SGM-FX insights

Toyota For those without a strong disposition look away. Toyota shares fell 35% in the last few weeks between the beginning of July and now, before recovering 13% in the past days. The reasons are twofold: firstly Toyota has been a major beneficiary of the weak Yen and when that abruptly changed the market reacted. […]

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 […]

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 […]

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 […]

US Dollar Broadly the market liked Trump’s nomination, choice of running mate and the growing likelihood of a second term for the ex President. USD strengthened against almost all of the G10 currencies and 10 year bond yields declined. EUR/USD 1.0888. Japanese Yen As is normal practice in Japan the Japanese authorities do not comment […]

UK Growth The UK economy expanded 0.4% in May after 0% growth in April and at double the pace expected. GBP was perky on this, or maybe it was the unusual amount of sunshine on offer yesterday afternoon that lifted the spirits of British pound traders. The reason is that this surprisingly good picture(the growth […]