US to Cast the Verdict on Trump’s Last 4 Years

Last week we saw the news focus on the rise of COVID cases in the UK and Europe. France and Germany announced on Friday that they will be implementing lockdown measures; which was swiftly followed on Saturday by the UK's own announcement. Despite the negative news surrounding lockdown, we saw economic data paint a more positive picture as both US and Eurozone GDP growth exceeded the massive contractions in Q2. In addition, the German October IFO survey revealed the first rise in expectations in four months. In the meantime, the ECB hinted strongly at further policy changes in December which are likely to manifest itself in further QE. The US election continues to dominate headlines with Americans heading to the polls on Tuesday. The final weekend saw both candidates continue and drive their campaigns towards the finish lines. As it currently stands according to Real Clear Politics is showing the aggregation of betting odds with Joe Biden showing a 64.7% probability of winning. Michael McDonald, a University of Florida professor who runs the US Elections Project stated that as of Sunday afternoon 34,004,455 in-person votes and 59,126,562 mailed ballots had been returned to election authorities; accounting for two-thirds of all 2016 turnout. It is likely that economic data and news may take a back seat this week and the focus will firmly be on lockdown measures and the US Presidential race. However, there is still a loaded calendar with UK and US interest rate decisions and US employment data.

2020-11-02T15:59:13+00:00November 2nd, 2020|

Covid-19, Second Wave or Tidal Wave?

As we decided to include the possibility of this in our ‘Five Looming Dilemmas for 2020’ series, I hadn’t thought that by the time we came to produce the article we would be right in the middle of the event! Many of you will be under local lockdown, or back to working-from-home due on the latest government advice. One of my favourite authors, Adam Kay (best known for the book This is Going to Hurt), summarised it quite well in a recent tweet. Adam said, “I can’t believe the government’s plan of keeping cases down by telling us to go back to work and eat at restaurants as much as possible hasn’t worked.” I feel as though the UK response has appeared muddled at times. History and understanding For those who have been living in a cave, or recently arrived in 2020 via time machine, Covid-19 is a strain of Coronavirus that originated in China in 2019. Its highly contagious nature has resulted in a rapid spread throughout the globe and current statistics show it has infected over 38m people, with an excess of 1m deaths. The effect on consumers and world markets was initially one of panic, with toilet roll less prevalent than diamonds for the first time in recorded history, as supermarket shelves were stripped bare. Stock markets initially tumbled, with the FTSE100 dropping from around 7,400 in February to a low of around 5,000 in March, a near 39% drop. We currently sit around 5900, still 22.5%

2020-10-30T15:23:41+00:00October 30th, 2020|

Economic Outlook Q4 2020: Focus on FX Budgeting & Strategies for 2021

This quarter we should see the conclusion of various risk events that have been looming since the turn of the year; namely Brexit UK/EU trade talks and the US Presidential Elections. In a move away from our normal quarterly outlook (after all these are abnormal times), we will be focusing on some of the challenges that businesses are facing as we look towards 2021. We will cover ground on budgeting and deploying a currency strategy that is appropriate for the uncertain future. In this report, we will focus on the action central banks and governments have taken and the resulting effect on volatility. This year has been tough for many businesses, we are all hoping for an improvement in 2021, but in the words of James Cameron: "Hope is not a strategy. Luck is not a factor. Fear is not an option." However, you will also find our regular content where we will highlight some of the key factors that could drive GBP, EUR and USD exchange rates over the coming months as well as displaying institutional forecasts on GBPUSD, GBPEUR and EURUSD. Read the full report: Infinity_Economic Outlook_Q4 2020 Subscribe to receive our updates in your mailbox! This blog post is intended to provide you with information on the services Infinity International Limited (IIFX) offer and should not be interpreted as advice or as a solicitation to offer to buy or sell any currency or as a recommendation to trade. Foreign exchange rates

2020-10-23T15:14:40+00:00October 23rd, 2020|

UK/EU Trade Talk Stalemate Raises the Probability Of “No Deal” Whilst COVID New Cases Dampens Sentiment

Last week much of the focus was on the political gamesmanship between the UK and EU with regards to trade talks as we approached the self-imposed deadline of the EU Summit. In the early part of the week it appeared that progress was being made, however, on Thursday (the start of the EU Summit) rhetoric started to turn sour. Sterling was fragile following comments on trade talks in which EU leaders stated that the UK needs to make “the necessary moves” for an agreement. UK chief Brexit negotiator David Frost said he was “surprised” at the suggestion. Indications are that negotiations are likely to continue for more weeks. Fisheries remain one of the sticking points. On Friday morning PM Johnson stated that the UK will now prepare for ‘no trade deal’. Talks are scheduled to continue this week but whether they happen given the rhetoric is unclear. Cabinet minister Gove stated on Sky News on Sunday “I want a deal, I’m keen to conclude one, but it takes two sides”. Sterling remained range-bound despite the ongoing uncertainty. That said, there wasn’t any fresh ground broken as sentiment echoes a tone of déjà vu. COVID new cases continue to raise concerns as infections rise with London, Essex and York among areas moving to ‘tier two’ whilst Greater Manchester is pushing back against a move to ‘tier three’. In Europe, there have been stronger restrictions implemented in several major cities with the obvious growth concerns becoming more apparent. This may be

2020-10-20T09:35:00+00:00October 20th, 2020|

Racing Towards The Final Furlough

I remember being glued to the daily briefings in mid-March after initially dismissing the early news with a ‘this will pass attitude’ – clearly Covid-19 was a different beast.  What I hadn’t expected was Chancellor Rishi Sunak’s announcement of the astonishing and unprecedented economic relief package for the UK. History and understanding This package announced on 20th March 2020 included grants to small businesses, access to alternative funding, deferred taxes, support for renters and additional financing for the welfare system.  Additionally, the Chancellor announced the scheme that most of us are now very familiar with and what this article will discuss; the Coronavirus Job Retention Scheme. Within this, the government agreed to pay for 80% of people’s wages so they can be furloughed rather than laid off to protect their jobs. This is one of the most important economic tools in recent history that has helped retain jobs in many of the business sectors that have been most affected by Covid-19. From 1st October, employers pay 20% towards furloughed staff’s wages and the government cover the remaining 60%. The furlough scheme now ends on 31st October 2020 and will be replaced by the Job Support Scheme and the extension of Self Employment Income Support Scheme.  The Job Support Scheme is designed to protect jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The scheme will open on 1 November 2020 and run for 6

2020-10-19T09:57:42+00:00October 19th, 2020|

UK/EU Trade Talks Plus Trump’s COVID Concerns Drive FX Price Action

Last week further demonstrated the sensitivity of sterling to Brexit negotiations. Developments from Thursday onwards highlighted responsiveness as the currency traded between a 150-pip range as positive and negative headlines hit the wires. Sterling was boosted by news that UK PM Boris Johnson and EC President Ursula von der Leyen agreed that talks will continue to "close significant gaps". Brexit headlines are likely to continue to dictate sterling movements. We saw the headline Euro-zone CPI inflation rate declined below expectations to -0.3% for September from -0.2% previously. The core rate (excluding food and energy) also declined to 0.2% from 0.4% also below market expectations of 0.5%. This was the lowest core reading since the Euro was introduced and will reinforce pressure for the ECB to take additional action to underpin both reported inflation and inflation expectations. The end of the week resulted in some unexpected news as President Trump released the news that he and the first lady had contracted COVID. Concerns heightened over the weekend as they were taken to hospital. News has since been inconsistent. The market will be focused on when he is discharged (rumoured to be early this week) and what the potential implications are on the next TV debate, voting behaviours and the net impact on the election. Looking to the week ahead, the market will be once again focused on Brexit trade talk developments as we approach the EU summit on the 15th of October. In the meantime, the situation surrounding President Trump

2020-10-05T13:38:51+00:00October 5th, 2020|

Sterling Faces Dual Risk of Brexit and Potential COVID Restrictions

Last week, sterling price action highlighted its sensitivity to both Brexit and negative interest rate news. The currency started the week on the backfoot as the Internal Market Bill was discussed in the House of Commons where it was highlighted that if passed, the UK has the ability to break international law. This came under criticism from all the living past Prime Ministers and was even attacked by US Presidential Candidate Biden. However, the rhetoric softened as PM Johnson meet with backbenchers and EC President Ursula von der Leyen stated that she felt a deal was still possible. Meanwhile, both the FOMC and BOE met to deliver their latest interest rate policy and relay their thoughts on economic policy. In the US, the Fed’s amendments to its policy guidance talked about allowing inflation to move “moderately” above target for “some time” before it will raise interest rates with the majority touting at least 2023 before interest rates are increased. In the UK, the BoE stipulated the possibility of negative interest rates, increasing the probability they give to a move below zero in 2021 pushing Sterling lower at the time. Concerns of UK economic growth were further compounded as the pace of expansionary data slowed and new COVID cases in the UK remained on an elevated path. Local lockdowns were implemented with concerns of more widespread consequence amidst the ongoing testing capacity debacle. Looking to the week ahead, Brexit and COVID headlines will continue to dominate. Informal talks between the

2020-09-21T11:53:16+00:00September 21st, 2020|

A Double Dip Recession or V Shape Recovery, How Will Sterling Be Affected?

By Jamie Jemmeson ACSI, MSTA at Infinity International Background The UK officially entered a recession following the Q2 GDP release in early August - a recession is defined by two consecutive quarters of negative growth. Whilst a recession was not unexpected, the position of the nation’s economy in comparison to its peers is somewhat of a concern. The official reading saw UK Q2 GDP contract by 20.4%, a record low. Compounding the concern for the UK economy is that this is the largest contraction for Q2 GDP amongst its peers in the G7. State of play The UK has not only suffered the highest number of COVID deaths in Europe, with 41,499[1] deaths at the time of writing but is also suffering from the deepest recession in the G7. This is not coincidental; the figures are intrinsically linked. The surge in deaths due to late lockdown dented economic confidence resulting in the dire GDP figures reported. Please don’t emigrate to Japan just yet – it’s not all doom and gloom. The monthly UK GDP figure, as opposed to quarterly detailed above, is likely a more appropriate reading of recent economic activity.  Given the fluid changes in guidance, travel corridors and easing of restrictions we have seen over the last few months, the figures are certainly more upbeat. The monthly figure for June reported an increase of 8.7% – a record single-month increase and slightly stronger than forecasts suggested, with May’s GDP figure also revised higher. This trend has not

2020-09-03T08:20:03+00:00September 2nd, 2020|

Sentiment Concerns Emerge Ahead of Packed US Calendar Including Virtual Jackson Hole

Last week we saw the US Dollar remain under pressure as economic data raised some question marks about its recovery. A leading indicator for employment, the weekly jobless claims, increased back above a million posting a figure of 1.1m, which was greater than the forecast of 930k. Compounding the recovery question marks was the Philly Fed Manufacturing data which was lower than expected as well as down from previous reports, suggesting that momentum is slowing. Keeping the Dollar under pressure was the sentiment in equity markets, with news from Pfizer that its Covid-19 vaccine was on course for regulatory review in October, has lent support. Sterling had a whipsaw week as both economic data and trade talk news drove the price. Sterling moved lower initially as speculation mounted that tensions between the UK and EU were raised during their trade talks. It was reported in the Financial Times that Brussels has rejected the UK’s opening demands for continued wide-ranging access to the EU for British truckers. During Friday’s press conference, Sterling once again came under pressure following comments from negotiators Michel Barnier and David Frost. The EU negotiator stated that he was "disappointed" and "concerned", whilst UK negotiator David Frost spoke of "little progress". Meanwhile, economic data continues to remain positive for the UK. Retail sales, services and manufacturing data all improved highlighting that the recovery’s momentum is continuing post easing restrictions. It will be interesting to see if the UK can continue this once the government’s schemes end - Furlough and Eat

2020-08-24T12:00:12+00:00August 24th, 2020|

5 Looming Dilemmas of 2020 & the FX impact

By Jamie Jemmeson ACSI, MSTA & Tyler Betts, FX Risk Manager at Infinity International “You can't connect the dots looking forward; you can only connect them looking backwards. So, you have to trust that the dots will somehow connect in your future.” – Steve Jobs Steve Jobs’ philosophy of trusting that dots will connect may be very difficult to fathom in this current landscape; but who are we to question the man who created the world’s first trillion-dollar company. Infinity International will be providing content to our clients on several relevant topics covering a variety of possible concerns during these unprecedented times. To do this, we are drawing on our own experience, client feedback as well as the input from others in our network. Last month we covered a series on FX hedging and how this could assist your business in managing the current market volatility. This month we are looking at the topics which could impact on currency and potentially drive emotional decision-making surrounding FX hedging. In this series, we will focus on five key looming dilemmas of 2020 and what this may mean for FX. There may only be one or two ‘trend changing’ events in a normal year, that could significantly impact the direction of exchange rates; however, this year we have seen COVID-19 increase volatility with several other events on the horizon. 2020 has been a rocky road to date, but there are five further topics that could further drive market volatility. Each week we will cover

2020-08-21T09:45:21+00:00August 20th, 2020|