A tale of two cities

Today’s news headlines:

‘Sunak to extend business support loans as Covid-19 spread worsens’. With UK virus rates tracking higher each week—prompting the government to consider new lockdown measures—the economic situation is clearly becoming more tenuous. Chancellor of the Exchequer Rishi Sunak is weighing the extension of several business loans schemes—that were to have ended between now and November—until the end of the year. Obviously, the extension will reawaken the budget deficit argument given the Office for Budget Responsibility's estimate that 40% of borrowers of government loans could eventually default. (Financial Times)

‘China’s export machine comes roaring back to life’. While western countries struggle to control coronavirus infection rates, the Chinese economy has seen the largest surge in exports than in any other year. Driven by demand for stay-at-home products and tech, the jump has leapt to 18% in April and retreated somewhat since then, but remains at historic highs. It's unclear whether this trade edge is temporary, in response to coronavirus-induced lifestyle changes, or a more enduring shift in power. However, because it's a very visible sign of trade disparity, its likely to reawaken old political woes. (Financial Times)

Today's events, rates, and data 

  • Last week ended rather flatly with tight trading ranges all around and little data of note, mostly suggesting a mixed outlook. The week starts quietly as well with little data today, though the Fed speakers this afternoon might provide a bit of impetus for Dollar movement.  

Today's events

UK  Rightmove HPI m/m: 0.2% vs -0.2% last month
US  Fed Chairman Powell speaking: 3:00 PM
US  FOMC Brainard speaking: 5:00 PM
US  FOMC Williams speaking: 11:00 PM     

Interbank rates:

GBP/USD – 1.2915
GBP/EUR – 1.0910
EUR/USD – 1.1840
USD/CAD – 1.3205