November FX Forecast

“Yesterday is not ours to recover, but tomorrow is ours to win or lose” - 36th US President Lyndon B. Johnson By the time this is published, we may have a clear picture of who is going to be residing in the White House for the next few years. What it has once again taught us is that opinion polls analysis do not mean the result will be as easy to predict. Unlike the Presidential opinion polls which at one point seemed to mirror 2016, the FX Forecasts provides a wide range of views that articulates the High, Mean and Low. Challenges still remain surrounding Brexit, COVID 19 and articulating the impact of the US Presidential Election resulting in the divergence in views. We forecast a 1, 3, 6 and 12-month view of GBP/USD, EUR/USD and GBP/EUR rates. Our monthly FX Forecast includes the key dates of scheduled political and economic events that might impact currency markets. Download the PDF report for the details: Infinity_FX Forecast November Infinity International would be happy to offer a complimentary FX review of your current process to offer a fresh perspective and to highlight any areas that could be made more efficient.  If you would like to organise a time for an exploratory conversation, please leave your details below. The review would encapsulate: Strategy ideation to align FX risk management with your business objectives FX volatility assessment to understand the impact of a significant FX rate Credit terms to ensure efficiency for cashflow when hedging currency

2020-11-05T14:33:16+00:00November 5th, 2020|

Focus Remains on Core Matters However ECB and Growth Data Could Change the Outlook

Last week saw Sterling lift following the resumption of UK/EU trade talks, after the early week’s standoff between the two respective trading blocks. Whilst fishing and a level playing field remain sticking points, the objective is to conclude discussions for an emergency EU summit in the middle of November. In the meantime, UK Chancellor Sunak announced a more generous Job Support Scheme starting in November as furlough ends this week. Data from the UK remains mixed with retail sales posting slightly better than expected, but the composite PMI activity showed a slowdown in momentum. However, Brexit trade talks and negative rates continue to dominate newswires. The US election continues to pick up momentum with no real blows landed in the second and final Presidential debate with the US set to head for the polls next Tuesday. Meanwhile, it has been reported that early voting has accounted for nearly a third of the total vote numbers seen in 2016. The week ahead will continue to focus on the progress of the UK/EU trade talks, and the final furlong in the US election, although there are some concerns surrounding current Vice President Pence as members of his entourage have been diagnosed with COVID. The centre of attention for the Eurozone will be the ECB meeting on Thursday, the market is not expecting any stimulus until December so the market will focus on signposting by officials to confirm. Monday German IFO Survey  US New Home Sales Markets will

2020-10-26T15:56:35+00:00October 26th, 2020|

Do US Presidential Elections Affect the Dollar?

First, how do the US presidential elections work? Can we expect the US presidential elections to impact currency? Ever since President Trump shocked the world with his victory there has been speculation as to whether this polarising character could win a second term. COVID-19 and an uncertain economy have added new dimensions to what may have already been a landmark U.S. election cycle. We will soon find out which way things will go as Americans will head to the polls on November 3rd. We work with many UK businesses who have US dollar exposure, and the key question they will want to understand is what impact the election could have on currency rates moving into 2021 and beyond. To better answer this question, we're going to highlight the differences in approaches from Biden and Trump and ultimately how this might affect the performance of the US dollar. Interest rate policy is unlikely to change direction because of COVID-19 and the fallout for the global economy. Central banks across the world have signposted that interest rates will be low for an extended period. The Federal Market Open Committee echoed this recently stating that they cannot see an increase in rates until 2023. However, there are plenty of areas where the candidates' policies diverge, for this opinion piece we are only focusing on some of the economic and foreign policy. Subject Biden Trump COVID recovery Proposing to spend trillions to create new jobs in clean energy, manufacturing, and caregiving. Signed legislation

2020-10-15T16:06:24+00:00October 5th, 2020|

September 2020 FX Forecast

“I don’t make predictions. I know what I can do, and I try not to think too far ahead.” - Bradley Wiggins Since the delayed Tour De France is taking place we thought it would be appropriate to quote Britain’s first Yellow Jersey winner; 2012, what a great year that was. Fast forward to today, not such a great year, the global economy is still recovering and markets are still split on the direction of this and as a result the residual impact on currency markets. Unlike Sir Bradley, financial institutions are constantly making predictions. We have collected the views of over 40 financial institutions to articulate the high, low and mean forecasts for the next 12 months in an attempt to provide this information to businesses. As you will see, the forecasts still predict a high degree of uncertainty based on the differential. Download the PDF report for the details: September FX Forecast Infinity International would be happy to offer a complimentary FX review of your current process to offer a fresh perspective and to highlight any areas that could be made more efficient.  If you would like to organise a time for an exploratory conversation, please leave your details below. The review would encapsulate: Strategy ideation to align FX risk management with your business objectives FX volatility assessment to understand the impact of a significant FX rate Credit terms to ensure efficiency for cashflow when hedging currency (subject to approval) FX pricing to determine your current cost of your current provider

2020-09-08T16:40:15+00:00September 8th, 2020|

Sterling Slides as Brexit Tension Increases Ahead of Trade Talks

Last week, the US Dollar made its biggest gain for two and a half months following the sell-off in the stock markets, in particular the Nasdaq (which is tech-led). There was no significant trigger for the sell-off, but commentators have rationalized the long winning streak and potential fears of a second wave of COVID-19. In the meantime, economic data was closely watched from the US for several reasons, including growth momentum, the upcoming presidential election in November and COVID. The headline figure for the week was the US labour data which came out stronger than expected. The headline non-farm payrolls hit expectations of 1.37m, whilst unemployment moved lower and average earnings edged higher. These numbers are likely to help President Trump. Closer to home, tensions between the UK and the EU don’t seem to be easing. The Prime Minister's office is reported to only see a 30-40% chance of a post-Brexit trade deal being agreed with the EU before the end of 2020. Currently, at the time of writing, peer to peer betting exchange Smarkets have the odds of no-deal emerging between the UK and EU before the end of 2020 at circa 60%. Over the weekend further tensions have been cited as Chief Negotiator Frost warned that the EU stance may limit the progress that could be made in the talks which resume on Tuesday. In addition, there are reports of new UK legislation which would over-ride the withdrawal agreement of Northern Ireland which may increase tensions sharply.

2020-09-07T13:47:23+00:00September 7th, 2020|

GBPUSD Hits Fresh 8-week Highs as Market Awaits US Labour Data

Last week the focus was on the Jackson Hole symposium where Powell confirmed that the central bank would adjust the inflation target to an average of 2%. Powell went on to state that employment will be given greater importance in achieving goals. The central bank is now more confident that higher employment will not lead to higher inflation and the economy will be allowed potentially to run at a faster rate to boost long-term employment. The inevitable implication that interest rates will remain at very low levels for a longer period and potentially undermine the dollar. However, there was some positive news as Q2 GDP data was revised to a contraction of 31.7% from 32.9%, slightly stronger than forecast. Economic data was mixed as US durable goods orders increased but consumer confidence declined to a 6-year low. Closer to home Sterling started the week on the back foot as following downbeat Brexit comments from the previous week. However, GBPUSD rose to fresh highs following the FOMC Chair’s comments. Despite the stress to the UK economy the Pound continues to shrug off negative data. The CBI retail sales survey dipped to -6 for August. The CBI stated that sales are forecast to decline at a faster pace in September with a reading of -17 for the expectation’s component. In the meantime, labour-market trends will be an important focus with August employment cut at the fastest pace since February 2009 and companies expect the rate of job cuts to increase further

2020-09-01T15:50:18+00:00September 1st, 2020|

Can Congress and US data stem the Dollar bleeding this week?

Last week the US Dollar continued to soften as economic data and politics failed to provide a boost. In terms of economic data, US initial jobless claims increased for a second consecutive week possibly a sign that economic growth may be cooling or faltering. Meanwhile, US second-quarter GDP contracted at an annualised rate of 32.9% after a 5.0% decline for the first quarter. This was the sharpest quarterly contraction on record by a substantial margin albeit expected given the crisis. With a unanimous vote, the Fed maintained the Fed Funds rate, in the 0.00-0.25% range, in line with consensus forecasts. Chair Powell stated that the evidence suggests that the pace of economic recovery had slowed since June and the pandemic is a disinflationary shock. He added that there is clearly a risk of a slowdown in the rate of growth and the labour market has a long way to go to recover. US politicians continue to debate whether to approve a fourth fiscal stimulus package as urged by Fed Chair Powell last week. The problem is that Congress is supposed to go into recess on Friday and some of the existing measures have expired. Sterling is on the front foot as data and comments boost the economy. UK mortgage approvals increased sharply to 40,000 for June from 9,300 the previous month. Further evidence from the Nationwide house price index show prices increased by 1.7% following the stamp duty tax cut. Also, the CBI retail sales report surged in July

2020-08-04T14:06:33+00:00August 3rd, 2020|

Market to Focus on UK/EU Trade Talks Whilst US Unemployment Could Hit 20%

Last week Sterling manged to reclaim some of the losses of recent weeks as comments from various BoE officials helped taper concerns of the prospect of negative interest rates ahead of the economy preparing to reopen. Today, schools reopen their gates to a limited number of year groups, car showrooms and open-air markets are due to reopen as are non-essential retailers in a couple of weeks’ time. This could give the economy a further boost. However, gains maybe limited as UK-EU trade talks are scheduled. Across the Channel we saw the European Commission (EC) announce a 750-billion-euro ($824 billion) plan to prop up the EU economies hammered by the coronavirus crisis. Under the proposal, the EC would borrow the funds from the market. The EC will disburse two-thirds of this in grants and the rest in loans, with much of the money going to Italy and Spain, the worst affected by the pandemic. In the meantime, the US Dollar was weaker as the “risk on” tone increased as the EC released their stimulus measures and the easing of lockdown. However, US-China geopolitical tensions could have an impact on market sentiment if we see this increase. This week the calendar is packed with both political events and economic data taking centre stage. The UK will be focus on the tone of the trade talk talks surrounding the future relationship between the nation and the EU. These will be led by the UK’s David Frost and the EU’s Michel Barnier, with

2020-06-22T15:05:07+00:00June 1st, 2020|

Sterling Drops Against US Dollar to Lowest Levels Since 1985

GBPUSD continues to move lower as investors were not convinced of the UK laissez-faire approach to Covid 19. Yesterday, sterling was able to temporarily retrace some of its losses follow the UK Gov. update where Sunak pledged a further £350bn to help businesses. However, it nose-dived today to its lowest level since the October 2016 flash crash. Barring that low, GBPUSD is trading at its lowest level since March 1985. Sterling losses were further compounded as cases of Covid 19 grew by circa 35% overnight from 1950 to 2626 and rumours that a London shut down is imminent. The move is in tandem with a strong demand for the global safe haven currency, the US Dollar. The US Dollar index (vs a basket of currencies) reached a 3-year high as the fear of Covid 19 grows. Analyst from Nomura on have stated that they consider that there is "the potential for GBP to reach, what is in our view, it’s Hard Brexit equilibrium of 1.15-1.18.". In the meantime, according to the WSJ, a group of asset managers have told new BoE Gov Bailey that financial markets should close for two weeks. The call was held with senior executives from Blackrock, JP Morgan, Vanguard and Bank of New York Mellon. Sterling continues to be under pressure as the Government measures to combat Covid 19 are consider a light touch in comparison to its European counterparts whilst the prospect of a hard Brexit is being considered. Tonight, the

2020-04-14T15:49:28+00:00March 18th, 2020|