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Market Review 14-12

Market Review 14-12

Forex News

When is China’s Retail Sales, and how could it affect the AUD/USD?

From: FXstreet.com

China Retail Sales overview

Friday at 02:00 GMT sees China’s latest annualized Retail Sales and Industrial Production figures, with retail expected to come in slightly above the previous period’s 8.6% at 8.8%, while Industrial Production is seen holding steady at 5.9%. With China’s domestic economy dwarfing Australia’s and being Australia’s closest trading partner, a continued slowdown in China’s economy bodes poorly for the Aussie, and Antipodean investors will be hoping for a good or at least on-balance reading for Friday, as the Australian economy struggles to maintain growth of its own.

How could it affect the AUD/USD?

The Aussie has remained caught in a bearish zone for some time, though the pair is currently awaiting a jolt in either direction, according to FXStreet’s own Valeria Bednarik: “the 4 hours chart for the pair shows that the pair remains stuck around the 23.6% retracement of its latest decline, still meeting sellers around the 200 SMA, and above a directionless 20 SMA. The 100 SMA is directionless, converging with the 38.2% retracement of the same slide at around 0.7260. Technical indicators in the mentioned chart have lost upward strength and are currently pressuring their midlines, lacking enough strength to confirm another leg south. Nevertheless, repeated failure to advance could discourage bulls, yet the pair will only turn bearish on a break below 0.7170.”

Support levels: 0.7200 0.7170 0.7140

Resistance levels: 0.7255 0.7300 0.7340

About China Retail Sales

The Retail Sales report released by the National Bureau of Statistics of China measures the total receipts of the retailed consumer goods. It reflects the total consumer goods that the various industries supply to the households and social groups through various channels. It is an important indicator to study the changes in the Chinese retail market and reflecting the degree of economic prosperity. In general, A high reading is seen as positive (or bullish) CNY, while a low reading is seen as negative (or bearish) for the CNY.

About China Industrial Production

Industrial output is released by the National Bureau of Statistics of China. It shows the volume of production of Chinese Industries such as factories and manufacturing facilities. A surge in output is regarded as inflationary which would prompt the People’s Bank of China would tighten monetary policy and fiscal policy risk. Generally speaking, if high industrial production growth comes out, this may generate a positive sentiment (or bullish) for the CNY, whereas a low reading is seen as negative (or Bearish) for the CNY.

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Dollar gains as focus shifts to Fed, euro and sterling under pressure

From: Reuters.com

The dollar firmed against most major counterparts on Friday, as investor focus shifted to an expected U.S. interest rate hike next week, although gains are likely to be capped on greater uncertainty about next year’s policy outlook.

The greenback found broad support as the euro and pound came under pressure after downbeat comments from the European Central Bank president about the outlook for the euro zone and renewed concerns about a hard Brexit.

Analysts say the next catalyst for larger moves in the currency markets will be the Federal Reserve’s Dec. 18-19 meeting.

The Fed is widely expected to raise interest rates by 25 basis points, its fourth rate hike this year though greater focus will center on the policy outlook for 2019, over which there is more uncertainty.

“There is a lot of disagreement in the markets over the Fed’s rate hike course in 2019 with traders expecting anywhere between one to four rate hikes,” said Michael McCarthy, chief markets strategist at CMC markets.

McCarthy said markets will be watching for any revisions in the Fed’s growth and inflation outlook. He sees more upside to the dollar versus the euro and yen if its forward guidance paints a stronger picture for the U.S. economy.

The yen JPY= was slightly stronger at 113.48 to the U.S. currency. The dollar has gained 1.2 percent versus the Japanese currency in the past six trading sessions as interest rate differentials between U.S. and Japan make the greenback a more attractive bet than the yen.

The dollar .DXY has been the biggest winner of 2018, having gained 5.3 percent over its peers so far this year. The Fed is the only major central bank to raise rates on the back of a robust economy, accelerating inflation and steady corporate profits.

However, in recent weeks, a softening in U.S. Treasury yields and tepid data have led some analysts to forecast a peak for the dollar. Comments from Fed officials have also been read as dovish by the market, where they have signaled that interest rates are nearing their “neutral range”.

The offshore Chinese yuan CNH= traded at 6.8867, slipping 0.15 percent against the dollar. The yuan weakened following weaker-than-expected data that showed China’s November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years.

With economic growth faltering, most analysts are expecting support measures from Chinese authorities including interest rate cuts to support the economy which would likely keep the yuan under pressure.

Negative sentiment out of China did not bode well for the Australian dollar AUD=, which lost 0.5 percent to $0.7189. China is Australia’s largest trade partner.

The euro EUR= traded flat on Friday, having struggled to stay in positive territory in the previous session.

The ECB formally ended its 2.6 trillion euro crisis-fighting bond purchase scheme on Thursday. However, monetary policy is most likely to remain accommodative as ECB President Mario Draghi warned that the euro area’s growth outlook is likely to remain weak amid threats of a global trade war and the prospect of a hard Brexit.

Sterling GBP= lost 0.2 percent, changing hands at $1.2627 in Asian trade after British Prime Minister Theresa May appealed to fellow EU leaders for concessions to help her win support in parliament next month for a deal that can smooth Britain’s exit from the European Union.

The pound had posted two consecutive sessions of gains versus the greenback after Prime Minister May fought off a bid to unseat her by colleagues unhappy with her Brexit plans.

In New Zealand, the kiwi NZD= fell 0.9 percent to $0.6796 after the central bank said it was considering almost doubling the required capital banks would need to hold to bolster the financial system’s capacity to handle any shocks.

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Stock Market News

Dow Closes Higher Despite Giving up Gains in Roller-Coaster Trade

From: Investing.com

The Dow closed higher Thursday, despite giving up most of its gains, as optimism over U.S.-China trade faded and weakness in financials weighed.

The Dow Jones Industrial Average rose 0.29% to 24,597, below its session high of 24,740. The S&P 500 fell 0.02%, while the Nasdaq Composite fell 0.39%.

Positive sentiment on trade faded, pressuring the broader market, even as a Chinese ministry spokesman touted progress on U.S.-China talks and reportedly said any U.S. trade delegation would be welcome.

The positive sound bite from Beijing on trade comes a day after reports that China could revamp its economic plans to give foreign companies more access to its domestic market.

Defensive corners of the market like consumer staples, and utilities, were in favor, underscoring the weaker sentiment on risk.

Procter & Gamble (NYSE:PG) led consumer staples higher, rising more than 2% after being upgraded to buy from neutral at Merrill Lynch.

Beyond trade, the broader market was hurt by ongoing weakness in financials as bank stocks continued to fall ahead of the Federal Reserve meeting next week, when the central bank is expected to rein in its outlook on rate hikes.

Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and Citigroup (NYSE:C) ended the day in the red.

Energy, meanwhile, supported the broader market on the back of rise in oil prices on signs tightening crude supply following reports of falling stockpiles at a key delivery hub in Oklahoma.

Losses in industrials, meanwhile, were limited by a rally in General Electric (NYSE:GE) after a long-time critic JPMorgan (NYSE:JPM) upgraded its outlook on the conglomerate, citing an improved balance sheet.

General Electric also announced it will launch a new Industrial Internet of Things software company, which would operate as a wholly-owned and independently-run GE business with $1.2 billion in annual software revenue.

In corporate earnings, Adobe Systems (NASDAQ:ADBE), after the close Thursday, reported earnings that missed on both the top and bottom lines.

Starbucks (NASDAQ:SBUX) shares fell in after-hours as the coffee chain’s subdued outlook on longer-term growth offset above-forecast earnings.

In political news, meanwhile, federal prosecutors reportedly launched a probe into whether President Donald Trump’s 2017 inauguration misspent funds it raised and also whether donors funded the campaign in exchanged for access to the incoming Trump administration as well as “policy concessions or to influence official administration positions,” The Wall Street Journal reported, citing sources.

Top S&P 500 Gainers and Losers Today:

General Electric (NYSE:GE), Aflac (NYSE:AFL) and Kimberly-Clark (NYSE:KMB) were among the top S&P 500 gainers for the session.

Monster Beverage (NASDAQ:MNST), Hanesbrands (NYSE:HBI) and Under Armour (NYSE:UA) were among the worst S&P 500 performers of the session.

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Lawyers of ex-Nissan boss: Carmaker could have planted evidence

From: Reuters.com

The battle between Nissan Motor Co Ltd and its ousted Chairman Carlos Ghosn in Brazil’s courts escalated on Thursday after the Japanese carmaker sued his sister alleging “unjust enrichment” and his lawyers alleged Nissan could have planted evidence.

In the afternoon, Nissan faced a setback in its battle to secure the contents of a beachfront apartment in Rio that Ghosn used when he ran the company and which it says may contain evidence of wrongdoing. An appellate judge ruled that Ghosn or his daughter must be allowed into the apartment for 24 hours to retrieve personal belongings.

Brazilian-born Ghosn was arrested last month and indicted this week in Japan for allegedly underreporting his income. Nissan also alleges he diverted company funds to pay for personal expenses. He has been held in a Japanese court since his arrest.

The Rio apartment has become the center of a side battle to the case being fought in Japan. Nissan says it has found three safes there that could contain evidence of Ghosn’s alleged crimes.

Ghosn and his daughter, however, have sued to retrieve what they say are personal items, such as “photographs, jewelry, watches and books.”

In court papers, lawyers for Ghosn said that since Nissan had entered the apartment after his arrest, the automaker could have “inserted objects or documents that could compromise his good reputation.”

A representative for Nissan in Brazil declined to comment. A Ghosn family representative had no comment on the “unjust enrichment” lawsuit and did not respond to a request for comment on the apartment decision.

Additional details regarding the unjust enrichment lawsuit were not immediately available and it was unclear how long it might take to resolve the case.

The Japanese press had already reported that Ghosn’s elder sister, Claudine Bichara de Oliveira, could be embroiled in the scandal.

Nissan’s internal investigation found that Ghosn had instructed the company since 2002 to pay about $100,000 a year to his sister, according to a November report by the Yomiuri Shimbun, Japan’s largest daily by circulation, that cited unnamed sources. The compensation was supposed to be for a role as an adviser.

The paper added that Bichara de Oliveira had in fact been living in and managing the Rio apartment that Nissan had bought for the use of Ghosn and that she had done no advisory work for the carmaker.

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Cryptocurrency News

Bitcoin slumps to fresh 15-month low as crypto rout continues

From: Marketwatch.com

Bitcoin prices tumbled to a fresh 15-month low on Thursday as the digital currency rout continued.

Bitcoin BTCUSD, +0.28% fell to $3,230.00, down 6.1% since Wednesday at 5 p.m. Eastern Time on the Kraken exchange—its lowest level since Sept. 15, 2017.

What are analysts saying

After plunging through $6,000 on Nov. 14, bitcoin has struggled for any meaningful bounce, falling in four of the past five trading weeks, and according to one analyst, the longer it treads water the more susceptible it becomes to another move lower.

“Bitcoin continues to muddle along in the mid-$3K range. The longer we maintain these levels, the less likely it becomes that prices are oversold and poised for a pop,” wrote Jani Ziedins of CrackedMarket. “The public has largely written cryptocurrencies off as a fad and no new money is coming in. The lack of demand will continue to be a big liability.”

Meanwhile, Tom Lee of Fundstrat Global Advisors said fundamentally the bitcoin selloff does not add up. “Given the steep discounts of BTC to our fair value models, the excessive bearish sentiment about fundamentals does not seem warranted,” he wrote in a research note to clients. Lee said his fair value estimate is between $13,800 and $14,800.

Altcoins and futures trading

Smaller cryptocurrencies — collectively known as altcoins — are moving lower with bitcoin. Ether, ETHUSD, +0.59% is down 6.9% at $83.70, Litecoin LTCUSD, +2.41% has lost 7.3% to $22.68, XRP, XRPUSD, -0.13% is down 4.3% at 29 cents, and Bitcoin Cash, BCHUSD, -3.17% is trading lower by 7.8% at $89.80.

According to data from CoinMarketCap, the market value of all cryptocurrencies is $105 billion.

Bitcoin futures tracked spot prices lower on Thursday. The Cboe Global Markets December contract XBTZ8, -0.15% ended the day down 5.4% at $3,245, and the CME Group December contract BTCZ8, +0.62% finished the session down 6.1% at $3,215.

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