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

A lot is happening in global markets this week.  No doubt you are reading much about key central bank meetings in Japan and the UK, and key data releases including Euro GDP and CPI.  However, we have decided to hone in on the AUD, NZD and CAD which present there own opportunities in a market searching for fresh direction.  We see upside potential for CAD on recent solid economic reports, rising rates, and positive news developing on NAFTA vs. ongoing trade tensions between the US and China.  NZD appears more vulnerable and faces a key hurdle this week with NZ labour data released for Q2.

A lot is happening in global markets this week.  No doubt you are reading much about key central bank meetings in Japan and the UK, and key data releases including Euro GDP and CPI.  However, we have decided to hone in on the AUD, NZD and CAD which present there own opportunities in a market searching for fresh direction.  We see upside potential for CAD on recent solid economic reports, rising rates, and positive news developing on NAFTA vs. ongoing trade tensions between the US and China.  NZD appears more vulnerable and faces a key hurdle this week with NZ labour data released for Q2.

Major Commodity Currencies May Diverge – CAD Set to Shine

AUD/NZD has fallen back to 1.05 for the first time since July last year; do fundamentals justify this? Will it last? Below is our tour de force analysis of the pair covering rates, commodities, underlying fundamentals and exposure to China.  The pair has fallen well below what might be justified by interest rate spreads.  However, interest rates have had little impact on the AUD/NZD for the last four or five years.  This is surprising given rates were the dominant driver in the preceding decade.  More recently, the AUD/NZD may have been undermined by fear of a China/US trade war.  We see scope for AUD/NZD to bounce near term, but looking at broad fundamentals, NZD has become less risky over the last 5 to 10 years, and indeed it is proving less sensitive to risk factors.

AUD/NZD has fallen back to 1.05 for the first time since July last year; do fundamentals justify this? Will it last? Below is our tour de force analysis of the pair covering rates, commodities, underlying fundamentals and exposure to China.  The pair has fallen well below what might be justified by interest rate spreads.  However, interest rates have had little impact on the AUD/NZD for the last four or five years.  This is surprising given rates were the dominant driver in the preceding decade.  More recently, the AUD/NZD may have been undermined by fear of a China/US trade war.  We see scope for AUD/NZD to bounce near term, but looking at broad fundamentals, NZD has become less risky over the last 5 to 10 years, and indeed it is proving less sensitive to risk factors.

AUD/NZD Struggles; Has NZD Become Less Risk-Sensitive?

There is a significant degree of USD weakness that has been unrelated to the relative improvement in its yield advantage, whether that be short or long term yields, real or nominal.  This has made it hard to predict USD exchange rates, generating uncertainty and a pervasive bearishness towards the USD that is hard to shake.  However, we may have got to a point where the USD has become so significantly stretched from yield spreads that it is resisting further depreciation.  Furthermore, US economic activity and inflation risks have accelerated compared to most other countries.

There is a significant degree of USD weakness that has been unrelated to the relative improvement in its yield advantage, whether that be short or long term yields, real or nominal.  This has made it hard to predict USD exchange rates, generating uncertainty and a pervasive bearishness towards the USD that is hard to shake.  However, we may have got to a point where the USD has become so significantly stretched from yield spreads that it is resisting further depreciation.  Furthermore, US economic activity and inflation risks have accelerated compared to most other countries.

In our report last week, (<a href="https://www.smartkarma.com/insights/bond-yields-in-driver-s-seat-time-for-correction-in-equities-and-the-usd" target="_blank">Bond yields in driver’s seat; time for correction in equities and the USD; 31-Jan</a>), we anticipated rising US yields spilling over to a correction in global equities and the USD.  The recovery in the USD has been modest so far, but it may be a creeper as the market pays more attention to risks associated with late-cycle economic growth and central bank policy tightening.   Progress by the US Congress on a funding deal could be the immediate catalyst for more dollar gains.  The recent fall in AUD/NZD appears out-of-line with relative economic trends, yield spread and commodity prices.

In our report last week, (Bond yields in driver’s seat; time for correction in equities and the USD; 31-Jan), we anticipated rising US yields spilling over to a correction in global equities and the USD.  The recovery in the USD has been modest so far, but it may be a creeper as the market pays more attention to risks associated with late-cycle economic growth and central bank policy tightening.   Progress by the US Congress on a funding deal could be the immediate catalyst for more dollar gains.  The recent fall in AUD/NZD appears out-of-line with relative economic trends, yield spread and commodity prices.

It is getting harder to know where to turn with political risk in the UK palpable. A dual citizenship debacle in Australia, NAFTA negotiations hanging over the CAD outlook, a significant change in policy direction in New Zealand, German coalition negotiations, and political uncertainty has never been far from mind in the US in the Trump era.  Japan is a source of stability, supporting its equities, not its currency.

It is getting harder to know where to turn with political risk in the UK palpable. A dual citizenship debacle in Australia, NAFTA negotiations hanging over the CAD outlook, a significant change in policy direction in New Zealand, German coalition negotiations, and political uncertainty has never been far from mind in the US in the Trump era.  Japan is a source of stability, supporting its equities, not its currency.

Political Risk for a Number of Currencies (AUD, NZD, GBP and CAD)

New Zealand

The New Zealand dollar is the official currency of New Zealand.  

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NZD (NZD BGN CURNCY)

Major Commodity Currencies May Diverge – CAD Set to Shine

A lot is happening in global markets this week. No doubt you are reading much about key central bank meetings in Japan and the UK, and key data...

Greg Gibbs

AUD/NZD Struggles; Has NZD Become Less Risk-Sensitive?

AUD/NZD has fallen back to 1.05 for the first time since July last year; do fundamentals justify this? Will it last? Below is our tour de force...

Greg Gibbs

Time for the USD to Fight-Back

There is a significant degree of USD weakness that has been unrelated to the relative improvement in its yield advantage, whether that be short or...

Greg Gibbs

USD Rebound Is a Creeper

In our report last week, (Bond yields in driver’s seat; time for correction in equities and the USD; 31-Jan), we anticipated rising US yields...

Greg Gibbs

Political Risk for a Number of Currencies (AUD, NZD, GBP and CAD)

It is getting harder to know where to turn with political risk in the UK palpable. A dual citizenship debacle in Australia, NAFTA negotiations...

Greg Gibbs

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)