Non-Japan Asia (NJA) currencies have weakened in the past four weeks, led by sharp falls in the INR, THB and IDR (Figure 1). Rising oil prices and tepid exports are amongst the common factors behind this currency weakness. Read more
After months of half truths, hollow promises, claims of greatness, veiled threats and televised showdowns, it’s finally over. No, I’m not referring to the overhyped but ultimately disappointing Mayweather vs Pacquaio “fight-of-the-decade”, but the far more unexpected outcome of the UK general election. The ruling Conservative Party has comprehensively won the battle and war for the hearts – or at least the minds – of UK voters.
The political landscape has not changed much since campaigning for the 7th May UK General elections started nearly a month ago. One-on-one interviews of Prime Minister David Cameron and opposition leader Ed Miliband, two televised debates featuring the main party leaders and the launch of the party manifestos have yielded much noise but ultimately shed little light on how and by whom the country will be governed in the next five years (See Figure 2). Read more
UK employment and wage data for February released today paint a picture of a benign economy and support the IMF’s positive assessment of the UK economy and policy mix. But these numbers are seemingly doing little to generate support for the ruling Conservative Party only three weeks before the 7th May general elections and this has got analysts and the media scratching their heads. The latest opinion polls indeed still have the Conservatives and opposition Labour Party roughly neck-and-neck on 34%. Read more
Much has been written about the apparent fall in emerging market (EM) central bank FX reserves since mid-2014 and the dire implications for developed equity and bond markets. I think this analysis misses three important points. Read more
It has been two arduous months since the Syriza party won the Greek elections on a platform to renegotiate the country’s debt and terminate austerity measures imposed by the IMF/ECB/European Commission Troika. The negotiations between Greek Finance Minister Varoufakis and his eurozone counterparts have generated much noise but seemingly achieved little. Read more
Sir Winston Churchill in October 1939 famously compared forecasting Russia’s action to “a riddle, wrapped in a mystery, inside an enigma”. He could easily have been describing Russia’s actions in the past 18 months or the challenge of forecasting who will be in government after the UK general elections on 7th May. The only certainty, even if eight weeks is a long time in politics, is that these parliamentary elections are likely to be the closest fought and hardest to predict in recent memory. Read more
The distinction between developed, emerging, in transition and frontier economies has in the past 10-15 years become somewhat more blurred and arguably misleading, in my view, for a number of reasons. For starters it’s a very subjective definition. Secondly, it’s a fluid set of groupings. Finally sell-side institutions (and in some cases countries themselves) have been conservative in redefining the boundaries. Read more
The relationship between the newly elected Syriza-led government and Greece’s official creditors has certainly not been black and white. However, I still think they will eschew the more extreme scenarios, as I argued in Greece Lightening and depict in Figure 1, and this will be one of a number of mildly supportive factors for EUR/USD. Read more
The ink has barely dried on the ECB’s shock-and-awe QE program that the market’s attention has already shifted back to Greece. The election over the weekend of a new government, led by Prime Minister Tsipras, has reignited the seemingly annual debate about whether/when Greece will default on its debt and leave the eurozone. Read more