Casterrian Weekly Roundup

Good morning and welcome to the Casterrian Weekly Roundup!

Last week saw Fintech firm Revolut reach a $5.5billion valuation, Sweden announce testing of the world’s first central bank digital currency, and Mastercard announce a re-shuflling of its c-suite.

Continue reading below to find your usual currency and market commentary and the latest headlines from around the business world.

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Currency and market commentary

Last week was a good week for the euro, which was the main beneficiary of a broad rotation lower in the U.S. dollar.

The U.S. dollar’s decline has been concurrent with U.S. Treasury yields hitting record lows, which has catalyzed a squeeze on euro short positions.

However, some market commentators fear that the common currency’s strength may not last. This feeling is held mainly due to the apparent exposure the Eurozone has to the coronavirus, in addition to German growth sputtering as demand for its exports wanes.

In the U.K. last week, sterling remained heavy, posting a six-week low against the euro and a three-month low versus the Japanese yen.

Markets appear to be taking a somewhat sceptical view of the U.K. currency after the UK government signalled that it is prepared to leave without a deal at the end of the Brexit-transition phase on December 21st 2020.

Trade talks between the U.K. government and European counterparts are due to commence this week.

The Japanese yen has remained underpinned by safe haven demand, with coronavirus anxiety at fever pitch.

Australian dollar / Japanese yen crosses, widely seen as a forex market barometer of risk appetite and a liquid currency proxy on China, dropped for a seventh consecutive day on Friday.

Oil prices continued to drop sharply on Friday with front-month WTI futures making a low at $45.45, which is the lowest level seen since December 2018.

Depressing oil prices is the fear that the coronavirus doesn’t look to have reached a peak, suggesting more economic disruption and less demand for oil.

On Friday in commodities:

  • Oil closed at $44.76 (-26.7% YTD)
  • Gold closed at $1,585.85 (+4.5% YTD)

Sources: Commodity prices – Markets Insider, Currencies – XE.

Coronavirus may cause the cancellation of the Six Nations

The future of the 2020 Six Nations Championship is set to be decided at a meeting in Paris on Monday, amid fears the coronavirus could wreck this season’s edition.

An already scheduled World Rugby gathering in the French capital will now also see officials consider if more alterations are needed to the final two rounds of the Championship, with the 7 March meeting between Ireland and Italy in Dublin already postponed by the global COVID-19 outbreak.

No replacement date has yet been set, with the Championship scheduled to conclude with matches involving all six teams on 14 March.

There is a precedent for rescheduling Six Nations fixtures due to health concerns.

In 2001, due to the highly contagious livestock foot and mouth outbreak, Ireland had three matches (against Scotland, Wales and England) rescheduled to September/October of that year.

Read the full report from RTÉ News by clicking here.

Fintech Revolut reaches $5.5billion valuation

Revolut, one of the fastest-growing upstarts in the hot U.K. digital banking and payments market, was valued at $5.5 billion after it raised $500 million in new funding from venture capitalists.

Revolut, started five years ago, provides app-based current accounts, money transfers and currency-exchange services and wants to build a global digital bank.

Its number of customers has more than doubled to 10 million in the past 12 months and the company plans to start offering services in the U.S. this year, enabled by a collaboration with Mastercard announced in October 2019.

The funding round was led by US venture-capital firm TCV, and it brought the total raised by Revolut to $836 million.

The significant capital raise will help with Revolut’s aggressive expansion plans. Revolut partnered with Visa in September 2019 as part of a plan to eventually expand into 24 new markets, for a total of 56 worldwide.

Read the full article in the Wall Street Journal by clicking here.

World’s first central bank digital currency will begin testing in Sweden

Sweden’s Riksbank said recently that it had begun testing an e-krona, taking the country a step closer to the creation of the world’s first central bank digital currency (CBDC).

Riksbank, in partnership with global consultancy firm Accenture, is running a pilot project that will develop a proposal for a technical solution for an e-krona.

The goal is to create a digital version of the krona (Sweden’s traditional, fiat currency) that is simple and user-friendly in an isolated test environment. The technical solution will be based on Distributed Ledger Technology (DLT), often called block chain technology

If the e-krona eventually comes into circulation it will be used to simulate everyday banking activities, such as payments, deposits and withdrawals from a digital wallet such as a mobile phone app, the Riksbank said.

Read the full report from Reuters by clicking here.

U.K. Court of Appeal rules decision to expand Heathrow unlawful

Controversial plans for a third runway at Heathrow Airport were thrown into doubt after a court ruling on Thursday.

The government’s decision to allow the expansion was unlawful because it did not take climate commitments into account, the Court of Appeal said.

Heathrow said it would challenge the decision, but the government said it would not appeal.

The judges said that in future, a third runway could go ahead, as long as it fits with the UK’s climate policy.

The case was brought by environmental groups, councils and the Mayor of London.

Read the full article from BBC News by clicking here.

Spain’s Renfe group enters US with $6billion high-speed rail contract

Spain’s state-owned high-speed rail operator, Renfe, has begun work on America’s first high-speed railway, in Texas.

The 386km line will connect Houston and Dallas/Fort Worth, giving riders a 90-minute trip.

Italy’s Salini Impregilo is building the line for private equity rail operator, Central Texas, but Renfe has been contracted to supervise and consult in the design and construction phase (lasting to 2026) and will then operate and maintain the line until 2042.

Renfe will get €311m for work in the design and construction phase and expects revenues of more than €5.6bn from the operational phase, the company said.

The agreement between Renfe and Central Texas was reached last year.

Renfe said it has already signed a pre-agreement and the contract is being drafted.

The press release from Renfe can be viewed  by clicking here.

Mastercard announces a c-suite reshuffling, and an expansion of its Dublin offices

Mastercard announced on Tuesday that Ajay Banga, who led Mastercard during nearly a decade of double-digit annual revenue growth and a soaring stock price, would step aside as the payments company’s chief executive at the start of 2021 and move into the role of executive chairman.

The group’s chief product officer, Michael Miebach, will become chief on January 1, the same day incumbent chairman Richard Haythornthwaite will also step down from his position.

Since Mr Banga’s appointment as chief in 2010, Mastercard’s revenue has grown from $5.5bn to $16.9bn, and its shares have returned more than 1,600 per cent, easily outperforming rival Visa. The S&P 500 returned 280 per cent over the same period.

Additionally, the credit card giant announced plans on Monday to more than treble its Irish workforce to 1,700.

The 1,200 new jobs will be created by expanding its base in Dublin, the company said.

Mastercard confirmed plans to lease three office blocks in Leopardstown, Dublin, which will ultimately have space for 2,500 workers.

You can read about the c-suite re-shuffling, as reported in the Financial Times, by clicking here, while details on the Irish Jobs announcement, as reported in the Irish Times, can be found by clicking here.

Disclaimer: The Casterrian Weekly Roundup is a marketing communication and should not be used for any investment research. This document is a general communication being provided for informational purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products.