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

US and global asset markets appear to have built in a completed US-China trade deal relatively soon.  Equities have rebounded this year, despite sluggish global trade and industrial activity since last year. If a trade deal proves elusive, or indeed if the US raises tariffs, it can significantly undermine global asset markets.Trump’s tweets may be tactical, but his administration has demonstrated a willingness to use tariffs to reset trade relations and for broader domestic and geopolitical objectives.  Unless there is a clear backlash on the US economy and US equities, we should expect the Trump administration to keep pushing the envelope on trade relations.The market is leaning slightly against an RBA hike later today.  We think the RBA should cut to send a clear message that its inflation target still matters and to address a sharp fall in inflation expectations in the last six month. As such we do expect them to cut.  In any case, they will probably express an easing bias.  We don’t see as much urgency for the RBNZ to cut on Wednesday, but if the RBA go, the RBNZ is likely to follow.  Either way, the pressure for lower rates, the relative strength of the US economy, and weaker global growth trends suggests downside pressure remains on both AUD and NZD.

US and global asset markets appear to have built in a completed US-China trade deal relatively soon.  Equities have rebounded this year, despite sluggish global trade and industrial activity since last year. If a trade deal proves elusive, or indeed if the US raises tariffs, it can significantly undermine global asset markets.Trump’s tweets may be tactical, but his administration has demonstrated a willingness to use tariffs to reset trade relations and for broader domestic and geopolitical objectives.  Unless there is a clear backlash on the US economy and US equities, we should expect the Trump administration to keep pushing the envelope on trade relations.The market is leaning slightly against an RBA hike later today.  We think the RBA should cut to send a clear message that its inflation target still matters and to address a sharp fall in inflation expectations in the last six month. As such we do expect them to cut.  In any case, they will probably express an easing bias.  We don’t see as much urgency for the RBNZ to cut on Wednesday, but if the RBA go, the RBNZ is likely to follow.  Either way, the pressure for lower rates, the relative strength of the US economy, and weaker global growth trends suggests downside pressure remains on both AUD and NZD.

RBA and RBNZ in the Hot Seat, Trump’s Tirade Threatens Global Risk Appetite

Stronger Eurozone Q1 GDP and German CPI suggest that the ECB need not rush to ease policy further.  However, these data points appear to be largely payback for weak previous outcomes.  More current business surveys suggest that there is no clear path back to above-trend growth.  The EUR downtrend may persist if the market continues to seek higher-yielding assets in an environment of stable or falling in global yields and credit spreads. The most-watched measures of US inflation have fallen, but there is a divergence in underlying measures and the lesser watched, but perhaps more indicative measures, have increased. The US labour market still appears tight, and the market and the Fed might be premature in writing-off inflation.  However, the Fed would welcome higher inflation, and US rates are expected to remain stable for the foreseeable future.

Stronger Eurozone Q1 GDP and German CPI suggest that the ECB need not rush to ease policy further.  However, these data points appear to be largely payback for weak previous outcomes.  More current business surveys suggest that there is no clear path back to above-trend growth.  The EUR downtrend may persist if the market continues to seek higher-yielding assets in an environment of stable or falling in global yields and credit spreads. The most-watched measures of US inflation have fallen, but there is a divergence in underlying measures and the lesser watched, but perhaps more indicative measures, have increased. The US labour market still appears tight, and the market and the Fed might be premature in writing-off inflation.  However, the Fed would welcome higher inflation, and US rates are expected to remain stable for the foreseeable future.

A Reprieve for the EUR, but Not a Game Changer

The USD is testing the top of its range for over a year against the DXY major currency index, and its highs for the year-to-date against the broader Bloomberg dollar index against ten leading currencies.  The rebound in the USD is surprising in light of the stronger than expected Chinese economic data.  However, other economic reports suggest that global manufacturing and export growth remains weak; including flash April PMIs and export data in Korea and Singapore.  Strength in the dollar reflects some risk aversion related to higher oil prices on USA’s Iran policy, Brexit risks, Italian government risks, and USA trade policy risks.  US bond yields stalled, consistent with some risk aversion.  However, US equities powered to new closing highs.

The USD is testing the top of its range for over a year against the DXY major currency index, and its highs for the year-to-date against the broader Bloomberg dollar index against ten leading currencies.  The rebound in the USD is surprising in light of the stronger than expected Chinese economic data.  However, other economic reports suggest that global manufacturing and export growth remains weak; including flash April PMIs and export data in Korea and Singapore.  Strength in the dollar reflects some risk aversion related to higher oil prices on USA’s Iran policy, Brexit risks, Italian government risks, and USA trade policy risks.  US bond yields stalled, consistent with some risk aversion.  However, US equities powered to new closing highs.  

Dollar Tests Highs as Global Risk Aversion Remains Elevated

Macroeconomics

The market absorbed more negative news on the global economy last week, including the IMF forecast downgrade, pessimistic ECB, trade threats by the US towards Mexico and Europe. However, by end week, bond yields, risk assets and the EUR were stronger, suggesting the market has built-in a quite negative scenario and may respond more to positive news in coming weeks.Global bond yields reaffirmed a recent rising trend from a low in late-March.  Equities and bond yields may have ended an extended and wide period of divergence and entered a period of convergence or co-movement.  Yields now look relatively low compared to the rebound in equities and commodities this year.There are latent signs of improved economic activity in China, and the US and China may agree on a trade deal relatively soon.

The market absorbed more negative news on the global economy last week, including the IMF forecast downgrade, pessimistic ECB, trade threats by the US towards Mexico and Europe. However, by end week, bond yields, risk assets and the EUR were stronger, suggesting the market has built-in a quite negative scenario and may respond more to positive news in coming weeks.Global bond yields reaffirmed a recent rising trend from a low in late-March.  Equities and bond yields may have ended an extended and wide period of divergence and entered a period of convergence or co-movement.  Yields now look relatively low compared to the rebound in equities and commodities this year.There are latent signs of improved economic activity in China, and the US and China may agree on a trade deal relatively soon.

FX markets are meandering with no clear trends, and it seems investors have little market conviction.  This appears to be resulting in choppy price action influenced mainly by short term technicals rather than macroeconomic developments.We have noted that in recent years the FX market has appeared to be less pre-emptive, and often responds surprisingly sharply after the event.  As such we remain wary of a reversal of recent USD strength if, as it seems increasingly likely, a negotiated trade and Brexit deal might be found relatively soon. If there is a trend, it is a mild downtrend in the EUR that has underperformed most other currencies over the last six months.  It failed to rise much in January when most other currencies experienced a rebound against the USD, and it has continued to drift lower, in recent months, during a period of mixed to weaker price action in other currencies against the USD.The market may be moving into a yield-seeking mode.  Yield compression tends to shift capital to higher-yielding assets, resulting in a stronger performance for higher-yielding currencies even as their yield spreads narrow. The USD is now one of the higher-yielding currencies.

FX markets are meandering with no clear trends, and it seems investors have little market conviction.  This appears to be resulting in choppy price action influenced mainly by short term technicals rather than macroeconomic developments.We have noted that in recent years the FX market has appeared to be less pre-emptive, and often responds surprisingly sharply after the event.  As such we remain wary of a reversal of recent USD strength if, as it seems increasingly likely, a negotiated trade and Brexit deal might be found relatively soon. If there is a trend, it is a mild downtrend in the EUR that has underperformed most other currencies over the last six months.  It failed to rise much in January when most other currencies experienced a rebound against the USD, and it has continued to drift lower, in recent months, during a period of mixed to weaker price action in other currencies against the USD.The market may be moving into a yield-seeking mode.  Yield compression tends to shift capital to higher-yielding assets, resulting in a stronger performance for higher-yielding currencies even as their yield spreads narrow. The USD is now one of the higher-yielding currencies.

Yield Grab Supports the USD, Japanification Fear Weakens EUR

Germany

The euro is the official currency of the European Economic & Monetary Union. 

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Euro (USDEUR CURNCY)

RBA and RBNZ in the Hot Seat, Trump’s Tirade Threatens Global Risk Appetite

US and global asset markets appear to have built in a completed US-China trade deal relatively soon. Equities have rebounded this year, despite...

Greg Gibbs

A Reprieve for the EUR, but Not a Game Changer

Stronger Eurozone Q1 GDP and German CPI suggest that the ECB need not rush to ease policy further. However, these data points appear to be largely...

Greg Gibbs

Dollar Tests Highs as Global Risk Aversion Remains Elevated

The USD is testing the top of its range for over a year against the DXY major currency index, and its highs for the year-to-date against the...

Greg Gibbs

Bond Yields Rope-A-Dope and Fight Back

The market absorbed more negative news on the global economy last week, including the IMF forecast downgrade, pessimistic ECB, trade threats by the...

Greg Gibbs

Yield Grab Supports the USD, Japanification Fear Weakens EUR

FX markets are meandering with no clear trends, and it seems investors have little market conviction. This appears to be resulting in choppy price...

Greg Gibbs

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