U.S. Dollar Slip Following Job Data; U.S.-China Trade Talk in Focus
U.S. dollar slipped on Monday in Asia following the release of the country’s job data. Progress on the Sino-U.S. trade front remained in focus after the latest round of negotiations wrapped up last Friday.
The U.S. dollar index that tracks the greenback against a basket of other currencies was down 0.1% to 96.860 by 12:59 AM ET (04:59 GMT).
On Friday, government data showed U.S. nonfarm payrolls rose by 182,000, which is more than the expected 175,000, but average hourly earnings grew at a slower pace than anticipated, indicating that the economy was not firing on all cylinders and supported the Federal Reserve’s decision to extend its pause on hiking rates.
“The data supports the thesis that the Fed is on hold for a long time. Until wages flare higher, there is little threat of inflation topping the target,” BMO said. “At the same time, with the jobless rate likely to grind lower as the economy picks up modestly in the spring, there is no compelling reason to ease policy.”
Meanwhile, trade talks were in focus today as officials from Beijing and Washington concluded their latest round of trade talks last Friday.
Chinese official broadcaster CCTV reported that there was “new progress” in trade negotiations. The two sides have discussed issues including technology transfer, protection of intellectual property rights, and the bilateral trade balance.
Donald Trump’s top economic adviser, Larry Kudlow, told CBS on Sunday that the two sides are “closer and closer” on a trade deal, although the White House said in a statement that “significant work remains, and the principals, deputy ministers, and delegation members will be in continuous contact to resolve outstanding issues.”
Elsewhere, the GBP/USD rose 0.2% to 1.3066 as the U.K. has asked the European Union for yet another extension until June 39.
EU leaders said Prime Minister Theresa May had not put forward credible reasons as to why the U.K. should be granted an extension for Brexit.
“If we are not able to understand the reason why the UK is asking for an extension, we cannot give a positive answer,” said French Finance Minister Bruno Le Maire. German Justice Minister Katarina Barley tweeted: “This playing for time must end.”
The U.K. had originally been due to leave the EU on March 29, but the deadline was pushed back to April 12 to allow the U.K. parliament more time to approve the withdrawal agreement, which it has been unable to do.
The USD/JPY pair was down 0.3% to 111.39.
The AUD/USD pair slipped 0.1% to 0.7093, while the USD/CNY pair was little changed at 6.7187.
BOJ offers bleakest view in six years on Japan’s regional economies
The Bank of Japan on Monday cut its assessment for three of the country’s nine regions, the biggest number of downgrades in six years, suggesting that the hit to exports and factory output from slowing overseas demand was broadening.
BOJ Governor Haruhiko Kuroda said the economy was expected to continue expanding moderately with robust domestic demand offsetting some of the weaknesses in exports.
“Core consumer inflation is expected to gradually accelerate towards 2 percent as the output gap remains positive, and medium- to long-term inflation expectations heighten,” Kuroda told a quarterly meeting of the BOJ’s regional branch managers.
But the central bank warned that weakening global growth and simmering Sino-U.S. trade tensions were taking a toll on some Japanese regions reliant on overseas demand.
“We have had to cut our assessments on exports and output for some regions because we’re hearing more complaints about the impact of the global economic slowdown than three months ago,” said a BOJ official briefing reports on the quarterly report.
The report cited several companies that put off investment in new equipment due to uncertainty over the global outlook.
“We decided to forgo a plan to build a new semi-conductor equipment plant as Sino-U.S. trade frictions heighten uncertainty over the global economy,” a machinery maker in Kumamoto, southern Japan, was quoted as saying.
The BOJ raised its assessment for one region, while it maintained its view for five regions.
Under a policy dubbed yield curve control, the BOJ guides short-term interest rates at minus 0.1 percent and the 10-year government bond yield around zero percent in an effort to achieve its 2 percent inflation target.
Stock Market News
Worst earnings season in three years could wreck 2019’s rally
DataTrek Research’s Nicholas Colas believes the upcoming round of quarterly numbers will be the most contentious in about three years, and he’s worried they could spark the next stock market downturn.
“Right now expectations are for a negative 3.9% comp from last year. That’s the worst comp and the first negative comp since 2Q of ’16,” the firm’s co-founder said Friday on CNBC’s “Trading Nation.”
Colas’ comments come a week before first quarter earnings season gets underway. J.P. Morgan Chase kicks off on Friday, April 12 before the market open.
“Analysts have been taking their numbers down dramatically over the course of the quarter. We started the quarter basically thinking up 3% now we’re looking more like down 4%,” he added. “That’s the biggest decline since the first quarter three years ago.”
Even though analysts have been taking down their earnings forecasts, Colas doesn’t think most investors are prepared for disappointing numbers.
“This market has really been dominated by a rate narrative. Interest rates have come down materially over the course of the year. And, that has buffered stocks against some worries about earnings,” said Colas. “But once you have to face the actual earnings results, I think the story is going to change.”
And, Colas suggests downbeat revenues will add fuel to the weak numbers.
“Even if companies beat materially though, the big issue here: Revenue growth is still supposed to be 5%. So margin pressure is going to be the story for this quarter,” Colas noted.
Despite his near-term cautious view, Colas sees a few sectors bucking the first quarter negative earnings trend.
“Only four sectors are expected to show earnings growth. And, they’re all defensive groups that have been working recently,” Colas said. “Utilities is one, and real estate is the other. Health care is challenged, but should show earnings growth. And industrials, for all of the drama around trade, should basically be flat. Everything else is going to be negative.”
Baffled and concerned, Nissan shareholders sever last ties with ousted Ghosn
Nissan Motor Co shareholders ousted erstwhile boss Carlos Ghosn as a director on Monday, formally severing his ties with the Japanese automaker he rescued from near-bankruptcy two decades ago and from which he is now accused of siphoning funds.
Shareholders gathered for an extraordinary meeting just days after Ghosn’s latest arrest in Tokyo, expressing bafflement and concern about growing financial misconduct allegations. Ghosn has denied all charges against him and said he is the victim of a boardroom coup.
Tokyo prosecutors last week took the highly unusual step of re-arresting Ghosn – who had been out on $9 million bail – returning him to the Tokyo detention center where he had previously spent more than 100 days. Under the latest allegations, he is suspected of trying to enrich himself to the tune of $5 million at the automaker’s expense.
Ghosn, who was first arrested in November, has been charged with under-reporting his Nissan salary for a decade, and of temporarily transferring personal financial losses to Nissan’s books. However, the new allegation is potentially more serious, as it could show he used company funds for his own purposes.
“I can’t comprehend how this could have happened, despite having auditors,” said Setsuko Shibata, a retired homemaker who said her family had held Nissan shares for decades. “I can’t say I feel better about the situation after today’s explanation.”
Meeting shareholders for the first time since Ghosn’s arrest rocked the global auto industry last year, Chief Executive Hiroto Saikawa started proceedings at a Tokyo hotel by apologizing for the inconvenience the scandal had caused, followed by a deep bow of contrition from him and a panel of executives and directors.
Proceedings were at times interrupted by some hecklers on the floor of the meeting, which was attended by a near record-high 4,100 shareholders.
The shareholders voted to remove both Ghosn and co-accused Greg Kelly from Nissan’s board of directors. Kelly has also denied all charges against him.
They also voted in Renault Chairman Jean-Dominique Senard as a director, an expected move that was widely seen as assuaging concern about the future of the Nissan-Renault automaking alliance engineered by Ghosn.
Ethereum Climbs 10% In Bullish Trade
Ethereum was trading at $184.47 by 20:41 (00:41 GMT) on the Investing.com Index on Monday, up 10.25% on the day. It was the largest one-day percentage gain since April 2.
The move upwards pushed Ethereum’s market cap up to $19.16B, or 10.44% of the total cryptocurrency market cap. At its highest, Ethereum’s market cap was $135.58B.
Ethereum had traded in a range of $173.57 to $184.47 in the previous twenty-four hours.
Over the past seven days, Ethereum has seen a rise in value, as it gained 28.02%. The volume of Ethereum traded in the twenty-four hours to time of writing was $8.07B or 13.70% of the total volume of all cryptocurrencies. It has traded in a range of $141.2880 to $184.4680 in the past 7 days.
At its current price, Ethereum is still down 87.04% from its all-time high of $1,423.20 set on January 13, 2018.
Elsewhere in cryptocurrency trading
Bitcoin was last at $5,237.6 on the Investing.com Index, up 3.65% on the day.
XRP was trading at $0.36381 on the Investing.com Index, a gain of 3.09%.
Bitcoin’s market cap was last at $92.31B or 50.30% of the total cryptocurrency market cap, while XRP’s market cap totaled $15.12B or 8.24% of the total cryptocurrency market value.
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