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With England due to play Germany in the last-16 round of the Euro Championships in a few hours time, now is a good time to revisit the Sterling-Euro exchange rate. Football fans will be hoping for a pulsating sporting encounter rich in history while traders will be hoping that the GBP/EUR cross, which is currently trading in the middle of
Read moreThe US Dollar NEER has since 12th February appreciated about 2.3% to a 4-month high and its inverse correlation with the S&P 500 (-4.2%) has re-established itself. This is in line with our forecast that the Dollar’s sell-off in early February was “a small, short-term correction” rather than “another prolonged downtrend”. If anything we were not bullish enough. We are
Read moreThe British Chancellor of the Exchequer Rishi Sunak will on 3rd March, at around 12.30 UK time, present to the House of Commons the annual budget for the United Kingdom. The ruling Conservative Party has a significant working majority of 87 seats in the lower house of parliament and we expect the budget to pass pretty smoothly. While revenue and
Read moreMedia and analyst reports focussing on the scope for further US Dollar weakness and Emerging Market currency outperformance have continued to proliferate in the past month. The consensus view is still seemingly that a Democratic administration will fuel large US twin deficits and expectations of higher domestics inflation while Fed will keep rates on hold, eroding the value of Dollar
Read moreSterling underperformed in September, in line with our bearish forecast (UK & Sterling facing potential quadruple whammy, 4th September 2020). It gradually recovered from 22nd September, appreciated throughout October and peaked on 27th November. Sterling NEER has since weakened about 2.4% to an 11-week low. The sell-off at the turn of December was exacerbated by all four of the United
Read moreWhile some countries, including Sweden and United states, have eschewed national lockdowns over the past nine months or so the vast majority have adopted unprecedented measures to deal with a once in a century pandemic which has so far cost almost 1.4 million lives. The strategy has invariably been a simple yet complex one – to save lives – but
Read moreMarket volatility has been reasonably subdued in recent weeks, despite acute event (and macro data) risk in the next four weeks, including of course US presidential elections on 3rd November, and a number of significant macro, policy and geopolitical developments. In the past month volatility in major developed and emerging market currencies versus the US Dollar has only risen materially
Read moreWe are sticking to our forecast, first set out in Shape of Recovery: Square Root & Hockey Stick (5th June 2020) that global GDP, which contracted about 7.0% qoq in Q2 (a number flattered by China’s GDP), will rise a record-high 3.0% qoq in Q3. However, this implies that world GDP will still only be at the level which prevailed
Read moreMuch of the market focus in recent months has been on major reserve currencies, namely: The US Dollar which, contrary to bearish expectations and in line with our benign Dollar view, has treaded water in the past six weeks and since the Fed’s tweak on 27th August to its dual inflation and employment mandate; The Euro’s rapid appreciation in July,
Read moreSterling 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
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