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

It feels a bit like if I write something on the FX today, it will be redundant by tomorrow as conditions in the market are changing so quickly due to a range of global risk factors. Today French budget risk and Brexit uncertainty are dragging down the GBP and EUR, despite growing political risk in the USA as Trump threatens to shut down the government over border wall funding.  Next week, US political risk and a dovish Fed may reverse gains in the USD.  The ECB meeting poses a near-term risk for the EUR if it follows the recent trend of more dovish central bank statements, although it should stick to its current policy guidance. US-China trade war fears eased on Tuesday and may help support Asian markets.

It feels a bit like if I write something on the FX today, it will be redundant by tomorrow as conditions in the market are changing so quickly due to a range of global risk factors. Today French budget risk and Brexit uncertainty are dragging down the GBP and EUR, despite growing political risk in the USA as Trump threatens to shut down the government over border wall funding.  Next week, US political risk and a dovish Fed may reverse gains in the USD.  The ECB meeting poses a near-term risk for the EUR if it follows the recent trend of more dovish central bank statements, although it should stick to its current policy guidance. US-China trade war fears eased on Tuesday and may help support Asian markets.

Dollar up Today, but Down Tomorrow? Fed and Govt Shut-Down Risk

The market appears to be taking a grimmer view of big global risk factors (Brexit, Italy, Chinese economy, and US trade policy).  The relative certainty that the Fed will persist with rate hikes despite souring global growth confidence may by driving up the USD.  Asian markets may be undermined by signs of weaker demand for tech goods, and a lack of bounce in Chinese assets pointing to deeper more persistent troubles in China over an above fears over US trade policy.  The EUR may be responding belatedly to persistently softer growth in the Eurozone and fading confidence in its export markets.  Brexit uncertainty has increased, dragging down GBP, but it could rebound quickly if the market contemplates fresh elections and a second referendum.  Two-way risks remain into year end.  China is rolling out policies to support its economy, the Xi-Trump meeting may ease trade tensions, US political risks may become more elevated, oil price falls may support the global economy, and US rate hike expectations may fade if US equities slide accelerates.  However, a relatively robust US economy, high USA yields, and fading global confidence may drive further gains in the USD in coming weeks.

The market appears to be taking a grimmer view of big global risk factors (Brexit, Italy, Chinese economy, and US trade policy).  The relative certainty that the Fed will persist with rate hikes despite souring global growth confidence may by driving up the USD.  Asian markets may be undermined by signs of weaker demand for tech goods, and a lack of bounce in Chinese assets pointing to deeper more persistent troubles in China over an above fears over US trade policy.  The EUR may be responding belatedly to persistently softer growth in the Eurozone and fading confidence in its export markets.  Brexit uncertainty has increased, dragging down GBP, but it could rebound quickly if the market contemplates fresh elections and a second referendum.  Two-way risks remain into year end.  China is rolling out policies to support its economy, the Xi-Trump meeting may ease trade tensions, US political risks may become more elevated, oil price falls may support the global economy, and US rate hike expectations may fade if US equities slide accelerates.  However, a relatively robust US economy, high USA yields, and fading global confidence may drive further gains in the USD in coming weeks.

A Grimmer View on Global Risks Boosting the Dollar

The CNY has developed a steady downtrend.  While this is often discussed in the context of political relations between the US and China, it may just reflect the fundamental realities.  These include policy easing in China to offset credit tightening related to increased regulatory scrutiny on shadow-finance.  Risk metrics in the Eurozone have deteriorated further; including wider credit risk premiums for periphery sovereign and corporate bonds.  This appears to be contributing to a weaker EUR.  EUR/CHF may have room to fall after diverging from wider Italian bond spreads in the last month.  The rise in US real yields in the last two months appears to reflect, to a significant extent, a higher term premium.  This suggests that the Fed’s balance sheet unwind may be starting to have a bigger impact, both supporting the USD and dampening global equities.    The cost of hedging long EUR/USD positions over three-month terms is at a record high.

The CNY has developed a steady downtrend.  While this is often discussed in the context of political relations between the US and China, it may just reflect the fundamental realities.  These include policy easing in China to offset credit tightening related to increased regulatory scrutiny on shadow-finance.  Risk metrics in the Eurozone have deteriorated further; including wider credit risk premiums for periphery sovereign and corporate bonds.  This appears to be contributing to a weaker EUR.  EUR/CHF may have room to fall after diverging from wider Italian bond spreads in the last month.  The rise in US real yields in the last two months appears to reflect, to a significant extent, a higher term premium.  This suggests that the Fed’s balance sheet unwind may be starting to have a bigger impact, both supporting the USD and dampening global equities.    The cost of hedging long EUR/USD positions over three-month terms is at a record high.

ECB and Fed QE Reversal in Play, Credit Risk Dampening CNY and EUR

In the FX market, fundamentals are battling excessive positioning in several currencies, including the AUD and NZD where positioning data suggest that the market is near record net shorts.  After around six months of exodus, funds may also be looking to rebuild positions in emerging markets.  Asia has lagged other regions recently as the market continues to worry about the economic outlook in China and headwinds from sour trade relations with the US.  Nevertheless, it is participating in a recovery in risk assets in the last week.  The capacity for a sustained retreat in the USD against other major and EM currencies may be limited by the recent strong gains in real long-term yields in the US.  This may be limiting the recovery in EUR and GBP.

In the FX market, fundamentals are battling excessive positioning in several currencies, including the AUD and NZD where positioning data suggest that the market is near record net shorts.  After around six months of exodus, funds may also be looking to rebuild positions in emerging markets.  Asia has lagged other regions recently as the market continues to worry about the economic outlook in China and headwinds from sour trade relations with the US.  Nevertheless, it is participating in a recovery in risk assets in the last week.  The capacity for a sustained retreat in the USD against other major and EM currencies may be limited by the recent strong gains in real long-term yields in the US.  This may be limiting the recovery in EUR and GBP.

Fundamentals Battle Positioning, Real Yields Support the USD

Under-performing Eurozone corporate assets point to downside risk for the EUR, as does higher US real yields and higher US hedging costs.  German industrial data has deteriorated, and wage pressure in the US is rising.  Unless the Italian budget standoff is resolved, EUR should develop a clearer downtrend.  Chinese equities remain under pressure, and the recent Bloomberg reports of alleged Chinese state-sponsored hacking points to major long-lasting risks for Chinese industry.  We wonder why major media outlets are not picking up on what is arguably the biggest global geopolitical scandal.  Australian commodity prices continue to rise, but the AUD remains a proxy for heightened financial and economic risk in China.  There is some evidence of peaking in the Australian economy.

Under-performing Eurozone corporate assets point to downside risk for the EUR, as does higher US real yields and higher US hedging costs.  German industrial data has deteriorated, and wage pressure in the US is rising.  Unless the Italian budget standoff is resolved, EUR should develop a clearer downtrend.  Chinese equities remain under pressure, and the recent Bloomberg reports of alleged Chinese state-sponsored hacking points to major long-lasting risks for Chinese industry.  We wonder why major media outlets are not picking up on what is arguably the biggest global geopolitical scandal.  Australian commodity prices continue to rise, but the AUD remains a proxy for heightened financial and economic risk in China.  There is some evidence of peaking in the Australian economy.

Germany

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

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Dollar up Today, but Down Tomorrow? Fed and Govt Shut-Down Risk

It feels a bit like if I write something on the FX today, it will be redundant by tomorrow as conditions in the market are changing so quickly due...

Greg Gibbs

A Grimmer View on Global Risks Boosting the Dollar

The market appears to be taking a grimmer view of big global risk factors (Brexit, Italy, Chinese economy, and US trade policy). The relative...

Greg Gibbs

ECB and Fed QE Reversal in Play, Credit Risk Dampening CNY and EUR

The CNY has developed a steady downtrend. While this is often discussed in the context of political relations between the US and China, it may...

Greg Gibbs

Fundamentals Battle Positioning, Real Yields Support the USD

In the FX market, fundamentals are battling excessive positioning in several currencies, including the AUD and NZD where positioning data suggest...

Greg Gibbs

Mounting Risks for Eurozone and China

Under-performing Eurozone corporate assets point to downside risk for the EUR, as does higher US real yields and higher US hedging costs. German...

Greg Gibbs

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