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

Relative commodity price trends (stronger energy and weaker dairy) help account for some of the recent recovery in the AUD/NZD.  Further supporting the recovery is the rise in global bond yields, tending to remove some of the additional demand for NZD generated by a global investor pre-occupation in a ‘search for yield’.  There may be more upside for the AUD/NZD, but revisiting the fair-value models we introduced in August, suggests that it is not far from fair-value.  Instead, we look at CAD/NZD.  As a more pure energy play, CAD has an advantage of the AUD that may be dragged down by weaker steel prices in China since August.  Furthermore, CAD is a much lower yielder than NZD or AUD, and thus is unlikely to need to reverse earlier gains related to a ‘search for yield’ as global bond yields rise.  Our regression analysis suggests that NZD/CAD has not yet fallen by enough to account for either the diversion in oil from milk, or the rise in global bond yields.  Furthermore, recent macroprudential measures in New Zealand appear to be working to slow its housing market and the RBNZ is likely, in our view, to proceed with a rate cut in November.  The Canadian economy has been mixed lately, but fiscal expansion is likely to be felt more as the year progresses and recent data in the USA is somewhat more positive, suggesting potential upside revisions for the USA and Canadian economic outlooks.

Relative commodity price trends (stronger energy and weaker dairy) help account for some of the recent recovery in the AUD/NZD.  Further supporting the recovery is the rise in global bond yields, tending to remove some of the additional demand for NZD generated by a global investor pre-occupation in a ‘search for yield’.  There may be more upside for the AUD/NZD, but revisiting the fair-value models we introduced in August, suggests that it is not far from fair-value.  Instead, we look at CAD/NZD.  As a more pure energy play, CAD has an advantage of the AUD that may be dragged down by weaker steel prices in China since August.  Furthermore, CAD is a much lower yielder than NZD or AUD, and thus is unlikely to need to reverse earlier gains related to a ‘search for yield’ as global bond yields rise.  Our regression analysis suggests that NZD/CAD has not yet fallen by enough to account for either the diversion in oil from milk, or the rise in global bond yields.  Furthermore, recent macroprudential measures in New Zealand appear to be working to slow its housing market and the RBNZ is likely, in our view, to proceed with a rate cut in November.  The Canadian economy has been mixed lately, but fiscal expansion is likely to be felt more as the year progresses and recent data in the USA is somewhat more positive, suggesting potential upside revisions for the USA and Canadian economic outlooks.

Currency markets have been mixed, choppy and in most cases exhibiting no trend over recent months. There are few clear opportunities and a number of risks to consider.  Two key data points this week in the USA include PCE inflation and durable goods orders. The Fed has forecast a subdued outlook for inflation, but it is not far below target, and the CPI measure is trending higher and above target.  Capital investment has been weak, but there has been a lift-off in orders in the two months to July, it will be important to see if this can build further.  However, recent broad activity indicators have been weak.  The forecast for a more gradual and shallow hiking path by the Fed helped lift some EM and commodity currencies last week. The BoJ policy meeting also contributed to a drop in long term yields back into their previous range, contributing to a rebound in equities and gold.  EM bonds and equities led the rebound in riskier assets and may continue to attract demand unless the low global rates view at the Fed is questioned.  Brexit and banking sector concerns may weigh on the GBP and EUR.  CAD looks a bit expensive relative to rates and oil prices.  A number of key events this week may set the tone for CAD; including a speech by Poloz, USA presidential debate, OPEC talks, and GDP data.

Currency markets have been mixed, choppy and in most cases exhibiting no trend over recent months. There are few clear opportunities and a number of risks to consider.  Two key data points this week in the USA include PCE inflation and durable goods orders. The Fed has forecast a subdued outlook for inflation, but it is not far below target, and the CPI measure is trending higher and above target.  Capital investment has been weak, but there has been a lift-off in orders in the two months to July, it will be important to see if this can build further.  However, recent broad activity indicators have been weak.  The forecast for a more gradual and shallow hiking path by the Fed helped lift some EM and commodity currencies last week. The BoJ policy meeting also contributed to a drop in long term yields back into their previous range, contributing to a rebound in equities and gold.  EM bonds and equities led the rebound in riskier assets and may continue to attract demand unless the low global rates view at the Fed is questioned.  Brexit and banking sector concerns may weigh on the GBP and EUR.  CAD looks a bit expensive relative to rates and oil prices.  A number of key events this week may set the tone for CAD; including a speech by Poloz, USA presidential debate, OPEC talks, and GDP data.

AmpGFX - Tough Currency Markets Await Key Events

High beta assets globally have significantly out-performed over recent months.  Emerging market equities, bonds and currencies have led the recovery since the Brexit vote.  They have been supported by fiscal and monetary policy easing, two strong US payrolls reports and other supporting US economic data including PMI surveys that suggest that the US economy is recovering solidly from a weak first half of the year. And recent PMI data from emerging markets that suggest they have stabilized and are now contributing to global growth again, including strong improvement in Brazil and Russia and stable China.  Information Technology equites are leading the global recovery and helping support demand for KRW and TWD currency and assets.  The USD has weakened against the rising in EM and commodity currencies as the preferred funding currency despite a recent modest improvement in its yield advantage against most currencies.  US rates have not yet risen sufficiently to force investors to consider alternative funding currencies.Ongoing uncertainty over policy direction in Japan and related volatility in the JPY and Japanese rates and bond yields is discouraging use of JPY as a potential funding currency, contributing to broader weakness in the USD that appears excessive in light of the improving prospects for the US economy and the risk that the Fed resumes rate hikes before year end. However, the market is still pricing in only a modest chance that the Fed hikes this year and has less than one full hike priced in over more than 18 months.  Most of the recent rise in USD term money market rates relate to tightening funding conditions for borrowing USD, rather than increasing expectations of Fed policy tightening.  Fed speakers have offered little indication that they have been moved by recent US and global events to consider raising rates sooner. The weaker trend in the USD is becoming more imbedded as the year progresses and may take some time to turn around, especially if Fed Chair Yellen remains lukewarm on the prospect for rate hikes over the cycle.  The improved state of investor confidence and upswing in emerging markets appears more resilient to the prospect of higher US rates and may continue to set the tone for the USD.

High beta assets globally have significantly out-performed over recent months.  Emerging market equities, bonds and currencies have led the recovery since the Brexit vote.  They have been supported by fiscal and monetary policy easing, two strong US payrolls reports and other supporting US economic data including PMI surveys that suggest that the US economy is recovering solidly from a weak first half of the year. And recent PMI data from emerging markets that suggest they have stabilized and are now contributing to global growth again, including strong improvement in Brazil and Russia and stable China.  Information Technology equites are leading the global recovery and helping support demand for KRW and TWD currency and assets.  The USD has weakened against the rising in EM and commodity currencies as the preferred funding currency despite a recent modest improvement in its yield advantage against most currencies.  US rates have not yet risen sufficiently to force investors to consider alternative funding currencies.Ongoing uncertainty over policy direction in Japan and related volatility in the JPY and Japanese rates and bond yields is discouraging use of JPY as a potential funding currency, contributing to broader weakness in the USD that appears excessive in light of the improving prospects for the US economy and the risk that the Fed resumes rate hikes before year end. However, the market is still pricing in only a modest chance that the Fed hikes this year and has less than one full hike priced in over more than 18 months.  Most of the recent rise in USD term money market rates relate to tightening funding conditions for borrowing USD, rather than increasing expectations of Fed policy tightening.  Fed speakers have offered little indication that they have been moved by recent US and global events to consider raising rates sooner. The weaker trend in the USD is becoming more imbedded as the year progresses and may take some time to turn around, especially if Fed Chair Yellen remains lukewarm on the prospect for rate hikes over the cycle.  The improved state of investor confidence and upswing in emerging markets appears more resilient to the prospect of higher US rates and may continue to set the tone for the USD.

AmpGFX - Emerging Markets Take Charge While Fed Free-Wheels

Canada

The Canadian dollar is the official currency of Canada. 

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CAD (USDCAD CURNCY)

Downside Potential in NZD Vs. CAD

Relative commodity price trends (stronger energy and weaker dairy) help account for some of the recent recovery in the AUD/NZD. Further supporting...

Greg Gibbs

AmpGFX - Tough Currency Markets Await Key Events

Currency markets have been mixed, choppy and in most cases exhibiting no trend over recent months. There are few clear opportunities and a number...

Greg Gibbs

AmpGFX - Emerging Markets Take Charge While Fed Free-Wheels

High beta assets globally have significantly out-performed over recent months. Emerging market equities, bonds and currencies have led the...

Greg Gibbs

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