FX Vol gone AWOL, directionality has not
This is a summary – Read the full research piece here
Read moreDraghi’s ECB legacy – stable Euro, weak inflation
European Central Bank President Mario Draghi will step down at the end of his eight-year term on 31 October. Christine Lagarde, the head of the IMF – which has implicitly called for looser global monetary policy – will take over pending European Parliamentary approval. The ECB’s dovish turn at its 6th June policy meeting, Draghi’s talk of possible monetary policy
Read moreAll paths lead to the Federal Reserve
Market focus is likely to centre on tomorrow’s G20 meeting between US President Trump and his Chinese counterpart Xi Jinping (11:30 local time). The broader context is the direct, negative impact which the ongoing US-China trade war has had on US and global economic growth and its dovish influence on the monetary policy stance and outlook of major central banks,
Read moreLooking beyond perfect Sterling Storm
It is now three years since the referendum on 23rd June 2016 in which 52% of the British electorate voted for the UK to exit the EU. The issue of whether, when and how the UK will leave the EU has shaped the UK’s political agenda and economic and social landscape. The chronic uncertainty associated with Brexit has had a
Read moreRenminbi depreciation true to form
We noted in “Renminbi depreciation – Case of déjà vu” (16 May 2019) that the Renminbi’s performance since early March had been very similar to that of May-June 2018 and that if, as we expected, history was to repeat itself the Renminbi would weaken further. While the Renminbi Nominal Effective Exchange Rate was broadly stable between 16th and 30th May,
Read moreBrexit: Greater standard deviation and skew pointing to second referendum
The recent local elections and European Parliament elections and Prime Minister Theresa May’s announcement a week ago that she would resign on 7th June have materially altered the probability distribution of the possible Brexit outcomes, in our view. British voters threw their weight behind parties which unequivocally back either i) a “no-deal” Brexit – namely Nigel Farage’s newly formed Brexit Party,
Read moreMore to FX markets than US-China trade war
Over-arching global themes, including the escalation in the trade war between the US and China since 5th May and global risk appetite jitters, offer a plausible explanation as to why the safe-haven Japanese Yen and Swiss Franc have both appreciated 2% in Nominal Effective Exchange Rate terms while the Chinese Renminbi has depreciated by as much. However, global macro and
Read moreRenminbi depreciation – Case of déjà vu
The Renminbi Nominal Effective Exchange Rate (NEER), which had appreciated 3.5% in the two months up to 5 March 2019 and then traded in a narrow 1% range in the following two months, has since 2 May depreciated 2.1% to its weakest level since 25th January. This is broadly line with our view that “the PBoC could conceivably slow or
Read moreRetail sales to the rescue
Retail sales are broadly defined as the sale of durable and non-durable goods by domestic retail establishments (including on-line) to domestic households and tourists. For most developed and emerging market economies retail sales are an important component of personal consumption and thus of overall GDP and historically growth in the global volume of retail sales has closely correlated with global
Read moreBrexit and Sterling going nowhere, fast
Much has happened in the past two months and yet the UK finds itself in a similar situation as in mid-October 2018 when it had just over five months to get a deal through parliament before its (original) exit date from the EU on 29th March. We have so far correctly forecast that the UK and EU would reach an
Read more