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

The RBA should cut rates next week to signal that its inflation target still matters.  Slumping inflation expectations over the last six months, and shifting global central bank focus to address low inflation outcomes, make it more imperative for the RBA to act.  Its patience with low inflation was appropriate when the housing market and associated financial stability risks were rising; this is no longer the case. Global and domestic economic indicators have already shifted the balance of risks towards a weaker labour market.  Waiting until after the election or until actual labour data soften before cutting risks more damage to the RBA’s credibility in the medium term, than acting now.The Fed emphasised a rates on hold view today, batting away pressure to address the recent fall in inflation.  Chair Powell highlighted the trimmed mean inflation data that shows inflation still steady at around 2%.  Using statistical measures of underlying inflation there is a clear divergence in inflation trends in the USA (rising) and Australia (falling).  With rates firmly on hold in the US, a rate cut by the RBA might be expected to push the AUD well below 0.70, something the RBA would welcome to help lift inflation expectations in Australia.

The RBA should cut rates next week to signal that its inflation target still matters.  Slumping inflation expectations over the last six months, and shifting global central bank focus to address low inflation outcomes, make it more imperative for the RBA to act.  Its patience with low inflation was appropriate when the housing market and associated financial stability risks were rising; this is no longer the case. Global and domestic economic indicators have already shifted the balance of risks towards a weaker labour market.  Waiting until after the election or until actual labour data soften before cutting risks more damage to the RBA’s credibility in the medium term, than acting now.The Fed emphasised a rates on hold view today, batting away pressure to address the recent fall in inflation.  Chair Powell highlighted the trimmed mean inflation data that shows inflation still steady at around 2%.  Using statistical measures of underlying inflation there is a clear divergence in inflation trends in the USA (rising) and Australia (falling).  With rates firmly on hold in the US, a rate cut by the RBA might be expected to push the AUD well below 0.70, something the RBA would welcome to help lift inflation expectations in Australia.

An RBA Rate Cut Next Week Is the Smart Move; Fed Firmly on Hold

Stronger Eurozone Q1 GDP and German CPI suggest that the ECB need not rush to ease policy further.  However, these data points appear to be largely payback for weak previous outcomes.  More current business surveys suggest that there is no clear path back to above-trend growth.  The EUR downtrend may persist if the market continues to seek higher-yielding assets in an environment of stable or falling in global yields and credit spreads. The most-watched measures of US inflation have fallen, but there is a divergence in underlying measures and the lesser watched, but perhaps more indicative measures, have increased. The US labour market still appears tight, and the market and the Fed might be premature in writing-off inflation.  However, the Fed would welcome higher inflation, and US rates are expected to remain stable for the foreseeable future.

Stronger Eurozone Q1 GDP and German CPI suggest that the ECB need not rush to ease policy further.  However, these data points appear to be largely payback for weak previous outcomes.  More current business surveys suggest that there is no clear path back to above-trend growth.  The EUR downtrend may persist if the market continues to seek higher-yielding assets in an environment of stable or falling in global yields and credit spreads. The most-watched measures of US inflation have fallen, but there is a divergence in underlying measures and the lesser watched, but perhaps more indicative measures, have increased. The US labour market still appears tight, and the market and the Fed might be premature in writing-off inflation.  However, the Fed would welcome higher inflation, and US rates are expected to remain stable for the foreseeable future.

A Reprieve for the EUR, but Not a Game Changer

The USD is testing the top of its range for over a year against the DXY major currency index, and its highs for the year-to-date against the broader Bloomberg dollar index against ten leading currencies.  The rebound in the USD is surprising in light of the stronger than expected Chinese economic data.  However, other economic reports suggest that global manufacturing and export growth remains weak; including flash April PMIs and export data in Korea and Singapore.  Strength in the dollar reflects some risk aversion related to higher oil prices on USA’s Iran policy, Brexit risks, Italian government risks, and USA trade policy risks.  US bond yields stalled, consistent with some risk aversion.  However, US equities powered to new closing highs.

The USD is testing the top of its range for over a year against the DXY major currency index, and its highs for the year-to-date against the broader Bloomberg dollar index against ten leading currencies.  The rebound in the USD is surprising in light of the stronger than expected Chinese economic data.  However, other economic reports suggest that global manufacturing and export growth remains weak; including flash April PMIs and export data in Korea and Singapore.  Strength in the dollar reflects some risk aversion related to higher oil prices on USA’s Iran policy, Brexit risks, Italian government risks, and USA trade policy risks.  US bond yields stalled, consistent with some risk aversion.  However, US equities powered to new closing highs.  

Dollar Tests Highs as Global Risk Aversion Remains Elevated

We see scope for dovish noises from the FOMC minutes and Fed speakers.  The Fed appears to be in the process of shifting towards adopting an average inflation target, which should make them more sanguine if inflation rises above the 2% target and more responsive to signs that economic growth may be slowing.  We expect no substantive changes in policy guidance from the ECB this week.  The RBA has opportunities in a speech and the financial stability review this week, and its minutes next week to flesh out what appears to have been a shift to an easing bias earlier this month.

We see scope for dovish noises from the FOMC minutes and Fed speakers.  The Fed appears to be in the process of shifting towards adopting an average inflation target, which should make them more sanguine if inflation rises above the 2% target and more responsive to signs that economic growth may be slowing.  We expect no substantive changes in policy guidance from the ECB this week.  The RBA has opportunities in a speech and the financial stability review this week, and its minutes next week to flesh out what appears to have been a shift to an easing bias earlier this month.

Watch Out for Dovish Noises from the Fed and RBA

FX markets are meandering with no clear trends, and it seems investors have little market conviction.  This appears to be resulting in choppy price action influenced mainly by short term technicals rather than macroeconomic developments.We have noted that in recent years the FX market has appeared to be less pre-emptive, and often responds surprisingly sharply after the event.  As such we remain wary of a reversal of recent USD strength if, as it seems increasingly likely, a negotiated trade and Brexit deal might be found relatively soon. If there is a trend, it is a mild downtrend in the EUR that has underperformed most other currencies over the last six months.  It failed to rise much in January when most other currencies experienced a rebound against the USD, and it has continued to drift lower, in recent months, during a period of mixed to weaker price action in other currencies against the USD.The market may be moving into a yield-seeking mode.  Yield compression tends to shift capital to higher-yielding assets, resulting in a stronger performance for higher-yielding currencies even as their yield spreads narrow. The USD is now one of the higher-yielding currencies.

FX markets are meandering with no clear trends, and it seems investors have little market conviction.  This appears to be resulting in choppy price action influenced mainly by short term technicals rather than macroeconomic developments.We have noted that in recent years the FX market has appeared to be less pre-emptive, and often responds surprisingly sharply after the event.  As such we remain wary of a reversal of recent USD strength if, as it seems increasingly likely, a negotiated trade and Brexit deal might be found relatively soon. If there is a trend, it is a mild downtrend in the EUR that has underperformed most other currencies over the last six months.  It failed to rise much in January when most other currencies experienced a rebound against the USD, and it has continued to drift lower, in recent months, during a period of mixed to weaker price action in other currencies against the USD.The market may be moving into a yield-seeking mode.  Yield compression tends to shift capital to higher-yielding assets, resulting in a stronger performance for higher-yielding currencies even as their yield spreads narrow. The USD is now one of the higher-yielding currencies.

Yield Grab Supports the USD, Japanification Fear Weakens EUR

United States

The euro is the official currency of the European Economic & Monetary Union.  The US dollar is the official currency of the United States of America.

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An RBA Rate Cut Next Week Is the Smart Move; Fed Firmly on Hold

The RBA should cut rates next week to signal that its inflation target still matters. Slumping inflation expectations over the last six months,...

Greg Gibbs

A Reprieve for the EUR, but Not a Game Changer

Stronger Eurozone Q1 GDP and German CPI suggest that the ECB need not rush to ease policy further. However, these data points appear to be largely...

Greg Gibbs

Dollar Tests Highs as Global Risk Aversion Remains Elevated

The USD is testing the top of its range for over a year against the DXY major currency index, and its highs for the year-to-date against the...

Greg Gibbs

Watch Out for Dovish Noises from the Fed and RBA

We see scope for dovish noises from the FOMC minutes and Fed speakers. The Fed appears to be in the process of shifting towards adopting an...

Greg Gibbs

Yield Grab Supports the USD, Japanification Fear Weakens EUR

FX markets are meandering with no clear trends, and it seems investors have little market conviction. This appears to be resulting in choppy price...

Greg Gibbs

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