• Matthew Fotheringham

🌎 Wine Tax Threats, Wuhan Clan and The Fixed Franc - 01/24/20 - 3 Things


January 24th, 2020


Happy Friday!


Now that we’ve all calmed down from the “Megxit” drama of last week we can focus on what’s important. No…, not Trump’s phone calling habits... but how can that many people be in Davos, and yet we’ve seen no one on skis?


Did You Know...

That there were more North American's than women that attended Davos this year, with just a meager 24% of the attendees being female.


Can you name the five countries that have zero female representation at this year's event? (Answers below) 


Read about us on Private Funds CFO


USD   EUR   GBP 


Trump Prefers American Wine Anyway!


Trade tensions between the US, EU and now the UK could escalate after Trump publicly criticized Europe’s tariffs and trade barriers saying they are “more difficult to do business with than China” (cough cough China tariffs). 


Trump, unlike everyone else in Switzerland this week, decided not to focus on climate change and instead turned his attention away from the “perennial prophets of doom” and focused on more trade deals and the proposed digital tax regimes by the EU and UK.

Things got especially heated between Treasury Secretary Steven Mnuchin and Britain’s Chancellor of the Exchequer Sajid Javid. Mnuchin retorted “If people want to just arbitrarily put taxes on our digital companies we will consider arbitrarily putting taxes on car companies”.

This did little to dissuade the Brits with the UK remaining defiant that 2% “temporary” levy could be imposed in April. The French, however, seemed to have softened their stance on their similar 3% tax proposal.

Just goes to show how much Bubbly and Vin Rouge Americans actually drink - $1.1bn worth to be precise.


GBP has risen from its lows in Q3 2019 (1.2) to recover about half of what it's lost since April 2018. Not surprisingly, GBPUSD has shown monthly volatility of 2.3%, quite a bit higher than its continental brethren. This recovery is surprising, considering the poor Q4 economic performance. Both services and manufacturing PMI were contractionary. 

EUR continues its two-year depreciation against the USD, having lost 9.6% since April of 2018.  



Monthly vol just under 2%. With weak PMI and retail sales, and consumer confidence to match, economic growth is set to remain feeble into 2020.


 CNY   USD 

Wuhan Clan Is On The Move



China expects 3 billion trips during their 40 day Lunar New Year celebrations. Why is this noteworthy? The Deadly Wuhan flu could be traveling with them and there is already 1 reported case in the US.

What we know:


  • The flu-like symptoms can make it difficult to initially detect

  • More severe cases reminiscent of SARS

  • At least 830 infected

  • At least 26 associated deaths

  • China locking down borders affecting 33m people 


Luckily we have Amazon to help protect us. 

It really has been a mixed bag for the Chinese economy these past few days and the currency has reacted in the same way.

CNY initially carried over its strength from the previous week following the positivity surrounding the signed trade agreements and being taken off the manipulator's list but it has been pegged back with its recent poor financial data the uncertainty of the containment of this potential epidemic the psychological 7 level is back in range.

USDCNY monthly vol = 1%

CNY steadily appreciating against USD in the last 5 months.


CHF   GBP   EUR 

Can I be Franc? We are not manipulators



119 Billionaires descended upon Davos Switzerland for the World Economic Forum and maybe their 500BN in combined wealth had something to do with the Swiss Franc strength we saw this week.

The US recently labeled the Swiss as currency manipulators and on Thursday Swiss National Bank (SNB) Chairman Thomas Jordan came out and said that despite them being put on the “watch list” it will not deter them from intervening and weakening the CHF if necessary, threatening that further interest rate cuts could be on the cards.

The SNB famously cut interest rates back in Jan 2015 and have been at -0.75% since then. 


In times of uncertainty, the CHF acts as a safe haven play with billions of currency flowing into the CHF and Goldman Sachs said recently that the CHF may act as a proxy to gold. Gold, which also acts as a safe haven in turbulent times, is currently at 6.5-year highs and the CHF is currently hovering around a key level of 1.03 against the USD (USDCHF = .97)



The Swissy holds near unity with 1.7% monthly volatility.


 USD   VES   CNY   BRL   EGP 

In Other News


This Weeks Economic Data Calendar



Keep An Eye On Next Week

Tuesday, Jan 28th

  • USD - Non-Defense capital Goods (excl aircraft)


Wednesday, Jan 29th

  • USD - FED Interest Rate & Conference


Thursday, Jan 30th

  • GBP - BoE Interest Rate, Vote and Minutes

  • USD - GDP

  • JPY - CPI


Friday, Jan 31st

  • EUR - CPI & GDP

Feature Article


Essential Maths For Treasurers & CFOs Managing FX Risk



While the Treasury dept is not R&D, there is a surprising amount of mathematics involved. From yield spread analysis, term structure of interest rates, zero-coupon yield curve, price/yield analysis and other concepts; the Treasurer or CFO is required to know more than a little mathematics...  READ MORE

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Currency Heat Map

This chart shows the relative volatility between currencies. The redder the color, the higher the volatility.


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Quiz of the week

Who has 0% women representation at Davos...

  1. Thailand

  2. Poland

  3. Oman

  4. Palestinian Territories

  5. Malaysia



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