20/11 – Treasury and Fed spat risks recovery

20/11 – Treasury and Fed spat risks recovery

GBP: Retail sales show October strength

EUR: European summit adds little to market mood

USD: Dollar sees through spat risk


Sterling is back towards the range highs this morning against the USD whilst sitting quietly against the euro.

Data this morning confirmed that UK retail sales put on their 6th consecutive month of growth as shoppers started Christmas shopping earlier although retail margins will have still remained under pressure given significant discounting across the High St.

Many in the retail sector know that it is Christmas that is the only thing that puts their business into the black for the year. While October’s retail sales effort is a strong number we have to hope that retailers have been able to shift online this month in a manner that allows them as much chance of getting out of the red before this lockdown and other regional measures elapse or we will be hearing a lot more businesses go the way of Jaegar and Peacocks.

Brexit news highlighted the fragility of market expectations yesterday as Michel Barnier announced a cancellation of next week’s EU briefings on Brexit after one of his team tested positive for Covid-19. Talks will continue virtually and his Deputy is updating the EU Council at the time of writing although little seems to suggest the three main hurdles of fish, level playing field and state aid have been resolved.


Headlines out of the European summit are pretty thin on the ground this morning with Brexit news not moving much. EURUSD has continued to play along with the generalised risk on atmosphere but we have our doubts over euro outperformance through the new year should this spat over the budget between the EU, Poland and Hungary not be resolved quickly.

US dollar

There was concerning news from the US overnight as Treasury Secretary Steve Mnuchin announced his intention to let some of the Federal Reserve support mechanisms expire at the end of the year. Given this amounts to taking away some of the tools that the US has to fight the economic effects of a strong 2nd wave of infections the decision is at the least puzzling, and at the most outwardly callous.

Risk was helped last night by a survey that showed over half of the US businesses contacted were more optimistic about doing business with China under a Biden administration than during Trump’s four years.

Given both jobless benefits and debt moratoriums are also expected to end at the end of the year we are looking at a cliff-edge of fiscal support in the last week’s of the Trump administration.


The Turkish central bank hiked interest rates by 475bps yesterday taking rates to 15% which alongside seemingly believable hawkish statement from the central bank suggests further gains for the lira in the coming months if market participants get on board.

The Turkish currency gained by 2% yesterday against the USD.

Have a great day and a better weekend.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.