People’s Bank of China Head, Yi Gang stated this weekend at an online banking seminar to the G30 what many in the markets already suspected: despite Covid starting in China and almost a year ago having shut down large parts of China’s economy, not only is China back and enjoying an expansion in its economy, Yi Gang expects the economy to grow by 2% in 2020. Fortunately that in turn will benefit the other global economies which many will feel is small recompense for the spread of the virus globally.
Unsurprisingly Chinese Renminbi is enjoying its best level against the USD this year and is currently at 6.70 with the direction of travel clearly towards a still stronger CNY in 2021.
SGM-FX having taken these particular tea leaves on board has in the past months added both Mandarin and Cantonese language capabilities to the languages already on offer to our customers around the world.
Meanwhile in Europe, hard hit Italy is expecting a contraction of 9% in its economy in 2020. Next year the ruling coalition of the Five Star Alliance and the Centre Left PD party is expecting growth of 6%. Late on Saturday night the Italian government approved a package of measures that will see EUR 40 Billion of economic stimulus in 2021. Apart from the ever increasing amount of Italian government borrowing, markets are still pondering the productivity issue that Italy faces- not enough.
As expected Jacinda Ardern won a landslide victory in NZ this weekend and returns to office with a clear mandate to govern for the next 3 years. Less clearcut is how, having won on the ticket of Going Early and Going Hard against Covid, she will rescue the NZ economy. NZD 62 Billion or USD 41 Billion has been assigned to bolster the economy and keep people in work through a package of loans and other measures. Government borrowing will break the hitherto sacrosanct level of 20% of GDP where it stood at the end of 2019 and is forecast to rise to 55% of GDP by 2024. Tourism is a core component of the NZ economy and the success of the shutting of the NZ borders to foreigners in fighting Covid, has of course crushed the tourist industry. NZ will need more than her mantra of compassionate leadership as will the NZD. USD bought NZD 1.7771 on 24-03-20 and although it is now back to 1.51, the ongoing impact on the NZ economy of fighting Covid(albeit successfully) must give rise to expectations of a lower exchange rate.
It was 50 years ago this week that the film, Ned Kelly about the famous outlaw was released starring Mick Jagger. It bombed and was panned by the critics with (now Sir) Mick being told that he should stick to strutting on stage and singing Street Fighting Man rather than trying to play the role of a tough Australian bushranger. One of the kinder reviews described Mick Jagger as being……”as lethal as last week’s lettuce.”
Discussion and Analysis by Humphrey Percy, Chairman and Founder
Germany The German business climate was slated to rise in July but instead it fell in terms of both current and also future expected business conditions as reflected in the IFO Index made up of manufacturing, services, trade and construction sectors as submitted by 9000 firms. Germans wishing doubtlessly that they could be as strongly […]
UK Energy Apart from announcing that there will be no further North Sea drilling licences issued, newly minted Uk Energy Minister Ed Miliband has wasted no time in greenlighting three huge new solar farms in Lincolnshire, Cambridgeshire and Suffolk. Sufficient to power 400,000 homes with an output of 1.4 GW the solar farms will cover […]
British Pound GBP is currently in fashion: with a record number of long positions and currently at the top of the G7 currency performance charts and after a period of being deeply unfashionable GBP is wanted-in a good way. The reasons for this are diverse: first off is the Bank of England’s caution on cutting […]