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

The CNY is still one of the least volatile currencies in Asia, but it has become more volatile and is the weakest in Asia this year.  Since the beginning of the year, The Chinese government has moved to emphasize management of its exchange rate against a basket of other currencies.  Their official basket includes significant components for EUR, JPY, and GBP.  As such, even though the CNY has depreciated significantly against the USD, it has been stable against its basket since July.  Nevertheless, China did allow the CNY to depreciate steadily against its basket in the first half of the year, and it appears to be pursuing a weaker exchange rate policy.  Chinese citizens and company capital outflow has persistent at a moderate pace this year, kept under control by capital flow restrictions.  However, in recent months it has picked up to a high since January when adding inflows from onshore to offshore RMB. These flows do not appear be causing severe liquidity problems for Chinese capital markets or wider global risk aversion, but they do point to underlying weakness in Chinese economic confidence and may be contributing to strength in the USD against other currencies.

The CNY is still one of the least volatile currencies in Asia, but it has become more volatile and is the weakest in Asia this year.  Since the beginning of the year, The Chinese government has moved to emphasize management of its exchange rate against a basket of other currencies.  Their official basket includes significant components for EUR, JPY, and GBP.  As such, even though the CNY has depreciated significantly against the USD, it has been stable against its basket since July.  Nevertheless, China did allow the CNY to depreciate steadily against its basket in the first half of the year, and it appears to be pursuing a weaker exchange rate policy.  Chinese citizens and company capital outflow has persistent at a moderate pace this year, kept under control by capital flow restrictions.  However, in recent months it has picked up to a high since January when adding inflows from onshore to offshore RMB. These flows do not appear be causing severe liquidity problems for Chinese capital markets or wider global risk aversion, but they do point to underlying weakness in Chinese economic confidence and may be contributing to strength in the USD against other currencies.

Weaker CNY Inducing More China Capital Outflow and Reinforcing USD Strength

Looking over the map, recent USD gains are less about renewed strength in the US economy and more about weaker trends in JPY, GBP and EUR spilling over to several emerging markets through direct links to their currencies or via currency basket regimes.  Commodity currencies and some emerging market currencies that are less influenced by these weaker major currencies, with more stable political environments, have performed solidly against the USD. We may continue to see weakness in non-dollar major currencies, provided the US economy and rates outlook remains stable. And we may see more spillover to some EM currencies in coming weeks.  Both EUR and JPY appear to be developing more sustained weaker trends and they may have some way to unwind excess gains in the first half of the year as vicious cycles turn to virtuous ones (related to rising global bond yields).  In essence, their currencies may weaken in response to their negative interest rates, improving inflation expectations, and a sense that their easy monetary policies are succeeding in holding down real yields. This may tend to perpetuate the recent trend towards a weaker EUR and JPY and relatively strong, if not outright strength, in commodity currencies. However, higher global bond yields may also tend to undermine currencies that have relied on flows into their bond market from investors seeking higher yield in an, until recent weeks, diminishing global yield environment.

Looking over the map, recent USD gains are less about renewed strength in the US economy and more about weaker trends in JPY, GBP and EUR spilling over to several emerging markets through direct links to their currencies or via currency basket regimes.  Commodity currencies and some emerging market currencies that are less influenced by these weaker major currencies, with more stable political environments, have performed solidly against the USD. We may continue to see weakness in non-dollar major currencies, provided the US economy and rates outlook remains stable. And we may see more spillover to some EM currencies in coming weeks.  Both EUR and JPY appear to be developing more sustained weaker trends and they may have some way to unwind excess gains in the first half of the year as vicious cycles turn to virtuous ones (related to rising global bond yields).  In essence, their currencies may weaken in response to their negative interest rates, improving inflation expectations, and a sense that their easy monetary policies are succeeding in holding down real yields. This may tend to perpetuate the recent trend towards a weaker EUR and JPY and relatively strong, if not outright strength, in commodity currencies. However, higher global bond yields may also tend to undermine currencies that have relied on flows into their bond market from investors seeking higher yield in an, until recent weeks, diminishing global yield environment. 

Weaker EUR & JPY, Stronger Commodity Currencies

China Macroeconomics & Academia

Christopher Balding

As the offshore CNH borrowing rates have spiked in Hong Kong, questions have understandably been raised about what is causing the spike in rates.  A variety of usual explanations have been put forth but for reasons, that we will explain, we find these reasons unsatisfying.  The unfortunate, but we believe more accurate answer, is that no one really knows what is causing the spike of this magnitude.The first explanation typically put forth is the falling liquidity in the offshore RMB market…

As the offshore CNH borrowing rates have spiked in Hong Kong, questions have understandably been raised about what is causing the spike in rates.  A variety of usual explanations have been put forth but for reasons, that we will explain, we find these reasons unsatisfying.  The unfortunate, but we believe more accurate answer, is that no one really knows what is causing the spike of this magnitude.The first explanation typically put forth is the falling liquidity in the offshore RMB market…

What's Driving 23% CNH ON Rates in Hong Kong? Honestly, Nobody Knows

The PBOC has released foreign exchange reserves data and the results are puzzling.  Even major investment banks releasing their notes on post-FX reserve analysis have expressed various degrees of bewilderment at the results.  Fundamentally, it is becoming increasingly difficult to reconcile the stock value of FX reserves and the flow changes we witness every month. There are numerous pieces of data that form our picture of the whole as to why we say this. Let’s break this down piece by piece…

The PBOC has released foreign exchange reserves data and the results are puzzling.  Even major investment banks releasing their notes on post-FX reserve analysis have expressed various degrees of bewilderment at the results.  Fundamentally, it is becoming increasingly difficult to reconcile the stock value of FX reserves and the flow changes we witness every month. There are numerous pieces of data that form our picture of the whole as to why we say this. Let’s break this down piece by piece…

A reoccurring theme is the contorted nature of the onshore and offshore RMB market.  Given some of the behavior we have outlined previously, it is not difficult to read into some of the outcomes heavy market intervention.  As an example, we have previously used, after the August 11 devaluation, the spot-futures spreads collapsed even as daily volatility quadrupled and depreciation expectations increased and were then realized. There are other data points if we dig into the calculations that…

A reoccurring theme is the contorted nature of the onshore and offshore RMB market.  Given some of the behavior we have outlined previously, it is not difficult to read into some of the outcomes heavy market intervention.  As an example, we have previously used, after the August 11 devaluation, the spot-futures spreads collapsed even as daily volatility quadrupled and depreciation expectations increased and were then realized. There are other data points if we dig into the calculations that…

Futures Market Imply Strengthening RMB: The CNH Carry Trade Play

China

The Chinese renminbi (yuan) is the official currency of The People's Republic of China. 

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CNY (USDCNY CURNCY)

Weaker CNY Inducing More China Capital Outflow and Reinforcing USD Strength

The CNY is still one of the least volatile currencies in Asia, but it has become more volatile and is the weakest in Asia this year. Since the...

Greg Gibbs

Weaker EUR & JPY, Stronger Commodity Currencies

Looking over the map, recent USD gains are less about renewed strength in the US economy and more about weaker trends in JPY, GBP and EUR spilling...

Greg Gibbs

What's Driving 23% CNH ON Rates in Hong Kong? Honestly, Nobody Knows

As the offshore CNH borrowing rates have spiked in Hong Kong, questions have understandably been raised about what is causing the spike in rates. ...

Christopher Balding

How the PBOC Is Sheltering FX Reserves

The PBOC has released foreign exchange reserves data and the results are puzzling. Even major investment banks releasing their notes on post-FX...

Christopher Balding

Futures Market Imply Strengthening RMB: The CNH Carry Trade Play

A reoccurring theme is the contorted nature of the onshore and offshore RMB market. Given some of the behavior we have outlined previously, it is...

Christopher Balding

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