Draghi’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

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Renminbi 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,

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Brexit: 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,

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More 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

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Retail 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

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Three Themes: Low FX vol, EM contagion and global growth

We touch on three key themes this week, which we will further explore in forthcoming FIRMS reports. Theme 1: Low FX volatility Despite significant event risk, including ongoing China-US trade negotiations and Brexit, and central banks’ dovish shift in recent weeks, volatility in major currency pairs – with the exception of the Turkish Lira, Brazilian Real and Argentine Peso –

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