Big Week of Economic Data Whilst Brexit and COVID-19 Concerns Remain

Last week was a mixed week for sentiment, with many eyes on the downside due to concern of an increase in COVID-19 cases in the US - new cases growing to north of 60k a day with Florida reporting in excess of 15k a day. In recent weeks, economic data from the US has been to the upside, but as a result of the recent surge Federal Reserve policymakers have warned that activity may be “leveling off” and that more fiscal support may be necessary. In the meantime, UK Chancellor of the Exchequer Rishi Sunak’s Summer Economic Update outlined the second phase of job retention measures. This has come in a three-step plan focusing on jobs, including a Job Retention Bonus to keep furloughed employees in work, a Kickstart Scheme for 16-24-year olds and targeted measures for hospitality and housing. Brexit newswires have been mixed and are likely to remain as such for the foreseeable future. It is difficult to say when exactly talks will conclude, given they had ended earlier than scheduled in the past two weeks; is this a good or bad sign? There were reports that the EU could be willing to compromise on the issue of fishing rights. Cabinet Minister Michael Gove said on Sunday progress was being made in talks but there were still divisions. Gove went on to say, “at the end of this year we are leaving the single market and Customs Union regardless of the type of agreement we reach with

2020-07-13T14:56:02+00:00July 13th, 2020|

Economic Outlook Q3 2020

Will the Reopening Signal Growth or Signpost Another Lockdown? The end of Q1 and beginning of Q2 saw the global economy in a position that it had not previously seen as lockdown hit the Western economies. Our Quarterly Report provides context on the UK, US and Eurozone markets of last quarter and highlights what we believe will be the focus of each of these regions over the coming months. In this report we will focus on the action central banks and governments have taken and the resulting effect on volatility. In this paper 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. Covid-19 may have started as a health crisis, but it quickly switched into an economic and social one. The US lost more than 20 million jobs in a two-month period. Growth forecasts globally were slashed by double figures as the world is facing a situation which it has not seen in modern times. In the second half of the quarter, we started to see green shoots emerge as lockdown restrictions eased across the globe. What does Q3 hold? Finally, we will provide some analytic data from two sources. The first is a survey of 200+ treasury departments which highlights their focus and their views of the lockdown duration. In the second, we will display the currency forecast taken from Reuters at the start of

2020-07-10T15:52:18+00:00July 10th, 2020|

Sentiment Takes a Dive Ahead of US Independence Day Weekend

Last week the focus was firmly on the prospects of a second wave of COVID-19 in the US. Last Monday in New York City, restaurants resumed sit-down service with outdoor-only seating. However, on Thursday, the US reported a new record for daily COVID-19 cases, with an increase of more than 40,000, exceeding the previous daily record in April. By Friday, Texas and Florida ordered bars and taverns to close. So far, new cases have been restricted to four states Arizona, California, Florida, and Texas which saw US daily case numbers jump sharply in June. The market will be watching closely as this story develops. If sentiment slides as a result of COVID-19 second wave fears growing, then the US Dollar could strengthen as a result. Compounding the decline in sentiment has been the mounting trade tensions. It was reported last week that the US is considering imposing additional tariffs on imports from the EU and UK. The IMF, meanwhile, revised down its 2020 global growth forecast to -4.9% from -3.0% in April. Focusing on the UK, it was publicised that air bridges are due to be announced over the coming days whilst the government announced that social distancing will be cut from 2 metres to just over 1 metre. On Friday, UK Chancellor Sunak stated that the UK is past the acute phase of the crisis while the furlough scheme will not be sustainable. Over the weekend Prime Minister Boris Johnson stated that the UK would be prepared to

2020-06-29T16:22:54+00:00June 29th, 2020|

Can Your Business Identify and Understand its FX Exposure?

By Jamie Jemmeson ACSI, MSTA at Infinity International Last week, we published an article on “Points to Consider Before FX Hedging in COVID-19 Conditions”, where we highlighted some of the talking points when considering either implementing a new FX policy or adapting your current hedging strategy. We understand that perhaps now more than ever, risk management is a priority for businesses, which is why we will go into detail answering the 4 questions we posed, assisting business to prepare in the coming weeks and months as we re-enter the markets under COVID-19 conditions. This week we are going to unpack Question 1 in more detail: Understanding your FX exposure. Has your FX exposure changed? Are you now using different suppliers/has your customer base changed focus geographically? Depending on the sector that your business operates, your FX exposure may have either decreased or increased dramatically as result of COVID-19. Before instructing any new FX hedges, you may consider whether demand has increased due to a sudden increase due to situational demand (for example toilet roll) and whether this demand is likely to continue once supply lines and/or trends change. How has this affected your currency requirements and what does this look like over the next few months? Have you changed where the business has sourced its goods? For example, have you adapted your supply chain, sourcing goods from Europe instead of Asia? Has this changed the currencies which you are exposed to? If yes, have you considered the underlying factors

2020-08-12T11:57:51+00:00June 10th, 2020|

Points to Consider Before FX Hedging in COVID-19 Conditions

By Jamie Jemmeson ACSI, MSTA at Infinity International Introducing the 4 questions you should start with... Prime Minister Boris Johnson announced recently that non-essential shops in England can reopen from 15 June, rates of infection permitting. This now puts businesses in the unenviable place of second-guessing what sentiment and confidence may look like and the resulting sales and inventory requirements. Business conditions remain fragile, despite a loosening of restrictions, it is unlikely to represent “business as usual” as we all continue to adapt to the ever-changing environment. With many still questioning whether a “second wave” emerges or not, makes it incredibly difficult to answer those FX hedging questions of “how much do we hedge; how long do we hedge for and when?” The key question to answer and understand is “what is the purpose of business hedging” and may now be the time as we ease out of this unprecedented crisis to re-assess some previously held views/policies. We have complied a few questions that you might wish to consider before executing a FX hedge or developing a hedging policy in these conditions. Over the next few weeks we will unpack each of the 4 questions, which are: 1. Understand your FX exposure Has your FX exposure changed – are you now using different suppliers/has your customer base changed focus geographically? Do you have line of sight on your currency requirements and what are the terms associated with your upcoming invoices? 2. What impact will hedging potentially have on the

2020-08-12T12:00:02+00:00June 2nd, 2020|

Infinity International Client Sentiment Index: Are Things Improving?

Infinity International aim to provide 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 introduced a monthly survey, Infinity International Client Sentiment, this measure a cross section of our clients, from different industry verticals, to gauge their experiences regarding current business conditions. An index score is then formulated from the data provided. The scoring is 0-100, with 100 being the most positive. The aim of the index is to determine the following points: Emotional mindset of businesses To understand the strength of order books Plans for investment and employment in the short term Any expectations to change price strategies By running the survey on a monthly basis during these unprecedented times, we aim to track how business sentiment is changing amongst our clients (a good cross section of UK PLC) against the COVID-19 backdrop. The score for our first survey, and for the month of April was 44.28, after completing this month’s survey we have arrived at a score of 46.84, resulting in a sentiment increase of 2.55 points. Our survey asked 7 simple questions to determine the above points and produce the score. The questions and results were as follows: 1. Overall, would you describe current conditions for your business as good, middling, or bad? Last month 51% of respondents said that they consider

2020-07-10T15:28:32+00:00May 29th, 2020|

UK Continues to Debate Negative Rates, Cummings and Further Relaxing of Restrictions

Last week, Sterling remained resilient despite being under pressure. The topic of negative interest rates continues to dominate the market concerns for the UK. During a testimony to the Treasury Select Committee, Governor Bailey stated that the bank does not rule out any instrument in principle. Bailey stated that a move to negative interest rates was not ruled in or out and the evidence would have to be considered closely. This resulted in in the latest UK government 3-year bond auction recording a negative yield for the first time on record. This comes while in the US, the minutes from April’s Federal Reserve meeting reiterated that it was committed to using all available tools to support the economy but there was no support for negative interest rates. Over the weekend and during the bank holiday (UK & US) on Monday we have seen several developments from the UK.  Focus was firmly on the actions and reactions of Government regarding Dominic Cummings. Many are still calling for his resignation so the pending pressure over the next few days could be interesting especially as the UK heads toward the deadline for an extension in trade talks at the end of June. During yesterday’s Covid-19 briefing, PM Johnson stipulated that non-essential shops in England can reopen from 15 June, rates of infection permitting. Outdoor markets and car showrooms can open from 1 June. Yesterday with Europe open, we saw some more positive data from Germany. German business sentiment rose in May, beating

2020-06-22T15:06:43+00:00May 26th, 2020|

Future Fund: Sunak’s next steps to help business

By Jamie Jemmeson ACSI, MSTA at Infinity International Now more than ever, the focus of FDs, Treasurers and finance teams is likely to be firmly fixed on cash-flow.  As a result, you will have seen from our other Infinity International blogs and insight pieces, we’re trying to ensure we provide content to our clients on several relevant topics covering a variety of possible concerns.  To do this, we are drawing on our own experience, client feedback as well as the input from others in our network. Funding for businesses is a relevant topic and a priority through these unprecedented times. According to Deloitte’s CFO survey for April just under a third of companies are accessing the Bank’s Covid-19 Corporate Financing Facility; whilst increasing cash flow was the second highest priority over the next 12 months[1]. The Government Coronavirus Business Interruption Loan Scheme (CBILS) has already been released but is not right for every business. As a result, we have shifted our focus to the new Government lending scheme for SMEs, the Future Fund, and how it will operate. Official details were release this week with applications opening today. Understandably, the recent focus from the Government and the nation has been on the current changes in the lockdown restrictions and the milestones for further easing. I spent some time chatting to the team at Polestar CF and asked Richard Hall, a corporate finance specialist for his take on the early stages of the Future Fund. For context, Richard is a

2020-06-22T15:08:39+00:00May 20th, 2020|

Re-framing 2020: Possible scenarios for the second half of the year

COVID-19 may have changed life as we know it. Anybody who claims that they know what happens next is speculating. In our Re-framing 2020 report, we have collated and articulated various news feeds and come up we three different scenarios that could happen, a likely, best case and worst-case scenario. This is displayed in high-level infographics to highlight the potential scenarios and outcomes including currency forecasts for each. We have also outlined four factors that are likely to be fluid throughout the remainder of the year but could have a large impact on market volatility as well as how the overall picture evolves. Download our Re-framing 2020 FX Forecast Report We’re here to cut through the clutter and industry jargon to provide you with relevant information so you can build your understanding of foreign exchange markets. 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 provided therein are for indicative purposes only and are not intended to give an accurate reflection of current currency exchange rates or to predict future movements in currency exchange rates. IIFX is a company registered in England with registered number 06333730 and registered address at Third Floor, 24 Chiswell Street,

2020-09-14T10:22:25+00:00May 15th, 2020|

Offices: changing the way we work?

By Tyler Betts: FX Risk Manager at Infinity International Working offices are rooted in history with the first ever examples found in Ancient Rome, within its very own business district.  Upon the collapse of the Roman Empire, offices were not a part of modern life until 1726 in the UK, when Thomas Ripley built the Ripley Building to house the Admiralty and bureaucrats of the Royal Navy.  This was followed by East India House on Leadenhall Street in 1729, to serve the powerful East India Company.  Both impressive buildings are still standing today! Early offices were segmented across individual rooms for each employee and only in the 1900’s did we see the advent of open plan working space, which has largely been the way we’ve worked ever since. Covid-19 has brought to light many challenges including the need to temporarily overhaul the way we work, with many organisations moving from office to home based in under 48 hours – a remarkable achievement for businesses operating exclusively from an office or on legacy technology. According to a study by Censuswide around working from home, it is claimed that “Sixty-eight per cent feel they are either more productive or equally productive from home – which is particularly significant given the unique challenges many workers face with handling childcare and home-schooling.”[1] This may be one of the reasons that Barclays CEO, Jes Staley, has said that “There will be a long-term adjustment to our location strategy,". "The notion of putting 7,000 people

2020-06-22T15:24:38+00:00May 7th, 2020|