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  • richard evans

An uneasy calm as event risk remains high

Good morning

The US dollar has lost some of its recent gains but still remains at elevated levels, particularly against EUR which now sits 1.1450, just 20 pips or so above the lows seen last week. GBPUSD is holding above 1.3400 having tested the mid-1.33s last week although it is looking fragile. EURGBP at 0.8535 (GBPEUR 1.1720), GBP just a little higher perhaps on some slightly positive news to come from NI talks. Not much data out today but UK unemployment tomorrow morning and inflation data Wednesday morning could set a tone for GBP. The appalling terrorist attack over the weekend hasn’t had much effect on the currency markets.

Inflation still high on the list of headlines and it is little surprise. I cannot be the only one to think that the price of living is going up. I’m not looking at statistics, I’m just looking at food, petrol, insurance, heating, clothing. None of them are going down in price, that’s for sure. These are not luxury items, they are pretty vital things. I do wonder whether this can have an negative impact on retail sales at some point.

Doesn’t seem like an issue in China where retail sales surpassed expectations overnight. Biden and Xi are due to meet tonight, albeit virtually. Recent meetings haven’t been so great, China clearly having very little interest in being told what to do and how to behave by US. I wonder if Taiwan will come up in conversation. It seems a case of when, not if, China chooses to take Taiwan back fully under its control.

The situation with Belarus and Poland doesn’t seem to have eased, nor has the reported build-up of Russian troops along the Ukrainian border, where it is feared an invasion will soon take place. As well as the obvious dangers of wars and battles, we also have the natural gas supply issues that will make dealing with Russia rather tricky. However there is some suggestions that Russia has increased through the Yamal pipeline to Germany. On the Poland/Belarus border, Poland has asked NATO to help, while Russia has offered its help. Greeat, NATO and Russia in the same place…that’s wouldn’t be great.

Covid restrictions have begun in Austria but only for unvaccinated citizens. Across many countries there seems to be a concerted effort to persuade unvaccinated people to get their jabs, making life difficult for anyone who has not been vaccinated to the extend they cannot go out or cannot hold certain jobs. I am still amazed at the reluctance of some people to get vaccinated.

If we thought Covid was going away, my eldest son has been told that cases in his year at school are so bad they must now take a lateral flow test every morning before they can attend school. Its not going away, that we are sure of. We do however still hope that jabs and boosters do their job. Mind you, I was one of the 81,575 people who sat in a full stadium at Twickenham on Saturday to watch England beat the Aussies. There were a few masks but if someone had just returned from a two year trip in space, you would forgive them for not noticing any difference, other than the fact I had a nice, cool beer served from an automated vending machine. Mind you at £7.30 a pint I’d really expect it to be delivered to my seat.

On the subject of sport, it was another great weekend for my young team who managed a dominant 3-0 win against the current league leaders. This winning streak must surely come to an end at some point but we’ll certainly enjoy it while it lasts.

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