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  • richard evans

A bit of doom and gloom this morning

Good morning

The world feels in a very bad place right now. It shouldn’t. In the UK we seem to have dealt with the Covid pandemic well and should now be looking forward to better things. But as I was getting up this morning I thought I’d list a few of the things going on in the world, and it wasn’t good.

Ukraine war, Russia’s nuclear threat, China covid lockdowns, North Korea nuclear plans, high inflation, low growth, high interest rates, high energy prices, plummeting GBP, possible Brexit deal failure. Not a lot to cheer about.

Of most concern right now is the Russian narrative that their invasion of Ukraine could become world war three and that the use of nuclear weapons is possible. Very worrying. The Russians seem to think they were at risk of invasion themselves by Nato. Do they really believe that? Anyway I wonder if the Russian comments are designed to deter the West from getting involved further. UN chief Guterres is due to meet Putin today, why do I feel this is like Chamberlain meeting Hitler back in 1938.

In China, I have been reading that not only are citizens of Shanghai still in lockdown, metal fences have been erected to ensure they stay within their own areas, sometimes even their own buildings. The situation looks grim, indeed a short video montage highlighting the plight of citizens in lockdown has been banned from all media in China. Difficult to know if this is just propaganda or if things are really this bad but if fences really are being put up to contain people it is obviously an escalation. And still China insist on their zero Covid strategy, but case numbers are now rising enough for Beijing to start mass testing, leading to fears the City could be locked down in the coming weeks. USDCNY fixed at 6.5590, currently trading 6.5475. PBoC cut the RRR and have said they will continue to provide support to the economy.

USD remains well bid, despite a bit of selling overnight that saw GBPUSD trade up to 1.2770 and EURUSD up to 1.0735, those two are now down at 1.2725 and 1.0705 respectively. EURGBP 0.8415 (GBPEUR 1.1885). USDJPY struggling to regain recent highs though as more talk of intervention to contain yen weakness does the rounds.

We deal with quite few client who need to buy dollars, struggling at these levels to decide whether to bite the bullet and buy their dollars here or sit and hope for the best. Neither fills us with much joy, the only thing worse than panic buying is burying your head in the sand. But we’ve been working on a couple of ideas that give those the chance to buy their dollars, but in the knowledge that should GBPUSD rise in the coming months their USD purchase rate will improve. No barriers, a smidge of leverage if needed to improve rates, no hidden surprises. Let me know if you want details.

Finally, I see that Elon Musk is to buy Twitter for $44bQuite what Musk will do with Twitter remains to be seen, he’s obviously got his own ideas. He might champion free speech but Twitter has been trying to deal with the hatred that is so easily found on the service, will Musk allow such content? Will he give Trump back his account after Twitter closed him down?

Other than a rather nifty trade idea, as you’ve worked out I’m struggling to find anything to really put a smile on our faces. I guess not every day can be full of hilarity. I have a trip to the physio this morning for some work on my shoulder, that isn’t exactly appealing either, but with some hard work I hope there will be a time when I can move pain-free and perhaps even swing a golf club again. Whatever happens, there’s always something to look forward to.

- 13.30 US durable goods orders

- 13.55 BoCs Lane speaks

- 14.00 US house price index

- 15.00 US new home sales, consumer confidence

- 02.30 AUS CPI

- 04.00 BoJ outlook report

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