U.S. Dollar Jumps on News of Trade Talk Extension
The greenback jumped on Tuesday as the U.S. and China plan to extend trade talks into Wednesday.
Officials from the two countries are meeting in Beijing and talks will extend to a third day, increasing hope that the two largest economies in the world could resolve their differences before a March 1 deadline.
Steven Winberg, Assistant Secretary for Fossil Energy at the U.S. Department of Energy, confirmed the extension to reporters at the U.S. delegation’s hotel.
“I confirm we’re continuing tomorrow, yes,” Winberg told reporters, declining to answer further questions.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.3% to 95.55 as of 10:29 AM ET (15:29 GMT). The dollar was higher against the yen, with USD/JPY rising 0.05% to 108.73.
Investors are also looking ahead to a speech from Trump at 9:00 PM ET (2:00 GMT Wednesday), where he is expected to address the government shutdown and building a wall on the border with Mexico. Trump has said he will not sign a budget unless it includes funding for a wall, which has lead to an impasse with Congress.
Pro-EU campaigners set out roadmap to second British referendum
Pro-European Union campaigners in Britain have set out for the first time their preferred path for how parliament could force the government to call a fresh vote on Brexit, arguing that there is still time for another referendum.
The future of Brexit remains deeply uncertain – with options ranging from a disorderly exit to another referendum – because British lawmakers are expected on Jan. 15 to vote down the deal that Prime Minister Theresa May struck with the EU in November.
May has repeatedly rejected the idea of a second referendum on leaving the EU, but the campaign for a so-called “People’s Vote” on the deal that May has agreed, has won support from some in parliament.
If May’s deal is voted down next week, ministers have to say in a parliamentary motion how they plan to proceed within 21 days.
The People’s Vote campaign said in a report that lawmakers should amend that motion by calling for another referendum. This would happen around the middle of February.
Britain would then be forced to ask for an extension to its timetable for leaving the EU to allow enough time for another referendum campaign, which may take around four months.
“Nobody has come forward with a proposal that could secure a majority in the present circumstances. The blunt reality is that such a proposal does not exist,” the campaign group said in the report. “We believe the only credible way forwards for (lawmakers) will be to hand the decision back to the people.”
Turning Brexit upside down would mark one of the most extraordinary reversals in modern British history and the hurdles to another referendum remain high. Both major political parties are committed to leaving the EU in accordance with the 2016 referendum.
The path to a new referendum is reliant on May, who does not have an outright majority in parliament, failing to win over skeptical lawmakers within her own party.
Extending the divorce beyond March 29 would require the unanimous agreement of EU heads of state and government in the European Council.
But the People’s Vote says that if the United Kingdom asked to delay Brexit so it could hold another referendum, the other EU countries would be likely to agree.
It said a new vote should ask a binary question such as whether voters wanted to accept the government’s leaving deal or stay in the EU, or another form of Brexit versus staying in.
The campaign group said that if there is another referendum, there is a strong case for EU citizens living in the United Kingdom, expatriate citizens who have lived outside the UK for more than 15 years and young people aged 16 and 17 to be given a vote.
Stock Market News
Trump Wants Trade Deal With China to Boost Stocks, Sources Say
President Donald Trump is increasingly eager to strike a deal with China soon in an effort to perk up financial markets that have slumped on concerns over the trade war, according to people familiar with internal White House deliberations.
Talks between mid-level U.S. and Chinese officials in Beijing concluded on Wednesday, according to a U.S. government official who asked not be named. The negotiations had been extended for a day, which added to optimism fueled by tweets from Trump that the two sides are making progress toward an agreement.
Inside the White House, some key economic advisers are campaigning for a quick resolution to the trade conflict to help soothe battered markets. The S&P 500 Index has fallen about 8 percent since Trump and Chinese President Xi Jinping agreed on a 90-day truce at a Dec. 1 meeting in Argentina.
“Talks with China are going very well!,” Trump tweeted on Tuesday, the latest in a series of upbeat messages from him on the negotiations since both his meeting with Xi and the December market turmoil.
Asian stocks and U.S. futures rallied Wednesday amid optimism on the potential for progress in trade talks between Washington and Beijing.
According to people familiar with the matter, Trump’s willingness to cut a deal with Beijing is driven in large part by his desire for markets to rally. He publicly said he’s eager to make a deal that benefits both sides while also stressing that China’s slowing economy and falling stock market signal the country is more desperate than the U.S. for a speedy outcome.
Still, talks between the world’s two biggest economies have repeatedly yielded no breakthroughs since they started in May, and Beijing has repeatedly said it won’t cave to U.S. demands.
Apple cuts first-quarter production plan for new iPhones by 10 percent: Nikkei
Apple Inc (AAPL.O), which slashed its quarterly sales forecast last week, has reduced planned production for its three new iPhone models by about 10 percent for the January-March quarter, the Nikkei Asian Review reported on Wednesday.
That rare forecast cut exposed weakening iPhone demand in China, the world’s biggest smartphone market, where a slowing economy has also been buffeted by a trade war with the United States.
Many analysts and consumers have said the new iPhones are overpriced.
Apple asked its suppliers late last month to produce fewer-than-planned units of its XS, XS Max and XR models, the Nikkei reported, citing sources with knowledge of the request.
The request was made before Apple announced its forecast cut, the Nikkei said. The bleaker sales outlook, which Apple attributed to weak China demand, triggered a broad sell-off in global stock markets.
Market research firm Canalys estimates shipments fell 12 percent in China last year and expects smartphone shipments in 2019 to dip another 3 percent, to below 400 million for the first time since 2014.
Overall planned production volume of both old and new iPhones is likely to be cut to a range of 40 million to 43 million units for January-March, from an earlier projection of 47 million to 48 million units, the Nikkei reported, citing one source familiar with the situation.
Ripple wants a piece of the global payment system while it fights a cryptocurrency ‘holy war’
Ripple is one of the most valuable private companies in Silicon Valley. But depending on who you ask, it is also potentially the most divisive.
CEO Brad Garlinghouse knows this better than anyone. While Ripple looks to chip away at a multi-trillion-dollar cross-border-payments industry, he and other company executives are constantly clarifying the company’s relationship with the cryptocurrency “XRP” and its pack of zealous followers.
Confusion around Ripple is warranted — the start-up payments company owns 60 percent of the XRP in existence. The cryptocurrency was for many years even called “Ripple” instead of XRP and listed on some online exchanges that way.
The sizable cryptocurrency stake puts Ripple in an almost unheard of position in Silicon Valley of not needing to rely on much venture capital to fund its operations. Instead, it sells XRP on a regular basis. And based on the amount it owns, the company’s value is at least $20 billion. The valuation of ride-hailing start-up Lyft, by comparison, is around $15 billion.
The price of XRP, and therefore Ripple’s value, skyrocketed last year in a buying frenzy led by retail investors. But after the bubble popped, the Ripple-XRP relationship has come under a microscope from skeptics and investors who lost out.
“People got really excited about the potential of a new platform and the hype got ahead of the reality. That unequivocally has happened in this space,” Garlinghouse said in an interview at CNBC’s midtown offices. “There’s religious fervor around all of them — some people seem to think these are the crusades and this is a holy war is being fought.”
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