ETF Securities Research Blog

If Bank of England doesn’t hike rates in 2017, then when?

One year on from the last rate cut, the Bank of England has kept rates on hold, with the MPC voting 6-2 in favour of the decision (roughly the same as last month). Although policy remains unchanged, GBP should remain supported by what is expected to be a tighter policy path in 20-17/2018. Indeed, Governor Carney indicated that policy may need to be tightened at a faster rate than the market is currently pricing. Read more…

Is the Canadian Dollar signalling an oil price bottom?

The Bank of Canada (BOC) raised rates for the first time in seven years this week, the second major central bank to do so after the Federal Reserve. The BOC indicated that its economy ‘is approaching full capacity’. As a result, the Canadian Dollar, the so-called Loonie, jumped to the highest level against the US Dollar in 13 months. A rising CAD could be signalling a bottom for oil prices. Read more…

Cryptocurrencies are the new Gold rush

Cryptocurrency miners are a fickle group, flipping from one currency to the next depending on their ability to mine it cost effectively. Mining has been proving lucrative for them, but as a consequence prices of tools used in mining cryptocurrencies are soaring, similar to the gold rush seen in the 19th century.

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The problem with cryptocurrencies

Cryptocurrencies are very much an emerging asset class, and the technology underpinning it is steadily developing. However, we believe there are intensifying issues regarding regulatory scrutiny, liquidity, trade execution/confirmation time, scalability, trust in the money creation process and the fundamentals that drive the currencies.

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No bounce for the Aussie Dollar

Although the Australian economy set a record of not having a recession in 104 quarters – since 1992 – growth in Q1 2017 was the weakest in over seven years. With the Reserve Bank of Australia (RBA) remaining firmly in an accommodative policy stance, the downside risks for the Australian Dollar (AUD) are mounting in the near term. Read more…

China A-shares finally in after four attempts

MSCI  has finally decided to include China mainland companies in its MSCI Emerging Market benchmark. While some obstacles that have prevented A-shares to be included in the past remain, many have been removed. As a result of the inclusion, A-shares stocks may benefit from short-term bet. We however believe that a credible reform agenda and adherence to it would be a stronger support for domestic companies over the longer run.

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From the horse’s mouth: Fed rate hike likely to prompt further USD weakness

The market has been fully pricing in a rate hike from the Federal Open Markets Committee (FOMC) for over a month – since mid-May, the US Dollar (USD) has fallen nearly 3%. Recent Fed speakers prior to the ‘blackout’ indicate that the view is relatively pragmatic and balanced. However, the USD could still weaken further even if the Fed follows through on market expectations for a rate rise Read more…

Further unnecessary political uncertainty and sterling volatility

The promise of ‘strong and stable leadership’ has bred more unnecessary political uncertainty and sterling volatility. With a tough Brexit process now likely, Theresa May could lose her job or be forced into a drawn out process to agree a coalition. This, and a lack of political unity in parliament is also likely to weigh on upcoming Brexit negotiations which are due to begin in 2 weeks’ time.

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