(Previous week in brackets)

15 January 2021: The relative quick drop of Euro vs USDollar against what appeared to be a main trend was expected as we removed some potential short term technical risk from the dollar receivable hedge (70%-50%). The steep drop in risk weight is close to bullish divergence and confirmed as soon as hourly risk turns up which at 15/1 close is that a very low risk 2%. I.e a rally on Monday morning seems on the cards and that may also push Daily risk weight into an uptrend. However this is potentially tricky as the high risk longer term risk weight time scales could push the dollar higher for a while due to a medium bearish divergence in its own timeframe. A potential intermdiate objective could be 1.16. Given the general economic uncertainty we strongly advise no more than 50% cover on dollar receivables. No Change.

8 January 2021: Our technical observation is the same as for US$ Index. On Jan 4 we took out 20% of dollar receivable cover. Specs should not be short dollars until a clear confirmation of the continuation of Euro uptrend can be shown. If short and medium term risk trends turn, one must be careful about the extend of such turn which more often than not turns to a Murphey's Law surprise or a move that will be larger than anticipated. The potential based on common chart patterns is that Euro flows back into a 1.16-1.18 range relatively quickly. No Change to 50% dollar receivable hedge.

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15 January 2021: We are changing our hedge recommendation on Cable to 30% max hedge on perptetual dollar transaction receivables, from 50%. This technically appears a low risk change from the 50% position we have adopted for much of 2020. Even though GBP has been relatively strong against other majors this past week, it doesn't look very appealing in our analysis.

8 January 2021: Cable was more volatile as a result of Brexit squaring trading between 1.3550 and 1.3650 most of last week. Risk looks similar to Index and Euro although Weekly Medium term is still in uptrend with interim Monthly uptrend weakening between Jan 4 and 8. No Change to 50% dollar receivable cover.31 December 2020: GBP was a weaker performer against USD in 2020 gaining a nhet 4.5% open to close, even though the dollar rallied massively with Cable dropping to a low of 1.1500 at the first lockdown in March. Current technical conditions at the start of trading in 2021 do not look that favourable even though the market seems to think Brexit is a positive thing for Sterling. As economic conditions have worsened the better risk approach is to stay with a 50% perpetual hedge on expected, not necessarily budgetted, dollar receivables.

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15 January 2021: GBP receivables to remain covered at 80% perpetual forward inflow. Even though GBP/EUR rallied by 1.5% last week, the picture doesn't look at all low risk and very speculative. Maybe some unwinding of position ahead of the US inauguration or the 'incredible positive news' following Brexit. The UK economy also looks extremely frail at the moment. No Change.

8 January 2021: Daily risk got quickly overbough on Jan 4 and turned down. The mix of tools is fairly neutral and the leading tools to indicate downbside risk still are Relative strength and MACD (Moving average advance decline). Stochastic risk is mixed meaning based on that alone this pair could turn on a moments notice and looks more speculative. In this scenario and the real problems UK has with European trade GBP receivables should remain 80% hedged for now. No Change.

31 December 2020: GBP/EUR opened 2020 at 1.1135 and closing at 1.1195. A net 0.5% rise which was wiped on this first day of trading. From a technical risk management perspective we have been more bearish on Sterling vs Euro and this is still the case today. Monthly risk weight is in an shalow uptrend but even contracting and narrowing to 40 at year end from 41, with further narrowing interim to 39 on Jan 4, 2021. This is not the picture for a strong market and companies receiving fwd sterling and vice versa should remain very cautious and keep at least 80% covered. The whole of 2020 looks like a struggle for GBP to keep a straight face amidst serious financial economic issue, not just a result of Covid. There is a gap open from Dec 31st that may still be filled at 1.1194, but it is not that same typical gap we have described many times and which can be expected to get filled almost 100% of the time. We'll see, but our recommendation is to keep 80% of GBP receivables covered. Translation risk is another issue that may start to play a role following Brexit, but often much harder for management to act on. Low risk currency management requires serious engagement. It is not that easy for most. No Change.

15 January 2021: Dollar Yen has hardly moved an inch during the dollar advance last week and confirms our long term view that is is likely to largely move with the dollar, although the dollar/Yen downtrend again appears hesitant to want to continue on that downtrend. Technicals are looking for a minor correction north towards 105.00 perhaps. No Change.

8 January 2021: As we have been expecting throughout 2020, the Japanese Yen continued to follow the dollar on its slightly weaker path versus the other major currencies, Euro, CHF, GBP. The 1% strengthening dollar/yen into 8 January to 104.00 from 102.60 is consistent with the general short term dollar direction last week. A 103.50-105.00 range is likely before we may see some very short term hourly divergence. Any move is likely to be fairly limited. No Change.

31 December 2020: $/Yen lost 5% open to close in 2020 which is a similar performance as GBP. A slightly weaker currency amongst the majors and this picture is not changing looking at our technical tools. Yes the dollar does still look a little weaker but at the start of trading today, January 4, it is starting to look bottomish with pottential bullish divergence within the daily and weekly time scales. Potential, not confirmed. With longer term risk still pointing down we could imagine the objective of 100 to one dollar, which is the low seen in 2016. We propose to hold Yen payables or dollar receivables versus Yen at 50%. No Change.

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