Chinese stimulus vs. a weak Australian housing market

Posted on January 17th, 2019

The multipronged stimulus policy announcement in China appears significant and should help Chinese investor and economic confidence recover.  The market is probably braced for weaker Chinese December activity reports next week and should look forward with some increased confidence in Chinese equities.  This is likely to contribute to a firmer outlook for the EUR that […]

GBP rebounds as the risk of no deal diminishes

Posted on January 16th, 2019

The GBP sinks and rebounds on the decisive vote in the UK parliament against the Brexit deal negotiated by UK PM May and supported by her cabinet.  In our view, most probable scenarios for what comes next moves the UK towards a softer Brexit, where it agrees to accept EU rules to stay in the […]

USD peaking with the economic and political cycle

Posted on January 10th, 2019

Out-performance in the US economy, as was seen in 2018, seems much less likely in the year ahead.  Lower oil prices and slowing high tech sectors will dampen activity and assets in the US more than many other developed and EM countries.  The boost to equities and growth from US tax policy has passed its […]

Chinese market sentiment at a crossroad

Posted on January 7th, 2019

Chinese equities face a crossroad to start the year as the market mulls a more serious phase in the structural decline in China’s economy balanced against renewed efforts to stimulate growth in 2019.  The US-China trade dispute and broader US policy shift to contain China’s economic ambitions in high tech industries have contributed to fears […]

The market gives Powell a thumbs down

Posted on December 20th, 2018

The Fed has displayed a lack of flexibility and is generating market fears that it will make a policy mistake.  The pundits continue to applaud Powell, but the markets have delivered a thumbs down; the US yield curve has inverted from 1 to 5 years, the US equity market has had its biggest correction since […]

Dollar up today, but down tomorrow? Fed and govt shut-down risk

Posted on December 12th, 2018

It feels a bit like if I write something on the FX today, it will be redundant by tomorrow as conditions in the market are changing so quickly due to a range of global risk factors. Today French budget risk and Brexit uncertainty are dragging down the GBP and EUR, despite growing political risk in […]

pro-EU side gains ascendancy in UK parliament

Posted on December 5th, 2018

Risk aversion on uncertain events from the US-China truce to Brexit and various other issues; including the OPEC meeting, and uncertainty over the global economy dominated markets on Tuesday. However, the Fed has softened its tone, the US and China have restarted negotiations,  Pro-EU members of the UK parliament appear to have gained ascendancy, and […]

Clarida puts the ball in Powell’s court, but amenable to a pause

Posted on November 28th, 2018

Last week we saw the first signs that the Fed might be softening its tone on the path for higher rates.   Both the Fed’s Powell and Clarida suggested that they have to be more data-dependent and pay closer attention to a range of factors from global growth indicators, liaison with business, and financial market conditions.  […]

Fed rate pause in view

Posted on November 20th, 2018

A Fed pause, if not a peak, may be coming into view.  Financial conditions in the US are tightening up, and the Fed Chair and Vice Chair expressed more caution last week.  They suggested that rate hikes are no longer on auto-pilot, but are more dependent on data and financial market conditions.  With the increased […]

A grimmer view on global risks boosting the dollar

Posted on November 13th, 2018

The market appears to be taking a grimmer view of big global risk factors (Brexit, Italy, Chinese economy, and US trade policy).  The relative certainty that the Fed will persist with rate hikes despite souring global growth confidence may by driving up the USD.  Asian markets may be undermined by signs of weaker demand for […]