Brexit

Market Review 19-03

Market Review 19-03

Forex News

GBP/JPY struggles around 147.60 amid Brexit headlines, UK employment data in spotlight

From: FXstreet.com

  • Mixed Brexit headlines, FOMC expectations and global growth concerns play their role
  • UK employment figure can provide fresh impulse with Brexit progress being in the background

GBP/JPY is mildly bid near 147.60 during early Tuesday. The pair has been struggling with the overall risk-on sentiment and Brexit developments. Next up in the traders’ radar will be British jobs data and progress over how the UK PM Theresa May prepares to confront the EU summit.

While expectations of monetary policy easing from the Fed and rejection of no-deal Brexit by the UK parliament seems in favor of the market’s recent risk-on mood, mixed set of headlines concerning further proceedings at the Britain and doubts over global growth challenge the pair’s an upside.

Latest among the Brexit headlines say the EU is ready for three-month extension to the March 29 deadline, PM May is expected to aim for nine to twelve month of a stretch, Tories are set for a strike if PM May doesn’t resign. Alternatively, recent data from the US, Australia and New Zealand haven’t been in market favor and continues to signal downside risk.

Additionally, PM May’s third Brexit proposal won’t be up for voting on Tuesday as the UK lawmakers oppose any deals similar to the previous ones that were already rejected. Hence, PM May is now forced to attend Thursday’s EU summit with empty hand requesting for a deadline extension.

The UK jobs report is set to release January month average earnings and unemployment rate details together with February month claimant count data at 09:30 GMT. No change is expected in the unemployment rate and average earnings excluding bonus numbers of 4.0% and 3.4%. However, headline average earnings could soften to 3.2% from 3.4% whereas claimant count change might also decline to 3.7K from 14.2K.

GBP/JPY Technical Analysis

Immediate ascending support-line stretched since March 08 at 147.00 may challenge short-term sellers, a break of which can print 146.50 and 145.40 on the chart whereas 200-day simple moving average (SMA) and two-month-old ascending trend-line, around 144.70/65, could limit further downside.

148.40 seem adjacent resistance ahead of the pair’s rise to 149.00 trend-line joining highs since September 2018.

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EUR/USD Price Forecast – Caution Ahead of Fed Update Continues To Inspire Rangebound Price Action

From: FXempire.com

The pair continues to trade range bound ahead of macro data updates which are expected to provide short term directional bias ahead of fed update.

The EURUSD pair started the week on a positive note but experienced two-way price action yesterday despite relatively calm trading activity. The pair saw steady upside price action across Asian and European market hours as EURO bulls found fundamental support from US Greenback’s weakness in the broad market owing to dovish Fed expectations and unexpected positive readings in EU trade surplus. This resulted in the pair hitting new two week highs at 1.3359 in European trading session. However, later in the day US Dollar rebound in the broad market resulting in the pair declining from intra-day highs.

Macro Data Updates Eyed For Short Term Gains

However, US Greenback is still subdued in the broad market as investors have taken a cautious stance ahead of tomorrow’s Fed meeting and this has resulted in relatively low trading volume since the trading session began for the week. This cautious investor sentiment has resulted in rangebound price action with price action trapped well within 1.13 handle so far this week. As of writing this article, EURUSD pair is trading flat at 1.1347 up by 0.10% on the day. Moving forward, investors are on the lookout for macro data updates for short term profit opportunities. Both EU & US calendar see the release of second-tier macro data updates today.

On the release front today, the European calendar will see the EU area’s wages data and ZEW economic sentiment data along with a speech by ECB’s Peter Praet and German ZEW current conditions and economic sentiment data While US calendar will see the release of factory orders data. When looking from a technical perspective, the pair shows a clear lack of directional bias in immediate and near future trading sessions. To the upside, the pair faces strong resistance near 1.1329, 1.1300, 1.1296/95 price handles while support to the downside is found near 1.1367, 1.1388, 1,1419 price handles respectively.

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Stock Market News

Elon Musk never sought approval for a single Tesla tweet, U.S. SEC tells judge

From: Reuters.com

Chief Executive Elon Musk has never sought pre-approval for a single tweet about Tesla Inc since striking a court-approved deal about how to communicate important information about the electric vehicle maker, the top U.S. securities regulator told a judge on Monday.

The Securities and Exchange Commission is doubling down on the government’s demand to find the Tesla CEO in contempt of a previous fraud settlement that required him to have the company pre-approve any tweets that could materially impact the automaker.

The ongoing public battle between Tesla’s chief executive and the SEC piles pressure on Musk, the public face of Tesla, who is struggling to make the company profitable after cutting the price of its Model 3 sedan to $35,000.

The SEC said a Feb. 19 tweet that Musk sent to his more than 24 million Twitter followers claiming the electric vehicle-maker would build around 500,000 cars in 2019 was “a blatant violation” of the agreement.

The SEC asked Tesla in late February whether any of Musk’s tweets had been pre-approved since that policy was adopted, according to the filing bit.ly/2HsMiUr in federal court in Manhattan.

Tesla responded, after more than two weeks, to say simply: “No.”

“It is therefore stunning to learn that, at the time of filing of the instant motion, Musk had not sought pre-approval for a single one of the numerous tweets about Tesla he published in the months since the court-ordered pre-approval policy went into effect,” the SEC said in the filing.

The regulator last month alleged that Musk had violated a September settlement of fraud charges by tweeting material information about Tesla without pre-approval from the company.

In response, Musk had argued that his “single, immaterial” tweet was in compliance with the settlement, and that the SEC’s push to find him in contempt infringed on his free speech.

Lawyers for Musk said the tweet complied with the company’s communication policy for senior executives and was a “proud and optimistic restatement of publicly disclosed information.”

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Amazon, Apple Re-Emerging as Tech Leaders While Facebook Falters

From: FXstreet.com

The divergence between the Dow and the other major indexes can be explained by the plunge in shares of Boeing. However, as far as Facebook is concerned, investors have to remember that this stock began to weaken months before the broad-based sell-off began in October 2018. This is something to keep in mind as we approach first quarter earnings season, which is already raising concerns about growth.

Investors continued to drive U.S. equity indexes higher on Monday at the start of a busy week as the U.S. Federal Reserve prepared for its two-day monetary policy meeting on Tuesday. Wall Street also remained focused on U.S.-China trade discussions although no major news crossed the wires during the trading session. However, continuing to underpin the markets was the hope the two countries would strike a trade deal sometime between late March and April.

These two factors were the macro events driving the price action on Monday. However, over the past two weeks, sectors and individual stocks have re-emerged as key market drivers.

For two weeks, the stock market has been supported by a strong performance in the technology sector. This sector drives the NASDAQ Composite as well as the S&P 500 Index. The Dow isn’t as heavily weighted in technology so the current rally has had a minimal effect on its performance. If you look at the charts, you’ll see this taking place with the NASDAQ leading and the Dow lagging.

The initial spark in the technology sector was fueled by a sharp rise in shares of Apple last week. This move was triggered by a bullish analyst report from Bank of America Merrill Lynch. Aggressive investors took it from there by spreading the wealth across the sector. On Monday, the sector was led higher by a percent rise in Apple and a 1.5 percent jump in Amazon.

The rallies in Apple and Amazon were needed on Monday because of the emergence of negative news. While these two stocks were soaring, shares of Facebook and Boeing were plunging. But through the magic of allocation and weighting in the NASDAQ Composite and the Dow Jones Industrial Average, these losses were absorbed.

Facebook shares continued to confound investors with issues about privacy, encrypted messages and the possibility of more regulatory scrutiny re-emerging. Shares of the social media giant fell 3.3 percent on Monday after Wall Street brokerage firm Needham analyst Laura Martin downgraded the stock to a hold rating and warned clients that the recent departure of 11 senior members could spark further flights from the company.

“We are concerned that regulatory, headline, and strategic pivot risks will negatively impact Facebook’s valuation more than investors currently believe due to the negative flywheel created by Network Effects,” Martin wrote. “A Negative Effect suggests that departures will continue, and since we believe that people are a key competitive advantage of FAANG companies, this implies accelerating value destruction until senior executive turnover ends.”

Helping to hold back the Dow was another steep plunge in shares of Boeing. It’s hard to tell when this company’s shares will start to recover because of the on-going investigations into a pair of plane crashes over the past six months. In the meantime, the Dow could continue to lag the other major indexes until investors find value, or until the airplane manufacturers is cleared of any wrongdoing.

On Monday, The Wall Street Journal reported the Department of Transportation and federal prosecutors were scrutinizing the development of the company’s 737 Max planes. This comes after an Ethiopian Airlines flight involving the 737 Max 8 jet crashed last week.

The divergence between the Dow and the other major indexes can be explained by the plunge in shares of Boeing. However, as far as Facebook is concerned, investors have to remember that this stock began to weaken months before the broad-based sell-off began in October 2018. This is something to keep in mind as we approach first quarter earnings season, which is already raising concerns about growth.

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Cryptocurrency News

Blockchain Boom in Ireland, but Brexit Looms

From: Cointelegraph.com

Strong growth has returned to Ireland one decade after the banking crisis and international bailout. But, financiers and investors fear a “no deal” Brexit — in which the United Kingdom leaves the European Union without a trade agreement at the end of the month — could again destabilize Ireland’s boom-and-bust economy.

The U.K. received 11 percent of Ireland’s exports of goods in the past year, while supplying more than one-fifth of its imports. The Irish central bank conjectures that an orderly exit from the EU would decrease the gross domestic product by 1.5 percent, according to a Reuters story.

While the economic uncertainty — like in many countries — has driven curiosity in cryptocurrencies such as Bitcoin, Ethereum and others in Ireland ahead of Brexit, it casts a shadow over a burgeoning blockchain boom.

“It’s hard to see beyond the shadow of Brexit at the moment,” said Dave Fleming, global head of research and development for Mastercard Labs in Ireland. “If Ireland is affected, it will probably be similar to 2008 and the whole world might be affected so possibly blockchains might help.” The Irish will have to wait and see, he says.

Ireland’s hope

If Britain leaves without agreeing to terms on the border with Northern Ireland, a more strongly enforced border could partially isolate Ireland and reignite conflict. According to Anthony Day, chief operating officer of Deloitte’s EMEA Blockchain Lab in Ireland, Brexit brings to mind the concept of a “digital border” between Ireland and the U.K. As Day explained:

“We see significant potential for Blockchain to provide the capability to enable secure, real-time and automated infrastructure to support trade, reporting, and the movement of goods and people. However, establishing the relevant working groups, governance, deploying such platforms and completing the necessary transformation within both public and private sector organizations would be a multi-year initiative, and the timescale for Brexit is immediate.”

Brexit has dampened Irish consumer confidence and stymied foreign investment. Ireland’s biggest companies are drawing up backup plans in case of a no-deal Brexit. Business owners fear tariffs, customs paperwork and delayed shipments of goods from Britain. AIB, Ireland’s biggest bank, said this past Monday that one-third of companies have canceled or postponed investments because of Brexit.

“A Brexit ‘no deal’ is clearly the biggest concern,” said Raul Sinha, a banking analyst at JPMorgan Chase.

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