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.

Macroeconomics

The BoJ’s deep throat policy makes sense this time around after the shock tactics back-fired in January.  The market is being massaged to expect comprehensive easing including a further rate cut aimed at a weaker JPY.  This time around expect most of the action ahead of the BoJ meeting next week.  JPY may weaken near term, but will face significant resistance toward 115 and may be volatile after the meeting with little net new direction.  We continue to see market risks building in China; weak corporate bonds, rising yields, steadily declining CNY against its basket, steady capital outflow and lagging equities.  AUD has been boosted by iron ore and oil, but is diverging recently and may also be reflecting constrained confidence in China, notwithstanding recent improvement in economic activity.  We had returned our focus to long gold in recent days, but it may work better against a short JPY position.

The BoJ’s deep throat policy makes sense this time around after the shock tactics back-fired in January.  The market is being massaged to expect comprehensive easing including a further rate cut aimed at a weaker JPY.  This time around expect most of the action ahead of the BoJ meeting next week.  JPY may weaken near term, but will face significant resistance toward 115 and may be volatile after the meeting with little net new direction.  We continue to see market risks building in China; weak corporate bonds, rising yields, steadily declining CNY against its basket, steady capital outflow and lagging equities.  AUD has been boosted by iron ore and oil, but is diverging recently and may also be reflecting constrained confidence in China, notwithstanding recent improvement in economic activity.  We had returned our focus to long gold in recent days, but it may work better against a short JPY position.

AmpGFX - BoJ's Deep Throat and China Market Risks Make Way for Higher Gold/JPY

Asia Economist and CEO, Centennial Asia Advisors

Manu Bhaskaran

Asia Economist and CEO

Centennial Asia Advisors

At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way. With over 30 years experience covering Asia’s political economy, you can be sure our conclusions and analyses are based on the unadulterated facts. Through years of fine-tuning our research methodologies, we deliver a quality of macroeconomic analysis few other houses can match.

Centennial Asia Advisors is an independent research and advisory firm that works with governments, multilateral institutions, financial firms and leading MNCs.

Economic Policy and Strategic Advisors

China: Low quality rebound may not be sustainable; but short term will boost global demand<ul><li>A massive monetary and fiscal injection will further boost China’s growth in coming months but it will only add more capacity and leverage to a system awash in excess capacity and leverage.</li><li>China’s exports ended an eight-month contraction, with its top two markets, US and the EU, growing robustly. Import volumes have been healthy even as import values remain negative, positive for global demand.</li><li>But as China exports its surplus capacity, the pain it creates in industries such as steel will increase trade tensions and lead to a rise in protectionism which would also hurt other Asian exporters.</li></ul>

China: Low quality rebound may not be sustainable; but short term will boost global demandA massive monetary and fiscal injection will further boost China’s growth in coming months but it will only add more capacity and leverage to a system awash in excess capacity and leverage.China’s exports ended an eight-month contraction, with its top two markets, US and the EU, growing robustly. Import volumes have been healthy even as import values remain negative, positive for global demand.But as China exports its surplus capacity, the pain it creates in industries such as steel will increase trade tensions and lead to a rise in protectionism which would also hurt other Asian exporters.

Story of Global Trade Recovery Bolstered by China's Trade Upturn

The recent rising trend in the JPY and falling trend in the USD have had a life of their own this year, unwinding excessive positioning built up from end 2012 to mid-2015 for the JPY and from mid-2014 until January this year for the USD.  These trend reversals have contributed to the volatility in global markets that were being buffeted by the upheaval in Chinese markets and commodity prices, and more recently by Brexit fears. The rebounding JPY added to risk aversion, while the falling USD boosted risk appetite, the feedback from a falling to USD to a rising JPY added to the churn and uncertainty.  However, the JPY and USD have started to stabilize in recent days and excessive positioning appears to have been significantly cleansed, allowing markets to see more clearly improving conditions in Chinese and EM economies and focus on the rebound in commodity markets.  Brexit fears are likely to remain heightened and indeed may intensify as we approach the 23 June referendum.  This may tend to keep risk appetite and USD/JPY contained below 110.  But investors may still tend to seek out EM and commodity currencies to avoid negative rates and record low yields in major economies.  Brexit fears have weighed on European currencies and we may see further gains in EM and commodity currencies against the EUR.

The recent rising trend in the JPY and falling trend in the USD have had a life of their own this year, unwinding excessive positioning built up from end 2012 to mid-2015 for the JPY and from mid-2014 until January this year for the USD.  These trend reversals have contributed to the volatility in global markets that were being buffeted by the upheaval in Chinese markets and commodity prices, and more recently by Brexit fears. The rebounding JPY added to risk aversion, while the falling USD boosted risk appetite, the feedback from a falling to USD to a rising JPY added to the churn and uncertainty.  However, the JPY and USD have started to stabilize in recent days and excessive positioning appears to have been significantly cleansed, allowing markets to see more clearly improving conditions in Chinese and EM economies and focus on the rebound in commodity markets.  Brexit fears are likely to remain heightened and indeed may intensify as we approach the 23 June referendum.  This may tend to keep risk appetite and USD/JPY contained below 110.  But investors may still tend to seek out EM and commodity currencies to avoid negative rates and record low yields in major economies.  Brexit fears have weighed on European currencies and we may see further gains in EM and commodity currencies against the EUR.

AmpGFX - Calmer USD and JPY, Weaker EUR, More Upside for EM and Commodity Currencies

Asia Economic Research, Centennial Asia Advisors

Asees Bajaj

Asia Economic Research

<ul>
<li>Japan switched on a radar station on Yonaguni island in the East China Sea on 28 Mar, affording itself a permanent intelligence post close to Taiwan and a group of disputed islands.</li>
<li>Japan is also planning to strengthen its military presence in the East China Sea by increasing its Self-Defense Force to almost 10,000 personnel and installing missile batteries that will enable Japan to employ a defensive curtain along the disputed islands.</li>
</ul>Implications: Another sign of opposition to Chinese…


Japan switched on a radar station on Yonaguni island in the East China Sea on 28 Mar, affording itself a permanent intelligence post close to Taiwan and a group of disputed islands.
Japan is also planning to strengthen its military presence in the East China Sea by increasing its Self-Defense Force to almost 10,000 personnel and installing missile batteries that will enable Japan to employ a defensive curtain along the disputed islands.
Implications: Another sign of opposition to Chinese…

Economist, Centennial Asia Advisors

Jason Tan

Economist

China: Rebound in activity but difficult balancing act for policymakers raises concerns<ul><li>Corporate debt defaults by SOEs are rising in China as the economy remains bogged down by the twin concerns of overcapacity and over-leverage.</li><li>Yet there are positive signs: Industrial profits have rebounded; PMI indices have increased; and real estate activity has led a surge in economic activity.</li><li>But this rebound is of a low quality and unsustainable. Rising SOE defaults will upset the perception of an implicit ironclad guarantee by the government. The surge in real estate only reflected frothy markets; curbs to prevent asset bubbles will be implemented.</li><li>As economic difficulties lead to social unrest resulting in political stresses, policymakers are finding it increasingly difficult to balance the demands of the economy and politics.</li></ul>

China: Rebound in activity but difficult balancing act for policymakers raises concernsCorporate debt defaults by SOEs are rising in China as the economy remains bogged down by the twin concerns of overcapacity and over-leverage.Yet there are positive signs: Industrial profits have rebounded; PMI indices have increased; and real estate activity has led a surge in economic activity.But this rebound is of a low quality and unsustainable. Rising SOE defaults will upset the perception of an implicit ironclad guarantee by the government. The surge in real estate only reflected frothy markets; curbs to prevent asset bubbles will be implemented.As economic difficulties lead to social unrest resulting in political stresses, policymakers are finding it increasingly difficult to balance the demands of the economy and politics.

China

iShares China Large-Cap ETF is an exchange-traded fund incorporated in the USA. The ETF tracks the FTSE China 50 Index, investing in large cap stocks. Its investments are focused in the financial, oil and gas, technology and communications sectors. The ETF uses a representative sampling indexing strategy, investing at least 90% of its assets in the securities of the underlying index.

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iShares China Large-Cap (FXI) (FXI US)

AmpGFX - BoJ's Deep Throat and China Market Risks Make Way for Higher Gold/JPY

The BoJ’s deep throat policy makes sense this time around after the shock tactics back-fired in January. The market is being massaged to expect...

Greg Gibbs

Story of Global Trade Recovery Bolstered by China's Trade Upturn

China: Low quality rebound may not be sustainable; but short term will boost global demand A massive monetary and fiscal injection will further...

Manu Bhaskaran

AmpGFX - Calmer USD and JPY, Weaker EUR, More Upside for EM and Commodity Currencies

The recent rising trend in the JPY and falling trend in the USD have had a life of their own this year, unwinding excessive positioning built up...

Greg Gibbs

Tensions in the East China Sea

Japan switched on a radar station on Yonaguni island in the East China Sea on 28 Mar, affording itself a permanent intelligence post close to...

Asees Bajaj

China: Policymakers Straddle Tightrope

China: Rebound in activity but difficult balancing act for policymakers raises concerns Corporate debt defaults by SOEs are rising in China as the...

Jason Tan

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