Morning Brief – Friday 7th

All right me old China?

According to the early morning Tweet of the 45th President of the USA today, the Sino-US trade talks are all going very well. Equity Markets have taken that at face value and not only arrested the declines of the past few days but also staged a recovery in European markets today with the FTSE rising at the time of writing by over 2%. Why? Well, a combination of oversold and too far too fast are a couple of reasonable explanations. Also, the old adage is that when doing something hurts oneself-and this sell off certainly qualifies for that-it’s a good idea to stop and do something else! So, is it all over? NO! 

As Deng Xiaoping replied almost 50 years ago when asked if he felt on balance that the 1789 French Revolution had been a success: “It’s too early to tell!”.

Nearer to home GBP has steadied and is trading at USD 1.2750 and EUR 1.12 ZAR 17.83. Rather like a swan-hopefully not a black swan-despite serenely gliding along, beneath the surface there is frantic paddling by HM Government, the Conservative Party and Mrs May with many wondering whether she will be in office this time next week following the big vote on Tuesday 11-12-18. Set your alarm clocks because our very own Charles M. Porter will be analysing the action and likely market moves on Talk Radio at 0530 that morning. They say that the early bird gets the worm and Charles is certainly in line for that.

Today’s Financial Times carried an absurd story by two eminent journalists: the article stated in complete seriousness that FX traders were finding that reading the machinations of GBP all too hard(bless) and therefore were not participating in the market. 

The trouble the article claimed was not volatility but a lack of volatility! Writing as someone who has been trading in markets for a very long time and probably since those two eminent journos were probably not being selected for their under X1 football teams, be very very careful what you wish for! 

Also, and not to be ignored, a cursory analysis of the moves of GBP against the USD in 2018 has seen GBP start the year at 1.35, move to 1.4340 in April, decline to 1.2700 in August, rally to 1.33 in September then return to the current 1.2750 in December. Try telling the hard-pressed Finance Director of an international firm that GBP does not move and be prepared for a hollow laugh. 

SGM-Foreign Exchange will be on hand throughout what promises to be a challenging week for markets, politicians and above all for you our Clients to guide you through the twists and turns of the currency markets. Tin hats me old China! Have a great weekend.

Today’s Global Market:

Discussion and Analysis by Charles Porter

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