Mind the Gap Cambridge Global Payments - 2020 FX Outlook Survey
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Mind the Gap
Cambridge
Global
Payments
2020
FX Outlook Survey
www.cambridgefx.comSurvey Summary
Small-to-medium enterprises are a crucial component of the North American economy, but their views and expectations
about currency markets aren’t typically included in the foreign-exchange surveys conducted by financial institutions and news
agencies.
To address that gap, Cambridge Global Payments, a currency risk management solutions company with a large, diversified
range of clients in the sector, is launching an annual survey of CFOs and other financial decisionmakers at small-to-medium
enterprises in conjunction with Leger.
The results of the first survey show the views of small-to-medium businesses diverge from those of large financial institutions
and other key participants in foreign exchange markets in some significant areas.
One of the biggest gaps is in expectations for volatility in foreign exchange. Slightly more than half of the survey respondents
anticipate that volatility will increase over the next six months. While the level of volatility anticipated in option markets
remains very low, periods of constrained volatility are usually followed by sharp increases, suggesting a significant share of
the SMB sector is not adequately prepared for a return to more volatile conditions.
Survey respondents also show a surprising degree of optimism regarding the economic outlook. While sentiment surveys have
suggested larger businesses have suffered a dip in confidence due to uncertainties about trade policies, Cambridge’s survey
found 81% of financial decisionmakers at businesses surveyed feel positive about the outlook over the next six months.
About 19% of survey respondents expect the US dollar to trade at or below 1.29 against its Canadian counterpart halfway
through 2020, below the 1.31 consensus forecast prepared by Bloomberg. Roughly 18% see the US dollar trading in the 1.29
to 1.32 range against the Canadian dollar, which encompasses the consensus forecast. Fully 21% see the US dollar trading
above the consensus level.
Survey respondents’ expectations for the British pound depart significantly from the Bloomberg consensus forecast level of
1.3300 at the end of June next year. Only 6% of respondents expect the British pound will reach that, and a total of 48%
expect the pound to be at or below 1.30 at that time.
2 Cambridge Global Payments FX Outlook SurveySurvey Methodology
Cambridge Global Payments, a currency risk management solutions company with a large, diversified range of clients in
the sector, is launching a first-of-its-kind annual survey of CFOs and other financial decision makers at small-to-medium
enterprises in conjunction with Leger.
The results of the first survey show the views of small-to-medium businesses diverge from those of large financial institutions
and other key participants in foreign exchange markets in some significant areas.
An online survey of 521 senior financial decision makers who work for North American companies with an annual revenue
between $5M and $250M was completed between November 7 to 21, 2019, using Leger’s online panel.
The margin of error for this study was +/-4.3%, 19 times out of 20.
Key Findings
▪ The majority feel positive about the outlook for their business over the next six months
▪ Nearly half (47%) believe the strength of the US dollar will be stronger by June 2020
▪ Over half (55%) believe the overall FX volatility will increase in the next six months, with roughly 28% believing that
overall FX volatility will remain stable, while only 10% believe it will decrease
▪ 61% overall think the factor that will have the most impact on FX markets is Donald Trump and U.S. political uncertainty,
particularly financial Canadian decision makers (70%) compared to those in the U.S. (58%).
Expectations for June 2020
▪ EUR/USD: 40% say they expect the EUR/USD pairing to trade at 1.10 to 1.15 in June 2020, while 30% expect the GBP/
USD pair to trade at 1.28 to 1.30 in June 2020.
▪ USD/CAD: Canadian financial decision makers are significantly more likely to believe the CAD/USD pair will trade between
1.29-1.35 (66% vs 52% American financial decision makers).
▪ GBP/USD: 30% expect the GBP/USD pair to trade at 1.28 to 1.30 in June 2020, while fewer expect the pair to trade at
1.30 and above.
3 Cambridge Global Payments FX Outlook Surveyof financial decision makers feel
positive about the outlook for their
business over the next six months.
47%
Nearly half of North American SME financial
decision makers (47%) believe the US dollar
will be stronger on a trade-weighted basis
by June 2020, while 29% feel it will remain
stable.
29%
55%
Over half (55%) believe overall FX volatility will
increase in the next six months, with Canadian
financial decision makers more likely to say this
compared to American financial decision makers
(61% compared to 53%).
53%
61%
4 Cambridge Global Payments FX Outlook SurveyWhen asked what factors might impact
FX markets in 2020:
61%
61% thought that Donald Trump and U.S.
political uncertainty would impact FX markets.
Canadian SME financial decision makers were
more likely to feel this way, when compared to
those in the U.S. (70% vs. 58%).
58%
70%
53%
53% believe that China-U.S. trade dispute will
have an impact on FX markets, followed by
Brexit (35%), geopolitical issues (27%), and
central bank policy (23%).
23%
27%
35%
Currency Expectations
40% 30% 66% 52%
expect the EURO/USD pairing to expect the GBP/USD pair to trade Canadian financial decision makers
trade at 1.10 to 1.15 in June 2020. at 1.28 to 1.30 in June 2020, while are significantly more likely to believe
fewer expect the pair to trade at the USD/CAD pair will trade between
1.30 and above. 1.29-1.35 (66% vs 52% American
financial decision makers).
5 Cambridge Global Payments FX Outlook SurveyGLOBAL HEADQUARTERS US HEADQUARTERS EUROPE HEADQUARTERS APAC HEADQUARTERS Toronto, Canada New York, United States London, England Sydney, Australia (416) 646 6401 (212) 594 2200 +44 (0) 20 7398 5700 +61 (2) 8076 6500 info@cambridgefx.com info@cambridgefx.com info@cambridgefx.co.uk info@cambridgefx.com.au
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