FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

FX & Rates

Relative commodity price trends (stronger energy and weaker dairy) help account for some of the recent recovery in the AUD/NZD.  Further supporting the recovery is the rise in global bond yields, tending to remove some of the additional demand for NZD generated by a global investor pre-occupation in a ‘search for yield’.  There may be more upside for the AUD/NZD, but revisiting the fair-value models we introduced in August, suggests that it is not far from fair-value.  Instead, we look at CAD/NZD.  As a more pure energy play, CAD has an advantage of the AUD that may be dragged down by weaker steel prices in China since August.  Furthermore, CAD is a much lower yielder than NZD or AUD, and thus is unlikely to need to reverse earlier gains related to a ‘search for yield’ as global bond yields rise.  Our regression analysis suggests that NZD/CAD has not yet fallen by enough to account for either the diversion in oil from milk, or the rise in global bond yields.  Furthermore, recent macroprudential measures in New Zealand appear to be working to slow its housing market and the RBNZ is likely, in our view, to proceed with a rate cut in November.  The Canadian economy has been mixed lately, but fiscal expansion is likely to be felt more as the year progresses and recent data in the USA is somewhat more positive, suggesting potential upside revisions for the USA and Canadian economic outlooks.

Relative commodity price trends (stronger energy and weaker dairy) help account for some of the recent recovery in the AUD/NZD.  Further supporting the recovery is the rise in global bond yields, tending to remove some of the additional demand for NZD generated by a global investor pre-occupation in a ‘search for yield’.  There may be more upside for the AUD/NZD, but revisiting the fair-value models we introduced in August, suggests that it is not far from fair-value.  Instead, we look at CAD/NZD.  As a more pure energy play, CAD has an advantage of the AUD that may be dragged down by weaker steel prices in China since August.  Furthermore, CAD is a much lower yielder than NZD or AUD, and thus is unlikely to need to reverse earlier gains related to a ‘search for yield’ as global bond yields rise.  Our regression analysis suggests that NZD/CAD has not yet fallen by enough to account for either the diversion in oil from milk, or the rise in global bond yields.  Furthermore, recent macroprudential measures in New Zealand appear to be working to slow its housing market and the RBNZ is likely, in our view, to proceed with a rate cut in November.  The Canadian economy has been mixed lately, but fiscal expansion is likely to be felt more as the year progresses and recent data in the USA is somewhat more positive, suggesting potential upside revisions for the USA and Canadian economic outlooks.

GBP has finally and belatedly responded to the heightened and prolonged Brexit uncertainty, notwithstanding a resilient UK economy and prospects of significant UK fiscal stimulus.  The outlook remains negative, but it is risky to jump on the selling bandwagon.  Bond yields may have resumed a fledgling rising trend, supported by the BoJ’s ‘Yield Curve Control’ and notions of ECB tapering that stem from the same concern that flat yield curves are bad for the financial sector and may be counter-productive. Higher yields are also supported by increasing expectations of more fiscal stimulus and firming commodity prices related to modest improvement in global economic activity.  Yields may be rebounding from extraordinary lows generated by fear of a shortage of bonds to feed QE programs, and depressed views on inflation and secular stagnation.  Gold has broken key support, weighed down by rising bond yields and firming confidence in global growth.  JPY has also broken a year-long downtrend and combined with weaker trends in gold and GBP is spilling over to broader gains in the USD, even though US economic data has been mixed. Vague ECB taper talk has added uncertainty.  It may tend to reinforce a rise in yields, but threatens to turn what was a constructive market to one that is more risk-averse.

GBP has finally and belatedly responded to the heightened and prolonged Brexit uncertainty, notwithstanding a resilient UK economy and prospects of significant UK fiscal stimulus.  The outlook remains negative, but it is risky to jump on the selling bandwagon.  Bond yields may have resumed a fledgling rising trend, supported by the BoJ’s ‘Yield Curve Control’ and notions of ECB tapering that stem from the same concern that flat yield curves are bad for the financial sector and may be counter-productive. Higher yields are also supported by increasing expectations of more fiscal stimulus and firming commodity prices related to modest improvement in global economic activity.  Yields may be rebounding from extraordinary lows generated by fear of a shortage of bonds to feed QE programs, and depressed views on inflation and secular stagnation.  Gold has broken key support, weighed down by rising bond yields and firming confidence in global growth.  JPY has also broken a year-long downtrend and combined with weaker trends in gold and GBP is spilling over to broader gains in the USD, even though US economic data has been mixed. Vague ECB taper talk has added uncertainty.  It may tend to reinforce a rise in yields, but threatens to turn what was a constructive market to one that is more risk-averse.

AmpGFX - Knock-Ons from Rising Bond Yields

News related to Deutsche Bank turned around what was a developing risk positive trend in global markets and currencies this week.  A stronger oil price helped weaken the JPY and strengthen energy producers, more broadly boosting risk appetite.  We are not convinced problems at Deutsche bank will have a sustained negative impact on global markets, and would prefer to fade the risk-off mood on Thursday.  However, as we approach month-end and key US inflation data on Friday, patience is advised.  Sentiment is likely to remain fragile in the lead-up to the US election and a probable rate hike by the Fed in December.  Low global bond yields have tended to undermine bank equities and expose problems at the weakest banks.  This issue has been felt most in Europe where the ECB is pursuing a negative interest rate policy and its QE program has flattened the yield curve.  Japan faces similar problems and the BoJ implemented Yield Curve Control to help support its financial sector, but yields remain low and Japanese bank shares have failed to recover much.  However, low yields have more broadly helped lift global asset markets; particularly those in emerging markets. As discussed earlier in the week, commodity prices are firming and may reflect a strengthening global economy albeit from a modest growth rate.  We may see more evidence of this in PMI data that are coming out today in many countries.

News related to Deutsche Bank turned around what was a developing risk positive trend in global markets and currencies this week.  A stronger oil price helped weaken the JPY and strengthen energy producers, more broadly boosting risk appetite.  We are not convinced problems at Deutsche bank will have a sustained negative impact on global markets, and would prefer to fade the risk-off mood on Thursday.  However, as we approach month-end and key US inflation data on Friday, patience is advised.  Sentiment is likely to remain fragile in the lead-up to the US election and a probable rate hike by the Fed in December.  Low global bond yields have tended to undermine bank equities and expose problems at the weakest banks.  This issue has been felt most in Europe where the ECB is pursuing a negative interest rate policy and its QE program has flattened the yield curve.  Japan faces similar problems and the BoJ implemented Yield Curve Control to help support its financial sector, but yields remain low and Japanese bank shares have failed to recover much.  However, low yields have more broadly helped lift global asset markets; particularly those in emerging markets. As discussed earlier in the week, commodity prices are firming and may reflect a strengthening global economy albeit from a modest growth rate.  We may see more evidence of this in PMI data that are coming out today in many countries. 

AmpGFX - Banks Weak, but Commodities Firming

FX markets are still searching for clear direction.  We have seen some evidence of a return to demand for higher yielding EM and commodity currencies in a risk constrained environment.  Lower global yields and some evidence of economic stability or strength in selected EM and commodity producers are attracting capital to these currencies.  The JPY remains relatively strong, but so far USD/JPY has stalled above the 100 level.  EUR remains directionless held back by fundamental concerns over Brexit and its banks.  But equally the aversion to risk from these factors may be discouraging capital outflow and supporting the EUR.  GBP looks vulnerable, so far stalling just above support lines since the Brexit vote against several currencies.  Commodity markets are showing some signs of strength.  Oil may be the exception, but it too is in the middle of its range since mid-year.  Economic growth appears to have stabilized and has been better that expected in China this year, helping support commodity prices.  This may provide the case for further gains in EM and commodity currencies.  However, this depends on the market continuing to see US rate rises delivered in a halting fashion.  USA durable goods orders and PCE inflation data this week pose a risk to the benign outlook for USA rates.

FX markets are still searching for clear direction.  We have seen some evidence of a return to demand for higher yielding EM and commodity currencies in a risk constrained environment.  Lower global yields and some evidence of economic stability or strength in selected EM and commodity producers are attracting capital to these currencies.  The JPY remains relatively strong, but so far USD/JPY has stalled above the 100 level.  EUR remains directionless held back by fundamental concerns over Brexit and its banks.  But equally the aversion to risk from these factors may be discouraging capital outflow and supporting the EUR.  GBP looks vulnerable, so far stalling just above support lines since the Brexit vote against several currencies.  Commodity markets are showing some signs of strength.  Oil may be the exception, but it too is in the middle of its range since mid-year.  Economic growth appears to have stabilized and has been better that expected in China this year, helping support commodity prices.  This may provide the case for further gains in EM and commodity currencies.  However, this depends on the market continuing to see US rate rises delivered in a halting fashion.  USA durable goods orders and PCE inflation data this week pose a risk to the benign outlook for USA rates.

AmpGFX - Non-Oil Commodity Prices May Reveal Improving Global Growth Trends

Currency markets have been mixed, choppy and in most cases exhibiting no trend over recent months. There are few clear opportunities and a number of risks to consider.  Two key data points this week in the USA include PCE inflation and durable goods orders. The Fed has forecast a subdued outlook for inflation, but it is not far below target, and the CPI measure is trending higher and above target.  Capital investment has been weak, but there has been a lift-off in orders in the two months to July, it will be important to see if this can build further.  However, recent broad activity indicators have been weak.  The forecast for a more gradual and shallow hiking path by the Fed helped lift some EM and commodity currencies last week. The BoJ policy meeting also contributed to a drop in long term yields back into their previous range, contributing to a rebound in equities and gold.  EM bonds and equities led the rebound in riskier assets and may continue to attract demand unless the low global rates view at the Fed is questioned.  Brexit and banking sector concerns may weigh on the GBP and EUR.  CAD looks a bit expensive relative to rates and oil prices.  A number of key events this week may set the tone for CAD; including a speech by Poloz, USA presidential debate, OPEC talks, and GDP data.

Currency markets have been mixed, choppy and in most cases exhibiting no trend over recent months. There are few clear opportunities and a number of risks to consider.  Two key data points this week in the USA include PCE inflation and durable goods orders. The Fed has forecast a subdued outlook for inflation, but it is not far below target, and the CPI measure is trending higher and above target.  Capital investment has been weak, but there has been a lift-off in orders in the two months to July, it will be important to see if this can build further.  However, recent broad activity indicators have been weak.  The forecast for a more gradual and shallow hiking path by the Fed helped lift some EM and commodity currencies last week. The BoJ policy meeting also contributed to a drop in long term yields back into their previous range, contributing to a rebound in equities and gold.  EM bonds and equities led the rebound in riskier assets and may continue to attract demand unless the low global rates view at the Fed is questioned.  Brexit and banking sector concerns may weigh on the GBP and EUR.  CAD looks a bit expensive relative to rates and oil prices.  A number of key events this week may set the tone for CAD; including a speech by Poloz, USA presidential debate, OPEC talks, and GDP data.

AmpGFX - Tough Currency Markets Await Key Events

Australia

The Australian dollar is the official currency of the Commonwealth of Australia.

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AUD (USDAUD CURNCY)

Downside Potential in NZD Vs. CAD

Relative commodity price trends (stronger energy and weaker dairy) help account for some of the recent recovery in the AUD/NZD. Further supporting...

Greg Gibbs

AmpGFX - Knock-Ons from Rising Bond Yields

GBP has finally and belatedly responded to the heightened and prolonged Brexit uncertainty, notwithstanding a resilient UK economy and prospects of...

Greg Gibbs

AmpGFX - Banks Weak, but Commodities Firming

News related to Deutsche Bank turned around what was a developing risk positive trend in global markets and currencies this week. A stronger oil...

Greg Gibbs

AmpGFX - Non-Oil Commodity Prices May Reveal Improving Global Growth Trends

FX markets are still searching for clear direction. We have seen some evidence of a return to demand for higher yielding EM and commodity...

Greg Gibbs

AmpGFX - Tough Currency Markets Await Key Events

Currency markets have been mixed, choppy and in most cases exhibiting no trend over recent months. There are few clear opportunities and a number...

Greg Gibbs

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Market Cap (USDm)

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