Yen weakens as BOJ flags easing risks, euro trims earlier gains
The dollar inched up against the yen on Tuesday after Japan’s central bank governor raised the possibility of further policy easing, while the euro’s latest bounce faded as the focus shifted back to economic challenges in the bloc.
The greenback rose to 110.615 yen from a low of 110.45 hit earlier in the session.
Bank of Japan Governor Haruhiko Kuroda, speaking at the Japanese parliament, said the central bank was ready to ramp up stimulus if sharp yen rises hurt the economy and derail the path towards achieving its 2 percent inflation target.
The dollar index versus a basket of six major currencies was nearly flat at 96.914 after ending the previous session unchanged. U.S. financial markets were closed on Monday for the Presidents’ Day holiday.
The euro was down 0.15 percent at $1.1297. It edged up 0.16 percent overnight, pulling away from a three-month low of $1.1234.
The single currency had been buoyed by improved investor sentiment as expectations increased for an easing of the U.S.-China trade conflict after both sides reported progress in talks.
The dollar, the world’s most liquid currency, has tended to perform well during bouts of investor nervousness.
“The euro’s latest bounce was not based a positive incentive specific to the currency and the market will likely return to pricing in the potential negatives. The euro will remain on a shaky footing,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.
“There is still some way to go before potential negatives are factored into the euro ahead of the March 7 ECB meeting.”
ECB policymakers will next meet on March 7, when the bank’s staff are expected to slash growth and inflation projections as the euro zone suffers its biggest slowdown in half a decade.
Aussie Drops After RBA Minutes; U.S. Dollar Flat
The Australian dollar traded lower after the Reserve Bank of Australia (RBA) minutes showed “significant uncertainties” on the economic outlook.
According to the minutes, the Monetary Policy Board saw significant uncertainties on the economic outlook as the housing markets nosedives. RBA members said they would continue to “assess the outlook carefully.”
The minutes also said policymakers believed there is no strong case for a near-term move in interest rates, as it was better to be a source of stability.
After briefly ticking higher following the release of the minutes, the Aussie dollar quickly retreated lower. At 11:34 PM ET (04:34 GMT), the AUD/USD pair was down 0.3% at 0.7109.
Meanwhile, the U.S. dollar was steady against its peers on Tuesday, lacking strong direction as U.S. markets were shut for a holiday the previous day.
The U.S. dollar index that tracks the greenback against a basket of other currencies was up 0.02% at 96.762.
Trade-related headlines are expected to be a major focus again later this week, as Chinese Vice-Premier Liu He is set to visit Washington for a new round of negotiations with the U.S.
He will meet U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer, the Commerce Ministry said in a short statement on Tuesday.
The last round of negotiations ended last week in Beijing without a deal, although U.S. President Donald Trump and his Chinese counterpart Xi Jinping both reported progress in trade talks last week, raising hopes of an agreement before a March 1 deadline for tariff hikes.
Stock Market News
Honda Plans to Leave Britain as Brexit Draws Close
The Japanese automaker Honda has become the latest business to make plans to leave Britain as global forces reshape the car industry and the country prepares to exit the European Union.
Honda will close its plant in Swindon, England, which employs 3,500 workers, by 2021, according to a statement from two members of Parliament, Justin Tomlinson and Robert Buckland, who have been in contact with the carmaker.
Honda declined to respond to queries about the move, reported earlier by Sky News. “At this point, we are not able to make any comments regarding the speculation,” the company said in an emailed statement. “We take our responsibilities to our associates very seriously and will always communicate any significant news with them first.”
But in a joint statement, Mr. Tomlinson and Mr. Buckland confirmed media reports about the upheaval and said they were “disappointed and surprised” that the plant would be gone in two years.
“Honda have told us today that they will be consulting with all staff and there is not expected to be any job losses or change in production until 2021,” the lawmakers said in an emailed statement. “All European market production is being consolidated to Japan, where the company is based.” They said production in Turkey would also be affected.
Honda follows other companies that have retrenched in the face of sluggish markets, tougher environmental regulation and challenges from deep-pocketed technology companies that are pursuing electric and autonomous driving cars.
Last month, Ford said it was cutting thousands of jobs across Europe as emissions rules and declining demand ate into its profits. Another American carmaker, General Motors, pulled out of Europe in 2017 after persistent losses in the region.
But the losses in Britain, coming as the country tries to leave the European Union, have been striking. Nissan said in early February that it would be producing the next generation of its X-Trail SUV at its Kyushu plant in Japan, rather than at its factory in Sunderland, England. The plant will continue to manufacture other models.
Like Nissan, Honda stands to benefit from a new trade deal between the European Union and Japan, which will make it easier to produce cars in Japan for export to the bloc. Their production lines in Japan will also be closer to markets viewed as having greater growth potential, like China and Indonesia.
The sales market is changing across the globe. Car sales to individual customers appear to have peaked in the United States last year. An economic slowdown in China has deflated sales there. Silicon Valley tech companies are increasingly competing for talent among manufacturers.
“All of that is taking a huge amount of resource out of car companies,” said Peter Wells, a professor at the Centre for Automotive Industry Research at Cardiff Business School. “They’ve got to access those new markets, restructure their operations; it’s an enormous burden financially. It’s putting strain on the whole sector.”
“It’s all going on around this industry and it’s proving to be a turbulent strategic time for the participants,” he said.
The continued stalemate over Brexit has made it more difficult for businesses to plan their operations past March 29, the day of departure. Investment in the country’s auto industry plummeted by half in 2018, prompting a recent plea from the automakers’ trade association.
“Brexit is the clear and present danger and, with thousands of jobs on the line, we urge all parties to do whatever it takes to save us from ‘no deal,’” said Mike Hawes, the organization’s chief executive, referring to the prospect of the country leaving the European Union without an agreement over the terms of departure.
Stocks Eye European Data, Can S&P 500 Uptrend Pass Key Resistance?
- APAC equities traded mixed after US markets were offline, Nikkei 225 rose
- AUD/USD fell on RBA meeting minutes as dovish BoJ trimmed JPY gains
- All eyes on German, Eurozone ZEW surveys. S&P 500 eyeing key resistance
After US markets were offline and a slight dose of risk aversion was added, Asia Pacific benchmark stock indexes traded mixed. The Nikkei 225 and ASX 200 saw gains ranging above 0.2% as we headed into Tuesday’s close. China’s Shanghai Composite was relatively flat while South Korea’s KOSPI aimed about 0.3% to the downside.
Looking at foreign exchange markets revealed a somewhat ‘risk-off’ trading dynamic. Both the sentiment-linked Australian and New Zealand Dollars traded lower against their major counterparts. As anticipated, the RBA meeting minutes ultimately sent AUD/USD to the downside as the central bank offered more details to their increasingly neutral policy outlook. This is as opposed to favoring a hike down the road.
While the anti-risk Japanese Yen was higher, gains were trimmed on dovish commentary from BoJ’s Governor Haruhiko Kuroda. This also offered a slight boost to the Nikkei 225. Looking ahead, S&P 500 futures are pointing narrowly lower. The upcoming German and Eurozone ZEW sentiment surveys may disappoint, fueling risk aversion and presenting knock-on effects for ASEAN currencies as the US Dollar appreciates.
S&P 500 TECHNICAL ANALYSIS
These next few days will be quite interesting for the S&P 500 if sentiment ends up prevailing instead. Ahead lays a range of resistance between 2785.93 and 2816.94. Should this be cleared, it could set itself up for paring losses from its dramatic plunge towards the end of 2018. Should it turn lower in the interim, near term support appears to be a rising trend line from January.
Is Ethereum Still Searching For Its Bottom?
The crypto space has mostly been seeing drops in value during the last 30 days, and it was clear that the bear market of 2018 still has enough energy to cause further damage in this year as well. Most coins occasionally felt a slight growth, although it was not big enough to spark a real rally and shake off the bears.
When it comes to Ethereum, the coin has been dropping continuously since January 10th. ETH experienced high volatility ever since it broke down a $180 support on November 14th, 2018. A small rally starting on December 15th started taking ETH back up, although the highest it managed to reach since then was $159.58 on January 6th, 2019. Since then, the coin’s price entered another free fall, although it never dropped below $100 since then.
The coin seemingly found some stability in the final days of January, when it was trading at around $119, although another drop followed in the first days of February, and Ethereum nearly dropped to $100 on February 6th.
However, February 8th brought a new surge which affected the entire crypto market, bringing the coin’s price back to $144.15, which is its price according to TradingView at the time of writing. The new surge exceeded 11% in the last 24 hours, although the main question is whether it will last, and whether or not Ethereum actually managed to find its bottom yet?
What will happen to ETH price in the following days?
Ethereum’s price drop did not really take the market by surprise, as most coins have been experiencing the same in the last month. Before the new rally, some analysts believed that the coin would go down until it reaches a minor support area, believed to be between $80 and $90. If it was to break this support as well, the next one was expected to be at $42-$55.
However, the new rally changes things, and while it is unknown whether it will last or not, and for how long, the coin managed to break through the resistance found at $115-$120, which may now serve as its new bottom. If the growth stops here, ETH might not drop below $115 again, unless the bearish grip finds new strength. In that case, the first minor ETH support lies between $95-$99.
So far, Ethereum’s weekly performance against USD shows a 10% increase, although, on a monthly basis, the coin has lost nearly 3% of its value. The situation is once again bullish in the previous 3-month period, when the coin’s growth actually exceeded 30%, according to TradingView. This is still far from being enough to recover the losses that ETH experienced in the last year, which are at around 80%, although a new rally brought quite a positive impact.
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