Virus, volatility and valuations
In reaction to the coronavirus epidemic governments across the world have enacted measures unprecedented in recent decades, including closing national borders, setting up quarantine zones, restricting travel and closing factories and schools. Economic activity in China has slowed sharply and disruptions to international supply chains are impacting global trade and production with the slump in […]
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). […]
Asian currencies showing some viral resistance
Acceleration in spread of novel coronavirus On 31st December 2019, the World Health Organisation (WHO) was alerted to several cases of pneumonia in Wuhan City in the Hubei Province of China. The virus did not match any other known virus. On 1st January Chinese authoriti… Become a member to read the rest of […]
Bank of England’s dovish warning bells ring true
Bank of England dovishness should come as little surprise UK GDP growth was negligible over Q2-Q3 2019 – averaging only 0.04% qoq – and likely remained weak in Q4 at about 0.3% qoq. There are a number of endogenous and exogenous factors, both cyclical and structural, behind this weak domestic growth – a number over […]
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. Trading FX last year was indeed an exerci… Become a member to read the […]
Sterling’s made its mind up, UK voters not quite
Sterling has appreciated 1.5% in Nominal Effective Exchange Rate terms since 26th November to a 7-month high, a notable move in a world of depressed currency volatility. Markets have seemingly taken comfort from the (modest) widening of the gap between the ruling Conservative Party and opposition Labour party in opinion polls to about 10pp and […]
Nominal Effective Exchange Rate seasonality November & December update
This report updates the monthly seasonal patterns of 32 major Nominal Effective Exchange Rates (NEERs) going back to May 2010, using over 90,000 daily data points with trade-weights derived from the BIS (April 2019) and national central banks (see Nominal Effective Exchange Rates: Monthly seasonal patterns, 10 January 2019). A number of factors can drive […]
Depressed FX volatility allows for few surprises
Global FX volatility has fallen further in the past month to its lowest level since September 2014 according to our estimate (see Figure 1). Volatility in most major currencies has either fallen or only increased marginally in the past month and is now very low relative to the p… Become a member to read […]
FX Vol gone AWOL, directionality has not
FX volatility remains subdued despite geopolitical tensions and event/policy risks Volatility in major currency pairs has risen in the past fortnight but remains subdued by historical standards, despite geopolitical tensions, including ongoing China-US trade negotiations, signifi… Become a member to read the rest of this article
Draghi’s ECB legacy – stable Euro, weak inflation
European Central Bank President Mario Draghi will step down at the end of his eight-year term on 31 October. Christine Lagarde, the head of the IMF – which has implicitly called for looser global monetary policy – will take over pending European Parliamentary approval. The ECB’… Become a member to read the rest of […]