The turn lower in the USD in recent sessions feels like a technical retreat from resistance. It comes despite intensifying risk from a trade war, ongoing political risk in Italy and a tightening US labour market. However, we are wary that the USD may continue to weaken in the near term. Political risk in the […]
Bank analysis is not my field of expertise, but as a macro analyst of FX markets, it is hard to ignore the rapid slide in Deutsche Bank’s (DB) share price. DB is one of the top five Globally Systemically Important Banks (G-SIB) as designated by the G20’s Financial Stability Board (FSB). It is around the […]
Individual country preliminary inflation data for May suggest that Eurozone headline and core measures will rebound more than expected. Without the political upheaval in Italy, the data might signal a clearer path to exiting QE and support a sizeable recovery in EUR. Political uncertainty eased somewhat on Tuesday and EUR has rebounded, but the situation […]
Italian leaders have set on a course to clash with the EU that will be hard to turn back from. A more prolonged crisis appears likely. Trump is pursuing his hard-line on trade; announcing plans to move ahead with tariffs on Chinese imports and restrictions on investments and trade in the high tech sector. It […]
There are a few different themes to wrap your head around in the FX market. We started today looking into trade rhetoric and its impact on markets. Last week it appeared that trade tensions were easing, this week they are ratcheting up again. Trump is willing to go to significant lengths to redress what he […]
Both the EUR and GBP have taken a beating in the last month. The EUR is near key support and may recover somewhat as risk aversion related to Italy eases and Q2 economic reports recover. However, we see the bounce as limited with Italian political risk set to linger and the potential for growing trade […]
The EUR has been undermined in recent days by political risk in Italy. The untested young leaders of anti-establishment populist parties in coalition talks to govern Italy have argued for freedoms from the rules of Eurozone monetary union. Italian bond yields rose 16bp on Wednesday, with some contagion to other periphery government bond markets and […]
We see higher US and global yields developing. Global equity market confidence may be returning, supported by conciliatory moves on US trade relationships with China, stability returning to the USD after a recent rebound, and a likely rebound in global economic reports in Q2. Oil and broader commodity prices remain elevated and are indicative of […]
There are domestic risks for the AUD coming from a slowing housing market, fallout from the Royal Commision into the financial sector, and a national election coming into focus. China is seen as a risk for AUD, with its trade friction with the USA and plans to rein in its shadow-banking sector. However, current economic […]
In recent weeks, EM has significantly underperformed the US and other major markets across currency, bond and equity markets. Several higher-yielding EM currencies have fallen more sharply; including ARS, TRL, IDR and INR. There appears to be some momentum behind the recent capital flight from EM that may not quickly reverse. US bond yields have […]