FX markets

Rouble stays unrattled in the Ukraine-Russia conflict

As the year 2018 gradually comes to an end, it is high time for the rouble to take stock. This is likely to paint a patchy picture for the Russian currency as it took quite a beating at times in the course of the year at the hands of the euro as well as of the US dollar. It had some reefs to circumnavigate – including the emerging markets crisis and the Fed’s more restrictive monetary policy stance. Primarily, however, in the past few months it has been the sanctions imposed on Russia by the USA that have put the country’s currency on the defensive. The first round of sanctions came at the beginning of April as a response to the alleged Russian interference in the US presidential election campaign. Further sanctions followed in August/September when the USA reacted to presumed Russian participation in the poison gas attack on the…

Brexit: One step forward, two steps back

Five hours have passed since Prime Minister May was able to announce a step forward in the Brexit negotiations. After an „emotional“ debate last night, she succeeded in uniting her cabinet and securing the approval of her ministers for the backstop solution. At least yesterday evening, it again seemed that May was able to retain her calm even in the biggest storm and not to let herself be unsettled by the commotion surrounding her. This morning, however, a new storm is already looming: May’s Brexit Minister Dominic Raab and Secretary of State for Work and Pensions Esther McVey have announced their resignations and there is a good chance that other ministers will follow suit in the course of the day. Everything now depends on whether May succeeds in saving her government from collapse and being able to remain in office herself. First May will have to reshuffle her cabinet and…

Bitcoin in a steady “recovery position” and certainly not dead

Bitcoin officially saw the light of day at the end of October 2008, and despite the success story written without a doubt since, the dinosaur among the cryptocurrencies most probably expected its tenth birthday to turn out slightly differently – particularly given the euphoria that arose in the second half of last year. Starting at just short of USD 20,000 in mid-December 2017, the Bitcoin price had slumped by the end of June to its low for the year thus far of just below USD 5,800. To date, 2018 has essentially been a disappointment not just for Bitcoin, but for the entire segment. There are several reasons for the way the quotations for Bitcoin & Co. sagged. First of all, the expectation that cryptocurrencies were about to win out compared to traditional currency that flared up for a while were probably exaggerated. The same applies to the hope that established…

The Brexit Advent Calendar

It’s definitely a fierce cut-and-thrust: regardless of how often one or the other of the two sides has let it be known that an agreement was only a litte way off, there continues to be discord between Brexit negotiators in Brussels as far as the critical issues are concerned. Their task is being made more difficult by the persistent political in-fighting in Westminster, where Brexit hardliners and advocates of a more moderate course are at irreconcilable loggerheads. Despite long-drawn-out meetings, Prime Minister May has not so far managed to bring her cabinet – let alone the British parliament – into line. In the light of this, the Brexit roadmap is looking increasingly ambitious. Now that the special summit originally planned for some time in November presumably appears to be definitively off the table, the focus has moved to the December summit (13/14 December). By then, at the latest, an agreement…

US midterms – an interim report on Trump

It is now two years since President Trump was elected as the world’s most important head of state. For two years, the currency markets‘ response to the direction of US policy has been unmistakable: „America First“ also means „US Dollar First“. It may have taken some time for financial markets to have accustomed themselves to Trump’s erratic leadership style, but they have now made their peace with it, as there is no question about the successes (at least short-term) of his economic policy. At present, Trump and his Republican Party enjoy the best possible power constellation: Republicans command a majority in both houses of Congress, giving them de facto control of the legislature. This position of strength also feeds the US dollar’s vigour and it is this constellation that now stands ready for the midterm elections on 6 November. A Democratically-controlled House of Representatives and a Republican Senate currently appear…

South African and Turkish investments are risky but attractive

The wind has shifted. While international investors still avoided financial markets in emerging markets this summer and scaled back significant investments, emerging market currencies have been able to stage a noticeable recovery in recent weeks. The South African rand and the Turkish lira have gained a good 4% and almost 19% respectively over the euro since the start of September. Turkey along with Argentina were at the heart of the emerging market turbulence during the summer months. Growing doubts about the central bank’s independence and concerns about further sanctions being imposed by the US, which would restrict the country’s access to international capital markets, generated considerable uncertainty among investors. Financial markets increasingly factored in a scenario whereby the situation could escalate, bringing about insolvency of many Turkish companies or even of the Turkish state. The portents of these two central factors driving the crisis have meanwhile turned. The Turkish central…

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