Beyond Currency

"With the market likely to be interested in the NFP data from the U.S. on Friday which coincides with a UK holiday, volatility could ramp up from a slow start today.

Acting in manner more like the Fed than the ECB, the Bank of England has taken up a watching brief as the Government deals with the fiscal necessities of the pandemic. This week’s MPC meeting may add further QE, it is unlikely to make it open ended like the Fed, but Andrew Bailey is sure to provide a greater degree of advance guidance than Christine Lagarde.

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Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

In the relative chaos and confusion of 50 American States each going their own way, with a President who is unwilling or unable to either coordinate any Federal planning or response, there is one U.S. institution that stands head and shoulders above the rest; the Federal Reserve.

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

The Q1 data for growth in the U.S. was as bad as the market had expected and then some! GDP contracted by 4.8% in the January to March period. Given market expectations of 4%, which in reality were little more than a shot in the dark, illustrates just how bad it can be when an economy slams on the brakes.

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

With the return of Boris Johnson to lead the Government’s response to the Covid-19 pandemic, there is a degree of optimism growing that the UK lockdown will start to be eased. As more evidence is revealed of the decline in economic activity large corporates are beginning to feel the pain and react in an effort to save their businesses.

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

Retail Sales data for March was released on Friday. They fell by 5.1% month on month, the worst ever result. It was expected that there would be something close to a collapse, given that the lockdown began on 23rd March. Sterling reacted poorly to the data as traders asked if a month with just one week of lockdown is that bad, what will April’s data look like?

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"It seems that traders have accepted that there is a recession on the horizon but in comparative terms, since every economy is in the same boat, single data sets do not necessarily mean a reaction from individual currencies.

If the UK economy is slowing at a rate of 6% per quarter, the U.S, Eurozone, Japan etc. are also slowing at an alarming rate so comparisons are futile."

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"The UK maintains that it will leave the EU on 31st December come what may, while there have been calls from a variety of officials from the Union for that date to be extended.

The UK remains steadfast that it will leave by the end of the year with no deal if necessary. There have also been rumours circulating that the UK will refuse to pay the £39 billion divorce payment should there be no agreement. That would be another blow to Brussels and something it will be keen to avoid."

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

Employers taking advantage of the Government's scheme to pay workers 80% of their wages up to a maximum £2.5k paper month may be using that facility just to keep going but once that is removed and the SMEs in particular have to survive without support the true effect will be seen.

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

"Boris Johnson the UK Prime Minister is at various stages of recovery depending on which newspaper you read. The Government’s speakers have agreed on one thing: he did hold a video conference with his number two, Dominic Raab last Friday where an extension of the lockdown was ordered.

The effect of the extended lockdown to at least the second week of May means that whatever happens after that, the UK will be behind the curve in catching up with other G7 nations."

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.

The pound reversed its recent rally yesterday as traders were reminded that the peak in the Covid-19 pandemic has not yet been reached and any talk of a loosening of lockdown regulations is premature.

Beyond Currency Market Commentary:

Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.