SGM-FX insights

Opportunity for a weaker Dollar  The passing of month-end allows markets an opportunity to reassess currency valuations. Despite a cooling off within the Dollar as forecasted following the agreement between the White House and Kevin McCarthy, month end flows yesterday showed favourable conditions for a short-term Dollar resurgence. The beginning of June coincided with headlines […]

Turkish Lira While President Erdogan removed the uncertainty overhanging the Turkish market by winning the election in the run off over the weekend, the news served to cement the certainty that nothing much was likely to change with respect to Turkish economic policy or indeed the subservient role of the Central Bank of Turkey to […]

Did EURUSD miss the news?  Over the weekend, the President and the Speaker of the House of Representatives reached a much-awaited deal on the US debt ceiling. The impending constraint on debt could have forced the shutdown of government departments and precluded the US government from servicing costs and existing debts, triggering a default. The […]

UK Wages Bank of England Governor Andrew Bailey yesterday warned of the pressure on wages that are threatening to lead to a wage price spiral as the effects of inflation on the cost of living together with the 12 consecutive interest rate rises that consumers have experienced. The market has not enjoyed the poor inflation […]

UK inflation – June hike worthy? Yesterday’s inflation data surprised markets. The data was released slightly ahead of European core trading hours. The lighter liquidity available at this time could have resulted in the short-term spike towards 1.2450 on cable and around half a cent to the mid-1.15s within GBPEUR. However, you could, and perhaps […]

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 […]