from tighter monetary policy and higher rates on interest. By contrast, decisions and commentary described as hawkish refer to a central bank […]