Gold and Precious Metals: Relationship on the rocks


Precious metals equities have re-rated to historical peaks or above. Morgan Stanley lifts its bull cases to reflect this, but still the risk reward is unappealing bar continued commodity price rises. MS downgrades Randgold to UW, with Centamin most and Fresnillo least preferred. Equity valuation disconnects… The recent rally in precious… Read More »

SNB FX intervention continues

Yann Quelenn -

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 »

Time to short sugar, coffee and soybeans

Nitesh Shah -

Sugar, coffee and soybeans have made spectacular returns this year, but much of their gains have been driven by currency movements, particularly the Brazilian Real Brazilian Real drives rallyThe El Niño weather pattern led to a failed monsoon in India and unseasonably wet weather in South America in 2015/16.However at… Read More »

The Case for a Higher EUR

Morgan Stanley Research -

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 »

Gold to outshine gold miners


Stronger Q1 2016 earnings coupled with the rising price of gold helped improve sentiment towards gold miners, driving the rally so far. Gold miners tighten their belts too much too fastGold miners have skyrocketed since the start of the year, staging a 81.6% rally. That is the strongest 6-month rally… Read More »

How to lower volatility


Single commodities are subject to specific and sometimes unique factors which drive price trends to be distinct and for volatility to be elevated. In this instalment, we take a closer look at some of the most important drivers responsible for the volatility seen in single commodities and how to mitigate with… Read More »

Attractive fundamentals trump fragile risk backdrop


Uncertainty over the US Federal Reserve (Fed) policy, risks of the UK exiting the EU, a China slowdown and a lacklustre earnings season in developed markets have all contributed to greater volatility in asset classes. We continue to expect further weakness in the US dollar in the coming month, primarily… Read More »

EU referendum unveils Sterling opportunity

Martin Arnold -

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 »

Policy error and cyclical recovery to benefit commodities

James Butterfill -

The US Federal Reserve (Fed) has made a policy mistake. After raising rates for the first time in nine years, the Fed has held back from further hikes in 2016, bowing to market tantrums. The Fed is struggling to focus on the strength of domestic fundamentals such as the strong… Read More »