Category: Big Picture

Warnings about US economy and USD overblown

The United States’ post-war record GDP contraction in Q2 of 9.5% qoq and the Dollar’s recent depreciation have been making headline news but some perspective is required.

The US GDP contracted about 10.6% in H1 2020, far more than in China (+0.6%) and South Korea (-4.6%).Read the rest

Risk aversion, not panic, in face of uncertainty

Major currencies, equity markets and the price of crude oil since 8th June – the cycle low in the US Dollar – have exhibited reasonably limited directionality, narrow trading ranges and very low volatility, with the notable exception of currencies in Latin America.Read the rest

Chinese Renminbi – Canary in the coal mine

While the United States and China have not gone as far as re-introducing or increasing tariffs on each others’ imports, the war of words between the two trading superpowers has clearly escalated with Hong Kong caught in the middle.Read the rest

Lessons learnt from Q1 collapse in global GDP

Global GDP growth, in year-on-year terms, slowed to -2.7% in Q12020  from +3.1% in Q4 2019 and in quarter-on-quarter terms to -4.5% from +0.6% in Q4, based on growth rates in 14 major economies accounting for close to 90% of world GDP.Read the rest

What you may have missed and why it matters

Financial-market post-mortems for 2019 are out and the bottom line is that the trade was to be long pretty much everything – including US and global equities, bonds and commodities (bar natural gas) – but short equity and FX volatility.Read the rest

What next for Asian currencies

Asian currency performance update – Moderate weakness in absolute and relative terms

Asian currencies, bar the safe-haven Japanese Yen and Philippines Peso, have come under greater pressure this week as the number of reported coronavirus cases in China (and now 23 other countries) and reported deaths in China has increased (see Figure 1).… Read the rest