Global Reach is becoming Corpay Cross Border, part of FLEETCOR, to broaden our client offering. Please contact our team or visit to find out more.

Supply-side boost

Supply-side inflation has been the runaway conversation for a while now, with the prospect of higher interest rates in the UK, the removal of monetary support in the US, and many economies dealing with the pressures of a cost living crisis. However, some positive news may be just around the corner.

The EU relies on Russia for more than 40% of its gas imports, and last week, Russian President Vladimir Putin ordered that the state-controlled energy corporation Gazprom pump more natural gas supplies through the bloc. Futures contracts fell on the news, but to many, this is all a part of Putin’s aim to get Nord Stream 2 approved after leveraging higher gas prices on many EU member states. The Russian government have been accused of weaponising gas supplies, threatening to cut-off supply to Moldova if the country didn’t agree to a new five-year contract.

Elsewhere, company profits have soared on the back of these conditions. Chevron reported third-quarter profits of $6.1bn, its highest since 2013, while ExxonMobil reported some of its best performance since 2017. The Biden administration has continued to push such companies to increase production in order to ease fuel prices. Some analysts have suggested that with output set to rise, the tide is beginning to turn.

Bottom line: Despite current fears, the rally in energy prices could be slowing. US oil futures marked their first weekly loss in ten weeks on Friday, ending nine weeks of gains—the longest since 1983. Global Head of Energy at KPMG, Regina Mayor, has given hints that the Organization of the Petroleum Exporting Countries Plus (OPEC+) could be planning to increase oil production by as much as 600K barrels per day, taking daily output to 1M barrels. This could be deemed an optimistic forecast considering the current 400k baseline. Gas contracts in Europe are also on a sharp downtrend, with further signs that Russia will increase exports to the area. UK gas futures contracts for December fell 15% on the back of this news on Friday. Despite the respite, supplies still remain precarious, with many countries at lower levels than normal. If a colder-than-expected winter occurs, then a cost of living crunch is a real threat. Only time will tell whether this is a momentary lapse for oil and gas producers or the first move in curtailing these rapid price rises.

The week ahead


Sterling fell 0.21% on a trade-weighted basis last week, after briefly climbing above the 1.19 figure against the Euro and the 1.38 level against the US Dollar. Markets have been aggressively pricing in interest rate hikes from the UK central bank for several weeks, leading to Sterling appreciation against its peers in October. In last week’s Budget announcement, Chancellor Rishi Sunak upped the pressure on the central bank by asking them to ‘reaffirm their remit to achieve low and stable inflation’. As of Monday morning, rates markets are expecting a 12-basis-point hike this week and a 25-basis-point hike in December. However, investors remain cautious of policy action dampening the UK’s economic recovery, as indicated in options markets where demand for downside Sterling protection has been climbing in recent weeks.

  • Monday’s Markit Manufacturing Purchasing Managers’ Index for October was expected at 57.7 but came in slightly better at 57.8.
  • On Wednesday, the Markit Services PMI is predicted to show expansion in the UK’s Services sector at 58.0, unchanged from previous estimates.
  • Thursday’s Markit Construction PMI for October is forecast to show slowing expansion down from 52.6 in September to 52.0.



Last week, the Euro index fell 0.61%, to its weakest level since July 2020, after its rally following the European Central Bank announcement failed to last longer than a day. On Thursday, ECB President Christine Lagarde admitted that Eurozone inflation would stick around for longer than the central bank previously expected but maintained the view that inflation would ease by 2022. In a similar fashion to other major economies, investors have brought forward expectations of interest rate hikes from the ECB and, as of Monday morning, are pricing in an interest rate hike by summer 2022. Lagarde’s post-announcement comments kept these beliefs alive, as she avoided claims that the expectations were stretched.  

  • Wednesday’s Unemployment Rate for the Eurozone is expected to come in at 7.4%, which would mark the lowest Unemployment Rate for the region since April 2020.
  • On Thursday, the Markit Services PMI is forecasting expansion across the region’s major economies, with the Eurozone aggregate expected to read 54.7.
  • Friday’s German Industrial Production is expected to have shown 1.0% growth in September, up from -4.0% previously, while French Industrial Production is forecasting 0.0% growth, down from 1.0% in August.



The US Dollar benefitted from month-end Dollar demand as it recovered Thursday’s losses, closing the week 0.5% higher on a trade-weighted basis. This week, the US Dollar opens near year-to-date highs ahead of Wednesday’s Federal Reserve policy meeting, where policymakers are expected to announce scaling back their bond-purchasing program in the face of rising inflation and a tightening labour market. Following the announcement, investor attention will quickly turn to Friday’s Non-Farm Payroll figure.

  • Monday’s ISM Manufacturing Index for October is expected to show slowing expansion in the sector in October at 60.5 versus 61.1 in September.
  • Wednesday’s ADP Employment Change is forecasting 400k new jobs in the US economy in October, down from 568k previously. Factory Orders are expected to have grown 0.0% in September, while Durable Goods orders are forecasting -0.4% growth for the same period. The Markit Services PMI is expected to signal expansion during October at 58.2.
  • Thursday’s Initial Jobless Claims are forecasting 275k people claiming unemployment in the week to 30th October 2021.
  • Friday’s Non-Farm Payroll figure for October is expected to read 450k, a significant improvement from September’s 194k, while the Unemployment Rate is expected to drop to 4.7% from 4.8%.


If you'd like to discuss your foreign exchange requirements with one of our currency specialists, call us on +44 (0)20 3465 8200.