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

In our view, the probability of a Bank of Canada hike on Wednesday is essentially zero, creating some risk of a further kneejerk rise in USD/CAD.  The market is pricing in a modest 19% chance of a hike.  The tone of the Bank’s statement, press conference and Monetary Policy Review will probably reflect the message delivered by Governor Poloz’s speech on 27-Sep; that the Bank is now more data dependent, and not a slave to its models.  The tone of recent data is that the economy has moderated from its rapid growth in the first half of the year.  There is enough reason to wait for a few months to see how the economy responds to the two quick-fire hikes in Q3.  However, the Bank is still likely to view the economy in-line with the forecasts presented in its July MPR and retain a clear tightening bias.  The labour market in particular retained its strength in September, and wage growth has lifted from low levels.  The recent retreat in the CAD exchange rate is consistent with the narrowing in its yield advantage in the last month.  Further gains in USD/CAD are possible in the context of a stronger USD and NAFTA uncertainty.

In our view, the probability of a Bank of Canada hike on Wednesday is essentially zero, creating some risk of a further kneejerk rise in USD/CAD.  The market is pricing in a modest 19% chance of a hike.  The tone of the Bank’s statement, press conference and Monetary Policy Review will probably reflect the message delivered by Governor Poloz’s speech on 27-Sep; that the Bank is now more data dependent, and not a slave to its models.  The tone of recent data is that the economy has moderated from its rapid growth in the first half of the year.  There is enough reason to wait for a few months to see how the economy responds to the two quick-fire hikes in Q3.  However, the Bank is still likely to view the economy in-line with the forecasts presented in its July MPR and retain a clear tightening bias.  The labour market in particular retained its strength in September, and wage growth has lifted from low levels.  The recent retreat in the CAD exchange rate is consistent with the narrowing in its yield advantage in the last month.  Further gains in USD/CAD are possible in the context of a stronger USD and NAFTA uncertainty.

The market has spent much of this year unwinding a structural short EUR position.  Bank analysts have shifted to a bullish long-term EUR view, ECB QE taper is largely priced-in, the political risk gap between Europe and the USA has narrowed, and the EUR is now stretched from its widening yield disadvantage.  Traders appear to hold an extreme long EUR position, and a head-and-shoulders top appears to be developing; a break of recent lows might target a fall to 1.13.  The US is making progress towards tax reform, and the market is too sanguine on US inflation risks.  Traders also appear to be holding extreme long positions in CAD, the Bank of Canada has shifted its tone on its policy outlook, Canada housing market is slowing, and negotiations on NAFTA are not going well (although have been extended).

The market has spent much of this year unwinding a structural short EUR position.  Bank analysts have shifted to a bullish long-term EUR view, ECB QE taper is largely priced-in, the political risk gap between Europe and the USA has narrowed, and the EUR is now stretched from its widening yield disadvantage.  Traders appear to hold an extreme long EUR position, and a head-and-shoulders top appears to be developing; a break of recent lows might target a fall to 1.13.  The US is making progress towards tax reform, and the market is too sanguine on US inflation risks.  Traders also appear to be holding extreme long positions in CAD, the Bank of Canada has shifted its tone on its policy outlook, Canada housing market is slowing, and negotiations on NAFTA are not going well (although have been extended).

EUR and CAD Need to Square up to Growing Threats

Canadian house price growth has cooled abruptly in recent months from rapid growth in the first half of the year.  After broad-based economic strength in the first half of the year, recent Canadian economic reports have been mixed.  A reversal of fortunes in the housing market may contain consumer confidence and activity.  In late-September, BoC Governor Poloz said that the Bank would be more data dependent in assessing future rate hikes after two back-to-back hikes in Jul/Sep this year. The risk is shifting to a more prolonged period before Canadian rates are raised further.  NAFTA uncertainty also poses a risk for the Canadian economy.  US PPI was stronger than expected and may reflect the impact of a weaker USD this year (CPI due tomorrow).  The Fed minutes were seen as dovish, revealing FOMC concerns over low inflation.  However, upside risk for US yields may arise from the impact of Hurricane recovery on growth, wages and inflation into year end.  The Fed and the US rates market do not appear to have built-in much risk that tax reform will be enacted next year.  Warsh would seem the best fit for Fed Governor and this prospect may boost US yields.

Canadian house price growth has cooled abruptly in recent months from rapid growth in the first half of the year.  After broad-based economic strength in the first half of the year, recent Canadian economic reports have been mixed.  A reversal of fortunes in the housing market may contain consumer confidence and activity.  In late-September, BoC Governor Poloz said that the Bank would be more data dependent in assessing future rate hikes after two back-to-back hikes in Jul/Sep this year. The risk is shifting to a more prolonged period before Canadian rates are raised further.  NAFTA uncertainty also poses a risk for the Canadian economy.  US PPI was stronger than expected and may reflect the impact of a weaker USD this year (CPI due tomorrow).  The Fed minutes were seen as dovish, revealing FOMC concerns over low inflation.  However, upside risk for US yields may arise from the impact of Hurricane recovery on growth, wages and inflation into year end.  The Fed and the US rates market do not appear to have built-in much risk that tax reform will be enacted next year.  Warsh would seem the best fit for Fed Governor and this prospect may boost US yields.

CAD Facing Risks from a Weaker Housing Market and NAFTA

Surprisingly, futures positioning in the USD moved to a new high in net shorts on 3-Oct, despite the rebound in the USD over the last month.  It seems the market is sceptical that the recent rise in the USD will last, and has been in a ‘sell-the-rally’ frame of mind.  However, the rise in the USD has been consistent with a higher short and long-term yield advantage.  US economic reports, including the labor data on Friday, support the notion that the USD can rise further.  The USD has rallied in part due to a rejuvenated push for tax reform.  However, it appears that the market retains a significant risk premium (discounting the USD) to account for US political uncertainty.

Surprisingly, futures positioning in the USD moved to a new high in net shorts on 3-Oct, despite the rebound in the USD over the last month.  It seems the market is sceptical that the recent rise in the USD will last, and has been in a ‘sell-the-rally’ frame of mind.  However, the rise in the USD has been consistent with a higher short and long-term yield advantage.  US economic reports, including the labor data on Friday, support the notion that the USD can rise further.  The USD has rallied in part due to a rejuvenated push for tax reform.  However, it appears that the market retains a significant risk premium (discounting the USD) to account for US political uncertainty.

Skeptical Market Is Very Short US Dollars

The rise in US long-term yields may continue, supported by Fed QT, ECB taper, rising oil prices, solid underlying recovery in the USA, solid global growth, diminishing uncertainty from geopolitical risks and hurricane season, and now a clearer focus on tax reform.  The USD/JPY is likely to mirror any further rise in yields.  The Bank of Canada walked back rate hike expectations.  NZD/USD may succumb to yet further narrowing in its razor-thin yield advantage with diminishing reasons to explain its strength.

The rise in US long-term yields may continue, supported by Fed QT, ECB taper, rising oil prices, solid underlying recovery in the USA, solid global growth, diminishing uncertainty from geopolitical risks and hurricane season, and now a clearer focus on tax reform.  The USD/JPY is likely to mirror any further rise in yields.  The Bank of Canada walked back rate hike expectations.  NZD/USD may succumb to yet further narrowing in its razor-thin yield advantage with diminishing reasons to explain its strength.

Rising US Yields to Lift USD/JPY; CAD and NZD Vulnerable

Canada

The Canadian dollar is the official currency of Canada. 

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CAD (USDCAD CURNCY)

Bank of Canada on Hold This Time

In our view, the probability of a Bank of Canada hike on Wednesday is essentially zero, creating some risk of a further kneejerk rise in USD/CAD....

Greg Gibbs

EUR and CAD Need to Square up to Growing Threats

The market has spent much of this year unwinding a structural short EUR position. Bank analysts have shifted to a bullish long-term EUR view, ECB...

Greg Gibbs

CAD Facing Risks from a Weaker Housing Market and NAFTA

Canadian house price growth has cooled abruptly in recent months from rapid growth in the first half of the year. After broad-based economic...

Greg Gibbs

Skeptical Market Is Very Short US Dollars

Surprisingly, futures positioning in the USD moved to a new high in net shorts on 3-Oct, despite the rebound in the USD over the last month. It...

Greg Gibbs

Rising US Yields to Lift USD/JPY; CAD and NZD Vulnerable

The rise in US long-term yields may continue, supported by Fed QT, ECB taper, rising oil prices, solid underlying recovery in the USA, solid global...

Greg Gibbs

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