Brexit

Market Review 06-03

Market Review 06-03

Forex News

GBP/USD Price Forecast – Brexit Proceeding Continues To Dictate Price Action

From: FXempire.com

The pair trades range bound near critical support levels as USD bulls dominate price action with high chance for brexit proceedings resulting in a bearish breakout.

The GBPUSD pair continues to trade with bearish bias as Brexit proceedings weigh down GBP bulls in the broad market. Further, strong dollar supported by upbeat US macro data added to GBP’s woes during yesterday’s trading session pushing the pair below 1.3100 handle, however, comments from Bank of England governor Mark Carney who hinted that there is a high chance of for rate hike in case of a Brexit deal between EU-UK even if its a soft deal or in case there is an extension of article 50 deadline improved sentiment surrounding GBP enough to push it back above 1.31 handle during Pacific-Asian market hours.

BOE Carney’s Comments Was Saving Grace For GBP

As Brexit deadlines approach with each passing day with no clear sign of how the UK is going to move forward given the fact that both sides are eager to avoid a no-deal exit scenario, trade talks began between representatives of both parties yesterday. EU was represented by Chief Brexit negotiator Michael Barnier and UK was represented by Attorney General Cox and Brexit Secretary Barclay. Despite three hours of negotiation, talks between two parties yesterday ended without any agreement between the two parties resulting in talks continuing to resume today. As of writing this article, the GBP/USD pair is trading flat at 1.3140 up by 0.01% on the day.

Moving forward, the day ahead will see USD bulls dictate price action ahead of the conclusion of EU-UK trade talks today. The outcome of Brexit talks between two parties will provide short term directional bias. UK’s calendar remains silent for the day aside from speech by BOE MPC members Cunliffe & Saunders while US calendar will see the release of ADP Non-Farm Employment and speech by FOMC members Mester & Williams. Macro data updates and speech by central bank members are expected to keep price action volatile and pave way for short term profits. However, a dovish Brexit proceeding will favor further downside move as USD remains strong in the broad market while unfavorable proceedings in Brexit front will add bearish fundamentals to British Pound. Expected support and resistance for the pair are at 1.3095, 1.3060, 1.3010 and 1.3150, 1.3175, 1.3200 respectively.

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Explainer: With Draghi’s job eyed, ECB prepares for grand reshuffle

From: Reuters.com

Euro zone leaders will have to pick a new president to lead the European Central Bank in the coming months, reshaping the 19-country currency bloc’s most powerful institution.

The selection will cap a year of change that will see half of the ECB’s board and more than a third of its Governing Council replaced, an unprecedented reshuffle in the euro’s 20-year history.

WHICH JOBS ARE UP FOR GRABS?

The Holy Grail is of course the presidency, with Mario Draghi’s term ending on Oct 31. The mandates of the ECB’s chief economist Peter Praet (May 31) and board member Benoit Coeure (Dec. 31) also expire. In addition, Austria, Belgium, Cyprus, Estonia, Ireland, Latvia, Slovakia and Slovenia are all due to get new central bank chiefs this year.

WHO IS IN THE FRAME?

Central Bank of Ireland Governor Philip Lane’s nomination as chief economist is virtually a done deal. The other two board positions are up in the air.

For president, Francois Villeroy de Galhau (France), Jens Weidmann (Germany), Olli Rehn and Erkki Liikanen (both Finland) are in the race. Coeure (France) is also mentioned in the press as a contender, but as a sitting board member, he is not eligible for reappointment. Some have suggested that if he resigned before a nomination, he could gain eligibility, but such a move would be unprecedented and contrary to the spirit of the law.

WHO DECIDES?

Appointments to the six-member ECB board are political, though key roles are usually filled by leading economists.

The next ECB president and the new heads of the European Commission and the European Council are all likely to be negotiated as part of a package after elections to the European Parliament in late May.

Draghi was appointed four months before he formally took over in 2011. The timeline will be tighter this year but the process should end by the time Europe shuts for summer holidays.

WHAT ARE THE UNWRITTEN RULES OF THE SELECTION PROCESS?

ECB presidents are usually picked from among the 19 national bank governors who sit on the Governing Council along with the six board members, and should be top-flight economists.

As the three biggest countries, Germany, France and Italy generally claim board seats, the 16 other members usually share the remaining three spots. Italy could be off the board for more than a year, however, as Draghi is unlikely to be replaced by an Italian. Since the next seat to fall vacant is held by France, it’s possible that Italy will have to wait until Yves Mersch’s term expires on Dec. 14, 2020 to reclaim a board position.

A nation should not have more than one board seat. So if, for example, Weidmann is appointed ECB president, the other German on the board, Sabine Lautenschlaeger, will be expected to resign.

The Netherlands, France and Italy have all had ECB presidents in the past and some argue that they should not get the job again until others have had the chance.

The European Parliament has often complained about the dearth of women in top ECB jobs. Currently, only two of the 25 members of the Governing Council are women and one is due to leave this year.

ISN’T IT GERMANY’S TURN THEN?

The Germans certainly think so. But Bundesbank President Weidmann has antagonized many. He openly opposed the ECB’s stimulus program, credited with reviving growth, and got into a public fight with Italy’s prime minister over fiscal discipline. Hints from Berlin also suggest that Germany will seek the EU Commission presidency rather than fight an uphill battle for Weidmann.

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Stock Market News

Big Tesla backer doesn’t oppose a Musk ouster: ‘I don’t think he needs to be CEO’

From: CNBC.com

  • Baillie Gifford is the second-largest stakeholder in Tesla behind Musk
  • Musk is facing contempt of court allegations after he tweeted what the SEC claims was “inaccurate” information about Tesla’s production outlook
  • Tesla has long touted the importance of keeping Musk in the top spot

A major Tesla backer doesn’t fear an SEC-inspired ouster of CEO Elon Musk, according to a new report by Barron’s.

“We wouldn’t be against him having a different role,” James Anderson, head of global equities for Baillie Gifford, told Barron’s. “I don’t think he needs to be CEO.”

Baillie Gifford is the second-largest stakeholder in Tesla behind Musk. The U.K.-based investment firm owns 7.7 percent of the company — or roughly $3.8 billion worth — according to FactSet. Musk owns 19.7 percent, while the third-largest investor, T. Rowe Price, owns 5.2 percent.

Musk is facing contempt of court allegations after he tweeted what the SEC claims was “inaccurate” information about Tesla’s production outlook. Tesla admitted to the SEC that Musk had not received approval to tweet the information, which is required by a settlement agreement struck between the agency and Tesla last fall.

Tesla has long touted the importance of keeping Musk in the top spot, saying in annual SEC filings that Tesla is “highly dependent on the services of Elon Musk, our Chief Executive Officer and largest stockholder.”

Anderson agreed that Musk is essential to Tesla, but suggested a less formal role to Barron’s like “chief ideologue.”

In December, Baillie Gifford contributed to a $500 million fundraising round in Musk’s rocket company, SpaceX, according to the Wall Street Journal.

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Wall St treads water as key market level eyed

From: Reuters.com

Wall Street’s main stock indexes moved in and out of positive territory on Tuesday as investors digested positive retailer earnings and economic data and eyed a key level for the benchmark S&P 500 index.

Concerns over U.S.-China trade relations also hovered over the market, as Secretary of State Mike Pompeo said President Donald Trump would reject a trade deal that was not perfect, but the United States would still keep working on an agreement.

Optimism over a U.S.-China trade deal and over the Federal Reserve being less aggressive in raising interest rates has helped boost the S&P 500 by 11 percent this year, but the index has struggled to move above 2,800.

“When you are here at that important level in the S&P 500, it’s healthier to see the market slow down, pause, take account of the micro and the macro and absorb the good news,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

“To see the market pause right now, as opposed to a deep sell off, is encouraging,” Krosby said.

The Dow Jones Industrial Average rose 19.77 points, or 0.08 percent, to 25,839.42, the S&P 500 lost 0.47 points, or 0.02 percent, to 2,792.34 and the Nasdaq Composite added 11.28 points, or 0.15 percent, to 7,588.84.

Communication services led gains among the 11 S&P 500 sectors, while energy lagged.

The consumer discretionary sector rose 0.5 percent, led by a 7.8 percent gain in Kohl’s and 5.3 percent gain for Target following those retailers’ respective earnings reports.

Target forecast 2019 profit above Wall Street estimates as investments to draw more shoppers online and in stores drove a jump in holiday sales, while Kohl’s forecast full-year profit above Wall Street estimates.

In other corporate news, General Electric shares dropped 5.3 percent as the conglomerate forecast an outright fall in free cash flow from its industrial business this year on the back of continuing weakness in its power unit.

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Cryptocurrency News

Crypto Advance; Russia Moves Closer to National Crypto Regulations

From: Investing.com

Major cryptocurrencies rebounded on Wednesday morning in Asia after losing ground during the first two trading days this week. Russia caught traders attention again as the country’s parliament adopted a bill to move closer to formulating national crypto legislation.

Bitcoin bounced back from around $3,700, trading at $3,840.9 by 10:07 PM ET (03:07 AM GMT), up 3.10%.

Other digital tokens also made gains, with Ethereum up 7.27% to $136.26, XRP trading 2.92% higher to $0.31277 and Litecoin surging 12.64% to $52.425 over the past 24 hours.

The crypto market cap also recovered to $131 billion on Wednesday from $126 billion the day before.

Russia again was on the radar of crypto traders and investors as the country is moving fast forward to come up with national regulations on digital assets, following a direct order from President Vladimir Putin last week.

On Tuesday, the State Duma adopted the bill “On Digital Financial Assets”. The bill includes amendments to the Civil Code of the Russian Federation on digital rights and provides a regulatory framework targeting the digital economy.

This came after Putin called for the adoption of the regulation by July 2019. Russia is also said to be considering an oil-backed digital token.

Read The Full Article Here

 

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