FX Talk - an Ebury podcast

According to the BoE, further increases in interest rates may be required to bring inflation back down to target, but the bank stated that the peak in rates would be '‘lower than priced into financial markets''. On the UK economy, the BoE once again struck a sombre note. In its statement, the MPC spoke of a ‘very challenging’ outlook for the UK economy, mentioning the tightening in...

Last time we spoke about the reaction in the pound to the budget and the potential impact of the tax cuts on the economy. Since then, we have seen one of the most dramatic U-turns in British political history. Most of the tax cuts (around 80%) that were announced have now been reversed.  How have markets reacted? Sterling posted decent gains and UK bond yields have stabilized. Big question for us:...

What are the economic consequences of the mini-budget? Since the initial sell-off, the GBP has recovered in the past few sessions. What are the reasons for the recovery in the pound?  We’d like to hear from you! Provide us with feedback so we can improve the podcast: https://linktr.ee/fxtalk   Liked this show? Please leave us a review here – even one sentence helps!  We’d like to hear from you! Pr...

We'd like to hear from you! Provide us with feedback so we can improve the podcast: https://linktr.ee/fxtalk   Since our last episode, the US dollar has rallied against almost every other G10 currency, with the sole exception of the Swiss franc, which has benefitted from the hawkish turn from the Swiss National Bank. The main theme in markets has been one of risk aversion, as investors and ec...

We’de like to hear from you! Provide us with feedback so we can improve the podcast: https://linktr.ee/fxtalk   The main talking point has been the move below parity in EUR/USD for the first time since December 2002. The pair teetered on the brink of parity for a couple of sessions, before falling fairly comfortably below it on Thursday. A divergence in natural gas prices across the Atlantic was l...

Time flies when you’re having fun. So, this is a good chance for us to look back on the first six months of the year, and talk about our main highlights in the FX market so far this year. We then look ahead, and talk about what we expect during the remainder of 2022. We’d like to hear from you! Provide us with feedback so we can improve the podcast: https://linktr.ee/fxtalk   Liked this show? Plea...

The Swiss franc was the best performing currency in the G10 last week after the SNB shocked markets by announcing a 50 basis point interest rate hike - the consensus was for no change. The bank also changed its wording on the franc, no longer calling it ‘highly valued’ and saying that it would be prepared to intervene in the market on both sides. We’d like to hear from you! Provide us with feedbac...

Markets will have one eye on next Wednesday's FOMC meeting. The Fed is set to raise rates by another 50 basis points next week and signal more hikes are coming at upcoming meetings. This will be followed by the Bank of England’s latest policy decision on Thursday.  But we’re going to focus first on Thursday’s ECB announcement, which delivered a long awaited hawkish pivot. In the bank’s statem...

On the whole, most economies rebounded well from the COVID induced slowdowns in 2021, as an easing in restrictions allowed for an unleashing in pent-up demand. While the strict covid restrictions are a thing of the past for most of us, a number of other downside risks to growth have materialized of late, causing markets and central bankers to fret that a slowdown could be on the cards during the r...

We spoke on our last episode about the sharp sell-off witnessed in risk assets in late-April, which sent most higher risk currencies lower against the safe-havens, notably the US dollar. The US dollar index, which measures the currency against a weighted basket of its peers, rose to its strongest position in almost 20 years earlier in the week, as heightened global growth concerns triggered a ‘ris...

In FX, we’ve seen a classic period of ‘risk off’ trading. The US dollar has been by far and away the best performing currency, rallying sharply against pretty much everything else. Most emerging market currencies are down, with the exception of the Russian ruble, some more than 4 or 5% in the past week alone. The major currencies have also suffered rather extraordinary sell-offs, in most cases to...

For the most part in the last month, we’ve seen an improvement in risk sentiment - the safe-havens have generally underperformed, notably the Japanese yen, which has slumped to around its lowest level at any time since I started working in the FX industry, and at the release of this recording may well have fallen to its lowest level since 2002.  The higher risk currencies have generally rebounded,...

Investors were caught wrong-footed by news of the full-scale invasion last Thursday, despite a host of warnings, with markets holding onto misplaced optimism that a peaceful solution could be found that would avoid conflict. In FX, almost all emerging market currencies sold-off, most rather sharply, albeit there were some exceptions (notably those in Asia, including CNY). European currencies in ge...

Last week was a very eventful one of central bank announcements, with the Bank of England also holding its February monetary policy meeting on Thursday. As expected, interest rates were raised by a quarter of a percent to 0.5%, the first back to back rate increase in the UK since 2004, after rates were of course raised by 10 basis points back in December. The euro has been one of the best performi...

So far in 2022, we have seen a broad rebound in most of these EM currencies, many in excess of 3% in less than 3 weeks - including the Brazilian real, South African rand and Hungarian forint. Now, while part of this recovery has to do with the broad weakness we’ve seen in the US dollar, we’ve also seen a general rebound in risk appetite, which has helped support these higher risk currencies. The U...

The main talking point in recent months has undoubtedly been the recent sharp increase in global inflation, driven largely by an unleashing of pent up demand and acute supply shortages. Price growth has continued to far exceed expectations of both central bankers and economists. Citibank’s G10 Inflation Surprise index, for instance, rose to a fresh record high in December.  The detection and aggre...

We’re going to start by talking about the most traded and popular currency pair in the foreign exchange market, and that is of course EUR/USD, which has been on a rather volatile ride in the past fortnight. The cross began November around the 1.16 level, although it has since fallen sharply and is down about 3% month-to-date to below the 1.13 level and its weakest position since July 2020.  As far...

We’d like to hear from you! Provide us with feedback so we can improve the podcast: https://linktr.ee/fxtalk   Liked this show? Please leave us a review here – even one sentence helps! 

More than half of the major G10 central banks have announced their latest policy decisions in the past couple of weeks. The Bank of Canada abruptly ended its quantitative easing programme, much sooner than the market expected. The Reserve Bank of Australia held policy steady, although indicated that it could raise rates sooner than it had previously outlined. While Norges Bank indicated that it wa...

The main talking point in financial markets continues to be the sharp increase in inflationary pressures globally. This has caused investors to both fret that a slowdown in global growth could be on the cards in Q4, and also raised expectations for central bank interest rate hikes.  We’d like to hear from you! Provide us with feedback so we can improve the podcast: https://linktr.ee/fxtalk   Liked...

The Real remains one of the most volatile emerging market currencies that we cover, with levels of implied probability that exceed just about all of its regional peers. BRL sold-off aggressively at the start of the COVID-19 pandemic, falling to a record low of around 5.9 to the US dollar. The currency stabilized in the second half of last year and has largely held its own versus a broadly stronger...

Investors appear slightly torn between renewed optimism surrounding the pandemic and concerns surrounding the recent stagflation narrative, whereby many economic areas are seeing rising consumer prices, coupled with slower growth. Following the recent sharp increase in US inflation and robust labour market performance, investors have braced for an announcement that the Fed will soon begin tapering...

Listen to what our analysts have to say about the latest FOMC policy meeting and what they expect from the financial markets in Augusta and early September.  We’d like to hear from you! Provide us with feedback so we can improve the podcast: https://linktr.ee/fxtalk   Liked this show? Please leave us a review here – even one sentence helps! 

It is been a period that has been largely characterized by ‘risk off’ trading. If we look at the FX performance tracker for the past month, the three best performers in the G10 have been the traditional safe-havens. The swiss franc, Japanese yen, and US dollar - in that order. Meanwhile, the higher risk currencies, including the Norwegian krone and Australian dollar, have largely underperformed. T...

We’re going to start this episode by talking about Friday’s nonfarm payrolls report - the impact it had on the market and our general thoughts I guess on the strength of the US labour market. Most currencies, particularly the major ones, spent much of it within rather narrow ranges amid a lack of significant newsflow. On Friday, however, we did see some volatility following the release of the mont...