Diverging EM assets and currencies, Global investor jitters, AUD Vulnerable
The USD has strengthened since September after trending down for the first eight months of the year. Its gains have stalled in recent weeks, and the jury is out as to whether it will revert to its weaker trend earlier in the year or push on. The rebound in the USD since September has some sound fundamentals; strengthening US economic reports, Fed sticking to its guns, and tax policy reform progress. However, the market is not convinced; US bond yields tried to go up, then slipped back. Equity investors have not yet been overly perturbed by the USD rebound, continuing to drive up global equities. Emerging market currencies have been caught somewhere between following stronger EM equities higher, or falling back against a firmer USD. In the first eight months of the year, the dollar smile theory was playing out with moderate US economic growth and weaker inflation trends sending capital towards EM and other developed market equities where growth was stronger and synchronized. This helped reinforce the USD down-trend and see the market tend to ignore a firming US rates advantage. We are now seeing an unusual divergence in EM bonds and currencies from EM equities. They will probably have to converge at some point either because the USD resumes broader weakness, or EM equities correct lower in a stronger USD environment. Amidst the broader uncertainty, we see downside risk for the AUD as the RBA reinforces a cautious steady monetary policy stance after weaker than expected Q3 CPI inflation, increasing political uncertainty, a slowing housing market, and Chinese commodity demand risks.
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 licensed in Australia to provide financial services.
We produce macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange.
These reports are drawn from analysis by Greg Gibbs and inform the capital management he undertakes on behalf of the company.
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.
We have two subscription levels for our research. AmpGFX members receive our AmpGFX reports. These are our flagship macroeconomic analysis produced two to three times per week. Real-Time members receive our AmpGFX reports plus Real Time Briefings. These include our specific trading strategy, including our entry levels and related orders, and additional market commentary.
Greg Gibbs is the director and founder of Amplifying Global FX Capital. Greg began his career at the Reserve Bank of Australia in 1989, and in the early 1990s, he was the first economics graduate at the Bank to be assigned to the foreign exchange dealing desk. In 1996, Greg joined Bankers Trust Australia on the FX sales desk covering Australian and international fund managers. In 1999, he joined Westpac Bank in New York and switched to the research side to become the bank’s first FX strategist based in New York, carving out a role covering major currencies. In 2002, he returned to Australia as senior FX strategist at RBC covering APAC currencies, and in 2006 he moved to ABN AMRO in Sydney, reuniting with many of his colleagues from Bankers Trust that were again part of a thriving full-service investment bank. Greg continued to work on at RBS in Sydney as senior FX strategist after it took over ABN AMRO in 2008. He moved to Singapore in July 2012 after the bank consolidated its FX business in Asia, and was appointed Head of APAC Markets Strategy for the bank in February 2014. In early 2015, Greg began to work on establishing his own company, Amplifying Global FX Capital, and launched its website in August 2015 after completing duties at RBS.
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