Brazen ECB verbal intervention against Euro unwarranted and unlikely

Markets bereft of key macro data releases and policy events in recent days will be turning their attention tomorrow to the European Central Bank’s policy meeting. The consensus forecast, which we share, is that the ECB will leave its policy rates, including its deposit rate (-0.50%), and the modalities of its PEPP and APP unchanged. However, unnamed ECB Governing Council

Read more

UK & Sterling facing potential quadruple whammy

Sterling has enjoyed a strong, if bumpy ride, since late-June. It has been the second strongest major currency against the US Dollar and appreciated 3.7% in NEER term, thanks in part to a build-up of speculative long-Sterling positions. Markets have seemingly taken heart from government measures to support the economy, including the labour and housing markets and service sector, the

Read more

US: Much ado about nothing

Fed Chairperson Powell, in his opening speech at the “virtual” gathering of central bank governors yesterday announced that going forward the Fed would “seek to achieve inflation that averages 2% over time” and therefore that “following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time.”

Read more

China’s V-shaped recovery under the microscope

Chinese GDP growth (seasonally-adjusted) was 11.5% qoq in Q2. This was stronger than consensus forecast (+9.6% qoq) and more than reversed Q1 contraction of 9.8% qoq. This record-high growth reflects both a post-lockdown bounce in economic activity and of course extremely “favourable” base effects. This is pertinent for China but also its key major trading partners and global economy. China

Read more

Major economies & currencies – What to look out for and why it matters

Price action in major currencies was again subdued last week. With few tier-one macro data releases for markets to trade off the focus was on the reaction function of governments and central banks to covid-19 related developments. Only a handful of currencies appreciated by more than 1% vs the Dollar last week and no major currency depreciated by more than

Read more

Risk aversion, not panic, in face of uncertainty

Major currencies, equity markets and the price of crude oil since 8th June – the cycle low in the US Dollar – have exhibited reasonably limited directionality, narrow trading ranges and very low volatility, with the notable exception of currencies in Latin America. However this is not a case of more confident financial market participants finding their feet, in our

Read more

United Kingdom: Back to 1999… and to the future

Part Two of this Five-part series of Insights into the UK economy and financial markets examines the critical role played by the British government, which continues to pump tens of billions into the economy via a vast array of measures, including a furlough scheme, to support household disposable incomes and ultimately consumption and GDP growth. Households’ limited opportunities to spend,

Read more
1 2 3 4 5 10