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Gold showing the way

Posted on February 20th, 2019

The USD remains mixed, but gold has developed a persistent uptrend.  This may reflect underlying weakness in the USD and doubts about the state of the global economy.  Its recent rise is at odds with the rebound in global equities, but consistent with lower global yields since the Fed moved to a stable rates outlook […]

Bearish Euro sentiment over-done

Posted on February 13th, 2019

We have turned our attention to the EUR in recent days, watching it break a key support on Monday (falling through 1.1300).  Its performance has been undermined by surprisingly weak activity data, and uncertainty over the state of the Chinese economy and global trade growth.  However, the Eurozone had a run of bad luck in […]

RBA policy faces big test

Posted on February 5th, 2019

Today the RBA releases its latest policy meeting statement.  This is followed by a speech by RBA Governor Lowe on Wednesday, and the release of the RBA quarterly Statement on Monetary Policy (SoMP) on Friday, where it updates its medium-term forecasts. A lot has changed A lot has changed in the last two months since […]

Fed completes its come-down

Posted on January 31st, 2019

The Fed’s newfound sensitivity to global economic and financial market risks has boosted global asset markets and softened the USD.  These moves may be limited by the still substantial global uncertainty over US trade policy, surprisingly weak economic data in Europe and China, tensions surrounding US legal action against Huawei, tech sector headwinds, Brexit, and […]

ECB’s TLTROs enter the frame

Posted on January 24th, 2019

The market appears somewhat prepared for a dovish tilt in the ECB policy meeting on Thursday.  This may involve an acknowledgement of downside risks to their outlook.  It does not appear that the market expects any significant change in the key policy guidance on rates at this time, but it is possible that the ECB […]

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 […]