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Morning Brief – Con-te Partiro

Con-te Partiro


Towards the end of yesterday’s European close there was a correction in risk appetite that saw the US Dollar appreciate against the Euro and commodity currencies. The sharp move that was precipitated by little fundamental adjustments or news headlines highlights the still fragile sentiment in global markets, particularly within the Eurozone. As this year has begun, despite the obstacle for Brexit largely surmounted, Eurozone risk has ticked up. This fragility allowed risk conditions to turn around almost instantaneously, translating into real price movements as sentiment ebbs and flows. Eurozone risk is heightened by the political uncertainty in Italy, the Netherlands and Germany, as well as lockdown’s accelerating throughout the Union’s core economies. Last night, the resignation of Italian Prime Minister Giuseppe Conte didn’t move markets immensely with expectations for political uncertainty already priced in.


The spread of Italian yields over German Bunds in a key metric of risk in the Eurozone and bears a strong correlation usually to the Euro. This spread has been rising to three-month highs, bracing for an inevitable breakdown in many Eurozone polities. Last night’s resignation by the Prime Minister was largely expected after he lost the support of former Prime Minister and leader of the Italia Viva party, Matteo Renzi, one of Conte’s coalition partners. However, the resignation was framed as an opportunity to secure a Presidential mandate to form a stronger government within the Senate, possibly without so many coalition partners. Given the near impossibility of holding elections within the nation given the current pandemic, it is thought now that Conte might use the need for immediate and strong governance to his advantage to secure a reformed coalition.


Stepping down ahead of a vote in the Senate scheduled for tomorrow on his own terms is even being interpreted as a potential improvement in European risk. The PM is set to offer his formal resignation to President Sergio Mattarella early this morning having failed to build sufficient support having narrowly survived votes of no confidence in both houses of the Italian parliament last week, saving him from potential embarrassment on Wednesday. The Five Star Movement was quick to reassert their support for Conte in an early sign that a new coalition could be formed. The Euro this morning, now trading within more liquid and voluminous European and London trading hours has shrugged off any weakness that the announcement of his resignation ushered in last night.




Discussion and Analysis by Charles Porter

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Morning Brief – Global Growth

Global Growth


This weekend has seen the first cautioning by both the Federal Reserve and the IMF that the global economy may not snap back in 2021 in the anticipated V shape and may be more of an elongated U due to the time that it will take to rollout the Covid vaccine.

Consequently WTI oil has pulled back almost 2% and USD has lost a bit of ground in early trading.


Indian Rupee


In this topsy turvy world, it is a source of confusion for many people that the Indian Rupee is not stronger versus USD given that generally emerging market currencies have benefitted at the expense of USD. The reason for this is that the Indian Central Bank has taken the opportunity at this time of general USD weakness to bolster their FX reserves which now stand at $586 Billion which is the fifth largest reserve fund globally behind Russia. That necessitates the Reserve Bank of India selling INR which means that USD equates to INR 72.9 at present. Perversely, once the USD strengthens in the future, the value of the FX reserves in India will appreciate which will….strengthen the INR! Forecasts have an appreciation in the INR to 72 by end 2021 and 70 by end 2022.


Feeling Lucky?


A shopper at grocery store Kroger in Detroit Michigan clearly was on Friday night. A few hours later that shopper discovered just how lucky: the ticket purchased was drawn and the prize of USD 1 Billion or EUR 825 Million was awarded. The odds were 1 in 302.5 million. To put that in perspective, bookies are offering 50000/1 on Elvis Presley being found alive in 2021…!


Jailhouse Rock


Just in case Elvis is out there-he would now be 86 incidentally, so definitely a possibility-fans may like to be reminded of this song that was released in 1958 and went straight to Number One this day 63 years ago: Jailhouse Rock


The warden threw a party in the county jail
The prison band was there, and they began to wail
The band was jumpin’, and the joint began to swing
You should’ve heard them knocked out jailbirds sing


Let’s rock
Everybody, let’s rock
Everybody in the whole cell block
Was dancin’ to the Jailhouse Rock


Spider Murphy played the tenor saxophone
Little Joe was blowin’ on the slide trombone
The drummer boy from Illinois went crash, boom, bang
The whole rhythm section was the Purple Gang


Let’s rock
Everybody, let’s rock
Everybody in the whole cell block
Was dancin’ to the Jailhouse Rock




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Euro



Following yesterday’s ECB meeting confirming that European ultra easy monetary conditions will be maintained and with confirmation that there will be further stimulus measures to counteract the economic effects of Covid when necessary, the market was reassured and the EUR remained firm at USD 1.2150.


U.S. Employment


At a high level, of the 22 million jobs lost in March/April 2020 in the USA, 12 million have been restored. Yesterday in the USA, as expected there were 900,000 initial claims for the past week slightly down from the preceding week. Expectations are that it will take another 2 years for the US economy to recover these jobs lost as a result of the Covid pandemic.


South Africa


Initially praised for their swift and decisive action, the SA government is now under pressure to explain that while other developing countries such as Indonesia and Argentina are rolling out vaccination programs, South Africa has yet to start. While at present the ZAR is at its recent high at 14.87 versus USD, this is more to do with a weaker USD than a testimonial for the SA vaccination program.




For the second year running the organisers of the Glastonbury music festival have bitten the bullet and cancelled this hugely popular and successful event once again. Tickets from both 2020 and 2021 will be rolled over to 2022. The numbers behind Glastonbury explain the financial success of the festival that has been going strong since1970: 900 acres, 200,000 people attend over a 5 day period; 79 stages and 2,800 acts fuelled by 400 food and refreshment outlets. Lastly, in 2020 tickets sold out in just 34 minutes.


I Wish


A huge hit for Stevie Wonder in 1976 that appeared on his album, Songs in the Key of Life and went straight to Number 1 on the Hot 100 on the US Billboard Chart. The song which seems from another and more innocent age was subsequently also recorded by Celine Dion.

Here is I Wish:


Looking back on when I
Was a little nappy-headed boy
Then my only worry
Was for Christmas what would be my toy
Even though we sometimes
Would not get a thing
We were happy with the
Joy the day would bring


Sneaking out the back door
To hang out with those hoodlum friends of mine
Greeted at the back door
With ‘Boy thought I told you not to go outside’
Tryin’ your best to bring the
Water to your eyes
Thinkin’ it might stop her
From whippin’ your behind


I wish those days could come back once more
Why did those days ever have to go
I wish those days could come back once more
Why did those days ever have to go
‘Cause I love them so


And….. we wish all of our readers a very good weekend!




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Inauguration



Passed down from Latin, to French and an English sounding ‘al’ stuck on some time in the late 17th century, inaugural is a word that had carried a similar meaning for a long time. The Roman and Greek picture of an inauguration involved an augur (appropriately named) watching out for natural signs like the behaviour of the birds or a change in the wind to see if the candidate had the will of the gods to fulfil the position the people had elected him/her to. It’s a bit of a far cry from ‘JLo’ singing from the podium to an empty crowd. Fortunately for President Biden, her high notes didn’t scare off the birds and force the augur to condemn his election against the will of the gods…


Joseph Robinette Biden Jr. has now been confirmed as the 46th President of the United States. Our modern day augurs appeared to bypass the constitutional requirement for a transition of power at 12pm London time exactly, with Mr. Biden being addressed as Mr. President a handful of minutes before. The pause that followed the short and sweet swearing in process didn’t stop the BBC presenter falling into a state of confusion and disarray as she wondered whether a 10 minute pause was now due and what on Earth she was supposed to do with it.


Following a term of division and recent chaos, the inauguration may have meant much more than usual for many US citizens. Indeed those that have felt the wrath of Trump’s policies abroad may too have focussed on the transition of power more than they usually might have. As expected the hours leading up to the inauguration ceremony were characterised by USD buying. Early session Dollar weakness met strong resistance at 1.37 and 1.215 versus the GB Pound and Euro respectively. The Dollar peaked immediately following Biden’s inauguration as the risk of civic unrest and disturbance subsided. The new President enacted as many as 15 executive orders immediately upon being sworn into office to set the course of his own administration. It is customary for an outgoing President to leave a note for their successor. The White House has confirmed this to be the case in the recent transition but has not released its contents to the public. My bet is on ‘MR Biden, you’re fake news’. Time will tell.


A policy decision at the ECB today will be pivotal to the Euro. No policy change is expected by the market either to interest rates or the asset purchase program (QE). Therefore any signs of deviation or comment on the Euro from President Lagarde could unsettle the single currency. The valuation in the euro however suggested that the meeting in combination with the EU summit presents risk to the Euro that is being reflected in its price this week. The potential for Lagarde to surprise us with an expansion in the QE program or a significant move forward in the bloc’s vaccination program could move the Euro dramatically.




Discussion and Analysis by Charles Porter

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Morning Brief – UK



UK Consumer Price Index up by 0.6% v expected 0.5%. GBP unmoved by that but inflation watchers monitoring closer for any signs of price moves outstripping forecasts.


U.S.Treasury Secretary Nominee: Janet Yellen


Yesterday’s address by Janet Yellen to the Senate Finance Committee was closely watched by markets yesterday and she did not disappoint, urging further economic stimulus assistance to the economy and stating that interest rate rises can wait until the USA is back in recovery mode. “Act big” was her message to the Senate. On the exchange rate Janet Yellen was clear that markets should determine the value of the USD and not foreign central banks. Emboldened by that, the USD duly weakened to 1.2130 v EUR.


On Another Planet


We all know that it takes Earth 365 days to complete an orbit around the Sun. Mars on the other hand takes 687 days but at the far end of the orbit scale for planets is Neptune which takes 165 years! With NASA planning the first Moon landing for decades, later this year (once they sort out the white flash that brought their test to a premature end last weekend) space travel and looking up planets is a welcome diversion from the current orbit of restricted lockdown activity.


Ozzy Osbourne


Today is the 38th anniversary of the now infamous Ozzy Osbourne act of biting the head of a bat during his Brummie band Black Sabbath’s performance in Des Moines, Iowa USA this day in 1982. Even ignoring 2021 Covid awareness implications of eating bats, SGM-FX’s I.T. guru and committed vegan, Michael looked quite faint when some of his headbanging BS fan colleagues were speculating on the circumstances behind this. It’s now time to reassure him that the bat was thrown on stage by a fan and was already dead. Released in August 1970 is this song which defined both Black Sabbath and Ozzie Osbourne, Paranoid:


Finished with my woman
‘Cause she couldn’t help me with my mind
People think I’m insane
Because I am frowning all the time


All day long I think of things
But nothing seems to satisfy
Think I’ll lose my mind
If I don’t find something to pacify


Can you help me occupy my brain?
Oh yeah


I need someone to show me
The things in life that I can’t find
I can’t see the things that make true happiness
I must be blind


Make a joke and I will sigh
And you…




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Two hands on the wheel

Two hands on the wheel


Either the result of a calendar mixup or just a series of unavoidable events, the week ahead is packed with risks that will dominate foreign exchange flows. President elect Joe Biden’s inauguration will take place in Washington on Wednesday. This week members of the European Council, the EU’s executive arm, will also meet. If that wasn’t enough, no fewer than four of the G10 currencies have a monetary policy decision or announcement due this week. All of these events, in conjunction with the less than certain times we live in, should prove to unsettle markets and drive up demand for safe havens. This will create risks as well as the potential for rewards across the foreign exchange market.


Yesterday the market saw heightened and renewed demand for safehaven assets creating direct and indirect flows in foreign exchange. As a result of a flight to safety the world’s largest and most liquid currency, the US Dollar, rallied from a defensive market bid. Other classic safehavens including the Japanese Yen rose in value as investors sought protection from expected volatility from this week’s events. Commodity and emerging market currencies lost some traction as the reflationary cycle took a breather to account for this week’s great number of episodic risks. We could rightly expect these trends to continue to gather pace throughout the remainder of this week as markets continue to be defensive, wary of the potential for widespread change at each scheduled event.


Top of the list of risks is this week’s Presidential confirmation. We have already learned of the heightened security due at the Capitol for Biden’s inauguration. As a result of the violence witnessed last week at least 25,000 members of the national guard will secure the streets of Washington to ensure a smooth transition of power. As a result of a ‘small fire’ yesterday the entire complex was put into temporary lockdown with lawmakers inside told to stay away from external windows and doors. The tensions therefore could not be higher moving into the inauguration, pushing investors into less risky assets.


The EU Summit too will be of particular importance given the scope of potential and planned discussions. With Italy’s Prime Minister teetering on the brink of resignation, the European Recovery fund still facing problems and the vaccination program all up for collective change, risks behind the Euro are mounting too. The ECB is also one of those central banks in the G10 currency space making a decision this week. Given the Euro’s persistent advance the market is still wary of the damage Lagarde and her Board could do with passing comments about the single currency’s strength.


Whilst less is expected from other central banks hosting decisions this week, including banks behind the currencies NOK, JPY and CAD, the overall picture of risks is daunting. This has been driving the wider market to take protection behind USD at the expense of riskier currency holdings. This market positioning and a focus on individual currency pairs will reveal market opportunities as this week unfolds. Our desk would be glad as always to talk you through how to maximise your exposure to these potentially market moving events.




Discussion and Analysis by Charles Porter

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Morning Brief – US Federal Reserve

US Federal Reserve


Next meeting for the Board of the Fed is on 26/27 January and following comments from members including the Boston Fed President, there is little expectation of any tightening in rates nor the reduction or removal of the bond buying program designed to inject stimulus into the US economy. Despite both the $1.9 trillion stimulus backed by President elect Biden and an expected pick up in the economy now that the vaccine program is being rolled out in the USA, markets have concluded that easy monetary conditions will need to prevail for the foreseeable future.


South Africa: Eskom


South Africa is experiencing rolling blackouts and Eskom has been using the mechanism of “load shedding” between 2300 Sunday and 0500 Monday. Unplanned maintenance, outage delays and breakdowns have been exacerbated by Covid infections among contractors and while not at its highest level, load shedding is currently at level two. Eskom as a 100% state owned utility is seen as the bellwether for South Africa and the health of the economy. Back in April 2020 USD was trading at ZAR 19.05 and having reached 14.54 in December 2020 is now at 15.23.


Brandy Supply Chain: It’s Getting Serious


This weekend I researched online and then ordered a particular bottle of cognac from a UK company that is Dutch owned and staffed. The problem is that those staff are locked down and therefore stuck at home in…Holland while the stock including my brandy is in North London. With little prospect of an early lifting of restrictions, I have been warned that I may need to be patient until the end of February when the company hopes to restart their supply chain in the UK. Meanwhile I am rediscovering some “treasures” at the very back of the drinks cupboard. Creme de menthe frappe anyone?!


That’s What Friends are For


Dionne Warwick, Elton John, Stevie Wonder and Gladys Knight released this song for charity in January 1986 and it went to Number One. Originally sung by Rod Stewart in 1982, it struck a chord with the public in 1986 and was the best selling record of the year. Now at this time in 2021, it resonates:


And I never thought I’d feel this way
And as far as I’m concerned
I’m glad I got the chance to say
That I do believe, I love you


And if I should ever go away
Well, then close your eyes and try
To feel the way we do today
And then if you can remember


Keep smiling, keep shining
Knowing you can always count on me, for sure
That’s what friends are for
For good times and bad times
I’ll be on your side forever more
That’s what friends are for


Well, you came in loving me
And now there’s so much more I see
And so by the way
I thank you


Oh and then for the times when we’re apart
Well, then close your eyes and know
The words are coming from my heart
And then if you can remember


Keep smiling and keep shining
Knowing you can always count on me, for sure
That’s what friends…




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – US Dollar

US Dollar


Still on an upward path at 1.2130 versus EUR, USD is strong on the effects of the expected $1.5 trillion Biden stimulus package. The yield on the US 10 year Treasury Bond has increased by 0.20% in the past month and now stands at 1.17%. US Equity markets on their highs.




The German economy shrunk by 5.0% in 2020 which is less than expected and considerably better than the -9% expected in both Italy and France. EUR has weakened versus GBP by 1.5% in the last week.


France Property


Expectations are that transaction volume will decline by 8% in 2021 but somewhat optimistically it is expected that prices will remain stable. Despite greater difficulty for buyers to obtain finance and a slower market, French property always has plenty of both actual and shy sellers which is the reason that sellers are expected to hold firm in 2021. Early signs are that the French rental market looks ok this year as le staycation is going to be the limit of most French peoples’ holiday plans.


In the Air Tonight


Exactly 40 years ago today Phil Collins released his single, In the Air Tonight on 15-01-81 which is a long rather bitter scream of pain based on his then wife leaving him. Hardly a first but what made it different was that in the Top of the Pops film, he positioned a tin of paint and paintbrush on the piano in camera shot, thereby confirming for close Phil Collins watchers that his wife had indeed departed the marital home with their painter and decorator. History does not relate whether it was indeed that 80’s favourite, avocado. Here’s (some of) In the Air Tonight which sounded better than it looks below:


I can feel it coming in the air tonight, (Oh lord)
And I’ve been waiting for this moment, for all my life, (Oh lord)
Can you feel it coming in the air tonight, oh lord, (Oh lord)


Well, if you told me you were drowning
I would not lend a hand
I’ve seen your face before my friend
But I don’t know if you know who I am


Well, I was there and I saw what you did
I saw it with my own two eyes
So you can wipe off that grin, I know where you’ve been
It’s all been a pack of lies.


And I can feel it coming in the air tonight, (Oh lord)
Well I’ve been waiting for this moment for all my life, (Oh lord)
I can feel it coming in the air tonight, oh lord
Well I’ve been waiting for this moment for all my life oh Lord, (Oh Lord)


On a happier note: Have a great weekend!




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Governor



GBP has been on a winning streak this week, re-testing 32-month highs versus the US Dollar yesterday. The price level, around the 1.37 mark versus the US Dollar was ultimately rejected once again by markets and GBP sent backing. However, momentum behind the UK pound has not been stalled so much yet as to jeopardise or unwind the recent uptrend. The local currency has been supported by the rise of global commodity currencies this week on the back of firming commodity prices. The expectation of global economic recovery and expansion by Q2/3 this year has led to revised estimates of demand for commodities and therefore the currencies of commodity exporters. The one key element pushing GBP’s performance above the rest of the pack has been comments from Bank of England Governor, Andrew Bailey.


On Tuesday the central bank Governor made his most decisive comments yet on the use of negative interest rates in the UK economy. Fortunately for the value of GBP those comments were particularly pessimistic of their use, citing domestic banking and home owning trends as problematic to their use. The comments forced fixed income markets to make a U-turn. Ahead of the announcement and for most of this year so far markets had been pricing a BoE rate cut into negative territory by the May meeting. That had hampered GBP demand as investors and commercial positions would have to pay for upside exposure to the UK Pound. As a result of Bailey’s speech, the yield curve corrected higher into positive territory for the vast majority of this year. Pushing GBP forward markets lower, the spot market lifted to set GBP on a decisive trend higher.


Momentum was challenged yesterday as markets not only encountered considerable technical resistance in the GBPUSD cross but Covid-19 deaths reached record highs in the UK. Whilst there was some statistical explanation behind the data point, it’s release still fostered pessimism surrounding the UK’s fight with the pandemic. Johnson’s second warning this week about the potential for tighter lockdown restrictions added to Sterling’s setback. Rising infection rates in the US and across much of Europe are also beginning to take their toll on risk conditions once again which could delay Sterling’s next challenge of this important resistance level.




Discussion and Analysis by Charles Porter

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Morning Brief – Commodities: the next frontier

Commodities: the next frontier


Traditionally associated with oil production, Norway is not the location that immediately springs to mind when it comes to the announcement of the discovery and 2023 mining of substantial new reserves of cobalt, copper, zinc, gold and silver. Challengingly, these minerals are not only under the sea and 700kms offshore, but still in Norwegian territorial waters. What has captured the market’s interest is the announcement that the Norway Government will be issuing exploration licenses following 3 years of study and that these deposits will contribute hugely to EVs and green energy being used in not only car batteries but wind farms. NKR has strengthened from 8.57 yesterday to 8.51 today versus USD. That could be down to the Copper reserves alone being estimated to be in excess of the annual global copper production of 21.7 million tons.


Sonic Boom


Those of us in East London and East Anglia were treated(?) to a very loud sonic boom yesterday at 13.19hrs which rattled more than just windows as birds took to the air and alarmed people took to social media. The sonic boom turned out to be caused by a RAF jet scrambling near Cambridge to intercept a private German jet that was not responding to air traffic controllers from Stansted. GBP had a less dramatic reaction to the boom but nevertheless benefitted from the market reducing its expectations of an interest rate cut in February and so GBP duly broke through USD 1.36 before subsiding back down to 1.3580 as the Germans safely disembarked at Stansted. EUR slightly weaker at 0.8938.However this morning the USD has given up some of its gains from the past 3 trading sessions and GBP is back over 1.36.


Village People


Back on this day in 1979, those fun loving Village People (see below for a reminder) who had earlier released their chart busting song, Y.M.C.A. found themselves in hot water and on the receiving end of a writ from the YMCA(Young Men’s Christian Association) which took exception to both Village People and the song. No need to explain about the reasons behind the law suit as it was subsequently dropped, but much to the chagrin of the YMCA, it lives on…and on. Here it is: Y.M.C.A:


Young man there’s no need to feel down
I said young man pick yourself off the ground
I said young man ’cause your in a new town
There’s no need to be unhappy


Young man there’s a place you can go
I said young man when you’re short on your dough
You can stay there and I’m sure you will find
Many ways to have a good time.


It’s fun to stay at the Y.M.C.A.
It’s fun to stay at the Y.M.C.A.
They have everything For young men to enjoy.
You can hang out with all the boys.


It’s fun to stay at the Y.M.C.A.
It’s fun to stay at the Y.M.C.A.
You can get yourself clean
You can have a good meal
You can do whatever you feel.


Young man, Are you listening to me
I said, young man, what do you want to be
I said, young man, you can make real your dreams,
But you’ve got to know this…





Discussion and Analysis by Humphrey Percy, Chairman and Founder

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