Forex

Since Theresa May set out plans to invoke Article 50 at the end of March, we have witnessed a significant weakening of the pound against both the dollar and the euro. The pound’s weakness is further exacerbated by the fact we have yet to see any significant weakness in the… Read More »

A few days after the flash crash which sent the GPBUSD below 1.2000 before bouncing back, it is alarming that no concrete cause has been found. Many are blaming altos but what would be the rationale to justify such a sell-off during the Asian session? Others claim that a fat… Read More »

The FOMC has a history of being reactive to inflationary pressure and we expect that this trend is unlikely to change. The Fed should raise rates in September, but won’t Then and nowWhen the Fed began its most recent tightening cycle in December 2015, the stage appeared set for another… Read More »

After years of difficulties and underperformance, emerging market (EM) assets have the makings of a potential turn-round. In recent years, EM bonds and currencies have been weighed down by a number of damaging developments within their borders. These developments include persistent inflation pressure, political turmoil and lackluster productivity growth. This… Read More »

The ruble continues to appreciate and is now at a one-month high against the dollar. There are of course room for further upside knowing the ongoing Russian economic recovery. 62 ruble for one dollar represents a decent target in the short-term. This current strengthening is due to the fact that… Read More »

The SNB has been acting to protect the Swiss Franc. The currency can currently be traded above CHF 1.08 against the single currency. Downside pressures on the EUR/CHF remain. It is clear that the Swiss National Bank tries to maintain the pair above 1.07 / 1.08. This is why FX… Read More »

Real yield differentials will become increasingly important for FX markets, but there are two ‘types’ of real yields to study. One is driven by risk premiums often seen in high-yielding currencies and the other by falling inflation expectations. In countries where the idiosyncratic stories are improving, risk premiums have started… Read More »

Gambling odds turn favourable for the ‘remain’ camp as political polls show tight referendum result.? Adverse economic impact is expected to outweigh regulatory and fiscal benefits of the UK leaving the EU.? Pessimistic sentiment is at the highest level on record in the FX options market for EUR/GBP. GBP should… Read More »

Currencies battered by volatility to turnaround, with Norwegian Krone and British Pound leading the way higher Sentiment divergenceInvestor uncertainty, which manifests in greater asset return volatility, has been driven primarily by uncertainty surrounding US central bank policy, the softer growth outlook for China, and plunging oil prices. However, investor sentiment… Read More »

  1. Since November, Sterling has weakened by around 8% on a trade-weighted basis (Exhibit 1). There is no shortage of explanations for the decline – over this period, Bank of England communication has become more dovish, the ECB surprised hawkishly relative to market expectations in its December meeting, the… Read More »