Brexit

Market Review 15-03

Market Review 15-03

Forex News

Pound Steadies as MPs Vote For Brexit Delay; Yen Up after BoJ Decision

From: Investing.com

The British pound edged up on Friday in Asia after lawmakers approved a motion setting out the option to ask the European Union (EU) for a short delay if parliament can agree on a Brexit deal by March 20, or a longer delay if no deal can be agreed in time.

The pound was mostly steady after the motion was passed late on Thursday. The GBP/USD pair last traded at 1.3246 by 11:12 PM ET (03:12 GMT) on Friday, up 0.05%.

Earlier this week, British Prime Minister Theresa May’s Brexit deal suffered a second defeat in Parliament. A new vote on her twice-rejected deal is likely next week, according to various media reports.

Lawmakers must now decide whether to back a deal they feel does not offer a clean break from the EU, or reject it and accept that Brexit could be watered down or even thwarted by a long delay.

Meanwhile, the USD/JPY pair edged down 0.1% to 111.62 following the Bank of Japan (BoJ)’s decision to keep its short-term interest rate target at minus 0.1% as expected. The central bank maintained the 10-year JGB yield target around 0%, also in line with expectation.

The BoJ tweaked its assessment of the Japanese economy, citing growing risks from the slowdown in the external sector.

The USD/CNY pair traded near flat at 6.7184. U.S.-China trade talks returned to focus after U.S. President Donald Trump said during a St. Patrick’s Day reception on Thursday that the U.S. will probably know in the next three or four weeks whether a trade deal with China is possible.

“If that one gets done, it will be something that people will be talking about for a long time,” Trump said, noting that China has been “very responsible.”

Citing three sources briefed on the discussion, CNBC reported that China is planning a state visit by President Xi Jinping and that Beijing wants to have all the details of the trade deal fully ironed out before its leader sits down with Trump.

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Status quo BOJ rate decision barely moves a needle on USD/JPY

From: FXstreet.com

  • USD/JPY is barely moving in response to BOJ’s status quo rate decision
  • The BOJ kept key rates unchanged and took note of the weak external sector as expected

USD/JPY is currently trading at 111.75, having clocked a high of 111.90 earlier today.

The Bank of Japan (BOJ) maintained short-term interest rate target at -0.1 pct and voted 7-2 to keep the 10-year JGB yield target around zero pct, as expected. Further, it retained the pledge to buy JGBs in a flexible manner with an aim to increase monetary base at an annual pace of around 80 trillion yen.

The central bank also tweaked its assessment of the Japanese economy, citing growing risks from the slowdown in the external sector.

All this was expected and priced in by markets in the last 24 hours or so. Therefore, the policy statement released a few minutes before press time has not had any impact on the JPY pairs.

Looking forward, the pair may revisit session highs near 111.90 if the US Treasury yields rise. As of writing, the 10-year yield is trading largely unchanged on the day at 2.64 percent.

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Stock Market News

SEC alleges Volkswagen ‘perpetrated a massive fraud’ and repeatedly lied to US investors

From: CNBC.com

  • The Securities and Exchange Commission alleged in a court filing that Volkswagen had “perpetrated a massive fraud” and repeatedly lied to U.S. investors
  • Volkswagen said the SEC complaint “is legally and factually flawed”

The Securities and Exchange Commission alleged in a court filing that Volkswagen “perpetrated a massive fraud” and repeatedly lied to U.S. investors in connection with the so-called dieselgate scandal.

The regulator is suing Volkswagen and its former chief executive Martin Winterkorn over the German automaker’s diesel emissions scandal. The suit seeks to bar Winterkorn from serving as an officer or director of a public U.S. company and recover “ill-gotten gains.” Winterkorn was charged by U.S. prosecutors in 2018 and accused of conspiring to cover up the German automaker’s diesel emissions cheating.

The SEC said in its complaint filed in San Francisco that from April 2014 to May 2015, Volkswagen issued more than $13 billion in bonds and asset-backed securities in U.S. markets at a time when senior executives knew that more than 500,000 U.S. diesel vehicles grossly exceeded legal vehicle emissions limits.

“By concealing the emissions scheme, Volkswagen reaped hundreds of millions of dollars in benefit by issuing the securities at more attractive rates for the company,” the SEC said in a summary of its filing.

Volkswagen said the SEC complaint “is legally and factually flawed.” Reuters reported that a lawyer for Winterkorn could not immediately be reached early on Friday.

VW had said in its annual report that the SEC could take enforcement action against the company over the German automaker’s involvement in the emissions scandal.

The automaker said the agency is “piling on” and that the agency’s complaint is without merit.

The SEC has asked Volkswagen for information on potential securities law violations over certain investments the company may have sold to investors. The agency is looking for evidence determining whether the automaker failed to disclose information about vehicles that didn’t comply with U.S. emission standards when it issued certain securities to investors.

The SEC can issue fines and other civil penalties for violations of securities law.

One of the world’s largest carmakers, Volkswagen was rocked by reports first surfacing in 2015 that it had been caught cheating on emissions tests in the United States. The subsequent scandal cost Volkswagen billions of dollars to settle and forced the automakers to recall millions of vehicles.

Here is Volkswagen’s full statement to CNBC:

The SEC’s complaint is legally and factually flawed, and Volkswagen will contest it vigorously. The SEC has brought an unprecedented complaint over securities sold only to sophisticated investors who were not harmed and received all payments of interest and principal in full and on time. The SEC does not charge that any person involved in the bond issuance knew that Volkswagen diesel vehicles did not comply with U.S. emissions rules when these securities were sold, but simply repeats unproven claims about Volkswagen AG’s former CEO, who played no part in the sales. Regrettably, more than two years after Volkswagen entered into landmark, multibillion-dollar settlements in the United States with the Department of Justice, almost every state and nearly 600,000 consumers, the SEC is now piling on to try to extract more from the company.

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Tesla unveils Model Y as electric vehicle race heats up, price starts at $39,000

From: Reuters.com

Tesla Inc unveiled its Model Y electric sports utility vehicle on Thursday evening in California, promising a much-awaited crossover that will face competition from European car makers rolling out their own electric rivals.

Chief Executive Elon Musk said the compact SUV, built on the same platform as the Model 3, would first debut in a long-range version with a range of 300 miles (482 km) priced at $47,000.

A standard version, to be available sometime in 2021, would cost $39,000, with a 230-mile range. The vehicles can be configured to include 7 seats for an additional $3,000.

After the event, Tesla’s website included a page to “design and order” the more expensive, long range version of the vehicle with rear-wheel drive, available next year. Ordering the car requires a $2,500 refundable deposit.

Musk unveiled the vehicle at a short 40-minute event at Tesla’s design studio in Hawthorne, outside Los Angeles, that was streamed live online. (www.tesla.com/modely).

Each of Tesla’s vehicles, from the Roadster to the latest Semi, were driven onstage before the blue Model Y appeared.

Small SUVs are the fastest-growing segment in the United States and China, the world’s largest auto market, where Tesla is building a factory, making the Model Y well positioned to tap demand.

Tesla has enjoyed little competition thus far for its sedans, but competition for electric SUVs is heating up as Tesla tries to master a new set of economics from the luxury line that made its reputation.

On Thursday, ratings company Fitch warned that, despite Tesla’s early lead, “incumbent carmakers have the ability to catch up … thanks to their capacity to invest and their robust record in product management.”

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Cryptocurrency News

SEC Chairman Highlights Investor Protection in Regard to Bitcoin ETF

From: Cointelegraph.com

United States Securities and Exchanges Commission (SEC) Chairman Jay Clayton is still concerned about investor protection when it comes to the commission approving a Bitcoin (BTC) Exchange-Traded Fund (ETF). The SEC chairman spoke about crypto in an interview with FOX Business on March 14.

In the interview, Clayton claimed to be neutral toward digital currencies, saying that he is not a spokesperson against the asset. The SEC chairman explained that he is concerned with the potential for manipulation associated with the space, and wants to guarantee investor protection:

“What I’m concerned about at the moment is if it can be reasonably demonstrated that the underlying trading is generally not manipulated, it’s happening on reliable venues with good rules and that custody is something we can feel comfortable about.”

While Clayton declined to comment on any specific Bitcoin ETF application, he still noted that there “may be a case where a Bitcoin ETF could satisfy our rules.” The chairman elaborated:

“I think this technology has and is already demonstrating pretty significant promise, but it’s demonstrating significant promise in the places where it’s consistent with our approach to capital raising in the past.”

Recently, the SEC announced it will soon start the countdown period to approve or disapprove the VanEck/SolidX Bitcoin ETF. After withdrawing the ETF application due to the U.S. government shutdown in late January, the Chicago Board Options Exchange (CBOE) re-submitted the application a week later.

Earlier this week, Jay Clayton confirmed his previous statement that Ethereum (ETH) and similar cryptocurrencies are not securities under U.S. law. However, Clayton stipulated that he meant that a digital asset’s definition as a security can change over time.

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