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

German bund yields have tended to lead global bond yields higher over recent months.  UK gilt yields have also risen sharply as a risk premium for a weaker and more volatile GBP is established and the government moves towards an easier fiscal policy, further contributing to higher global yields.  Recent economic activity and inflation indicators (headline CPI and long-term break-evens) in the UK and Eurozone support the rising trend in their yields.  The market continues to expect an extension of QE in the Eurozone and appears more sensitive to any hint that the extension may be limited or the pace of purchases tapered.  The case for higher yields is less clear in the US with mixed economic reports, but activity appears stable and the outlook may improve post-election.  Japanese yields have been much more stable since the BoJ implemented Yield Curve Control.  If the rising trend in global yields persists, we expect Japanese yields to remain more stable, creating higher yield support for other currencies against the JPY.

German bund yields have tended to lead global bond yields higher over recent months.  UK gilt yields have also risen sharply as a risk premium for a weaker and more volatile GBP is established and the government moves towards an easier fiscal policy, further contributing to higher global yields.  Recent economic activity and inflation indicators (headline CPI and long-term break-evens) in the UK and Eurozone support the rising trend in their yields.  The market continues to expect an extension of QE in the Eurozone and appears more sensitive to any hint that the extension may be limited or the pace of purchases tapered.  The case for higher yields is less clear in the US with mixed economic reports, but activity appears stable and the outlook may improve post-election.  Japanese yields have been much more stable since the BoJ implemented Yield Curve Control.  If the rising trend in global yields persists, we expect Japanese yields to remain more stable, creating higher yield support for other currencies against the JPY.

Bund Yields Leading Global Yields Higher, Lifting EUR/JPY Yield Support

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

Brexit fear is now close to being fully priced into the GBP, in our view.  The most recent slide in October tends to reflect the hard Brexit risk.  GBP is likely to remain weak for some time, but it may have seen its low in the flash crash last week.  Global bond yields continue their creep up despite dovish comments by the ECB and BoJ since Friday. We can see further rises in global yields unwinding from an extreme low that evolved on expectations of more QE, deeper negative rates, and extreme dis-inflationary expectation.  The market has been distracted from the evidence of modest improvement in the global economy and a rising trend in commodity prices this year by Brexit, banking sector woes in Europe and Japan and more bearish long-term forecasts by the Fed since mid-year. Fiscal impetus has turned positive and inflation expectations are now firming, supported by higher commodity prices.  As yields rise they will tend to reinforce an improvement in global economic confidence and unwind excessive pessimism on inflation.  Higher yields have negative implications for both ends of the risk spectrum, they will tend to weaken extreme low yielders (JPY, EUR, and gold) and also weaken the high yielders, like NZD.

Brexit fear is now close to being fully priced into the GBP, in our view.  The most recent slide in October tends to reflect the hard Brexit risk.  GBP is likely to remain weak for some time, but it may have seen its low in the flash crash last week.  Global bond yields continue their creep up despite dovish comments by the ECB and BoJ since Friday. We can see further rises in global yields unwinding from an extreme low that evolved on expectations of more QE, deeper negative rates, and extreme dis-inflationary expectation.  The market has been distracted from the evidence of modest improvement in the global economy and a rising trend in commodity prices this year by Brexit, banking sector woes in Europe and Japan and more bearish long-term forecasts by the Fed since mid-year. Fiscal impetus has turned positive and inflation expectations are now firming, supported by higher commodity prices.  As yields rise they will tend to reinforce an improvement in global economic confidence and unwind excessive pessimism on inflation.  Higher yields have negative implications for both ends of the risk spectrum, they will tend to weaken extreme low yielders (JPY, EUR, and gold) and also weaken the high yielders, like NZD.

Brexit Impact Over, Yields Rising, Currencies at Both Ends of Risk Spectrum Fall

GBP has finally and belatedly responded to the heightened and prolonged Brexit uncertainty, notwithstanding a resilient UK economy and prospects of significant UK fiscal stimulus.  The outlook remains negative, but it is risky to jump on the selling bandwagon.  Bond yields may have resumed a fledgling rising trend, supported by the BoJ’s ‘Yield Curve Control’ and notions of ECB tapering that stem from the same concern that flat yield curves are bad for the financial sector and may be counter-productive. Higher yields are also supported by increasing expectations of more fiscal stimulus and firming commodity prices related to modest improvement in global economic activity.  Yields may be rebounding from extraordinary lows generated by fear of a shortage of bonds to feed QE programs, and depressed views on inflation and secular stagnation.  Gold has broken key support, weighed down by rising bond yields and firming confidence in global growth.  JPY has also broken a year-long downtrend and combined with weaker trends in gold and GBP is spilling over to broader gains in the USD, even though US economic data has been mixed. Vague ECB taper talk has added uncertainty.  It may tend to reinforce a rise in yields, but threatens to turn what was a constructive market to one that is more risk-averse.

GBP has finally and belatedly responded to the heightened and prolonged Brexit uncertainty, notwithstanding a resilient UK economy and prospects of significant UK fiscal stimulus.  The outlook remains negative, but it is risky to jump on the selling bandwagon.  Bond yields may have resumed a fledgling rising trend, supported by the BoJ’s ‘Yield Curve Control’ and notions of ECB tapering that stem from the same concern that flat yield curves are bad for the financial sector and may be counter-productive. Higher yields are also supported by increasing expectations of more fiscal stimulus and firming commodity prices related to modest improvement in global economic activity.  Yields may be rebounding from extraordinary lows generated by fear of a shortage of bonds to feed QE programs, and depressed views on inflation and secular stagnation.  Gold has broken key support, weighed down by rising bond yields and firming confidence in global growth.  JPY has also broken a year-long downtrend and combined with weaker trends in gold and GBP is spilling over to broader gains in the USD, even though US economic data has been mixed. Vague ECB taper talk has added uncertainty.  It may tend to reinforce a rise in yields, but threatens to turn what was a constructive market to one that is more risk-averse.

AmpGFX - Knock-Ons from Rising Bond Yields

News related to Deutsche Bank turned around what was a developing risk positive trend in global markets and currencies this week.  A stronger oil price helped weaken the JPY and strengthen energy producers, more broadly boosting risk appetite.  We are not convinced problems at Deutsche bank will have a sustained negative impact on global markets, and would prefer to fade the risk-off mood on Thursday.  However, as we approach month-end and key US inflation data on Friday, patience is advised.  Sentiment is likely to remain fragile in the lead-up to the US election and a probable rate hike by the Fed in December.  Low global bond yields have tended to undermine bank equities and expose problems at the weakest banks.  This issue has been felt most in Europe where the ECB is pursuing a negative interest rate policy and its QE program has flattened the yield curve.  Japan faces similar problems and the BoJ implemented Yield Curve Control to help support its financial sector, but yields remain low and Japanese bank shares have failed to recover much.  However, low yields have more broadly helped lift global asset markets; particularly those in emerging markets. As discussed earlier in the week, commodity prices are firming and may reflect a strengthening global economy albeit from a modest growth rate.  We may see more evidence of this in PMI data that are coming out today in many countries.

News related to Deutsche Bank turned around what was a developing risk positive trend in global markets and currencies this week.  A stronger oil price helped weaken the JPY and strengthen energy producers, more broadly boosting risk appetite.  We are not convinced problems at Deutsche bank will have a sustained negative impact on global markets, and would prefer to fade the risk-off mood on Thursday.  However, as we approach month-end and key US inflation data on Friday, patience is advised.  Sentiment is likely to remain fragile in the lead-up to the US election and a probable rate hike by the Fed in December.  Low global bond yields have tended to undermine bank equities and expose problems at the weakest banks.  This issue has been felt most in Europe where the ECB is pursuing a negative interest rate policy and its QE program has flattened the yield curve.  Japan faces similar problems and the BoJ implemented Yield Curve Control to help support its financial sector, but yields remain low and Japanese bank shares have failed to recover much.  However, low yields have more broadly helped lift global asset markets; particularly those in emerging markets. As discussed earlier in the week, commodity prices are firming and may reflect a strengthening global economy albeit from a modest growth rate.  We may see more evidence of this in PMI data that are coming out today in many countries. 

AmpGFX - Banks Weak, but Commodities Firming

Japan

The Japanese yen is the official currency of Japan. 

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JPY (USDJPY CURNCY)

Bund Yields Leading Global Yields Higher, Lifting EUR/JPY Yield Support

German bund yields have tended to lead global bond yields higher over recent months. UK gilt yields have also risen sharply as a risk premium for...

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

Brexit Impact Over, Yields Rising, Currencies at Both Ends of Risk Spectrum Fall

Brexit fear is now close to being fully priced into the GBP, in our view. The most recent slide in October tends to reflect the hard Brexit risk. ...

Greg Gibbs

AmpGFX - Knock-Ons from Rising Bond Yields

GBP has finally and belatedly responded to the heightened and prolonged Brexit uncertainty, notwithstanding a resilient UK economy and prospects of...

Greg Gibbs

AmpGFX - Banks Weak, but Commodities Firming

News related to Deutsche Bank turned around what was a developing risk positive trend in global markets and currencies this week. A stronger oil...

Greg Gibbs

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