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 US economy has retained strong momentum, generally beating expectations, while the Eurozone economy has lost momentum and has consistently underwhelmed expectations over recent months.  The ECB said it has been monitoring strength in the EUR since January.  The evidence suggests that indeed EUR strength has contributed to weaker growth and is a problem for the ECB.  The EUR has fallen after the last four ECB meetings, as Draghi emphasised patience and warned of risks. The same appears likely this week. It may seem distracting to consider relative economic trends and rate spreads when the USD has suffered a big picture slump in confidence, but the background noise may no longer be drowning out the economic action at the front of the stage.

The US economy has retained strong momentum, generally beating expectations, while the Eurozone economy has lost momentum and has consistently underwhelmed expectations over recent months.  The ECB said it has been monitoring strength in the EUR since January.  The evidence suggests that indeed EUR strength has contributed to weaker growth and is a problem for the ECB.  The EUR has fallen after the last four ECB meetings, as Draghi emphasised patience and warned of risks. The same appears likely this week. It may seem distracting to consider relative economic trends and rate spreads when the USD has suffered a big picture slump in confidence, but the background noise may no longer be drowning out the economic action at the front of the stage.

We see the recent resurgence in US yields as potentially the most important driver in the coming week or longer.  The resumption of the rise in US yields in the last week appears related to a more persistent underlying trend.  It has been supported by a rise in commodity prices, but occurred despite weaker confidence in global growth and equity markets, suggesting it may be a more pervasive trend likely to influence other markets, rather than be influenced by them. The USD reaction to higher US yields has hardly been straightforward in the last year, but it did strengthen broadly in-line with higher yields in the last week.  This may reflect troubles in the tech sector and broader geopolitical uncertainty undermining EM markets. EM equities and currencies have underperformed developed markets in the last month.  Some easing in trade tensions over the weekend may help stabilise EM currencies and global equities.  However, concerns over the tech sector are starting to run deeper and may prevent their recovery.  If US yields rise significantly further, they may also cap equities more broadly, and undermine EM currencies, especially high yielders more susceptible to US yields.  USD/JPY may initially benefit from higher US yields, but equity performance may limit gains.  EUR has been able to shake off a more significant slowdown in Eurozone economy momentum to date, underpinned by capital flows from SEK, CHF and RUB, but these have likely peaked.

We see the recent resurgence in US yields as potentially the most important driver in the coming week or longer.  The resumption of the rise in US yields in the last week appears related to a more persistent underlying trend.  It has been supported by a rise in commodity prices, but occurred despite weaker confidence in global growth and equity markets, suggesting it may be a more pervasive trend likely to influence other markets, rather than be influenced by them. The USD reaction to higher US yields has hardly been straightforward in the last year, but it did strengthen broadly in-line with higher yields in the last week.  This may reflect troubles in the tech sector and broader geopolitical uncertainty undermining EM markets. EM equities and currencies have underperformed developed markets in the last month.  Some easing in trade tensions over the weekend may help stabilise EM currencies and global equities.  However, concerns over the tech sector are starting to run deeper and may prevent their recovery.  If US yields rise significantly further, they may also cap equities more broadly, and undermine EM currencies, especially high yielders more susceptible to US yields.  USD/JPY may initially benefit from higher US yields, but equity performance may limit gains.  EUR has been able to shake off a more significant slowdown in Eurozone economy momentum to date, underpinned by capital flows from SEK, CHF and RUB, but these have likely peaked.

A Pervasive Rise in Yields May Propel Further USD Gains

What does the widening in USD and AUD LIBOR/OIS spreads and higher cross-currency swap basis mean for their exchange rates?  Some have argued that the implied tightening in financial conditions in their home countries may delay central bank rate hikes and undermine their exchange rates.  But this seems to ignore the fact that the spread widening has placed direct upward pressure on the effective carry from holding long positions in the USD and the AUD against other currencies.  We look specifically at the carry for 3mth and 2yr terms for the EUR/USD and AUD/USD.  Overall, FX markets remain difficult to call, and patience is required as the market grapples with tariffs, political uncertainty, and volatile equity markets.

What does the widening in USD and AUD LIBOR/OIS spreads and higher cross-currency swap basis mean for their exchange rates?  Some have argued that the implied tightening in financial conditions in their home countries may delay central bank rate hikes and undermine their exchange rates.  But this seems to ignore the fact that the spread widening has placed direct upward pressure on the effective carry from holding long positions in the USD and the AUD against other currencies.  We look specifically at the carry for 3mth and 2yr terms for the EUR/USD and AUD/USD.  Overall, FX markets remain difficult to call, and patience is required as the market grapples with tariffs, political uncertainty, and volatile equity markets. 

The USD has managed to shake-off increased political risk, although this remains a threat.  The prospect of a more upbeat FOMC may be supporting the USD. The market is looking for some upward revision to the dot-plot.  Eurozone confidence and inflation expectations have eased.  EUR yield spreads deteriorate to new lows.  AUD may have been undermined by weaker metals prices and risks to Chinese growth; including from the US protectionist threats.  The Australian employment report this week and improving prospects for corporate tax cuts may help support the AUD, but the Royal Commission into Misconduct in the Banking, and Financial Services Industry, and slowing housing market may be undermining investor demand for the AUD.

The USD has managed to shake-off increased political risk, although this remains a threat.  The prospect of a more upbeat FOMC may be supporting the USD. The market is looking for some upward revision to the dot-plot.  Eurozone confidence and inflation expectations have eased.  EUR yield spreads deteriorate to new lows.  AUD may have been undermined by weaker metals prices and risks to Chinese growth; including from the US protectionist threats.  The Australian employment report this week and improving prospects for corporate tax cuts may help support the AUD, but the Royal Commission into Misconduct in the Banking, and Financial Services Industry, and slowing housing market may be undermining investor demand for the AUD.

USD Shrugging-Off Political Risk, AUD Headwinds and EUR Cracks

Political risk in the US is elevated and likely to rise further as the market contemplates the possibility of Democrats taking control of one or both houses of Congress in the mid-term elections.  The close outcome of the special election in Pennsylvania on Tuesday points to Democratic momentum.  US political risk over the last year has appeared to contribute to a broad USD decline.  However, there are reasons to be less sure that EM and commodity currencies will benefit going forward; Trump is pursuing protectionist trade policies, and equity markets have become more volatile.  Draghi was upbeat but warned on risks to the inflation outlook from a possible trade war and a strong EUR that cannot be fully explained by stronger Eurozone economic growth.

Political risk in the US is elevated and likely to rise further as the market contemplates the possibility of Democrats taking control of one or both houses of Congress in the mid-term elections.  The close outcome of the special election in Pennsylvania on Tuesday points to Democratic momentum.  US political risk over the last year has appeared to contribute to a broad USD decline.  However, there are reasons to be less sure that EM and commodity currencies will benefit going forward; Trump is pursuing protectionist trade policies, and equity markets have become more volatile.  Draghi was upbeat but warned on risks to the inflation outlook from a possible trade war and a strong EUR that cannot be fully explained by stronger Eurozone economic growth.

US Political Risk Threatening the USD and More

Germany

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

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Euro (USDEUR CURNCY)

Time for a EUR Reality Check

The US economy has retained strong momentum, generally beating expectations, while the Eurozone economy has lost momentum and has consistently...

Greg Gibbs

A Pervasive Rise in Yields May Propel Further USD Gains

We see the recent resurgence in US yields as potentially the most important driver in the coming week or longer. The resumption of the rise in US...

Greg Gibbs

Spreads, Basis, and the USD and AUD

What does the widening in USD and AUD LIBOR/OIS spreads and higher cross-currency swap basis mean for their exchange rates? Some have argued that...

Greg Gibbs

USD Shrugging-Off Political Risk, AUD Headwinds and EUR Cracks

The USD has managed to shake-off increased political risk, although this remains a threat. The prospect of a more upbeat FOMC may be supporting...

Greg Gibbs

US Political Risk Threatening the USD and More

Political risk in the US is elevated and likely to rise further as the market contemplates the possibility of Democrats taking control of one or...

Greg Gibbs

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