GBP/USD: Hopes of any recovery rest on May’s shoulders
The pound was hammered in trading yesterday after May pulled the Brexit vote but ironically, hopes of any recovery now will depend on her as she travels to meet with Juncker and co.
She’s headed over to Germany later today where she will be meeting with European leaders in hopes that she will be able to seek legal assurance that the backstop will not be open-ended. She is very much hoping that such a move will be enough for her to return home and gather enough support in parliament for her deal to win a meaningful vote.
There’s no doubt that all parties would like to avoid a no-deal Brexit option at the end of the day. But at this point, we could be very well staring at that distinct possibility if the European Union refuses to budge on their position. And that is what markets are really fearing at this point.
Sure, there are still plenty of other outcomes that could play out should May fail in her attempt here such a second referendum, a general election, or even the far-fetched idea of revoking Article 50 altogether. But markets will always fear the worst when it comes to uncertainty and the price action in the pound yesterday reflects that well.
If May fails to get the legal assurances that is needed for the backstop, the fear is that the worst isn’t over yet for the pound. Technically, the break below the June 2017 low is rather crucial as it opens up the path towards the psychological level of 1.2500.
Beyond that, further support is only seen around the swing region of 1.2340-60 before we head towards the March 2017 low of 1.2106.
As traders begin to get more nervous about May’s chances of winning over European leaders and the UK parliament, expect the pound to stay pressured in the coming sessions especially now that the floodgates are pretty much open for further downside pressure to continue.
Japan keeps distance from FX as U.S automakers target yen manipulation
Japanese Finance Minister Taro Aso said on Tuesday that any discussion with the United States over foreign exchange would take place between his ministry and the U.S. Treasury Department, indicating Japan’s desire to keep currency and trade talks separate.
Aso was responding to reporters’ questions about demands from the U.S. auto industry on Monday for strong provisions to combat currency manipulation in any trade agreement between the two countries.
The United Auto Workers union also called on the U.S. government to impose strict import quotas on Japanese vehicles and parts at a hearing on U.S. negotiating objectives for trade talks expected to start early next year.
Any provisions against yen weakness or limits on the number of car exports to the United States would pose a serious threat to Japan’s auto industry and potentially threaten its economic outlook.
“We have agreed with the U.S. side that any questions on currencies will be discussed with the U.S. Treasury Department, and so far it hasn’t been brought up,” Aso said.
U.S. President Donald Trump did not bring up the matter in his recent meeting with Prime Minister Shinzo Abe, he added.
In September, Abe and Trump agreed to start trade talks in an arrangement that appeared, temporarily at least, to protect Japanese automakers from further tariffs on their exports, which make up about two-thirds of the country’s $69 billion trade surplus with the United States.
Japan has insisted that any agreement with the United States would not be a wide-ranging free trade agreement, but U.S. Trade Representative Robert Lighthizer and other U.S. officials have indicated they want a broader agreement.
The Bank of Japan launched a massive quantitative easing program in 2013 in an attempt to spur inflation, which has caused the yen to fall versus the dollar.
Any provisions against yen declines could tie the BOJ’s hands on policy, making it more difficult to manage the economy.
Quotas on Japanese auto exports to the United States could encourage Japan’s car makers to shift even more production overseas, which could curb domestic manufacturing activity.
Stock Market News
Google CEO defends ‘integrity’ of products ahead of testimony
The chief executive officer of Alphabet Inc’s Google on Monday defended the integrity of the company’s products a day ahead of a congressional hearing where he is expected to face tough questions from U.S. lawmakers.
The technology company has been under fire on Capitol Hill over issues including why it delayed disclosing vulnerabilities with its Google+ social network, whether it will restart its search engine in China and if it is biased against Republicans.
Three Democratic senators wrote the Federal Trade Commission in October asking the agency to investigate Google+.
In written testimony to the House Judiciary Committee made public on Monday, CEO Sundar Pichai said he led the company “without political bias.”
“We work hard to ensure the integrity of our products, and we’ve put a number of checks and balances in place to ensure they continue to live up to our standards,” Pichai’s testimony said. “I lead this company without political bias and work to ensure that our products continue to operate that way. To do otherwise would go against our core principles and our business interests.”
Pichai agreed in September to testify over Republican concerns that the company is biased against conservatives. Google has repeatedly denied this.
The company faced renewed criticism on Capitol Hill after senior executives skipped a high-profile Senate Intelligence Committee hearing earlier in September.
Google previously told U.S. lawmakers it was considering “a variety of options” to offer additional services in China, but declined to detail plans for addressing Chinese censorship.
The company has been criticized after reports it was considering re-entering China’s search engine market and would comply with its internet censorship and surveillance policies.
Pichai said in his testimony that “even as we expand into new markets we never forget our American roots.” He added that “we do work, and we will continue to work, with the government to keep our country safe and secure.”
Apple vs Qualcomm: How can one US company block another in China?
- Both companies are based in California, but generate a significant portion of their revenues from China.
- The two patents cover the ability to adjust and reformat photographs, and navigate through applications with a touchscreen.
- Apple has appealed the Chinese court order, which bans the sale of seven older iPhone models, ranging from 6s to X.
The ban of some Apple iPhones in China shows that intellectual property rights are still determined by national borders.
Qualcomm announced Monday that a court in China — the Fuzhou Intermediate People’s Court — had granted the chipmaker’s request for two preliminary injunctions against four of Apple’s Chinese subsidiaries for patent infringement.
The two patents cover the ability to adjust and reformat photographs, and navigate through applications with a touchscreen. Apple has appealed the Chinese court order, which bans the sale of seven older iPhone models, ranging from 6s to X.
“A patent in the U.S. is not a patent in China, unless someone registers a patent in China,” said Matthew Dresden, an attorney at Harris Bricken covering international intellectual property. “It’s just another facet in another battle between two tech titans.”
Qualcomm and Apple have been embroiled in a years-long legal dispute over patent royalties.
Both companies are based in California, but generate a significant portion of their revenues from China. For the fiscal year that ended in late September, Apple reported that 19.6 percent of net sales came from greater China.
Qualcomm said revenues from China, including Hong Kong, accounted for 67 percent of total consolidated revenues for fiscal year 2018, which also ended in late September. The chipmaker also said in the report it has not recorded any revenues for royalties due on sales of Apple products since the third quarter of 2017.
It is relatively cheaper and quicker for one party to bring a case against another in China compared to the U.S., said Eileen Li, head of research at Shanghai-based market intelligence firm Red Pulse. The environment for high-end industries is also more favorable in China given Beijing’s efforts to produce more technology at home through Made in China 2025, she added.
“In general, China is known for having what industries would call copycats. (Most of these are in) consumer and retail areas,” Li said. “With tech, China is tightening a lot of its policy and becoming more serious about IP protection.”
It remains to be seen whether a preliminary injunction from a municipal court in China will have a lasting, nation-wide effect. The ban does not cover Apple’s latest iPhone models and the company said all versions of the smartphone remain available for customers in China.
ABC, Litecoin and Ripple Daily Analysis – 11/12/18
With the broader market seeing red following Monday’s sell-off, things could turn around should the majors not slide deeper into the red this morning.
Bitcoin Cash – ABC Back in the Red
Bitcoin Cash ABC fell by 4.28% on Monday, partially reversing Sunday’s 7.11% fall, to end the day at $101.78.
Bearish through much of the day, Bitcoin Cash ABC fell from a start of a day intraday high $107.89 to an early afternoon intraday low $99.06 before steadying, with the day’s high and low leaving the major support and resistance levels untested.
A relatively range bound 2nd half of a day saw Bitcoin Cash ABC find continued support at sub-$100 levels to recover to $101 levels by the day’s end.
At the time of writing, Bitcoin Cash ABC was down 2.5% to $99.23, with moves through the early morning seeing Bitcoin Cash ABC slide from a start of a day morning high $101.51 to a morning low $99.00, the day’s major support and resistance levels left untested early on.
For the day ahead, a move back through the morning high $101.51 to $102.9 would support an afternoon rally to bring the day’s first major resistance level at $106.76 and Monday’s intraday high $107.89 into play before any pullback, Bitcoin Cash ABC unlikely to hit $108 levels with the bears still firmly in control.
Failure to move through the morning high to $102 levels could see Bitcoin Cash ABC take a bigger hit later in the day, a pullback through the morning low $99 to $98 levels bringing the day’s first major support level at $97.93 into play before any recovery, sub-$97 support levels unlikely to be tested on the day.
Litecoin Finds Support
Litecoin fell by 5.22% on Monday, reversing Sunday’s 4.63% gain, to end the day at $23.97.
A start of a day intraday high $25.65 came up short of the first major resistance level at $26.59, with a broad based crypto reversal seeing Litecoin slide through the first major support level at $24.03 to an early afternoon intraday low $23.55 before steadying.
A relatively range bound afternoon saw Litecoin move back through to $24 levels before sliding back through the first major support level by the day’s end.
At the time of writing, Litecoin was down 0.08% to $23.95, a relatively range bound start to the day seeing Litecoin rise from a morning low $23.78 to a morning high $24.17 before easing back to $23 levels, the day’s major support and resistance levels left untested early on.
For the day ahead, a move back through the morning high to $24.4 levels would support an afternoon rally to bring the day’s first major resistance level at $25.23 into play before a pullback, $26 levels and the second major resistance level at $26.49 unlikely to be in play through the day.
Failure to move through to $24.4 could see Litecoin hit reverse later in the day, a pullback through the morning low $23.23 bringing the day’s first major support level at $23.13 and $22 levels into play before any recovery, the second major support level at $22.29 there to prevent heavier losses on the day.
Ripple Holds onto $0.30s
Ripple’s XRP slipped by 3.07% on Monday, reversing Sunday’s 2.05% gain, to end the day at $0.3075.
Tracking the broader market, Ripple’s XRP fell from a start of a day intraday high $0.32162 to an early afternoon intraday low $0.3002. The reversal saw Ripple’s XRP call on support at the day’s first major support level at $0.3047 to avoid a return to sub-$0.30 levels, while the day’s high came up short of the first major resistance level at $0.3294.
Ripple’s XRP managed to break back through the first major support level by the late afternoon, while failing to breakout from $0.30 levels through the rest of the day.
At the time of writing, Ripple’s XRP was down 0.38% to $0.30632, moves through the early hours seeing Ripple’s XRP fall to a morning low $0.30399 before recovering to a morning high $0.30765, the relatively tight ranges leaving the major support and resistance levels untested.
For the day ahead, a move through the morning high $0.30765 to $0.31 levels would signal the start of a rebound, bringing the day’s first major resistance level at $0.3193 and $0.32 levels into play before any pullback, Monday’s high likely to pin Ripple’s XRP back from bigger gains on the day.
Failure to move through to $0.31 levels could see Ripple’s XRP pullback through the morning low $0.30399 to bring sub-$0.30 levels and the day’s first major support level at $0.2979 into play before any recovery, heavier losses unlikely barring particularly negative news hitting the wires.
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