IS Risk Analytics' View From the Desk - June 2020
June profits and volumes were front-loaded with the bulk of PL in the first 10 days of the month, primarily due to broad-based USD selling. Profitability in that period was focused in EUR and JPY pairs, along with indices and gold. Mid-month activity was relatively flat, but the month finished well primarily because of the continuation of the gold rally. Overall, both profits and volumes recovered well from the lows seen in May.
*Average Daily Volume represents the daily volume from ISRA customers for each day of the month divided by the average daily volume for the month. Each day is represented as a percent of the average.
** Average Daily B Book PnL represents the daily B Book PnL from ISRA customers for each day of the month divided by the average daily B Book PnL for the month. Each day is represented as a percent of the average.
Source: IS Risk Analytics Database. Past Performance is not necessarily indicative of future results
Border tensions between China and India escalated in June when 20 Indian Army personnel were killed in a conflict with Chinese troops. India has subsequently moved to ban 59 of China’s largest apps alleging that they present a security threat to the country. China is claiming that the ban violates WTO rules and is urging the Indian government to revoke its decision.
EU GBP is also expected to show a deep decline in the second quarter, though not as bad as initially predicted as the regions largest economies further eased coronavirus related restriction in June. The latest round of Brexit negotiations ended a day early following lack of progress and what has been characterized as serious disagreements. The UK continues to insist that it will not seek to extend the December deadline to reach a deal.
Figures released in June showed the US economy shrank at a 5% rate in the first quarter as a result of the fallout from the coronavirus pandemic. Those figures only capture the first few weeks of the shutdowns that began in earnest in mid-March. Economists are predicting a much larger decline, perhaps as high as 20%, for the second quarter of the year.