SGM-FX insights

US Economy   The picture may look a bit fuzzy with US initial jobless claims for the week until July 24 being expected to be 380,000 but coming in at 400,000, but overall the direction of travel is clear: the US Economy grew 6.4% in Q1 and 6.5% in Q2 annualised. Not too shabby even […]

Baby steps   The Federal Reserve Bank offered its latest monetary policy decision yesterday. The announcement from the central bank fell broadly in line with the market’s expectations with Chairman Powell noticing progress in the international economy, but not quite the kind of domestic ‘substantial further progress’ required in order to justify fiddling with the […]

US Dollar   In late May the Dollar Index stood at the year’s low of 90.00 having been up to 93.19 in late April. Now back to 92.80 the US Dollar has benefitted and especially so versus the AUD and the CNY. Net long US Dollar positions are at their highest levels since May 2020 […]

Scale   The Federal Reserve has been in its blackout period ahead of its latest monetary policy decision this week. No doubt many Fed Presidents are itching to head towards the microphone once Powell’s Reserve publishes its latest policy decision. The bond market has been flashing warning signals as we have covered with fair value […]

Stagflation and the USA   In the 1970’s for anyone who can remember, the USA experienced the economic environment called stagflation notable for high unemployment, high inflation and low economic growth. As inflation rises investors sell bonds resulting in lower prices and higher yields which in turn prompts those investors to sell equities as well. […]

Euro Interest Rates and the ECB   Interest rates lower for longer to boost inflation and fears expressed about the impact of Covid on the Eurozone economy: no change there. Amid all the usual dry ECB delivery is the deathless phrase where the ECB commits to deliver “a persistently accommodative monetary policy” which President Lagarde […]

ECB: From Nothing to (Maybe) Something   For most of this year, you could have bet that the July ECB meeting would not be anything to either get excited about nor a meeting to expect any currency-moving impacts from. In fact, markets put their money where the mouth was, pricing volatility at extraordinarily low levels […]

Global Happiness   Health and wealth plus freedom of life choices together with social support are the prime drivers for what constitutes happiness. And the happiest country in the world? Fun loving Finland, followed by Canada, Israel, Uruguay, USA, Norway, Sweden, Germany, Netherlands, Denmark, UK, Switzerland, Australia and New Zealand. At the other end of […]

GBP Call   GBP has fallen in a controlled and predictable fashion since its peak right at the beginning of June. The rejection of tighter monetary policy at the bank of England and approaching technical resistance levels north of 1.40 on GBPUSD sealed the short-term fate for Sterling. Now approaching a fragile but extant price […]

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 […]

Loonie?   Amidst signs of rising inflationary pressures and a strong recovery in underlying economic activity, Canada joined the early recovery club early on. With strong fundamentals of its own and the expectations of a spillover from its outperforming neighbour, the United States, the Bank/Banque signalled its intent to normalise policy ahead of many of […]