Special Reports

Investment Theme – Pound takes a knock from Brexit bill and Scottish referendum call

Posted on March 14, 2017 at 2:37 pm GMT

The British pound became susceptible to Brexit-induced volatility today as investors were unnerved by Scotland’s fresh call for an independence referendum coinciding with Parliament’s approval of the Article 50 bill. The Scottish National Party’s decision to call a second referendum on Scottish independence from the UK on the same day as the Article 50 bill passed through Parliament, was seen as a deliberate move by the SNP to derail the government’s Brexit plans. Prior to the SNP’s surprise but not [..]

Investment Theme – After Yellen, markets in search for next dollar driver

Posted on March 6, 2017 at 3:03 pm GMT

With a March rate hike now mostly priced in by financial markets, the US dollar appears to be suffering a case of “buy the rumour, sell the fact” as the rally struggles to regain momentum. Last week, a chorus of Fed speakers, including Fed Chair Janet Yellen herself, all but confirmed a rate rise as early as the next FOMC meeting on March 14-15, pushing up the odds (as implied by Fed fund futures prices) to over 80%. However, apart [..]

Investment Theme – Weaker yen having positive impact on inflation in Japan

Posted on March 3, 2017 at 5:33 pm GMT

Consumer prices in Japan are showing signs of picking up as a result of a weakening yen combined with the strength of the US dollar since Donald Trump’s US election victory, giving relief for the Bank of Japan in its fight against deflation. Core inflation has returned to Japan for the first time since 2015 according to data released today. Consumer prices excluding fresh food, rose 0.1% year-on-year in January after a 0.2% drop in December. Japan’s policymakers have been [..]

Investment Theme – Pound hit by fresh Scottish referendum fears as Article 50 deadline looms

Posted on February 28, 2017 at 3:25 pm GMT

The British pound has been hit by fresh market jitters about a possible call for another Scottish independence referendum, threatening to create a major headache for the UK government as it prepares to formally give notice to the European Union of its intention to leave the organization. While the risk of a fresh referendum by the Scottish Nationalist Party (SNP) is nothing new, reports in the Sunday Times over the weekend that UK Prime Minister, Theresa May, is readying for [..]

Investment Theme – Australian dollar underpinned by rising commodity prices and surge in exports

Posted on February 21, 2017 at 3:50 pm GMT

The Australian dollar has been moving steadily higher since the start of this year, mainly due to the resurgence in commodity prices. As result of surging prices for iron ore and coal, which are what Australia mainly produces and exports, there has been an improvement in the country’s terms of trade. This has driven the aussie higher, resulting in more than 6 percent gain so far this year. Meanwhile, a steadying Chinese economy is also beneficial for the Australian economy [..]

Investment Theme – Euro faces tough tests in 2017 as key elections loom

Posted on February 13, 2017 at 4:11 pm GMT

Twenty seventeen looks set to be a difficult year for the euro as concerns grow about the future of the European project with key elections coming up in the Netherlands, France and Germany. Snap elections in Italy and Greece are also a possibility, while the Greek debt crisis continues to rumble on. After last year’s shock leave vote in the UK’s EU referendum and Donald Trump’s surprise win of the US presidential election, traders are bracing themselves for a rocky [..]

Investment themes – Political developments trump fundamentals for dollar, pound

Posted on January 12, 2017 at 3:17 pm GMT

One interesting theme for the second half of 2016 as well as for the first few days of 2017 has been how political developments are moving two of the world’s most important currencies: the dollar and the pound. The two currencies are paying less attention to economic fundamentals and more on the pronouncements of the two countries’ new leaders, Prime Minister Theresa May and President-elect Donald Trump on Brexit and possible fiscal stimulus respectively. In the UK, statements by May [..]

Investment themes – Euro / dollar at crossroads as “Trump trade”, European uncertainty may have peaked for now

Posted on December 7, 2016 at 1:46 pm GMT

The announcement that the Italian referendum on Sunday, December 5 was lost by the government with the decisive margin of 60-40, led to a 21-month low in the euro / dollar exchange rate. Euro / dollar briefly dipped to 1.0505 but the pair quickly rebounded to above 1.07. Below 1.05 lies the 13-year low of 1.0460, which was struck in March 2015. The euro’s rebound surprised market participants as the single currency found itself trading higher than the level at [..]

Investment themes – The dollar, the Fed and the recent election-induced volatility

Posted on November 2, 2016 at 3:03 pm GMT

The revelation that the FBI was reopening a probe into Secretary Clinton’s use of a private email server on Friday, October 28, was enough it seems for the markets to reassess the likely outcome of the November 8 US elections. This has caused some volatility across a range of assets although it must also be said that the shake-up seems to remain contained for now. Interestingly one of the biggest victims has been the US dollar. Dollar / yen for [..]

A brief take on the US dollar and the UK pound following Brexit

Posted on September 20, 2016 at 1:26 pm GMT

Brexit was one of the year’s key events, which caused quite a lot of volatility initially. Looking at the currency market, it is worth revisiting some of the key recent fundamental influences for two currencies in particular; the pound and the US dollar. Starting with the pound, it is interesting to note that the initial shock devaluation that Brexit inspired was followed by some sideways action. Bank of England stimulus hurt the pound initially, but stronger-than-expected economic data created some [..]

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