GBP/USD flat-lining as markets brace for further Brexit difficulties, UK PM May and EU’s Juncker to meet
- The Cable is backing into last week’s lows as bulls remain off-balance.
- A Brexit meeting between the UK’s May and the EU’s Juncker is expected for today, promising plenty of Brexit headline fodder.
The GBP/USD is trading sideways ahead of Wednesday’s London market session, skidding across the floor near 1.2785 after Tuesday saw a resurgence of the Greenback across the broader markets, as well as a revival of Brexit-bearish headlines, with Spain’s Gibraltar attempting to oust the Northern Ireland border as the next impossible-to-solve issue.
Spain has demanded that oversight on the island of Gibraltar be included in an EU-UK Brexit agreement, with the Spanish government demanding that clarity on Gibraltar be a bilateral issue, threatening to veto the current draft deal if their demands aren’t met, and a fresh round of Brexit bearishness can be expected as the two sides continue to run into new walls in their race against the clock to rough-in a divorce deal. The Gibraltar factor poses a significant delay to Brexit proceedings, and will significantly hamper both sides’ ability to pull positive headlines out of today’s EU-UK meet and greet.
Little else remains on the data docket for Wednesday, but the UK’s Prime Minister Theresa May and the European Commission’s Chief, Jean Paul Juncker are slated for a meeting today for Brexit deal discussions, and statements from both sides can be expected as the duo try to salvage market sentiment with soothing words. The Brexit meeting is expected to be tabled around 16:30 GMT.
GBP/USD Levels to watch
The Cable is stuck in bear mode, with the downside continuing to open up on still-crumbling investor confidence, and as FXStreet’s Chief Analyst Valeria Bednarik noted, “technical readings in the 4 hours chart maintain the risk skewed to the downside, as the pair is now below a bearish 20 SMA after spending the day struggling around it, while technical indicators resumed their declines, the Momentum extending below its mid-line and the RSI currently at 38. Should the pair fell below 1.2765, a test of the November low at 1.2723 is back on the table, while a relief rally would need to send the pair above 1.2880 to support a more positive outlook ahead.”
Support levels: 1.2765 1.2725 1.2680
Resistance levels: 1.2845 1.2890 1.2530
Safe haven dollar firms on global slowdown fears, trade tensions
The dollar traded firm against major peers on Wednesday, extending overnight gains as investors shunned riskier assets in favour of safe haven currencies on escalating worries about slowing global growth and the U.S.-Sino trade war.
With sentiment souring and a global equities rout on Tuesday, risk averse traders sought shelter in the liquid dollar, which climbed from a two-week low hit earlier on Tuesday.
“What’s driving currency markets right now are fears of a slowdown in economic growth with safe haven currencies like the dollar and yen likely to benefit,” said Michael McCarthy, chief markets strategist at CMC Markets.
The greenback had been under pressure for most of this week as cautious comments by Federal Reserve officials and surprisingly weak U.S. economic data suggested the central bank could slow the pace of monetary policy tightening.
The dollar index, measuring performance against six major peers, was steady at 96.82 on Wednesday. The index gained 0.65 percent in the previous trading session.
“For now, the dollar has retained its safe haven attributes outperforming across the board in the overnight session,” said Rodrigo Catril, senior currency strategist at NAB, in a note.
With the Federal Reserve widely expected to raise interest rates by 25 basis points in December, analysts think the greenback could trade with a positive bias in the short term, despite lowering their longer-term rate hike expectations.
Stock Market News
Asian Stocks Continue to Retreat After Wall Street Slump
Asian markets continued to retreat in afternoon trade on Wednesday after steep losses on Wall Street overnight.
China’s Shanghai Composite and the Shenzhen Component slipped 0.1% and 0.3% respectively by 1:15 AM ET (06:15 GMT).
In a 53-page report released on Tuesday, U.S. Trade Representative Robert Lighthizer’s office accused China of failing to change its “unfair, reasonable” practices regarding its intellectual property and technology transfer policies.
“China fundamentally has not altered its acts, policies, and practices related to technology transfer, intellectual property, and innovation, and indeed appears to have taken further unreasonable actions in recent months,” the report said.
U.S. President Donald Trump is due to meet his Chinese counterpart Xi Jinping later this month during the G-20 summit in Buenos Aires.
Hong Kong’s Hang Seng Index was down 0.3%.
Tongcheng-Elong Holdings Ltd, a Chinese travel website backed by tech giant Tencent Holdings Ltd (HK:0700), raised a total of $180 million from an IPO in Hong Kong.
The company sold 143.8 billion shares at HK$9.8 per piece, near the bottom of the range the company offered between HK$9.75 to HK$12.65 per share. The IPO raised far less than the $1 billion that had been originally touted.
Weak markets and a tumble in the share price of Ctrip.Com International Ltd ADR, another investor of Tongcheng-Elong, pushed the website firm to slash the size of the IPO, according to Reuters.
Tongchen-Elong’s shares will start trading in Hong Kong on Nov. 26.
Japan’s Nikkei 225 traded 0.5% lower. Nissan Motor Co., Ltd. (T:7201) received some continued focus on reports that Japanese prosecutors are considering bringing a case against company Chairman Carlos Ghosn’s arrest, according to the Asahi Shimbun daily.
Ghosn was arrested on Monday after Nissan reported in a statement that “numerous significant acts of misconduct have been uncovered, such as personal use of company assets.” The company added that Ghosn had also made inappropriate investments.
Renault names Ghosn stand-ins amid tension over Nissan probe
French carmaker Renault tapped its chief operating officer and a senior board member to fill in for embattled boss Carlos Ghosn, after an investigation by alliance partner Nissan led to his arrest on suspicion of financial misconduct.
Thierry Bollore, Ghosn’s operational second-in-command, will become deputy chief executive, while lead independent director Philippe Lagayette assumes the function of interim chairman, Renault said after a board meeting late on Tuesday.
But the board refrained from firing Ghosn while awaiting more detail on the allegations – in a decision that could also buy more time for an accelerated, permanent succession process.
“Mr. Ghosn, temporarily incapacitated, remains Chairman and Chief Executive Officer,” Renault said in a statement. “During this period, the board will meet on a regular basis under the chairmanship of the lead independent director.”
Ghosn, one of the car industry’s best-known leaders, was arrested on Monday after Nissan said he had engaged in years of wrongdoing, including personal use of company money and under-reported earnings. The Japanese company plans to remove him as chairman on Thursday.
The French government, Renault’s biggest shareholder, had begun to distance itself from Ghosn, calling for new interim leadership before the meeting, as the Japanese investigation expanded to include Renault-Nissan alliance finances.
“Carlos Ghosn is no longer in a position where he is capable of leading Renault,” Finance Minister Bruno Le Maire said earlier in the day. “Renault has been weakened, which makes it all the more necessary to act quickly.”
Statements by Le Maire, Renault and its board all echoed French preoccupations over the future of the alliance first articulated by President Emmanuel Macron within hours of Ghosn’s arrest on Monday.
Following talks between Le Maire and his Japanese counterpart Hiroshige Seko on Tuesday, the ministers reaffirmed their “shared wish to maintain this winning cooperation”.
But in a sign that Nissan may now seek to loosen its French parent’s hold on the partnership, the Japanese company informed Renault it also had evidence of potential wrongdoing at Renault-Nissan BV, the Dutch venture overseeing alliance operations under Renault’s ultimate control, three people with knowledge of the matter told Reuters.
The private communication came from Nissan Chief Executive Hiroto Saikawa, whose company is 43.4 percent-owned by Renault in a complex alliance forged by Ghosn over almost two decades.
Crypto Prices Continue to Slide as Bitcoin Approaches $4,000 Mark
Investing.com – Cryptocurrency prices continued to slide on Wednesday, with Bitcoin tumbled to as low as $4,051 earlier in the day.
Bitcoin fell 5.0% to $4,559.4 by 11:05 AM ET (04:05 GMT) on the Bitifinex exchange. The world’s largest digital coin has now lost more than 25% of its value within a week.
XRP/USD plunges 10.5% to $0.44106 on the Poloniex exchange.
Ethereum slumped 8.5% to $135.67, while Litecoin declined 9.2% to $33.789 on the Bitifinex exchange.
While the trigger for the latest sell-off is unclear, it has coincided with the U.S. Securities and Exchange Commission’s penalties against two crypto companies that did not register their initial coin offerings (ICO) as securities.
The two companies, Airfox and Paragon Coin, will each have to pay penalties of $250,000 to compensate their investors; Bloomberg reported citing SEC’s statement.
“The whole move by the SEC has seemed like a nail in the coffin, and with talk about price-rigging the market, it’s getting nasty,” said Marc Ostwald, global strategist at ADM Investor Services International in London.
on Tuesday, Bloomberg reported that the U.S. Justice Department is investigating whether cryptocurrency’s rally last year was fueled in part by manipulation.
Meanwhile, others blamed fears that a “hard fork” in Bitcoin cash may have driven down demand for the virtual coin.
The most recent drop in Bitcoin came after several months of stability around the $6,500 range.
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