Market Review 14-01

Market Review 14-01

Forex News

Pound Pares Gain as Government Denies Brexit Date May Be Delayed

From: Bloomberg.com

The pound rallied to the highest since November on a report that Brexit could be delayed beyond the March deadline, before paring gains as the government ruled out an extension.

The currency climbed as much as 0.8 percent after the Evening Standard newspaper cited unidentified cabinet ministers as saying a delay to the March 29 Brexit deadline was looking increasingly likely. Sterling then slipped back as a spokeswoman for Prime Minister Theresa May said it wasn’t government policy to extend Article 50.

The size of the move shows the market is poised to jump on good news, said Credit Agricole (PA:CAGR) SA’s head of Group-of-10 currency strategy Valentin Marinov. May’s Brexit deal is widely expected to be rejected by Parliament in a vote on Tuesday.

“There remains an overhang of pound shorts,” said Marinov. “The squeeze in the event of more positive developments could be brutal and propel the pound back to levels last seen in the first half of 2018.”

The pound was up 0.4 percent at $1.2794 by 11:23 a.m. in London, after rising to $1.2851, the highest since Nov. 26. The currency is heading for a fourth weekly gain, its best run in nearly a year, after a bruising 2018 saw it lose more than 5 percent against the dollar on fears of the U.K. crashing out of the European Union without a deal.

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Weekly Outlook: January 14 – 18

From: Investing.com

This week investors will be looking ahead to Tuesday’s data on U.S. producer price inflation as they continue to gauge the outlook for policy tightening by the Federal Reserve this year.

If figures indicate that inflationary pressures are cooling, there could be a further reprieve from concerns over the prospect of additional rate hikes in the coming months.

A number of Fed officials will also be speaking this week, giving them additional opportunities to reassure market watchers that they will take a patient approach towards monetary policy.

China is to publish what will be closely watched trade figures on Monday amid the ongoing trade war between Beijing and Washington.

The British parliament is due to hold a vote on Prime Ministers Theresa May’s Brexit deal on Tuesday after the first attempt at voting on the agreement was postponed last month.

Meanwhile, the euro zone is to publish revised inflation figures on Thursday and the UK is to release retail sales data on Friday.

The U.S. dollar pushed higher on Friday, even as the greenback’s outlook remained bleak amid cautious signals from the Fed about further rate hikes.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, ended Friday up 0.14% at 95.25, but posted its fourth straight weekly decline.

Greg Anderson, global head of FX strategy at BMO Capital Markets in New York, said the Fed’s rate outlook was just one factor for the dollar’s weakness so far in January.

The Fed chairman said on Thursday in a forum at the Economic Club of Washington that the U.S. central bank intends to shrink its balance sheet further, suggesting it is not done tightening monetary policy just yet.

Markets, however, are pricing in no further rate hikes by the Fed this year.

Data showing U.S. consumer prices in December fell for the first time in nine months in December had little impact on the market, but it backed the Fed’s cautious stance about raising rates this year.

Aside from the Fed’s dovish rate outlook, Shaun Osborne, chief FX strategist, at Scotiabank in Toronto, cited cyclical, structural and secular trends, which could also pressure the dollar in 2019.

“The outlook for relative central bank policy has reached its climax in terms of offering the U.S. dollar support, and widening fiscal and current account deficits are expected to deliver medium-term weakness in the currency,” Osborne said.

“The outlook for relative central bank policy has reached its climax in terms of offering the U.S. dollar support, and widening fiscal and current account deficits are expected to deliver medium-term weakness in the currency,” Osborne said.

The euro was little changed against the dollar in late trade, with EUR/USD at 1.1467.

The greenback was also little changed against the yen and the pound, with USD/JPY at 108.54 and GBP/USD changing hands at 1.2849.

Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.

Monday, January 14

Financial markets in Japan will be closed for a holiday.

China is to release data on trade and direct foreign investment.

New Zealand is to release a report on business confidence.

Tuesday, January 15

In the UK, parliament members are due to hold a second attempt to vote on Prime Minister Theresa May’s Brexit deal.

European Central Bank President Mario Draghi is due to speak at an event in Strasbourg.

The U.S. is to release figures on producer price inflation and the Empire manufacturing index is also on tap.

Kansas City Fed President Esther George is to speak.

Wednesday, January 16

Australia is to release data on consumer sentiment.

Bank of England Governor Mark Carney is due to testify, along with other policymakers, on the Financial Stability Report before the Treasury Select Committee.

The UK is to release producer price inflation data.

Thursday, January 17

Central bankers and finance ministers from the G20 nations are to hold a summit meeting in Tokyo.

Bank of Japan Governor Haruhiko Kuroda is due to speak at the G20 summit.

The euro zone is to publish revised inflation figures.

The U.S. is to publish the weekly report on initial jobless claims as well as the Philly Fed manufacturing index.

Fed Governor Randal Quarles is to speak.

Friday, January 18

The G20 summit is to continue for a second day.

The UK is to release data on retail sales.

Canada is to release inflation figures.

New York Fed President John Williams is to speak.

The U.S. is to close out the week with preliminary data on consumer sentiment.

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Stock Market News

FTSE 100 Awaits Brexit Vote, S&P 500 Looks to Earnings Season

From: DailyFX.com

  • A key vote on the Irish backstop for a Brexit deal could see the FTSE come under pressure on January 15th
  • Dovish FOMC minutes and commentary from Chairman Jerome Powell could create some support for the US stock market
  • Trade war updates will continue to have an impact on all global equity markets

STOCK MARKETS FACE FAMILIAR HEADWINDS

This past week saw global equity markets enjoy a slight rebound from the pain felt in December. A combination of promising trade negotiations and dovish Fed minutes worked to improve sentiment and drive equities higher. As these fundamental developments fade to the rearview mirror, global stock markets are threatened again by the same headwinds they have faced for months.

A BREXIT VOTE POSES TROUBLE FOR THE FTSE 100

Next Tuesday will see Theresa May attempt to pass her deal through parliament. However, after surviving a no-confidence vote in which over 100 members of parliament voted against her, the chances to pass the test seem slim. While it would not be completely unexpected, a failure could deal a blow to both the FTSE 100 and the GBP. The latter of which could soften the impact on the former.

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Ousted Nissan’s chairman Carlos Ghosn was paid $8 million last year by a Dutch entity

From: CNBC.com

  • Ghosn signed a contract with a Dutch entity granting him a $1.7 million signing bonus and salary of $6.7 million for the year through March 2019, according to The Wall Street Journal, citing a person familiar with the matter.
  • The amount Ghosn made was more than any of his peers who had held his roles at Nissan, Mitsubishi and Renault SA, the Journal says.

Carlos Ghosn, the recently ousted Nissan Motor chairman, received about $8 million in pay in 2018 from a Netherlands-based entity that was owned by both Nissan and partner Mitsubishi Motors, according to a Wall Street Journal report.

The publication, citing a person familiar with Nissan’s probe, reported on Sunday that the motor giant found that Ghosn signed a contract with a Dutch entity that granted him a $1.7 million signing bonus and salary of $6.7 million for the year through March 2019.

The amount Ghosn reportedly made was more than any of his peers who had held his roles at Nissan, Mitsubishi and Renault SA. It undercut Ghosn’s previous claim that his salary was short of his peers, the Journal said.

A spokesperson for Nissan did not immediately respond to CNBC’s request for comment.

Ghosn has been charged with under-reporting his income in Japan where prosecutors allege that the former Nissan chairman understated his pay in the company’s financial statements by more than $80 million over eight years. Ghosn, who was removed from the company after his arrest, has denied the accusations.

The $8 million alleged payments in the Journal report would be in addition to those mentioned in the charges in Japan. The entity that made the payments is called Nissan-Mitsubishi BV, was founded in the Netherlands in June 2017, with the two automakers each having half of the ownership.

Ghosn managed to authorize the payments without other executives’ knowledge because he had earned the board approval to have the sole authority to disburse the entity’s cash in January 2018, according to The Journal’s report.

Nissan has been looking into a number of Dutch entities fully or partly owned by the company, including Renault-Nissan BV, jointly owned with alliance partner Renault, the Journal reported.

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Cryptocurrency News

Crypto Prices Continue to Drop Following Sudden Market Meltdown Last Friday

From: Investing.com

Bitcoin and other major digital coin prices continued to drop on Monday in Asia, following a sudden market meltdown last Friday that saw double-digit losses across all cryptocurrencies over 24 hours.

Bitcoin slid 2.67% to $3,521.9 by 12:30 AM ET (05:30 GMT). The world’s biggest digital token dropped to a fresh 3-week new low, testing the $3,500 level.

Meanwhile, Ethereum lost 6.10% to $116.56, XRP was down 3.54% to $0.31846, and Litecoin slumped 7.83% to $30,272.

On Monday morning, a few reports garnered some attention: Japan clarifying it would not approve crypto exchange-traded funds (ETFs), U.S. local authorities passing regulations on crypto startups, and mining giant Bitmain announcing a management shuffle.

Last Tuesday, a Bloomberg report cited a person familiar with Japan’s Financial Services Agency (FSA)’s thinking, suggesting that the watchdog might approve crypto ETFs that track the digital tokens. However, the watchdog clarified on Monday that it has no intention to do so.

“There is no such fact that we are considering approving ETFs which track crypto-assets at present … we are not currently considering approving them,” a spokesperson said to news outlet Bitcoin.com.

According to the report, the FSA added that it is not considering the listing of Bitcoin futures on the financial instruments market either.

That response is in line with its careful approach to crypto-assets. Last month, it opposed revisions to the nation’s securities law to allow crypto futures and options to be listed on major financial exchanges.

Meanwhile, the U.S. state of Wyoming has advanced a bill to allow blockchain startups to operate within a regulatory “sandbox” for a legislative vote. If the bill is passed into law, these startups could test new technologies and decide how they might operate within existing regulatory regimes.

In Asia, media reports said that co-founders of Chinese Bitcoin mining giant Bitmain, Jihan Wu and Micree Zhan, will step down as CEOs of the company and Wang Haichao will take over as CEO. Zhan and Wu will remain company co-chairs, the report said. The news follows a major layoff that affected over half of its staff and an IPO application that is to lapse soon.

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