Morning Brief – Currencies

Currencies

With the USD enjoying its 8th straight week of gains which is its best run for 9 years, it is worth looking at the other end of the scale: the CNY or Chinese Yuan has sunk to its low of 2007 at 7.3430. Good news for the Canadian Dollar on the back of 30,000 new jobs last month versus the expected 15,000 meant that the CAD at least strengthened versus USD at 1.3640. The Japanese Yen remains weak and the market is looking for the bank of Japan to be picking its moment to intervene once again with USD/JPY 147.60.

EUR/USD 1.0700.

US Government Debt

Just in case you get this one in a pub quiz: the answer is that the US Government now owes USD 33 Trillion and every year since 2001 the US Government has spent more than it’s gathered in by way of taxes. Since the pandemic, US Government Debt has increased by almost 90%. Having ploughed through a research piece over the weekend, I remain to be convinced that continuing increases in that debt mountain are good especially when one of the main arguments for it being beneficial is because bond holders earn more interest or coupon payments which allows them in turn to spend that income in the US economy.
2 Year US debt at 4.99% and 10 years at 4.26%.

Climate: The Battle for Net Zero

In case you missed it in 2019, in the heat of parliamentary battles over Brexit, the UK Parliament legislated for the UK to become the first country to target Net zero by 2050. That vote was passed without a single vote against-either because the MPs were distracted by Brexit or because 2050 was so far beyond the likely term of any of their political careers.
4 years later the embattled UK Prime Minister sees Climate and Net Zero as a vote winner despite the growing unrest over the costs associated with achieving it. Meanwhile in Southern Germany in June, 13,000 people gathered in protest to object to the banning of gas fired boilers. The German Government is under fire to halt a EUR 212 Billion fund that has been established to finance the green movement on grounds of affordability. However at the same time, this year’s extreme weather, flooding and forest fires have all contributed to voters wanting government action in every country, so Rishi Sunak is probably right provided he can get some other policy issues right too.

GBP/USD 1.2460.

Kent Claret

No don’t pinch yourself, it’s coming to the Garden of England by way of the Swiss Divico grape that is promised to revolutionise red wine production in the UK. First off the blocks is Yotes Court near Maidstone Kent. Red wine production is confidently predicted to get to 6 million bottles a year, but in the meantime Yotes Court: The Favourite Divico is available from September 30 at the reassuringly expensive price of GBP55.

GBP/EUR 1.1640.

Dreamlover

This was a hit for chanteuse Mariah Carey back in 1993 when it went to Number 1 and stayed there for two months.

Ooh, baby (baby)
Ooh, baby
Oh yeah

I need a lover to give me
The kind of love that’ll last always
I need somebody uplifting
To take me away, babe, oh yeah, yeah

I want a lover who knows me, yeah
Who understands how I feel inside (ooh, baby)
Someone to comfort and hold me
Through the long lonely nights
‘Til the dawn
Why don’t you take me away

Dream lover come rescue me
Take me up, take me down
Take me anywhere you want to, baby now
I need you so desperately
Won’t you please come around
‘Cause I wanna share forever with you, baby

With you, baby

I don’t want another pretender, no
To disillusion me one more time
Whispering words of forever
Playing with my mind, no no
No-no-no, no no, baby

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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