Early warning

Today’s news headlines:

‘Trump raises prospect of "decoupling" US economy from China’. The President has suggested that the US may ‘decouple’ its economy from China. The motivation is not clear, though several of Trump’s comments suggest it's a combination of economic and national security interests. He also floated the idea of blocking US companies that outsourced to China, possibly returning to his 2016 election manifesto to bring jobs back to the US. In an attempt to draw attention away from his handling during the covid pandemic, the President said the US would hold China accountable for the 181,000 Americans killed by the coronavirus so far.  

‘Private equity says payouts levy rise would drive industry out of UK’. The UK Chancellor of the Exchequer is considering an equalisation of tax between income tax and capital gains tax, in an effort to bridge the funding gap caused by coronavirus support measures. This move would affect private equity and venture capital investors who use a legitimate loophole to classify their income at the lower (28% vs 45%) tax rate. The barest mention of this consideration has prompted a letter from the industry lobby group, stating that this would drive the industry out of the UK.

Today's events, rates, and data 

• Yesterday, was yet another session of Dollar rally fuelled by American-Chinese tensions which continues to push Brent Crude oil towards $40 per barrel. Sterling fell against all of its G-10 peers on recent Brexit headlines that ramp up the odds of the UK leaving with no free trade agreement come the end of the year. Stocks in Asia struggled for direction after last week’s sell-off on Wall Street. Meanwhile, European equity futures are pointing firmly higher.

Today's events

JP  Average Cash Earnings y/y: -1.3% vs -2.0% last month
JP  Household Spending y/y: -7.6% vs -1.2% last month
JP  Economy Watchers Sentiment: 43.9 vs 41.1 last month
AU NAB Business Confidence: -8 vs -14 last month
EU  French Private Payrolls q/q: -0.8% vs -0.6% last quarter
EU Italian Retail Sales m/m: 9:00 AM

Interbank rates:

GBP/USD – 1.3135
GBP/EUR – 1.1125
EUR/USD – 1.1800
USD/CAD – 1.3110