SGM-FX insights

Central Bank Consensus As expected both the Bank of England and the European Central Bank came in to join the US Federal Reserve with 50bp hikes. Not surprisingly the Bank of England’s Monetary Policy Committee is split 3 ways with outliers voting for either lower or higher rises than what was decided given the high […]

Calling the bluff As expected, the Federal Reserve raised interest rates in the United States yesterday evening by a further 50 basis points. As a result of this policy adjustment, immediate target policy levels now stand at 4.25-4.5%. As also expected, the Fed pushed back fairly hard on the idea that it is ready to […]

Grain and Oilseed Supply pressures will keep prices high into 2023 which are also impacted by the Ukraine war, high energy costs and bad weather in Latin America and South East Asia. While the higher prices will of course encourage farmers to plant more crops, the fact is that inventories need to be replenished from […]

Pencil to pen As with any year ahead, 2023 has been fervently speculated over by market participants. Whilst forecasts for the forthcoming year take great priority every year, 2023 has perhaps the most divergent set of forecasts between analysts and institutions on recent record. Across asset classes and between institutions the core themes expected to […]

UK Credit Rating Fitch have affirmed the UK’s credit rating at AA- citing the quality of the macro economic policy, Sterling’s status as a reserve currency and the deep capital markets of the UK. The outlook is negative but this is timely recognition given the Central Bank meetings taking place this week and also a […]

UK Market Poll The thing about market polls is that they are notoriously unreliable but having said that, it is worth noting where expectations are for the upcoming Bank of England meeting on December 15 as reported by a Reuters poll: Rates up by 50bps taking borrowing costs to 3.50%. This is versus the 11.1% […]

Expensive Furniture At the time of writing at least, ANC leader and South African President Cyril Ramaphosa has managed to hang onto power. When the President found himself at the centre of a South African political scandal, there was a lot of concern and risk surrounding the nation and its assets. International attention was cast […]

Australia With the Reserve Bank of Australia (RBA) raising AUD interest rates to 3.1% which is a 10 year high, it has thrown the GBP/AUD rate back into the spotlight. Trading lower at AUD1.8185, nevertheless GBP remains at its highest level since March 2022 and still represents value-the range has been pretty much 1.80-1.90 for […]

False Illusions On Friday last week markets had got very exuberant over comments made by the Federal Reserve Chair the day prior. As a result of the interpretation of those comments, the US Dollar had dropped several cents to trade at its recent lows. There was a narrative that was being pieced together and justified […]

Great British Pound GBP has notched up the sharpest recovery for some years and on Friday night was trading at GBP/USD 1.2285 and GBP/EUR 1.1655. Quite a turn around. Before continuing however, it is worth reminding ourselves that in times of such volatility, it is rare for a currency to continue in a straight line […]

Germany Despite the ECB (European Central Bank) releasing a more optimistic outlook for inflation this week, careful Germans unlike their more profligate Southern European neighbours are spending less as they come to terms with much higher energy bills and much more expensive food costs. The Germans are also more worried about their personal finances than […]

Data incoming It looks like Christmas has come far too early for equities. Led by exchanges primarily in the United States, it appears Santa, in the form of Jay Powell, has been spotted heading down the chimney. It is only December 1st after all so I will stop the parallels between Santa Claus and Federal […]