EUR failed to rise on upbeat political developments. It appears that EUR is trading more like a high-beta growth currency; unusual for a low yielding current account surplus currency. EUR has probably benefitted from unhedged equity inflow and is vulnerable to a correction in equities. The market is also net long EUR and, in a […]
Comey characterized Trump as untrustworthy, manipulative and liberal with the truth. But that is who a minority of Americans voted in as President. Is Trump inexperienced in public office? Is he used to running the show and getting his way? Tick and tick, nothing new here either. Comey offered plenty of salacious detail and did […]
The fall in US yields continues to be a surprising development in global markets, coinciding with a weaker USD. There are a number of factors that may account for weaker US yields, although none are so powerful alone to suggest yields should fall significantly further. The outlook for inflation has eased from earlier in the […]
Global investors heading into Japan equities may no longer be routinely hedging the JPY currency exposure. Equity investors, viewing the largely trendless major currency markets over recent years, albeit with some sizeable swings, and more recently a weaker USD, may be moving funds into Japanese and European equities without currency hedges. These equity flows may […]
Former FBI director Comey may go down as one of the most enigmatic figures in US history seemingly unwittingly taking down candidate Clinton and chopping President Trump off at the knees. US political uncertainty may have just blown over the top, and may settle down, but the controversy is likely to simmer at a high […]
The EUR has broken above the psychological 1.10 level after a lengthy and frustrating period of consolidation below this level since the first round of the French election. Eurozone economic momentum has maintained a steady improving trend and more clearly appears on a sustainable path to achieving the ECB’s inflation goals over the medium term, […]
The RBNZ have managed to surprise again, this time in a dovish direction. They did not revise up their rate projections, still seeing rates on hold through to around Q3-2019. In his press conference, Governor Wheeler said rates are expected to be on hold for the foreseeable further. Despite a rebound in headline inflation to […]
We had been reluctant to sell the AUD in anticipation of an expansionary Australian Government budget. Sure enough, the government announced an impressive plan to inject up to $75bn over 10 years. This should be an important support for overall capital investment, offsetting the diminishing drag from the mining investment downturn and potentially boosting economic […]
Notwithstanding the strength of their banking systems, the CAD and AUD and bank share prices in both countries are exhibiting financial stability risks following the stress experienced by the Canadian mortgage finance company Home Capital Group (HCG). The CAD fell to new lows in over a year in conjunction with a fall in HCG shares, […]
The Australian government budget next Tuesday is set to announce significant debt-financed infrastructure spending. This contrasts with the Trump administration that touted big spending on infrastructure spending and tax reform, but then placed more emphasis on border control, immigration, health care and trade policy. Its more pro-growth tax and infrastructure policies face an uphill battle […]