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  • richard evans

The right-wing comes good after all. That's where England's goals came from...

Good morning

 

I’m back from holidays, and what a marvellous holiday it was.  It seems a long time since I’d felt real warmth from the sun, certainly on a regular basis, and ah how lovely it is.  I know much of the UK had high temperatures for a few days while I was away, I arrived back too late for those, but I have to say the last day or so back home has been far more pleasant than the weather we had before I went away.  Lets hope it stays that way.

 

So, what have I missed?  Well ‘plenty’ is the answer and there is no way I am going to cover it all in this email.  We have left H1 2024 behind and have moved into H2, so I won’t go over too much old ground now, although I will mention that from what I read we in the UK could be in for a rate cut as early as next month if the last BoE meeting was anything to go by.

 

In terms of currencies, GBPUSD isn’t too far from where it was when I wrote my last report back on 14th June.  At the time it was 1.2705, now 1.2680, having seen a low around 1.2620 while I was off.  GBP has lost ground against EUR over the past couple of weeks, it had traded up to 1.1900 but has since slipped back to 1.1770, while EUR has also made gains against USD from the 1.0700 area up to 1.0770 where we currently trade. 

 

The EUR has gained over the weekend on the French election first round results, where Le Pen’s right wing party National Rally won 33.1% of the vote, pushing Macron’s Ensemble Alliance into third place with just 20.76% of the vote, second place went to the left-wing New Popular Front with 28%.  EUR gains were prompted by the failure of National Rally to earn an overall majority, which would make it nigh on impossible for them to introduce the immigration and tax cuts that they promise.  Second round voting is next weekend and already the failing parties are talking of ditching marginal candidates in order to try to consolidate votes for one left-wing candidate, but it seems that France is on course for a rather unsettled political playing field.  Worth noting the high turnout for this election, nearly 67%. 

 

USDJPY has traded up to new multi-year highs, reaching 161.20 or so with no sign of intervention from Japan.  162.00 is a level being talked about although unless we see action from Japan I can see this being tested, with the strong USD and weak Yen staying until such a time US cut rates and Japan raise rates.  GBPJPY up at 204.00.

 

Of course we have the UK election coming up later this week.  The right wing will not do anywhere near as well in the UK as we saw in France this time, the big question here is how many seats Reform can take, and perhaps more importantly whether they take them from Labour or Conservative.  Labour look set to win with a landslide victory as the public lose faith in the Tories, who stand to lose 275-300 seats.  A key issue for me with both parties is that they are all in it for themselves, serial politicians, rather than really being in it for the good of the country.  They’ll do anything to hold onto their jobs regardless of whether it’s the right or wrong thing.  I see no difference between Tories and Labour in this respect.  Anyway, I will be interested to see the turnout this time around.  Back in 2019 it was 67.3% across the UK.  I think we have a chance to substantially exceed that this time although of course there is still a chance voters such as old Tory voters stay away, not willing to vote again for their party but unwilling to place a cross against a Labour name. 

 

And of course we have the ongoing US presidential battles in the US.  Still some months to go before the vote itself but the televised debates have started and I have to say it doesn’t look good for Biden, who is clearly suffering from some sort of illness, with stiff body and vacant expressions.   He can’t be well enough to be President.  Will he stand?  And if not, who will stand instead?  Kamala Harris, current vice-president, has been rather quiet.  Mind you Biden has to withdraw in order to be replaced unless the cabinet declared him unfit for office, something that has never happened before. 

 

Meanwhile, I read that several US bases across Europe have raised alert levels to their second highest level possible which suggests they have intelligence that a terror attack against the base is likely.  Some suggestions are that the ISIS group that led the recent terror attack in Moscow have been thwarted in trying similar attacks in France and perhaps there is a fear they will target US military personnel off-base. 

 

In sport, Wimbledon begins today, the weather looks good enough and I’m sure the players will be pleased to be playing in temperatures around 20°c rather than 30°c, although I’m sure the general UK public would prefer the weather to be warmer.

 

Of course, for me, the main event remains Euro 2024.  I have to confess that much of our down-time on holiday was spent watching football regardless of who was playing.  Most bars and restaurants had at least a couple of screens, so it was difficult to avoid, and we did end up seeing more than I’d expected.  I was back in time to see England play yesterday evening, I won’t go into detail about my feelings for the match, save to say that over the whole tournament so far, England have really shown just ten minutes of the intensity levels I’d expect, towards the end of the 90 minutes yesterday when it looked as though the team would be heading home. The win is all that matters but something just isn’t working.  Quarter-finals beckon, but we’re going to have to improve if we have any chance of beating the likes of Germany or Spain.  Both England goals came from the right wing, I’m surprised the UK papers hasn’t picked up on that political connection as yet.

 

That’s all from me for now.  US ISM this afternoon likely to be the key, Lagarde speaks later this evening, it will be interesting to see if she makes any mention of the French elections.  US employment numbers out this week with nonfarms on Friday, and of course we also have the UK election to keep us busy.

 

-  13.00 German HICP

-  15.00 US manufacturing ISM

-  20.00 ECBs Lagarde speaks

-  23.00 NZ NZIER business confidence

-  23.45 NZ building permits

-  02.30 RBA minutes

 

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