Founder

Olivier Desbarres

Exacting. Excellent. Exceeding. Exemplary.

4X Global Research

4X Global Research was founded in 2017 to provide institutional and corporate clients with the substantive research, high-quality analysis and thoughtful insight on Emerging and G20 economies and financial markets they need to make informed and timely decisions and gain an edge in their investments.

FX & Rates

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 a narrow 7-week range of only 1.4% and has exhibited very little volatility, will throw up some excitement of its own in the second half of the year. 
Our core scenario is that the GBP/EUR cross will fall short of setting the FX world alight but will appreciate slightly in Q3, for three inter-connected reasons.
First, international travel restrictions in the UK and Eurozone, while admittedly fluid, are likely to result in far smaller net outbound tourism from the UK this summer than compared to previous “normal” years, in our view. 
If this holds true, the typically very large UK tourism deficits, including with Eurozone countries, are likely to be far smaller than normal in July-August, which will could in turn up-end Sterling’s typical seasonal weakness versus the Euro in these two months.
Second, we think these respective travel restrictions will help boost the UK economy, particularly if as per our core scenario the British government lifts all, or at least most remaining social distancing restrictions on 19th July. The UK is on track to have double-vaccinated 80% of its adult population by mid-July, with Eurozone countries on average still about six weeks behind according to our estimates.
The upshot is that the GDP growth differential between the UK and Eurozone as measured by the Composite PMI, which has narrowed in the past two months, will widen again in coming months and push GBP/EUR higher, in our view.
Finally, as a result of this (expected) relative pick-up in growth and inflation dynamics in the UK and Eurozone we think the risk is tilted towards the Bank of England’s monetary policy stance becoming increasingly less dovish relative to the European Central Bank’s.

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 a narrow 7-week range of only 1.4% and has exhibited very little volatility, will throw up some excitement of its own in the second half of the year. 
Our core scenario is that the GBP/EUR cross will fall short of setting the FX world alight but will appreciate slightly in Q3, for three inter-connected reasons.
First, international travel restrictions in the UK and Eurozone, while admittedly fluid, are likely to result in far smaller net outbound tourism from the UK this summer than compared to previous “normal” years, in our view. 
If this holds true, the typically very large UK tourism deficits, including with Eurozone countries, are likely to be far smaller than normal in July-August, which will could in turn up-end Sterling’s typical seasonal weakness versus the Euro in these two months.
Second, we think these respective travel restrictions will help boost the UK economy, particularly if as per our core scenario the British government lifts all, or at least most remaining social distancing restrictions on 19th July. The UK is on track to have double-vaccinated 80% of its adult population by mid-July, with Eurozone countries on average still about six weeks behind according to our estimates.
The upshot is that the GDP growth differential between the UK and Eurozone as measured by the Composite PMI, which has narrowed in the past two months, will widen again in coming months and push GBP/EUR higher, in our view.
Finally, as a result of this (expected) relative pick-up in growth and inflation dynamics in the UK and Eurozone we think the risk is tilted towards the Bank of England’s monetary policy stance becoming increasingly less dovish relative to the European Central Bank’s. 

Sterling Leads Euro 1-0 at Half-Time in Dull Encounter but Could Extend Advantage

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Thematic (Sector/Industry)

*Mainland China Crackdown: Unsurprisingly, this past week mainland China has continued its steady official crackdown on cryptoccurency, reiterating its ban on providing cryptocurrency services, placing pressure on bitcoin miners, etc; and *Tether Flows: Given the mainland Chinese crackdown, it would appear that investors don't understand Tether’s systemic risks; and/or mainland Chinese-based investors are aggressively moving funds out of the country via this channel prior to it being shut down completely. If  authorities decide the shut the Tether channel over its use for moving large amounts of capital out of mainland China, cryptocurrency market liquidity would essentially dry up as Tether accounts for over 60% of global cryptocurrency daily trading volumes.

*Mainland China Crackdown: Unsurprisingly, this past week mainland China has continued its steady official crackdown on cryptoccurency, reiterating its ban on providing cryptocurrency services, placing pressure on bitcoin miners, etc; and *Tether Flows: Given the mainland Chinese crackdown, it would appear that investors don't understand Tether’s systemic risks; and/or mainland Chinese-based investors are aggressively moving funds out of the country via this channel prior to it being shut down completely. If  authorities decide the shut the Tether channel over its use for moving large amounts of capital out of mainland China, cryptocurrency market liquidity would essentially dry up as Tether accounts for over 60% of global cryptocurrency daily trading volumes. 

The Federal Reserve at its policy meeting on 16th June, whether inadvertently or by design, reset financial markets’ clocks. The dust has since settled somewhat, with US short-end and long-end yields, the US Dollar and S&amp;P 500 trading sideways for the past couple of sessions. When looking at the past month, hawks, doves, bulls and bears can all claim at least a partial victory.The million Dollar question remains when the Federal Reserve will start tapering its asset purchases and hiking its policy rate. FOMC members will undoubtedly try to refine their thoughts in coming weeks, as will Chairperson Powell today in his testimony before the Joint Economic Committee.  But the next big hurdle for markets is Friday’s release of PCE-inflation data for May. Markets in May glided past US inflation data releases largely unscathed, in line with our forecasts, but the financial landscape has undergone a paradigm shift in the past week.Our view is that that unless PCE-inflation in May surprises materially to the upside, US short-end yields may retrace somewhat and the Dollar give back some its recent gains – but this is admittedly not a high conviction call.The Federal Reserve’s anonymous dot-charts have their limitations but for now we are sticking to “our core scenario that the Federal Reserve will only start tapering its monthly asset purchases in 2022 and only start hiking its policy rate in 2023”.We also think that that the gap between the start of the taper and the start of the rate hiking cycle will likely be materially shorter than the 24 months gap in 2013-2015.Our next FIRMS report will focus on Sterling and Euro which are drawn level as we approach half-time. Sterling has at the margin dominated the encounter in the past month, with the GBP/EUR cross currently trading around 1.168 – the upper half of a still depressingly narrow 18-week range of just 2.7%. We think Sterling will continue to slowly pull ahead in Q3 before losing steam in Q4.

The Federal Reserve at its policy meeting on 16th June, whether inadvertently or by design, reset financial markets’ clocks. The dust has since settled somewhat, with US short-end and long-end yields, the US Dollar and S&amp;P 500 trading sideways for the past couple of sessions. When looking at the past month, hawks, doves, bulls and bears can all claim at least a partial victory.The million Dollar question remains when the Federal Reserve will start tapering its asset purchases and hiking its policy rate. FOMC members will undoubtedly try to refine their thoughts in coming weeks, as will Chairperson Powell today in his testimony before the Joint Economic Committee.  But the next big hurdle for markets is Friday’s release of PCE-inflation data for May. Markets in May glided past US inflation data releases largely unscathed, in line with our forecasts, but the financial landscape has undergone a paradigm shift in the past week.Our view is that that unless PCE-inflation in May surprises materially to the upside, US short-end yields may retrace somewhat and the Dollar give back some its recent gains – but this is admittedly not a high conviction call.The Federal Reserve’s anonymous dot-charts have their limitations but for now we are sticking to “our core scenario that the Federal Reserve will only start tapering its monthly asset purchases in 2022 and only start hiking its policy rate in 2023”.We also think that that the gap between the start of the taper and the start of the rate hiking cycle will likely be materially shorter than the 24 months gap in 2013-2015.Our next FIRMS report will focus on Sterling and Euro which are drawn level as we approach half-time. Sterling has at the margin dominated the encounter in the past month, with the GBP/EUR cross currently trading around 1.168 – the upper half of a still depressingly narrow 18-week range of just 2.7%. We think Sterling will continue to slowly pull ahead in Q3 before losing steam in Q4.

Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

While our base case is not one of significant dollar strengthening, we need to be cognizant of the risk. As such, we evaluate which currencies are the most vulnerable if we get a repeat of the Q1 dollar appreciation and EM FX sell-off on the back of higher US Treasury yields.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

While our base case is not one of significant dollar strengthening, we need to be cognizant of the risk. As such, we evaluate which currencies are the most vulnerable if we get a repeat of the Q1 dollar appreciation and EM FX sell-off on the back of higher US Treasury yields.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Which Currencies Are Most Vulnerable to Dollar Strengthening?

In this note, we identify the currencies that have outperformed and underperformed as EM currencies have overall appreciated with the dollar depreciating since the end of March. We also place our outstanding trade recommendations in the context of the relative performances of EM currencies.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

In this note, we identify the currencies that have outperformed and underperformed as EM currencies have overall appreciated with the dollar depreciating since the end of March. We also place our outstanding trade recommendations in the context of the relative performances of EM currencies.Separately, the attached file is a snapshot of the EM currency market in which we seek to identify the leaders and laggards among currencies by comparing the performance of each to its history as well as to other currencies based on their respective betas to an EM currency index.

FX Dashboard: Updating the Winners and Losers in the EM Turnaround

United States

The euro is the official currency of the European Economic & Monetary Union.  The US dollar is the official currency of the United States of America.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

EURO/US DOLLAR (EURUSD CURNCY)

Sterling Leads Euro 1-0 at Half-Time in Dull Encounter but Could Extend Advantage

GBP/EUR in narrow range in past 7 weeks as UK has lost macro & social distancing lead over Eurozone. But GBP/EUR could rally in Q3 as summer...

Olivier Desbarres

Tether – Holding On By A String

TETHER: Mainland China is cracking down on crypto. If authorities decide to close Tether, the cryptocurrency market liquidity could essentially dry...

Thomas J. Monaco

Fed: Same Game, Different Rules

Fed has reset rules of the game but we still think QE taper is about 6 months away and that Fed won't start hiking till 2023 - albeit potentially...

Olivier Desbarres

FX Dashboard: Which Currencies Are Most Vulnerable to Dollar Strengthening?

We evaluate which currencies are the most vulnerable under the risk scenario of a repeat of the Q1 dollar appreciation and EM FX sell-off on the...

Gautam Jain, PhD, CFA

FX Dashboard: Updating the Winners and Losers in the EM Turnaround

We identify the currencies that have outperformed and underperformed with the dollar depreciating since the end of March and place our outstanding...

Gautam Jain, PhD, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)