U.S. Might Change Currency Test to Determine Forex Manipulator
The Chinese yuan slipped on Monday amid reports that U.S. is considering changing its currency test that determines which nations are manipulating their currencies.
The move could finally give U.S. President Donald Trump the chance to name China a forex manipulator, Bloomberg reported, adding that the U.S. could use a 1988 trade act with a broad definition of currency manipulation to designate a country a manipulator.
In a semi-annual report released last week, the Treasury Department declined to label China or any other trading partner of the U.S. as currency manipulators, but added that Beijing and some other countries including Germany, Japan and India have been put on a watch list.
The USD/CNY pair edged up 0.04% to 6.9333 by 1:00 AM ET (05:00 GMT). The People’s Bank of China (PBOC) raised the yuan’s daily fixing by 151 pips to 6.9236 per USD Monday, vs Friday’s fix of 6.9387 per USD.
Euro, sterling try to steady as traders keep wary eye on Italy budget, Brexit
The euro and the British pound managed to hold steady against the dollar on Monday as investors cautiously awaited developments around Brexit as well as Italy’s budget plan which drew heavy criticism from the European Union.
The dollar was also broadly unchanged against its major rivals. Tensions with Saudi Arabia and the West, trade frictions and uncertainly about the global growth outlook kept most currency pairs stuck in tight ranges.
An index measuring the greenback’s value against its major peers was flat at 95.67, having hit a of high of 96.09 on Friday.
Both the euro and sterling remained sensitive to news around Brexit and a controversial Italian budget proposal.
“The movement of the euro and British pound may become increasingly sensitive to geopolitical factors such as Italy’s budget issue and Brexit talk gaining more headline exposure,” said Jonathen Chan, market analyst at CMC Markets in a note.
Stock Market News
Asia shares rally as China surges on stimulus hopes
Asian share markets swung into the black on Monday as the promise of more stimulus boosted Chinese stocks for a second session and helped offset geopolitical concerns over Saudi Arabia, Italy and Brexit.
China’s tax cuts next year could be worth more than 1 percent of gross domestic product (GDP), a central bank adviser said in remarks published on Monday, in a sign policymakers might be considering another round of reductions.
The government also published a draft version of new rules for tax deductions available to individuals.
Blue chips in Shanghai jumped 4.8 percent in the largest daily gain in three years, adding to Friday’s bounce on Beijing’s pledge of support for the economy and companies.
E-mini S&P 500 Index (ES) Futures Technical Analysis – Strengthens Over 2768.25, Weakens Under 2748.50
Based on Friday’s close at 2767.50 and today’s early price action, the direction of the December E-mini S&P 500 Index on Monday is likely to be determined by trader reaction to the short-term 50% level at 2768.25.
December E-mini S&P 500 Index futures are trading lower shortly after the pre-market opening on Monday. The early selling has also taken out Thursday’s low, turning 2824.25 into a new main top. At 2235 GMT, the index is at 2754.75, down 12.75 or -0.49%.
The main trend is down according to the daily swing chart. A trade through 2824.25 will change the main trend to up. A move through 2712.25 will signal a resumption of the downtrend.
The major support zone is 2748.50 to 2701.75. This zone stopped the selling on October 11 at 2712.25.
The short-term range is 2712.25 to 2824.25. Its 50% level or pivot is 2768.25. This level is controlling the short-term direction of the index.
Combining the short-term and long-term 50% levels creates a potential support zone at 2768.25 to 2748.50.
The main range is 2947.00 to 2712.25. If the trend changes to up then buyers could run into its retracement zone at 2829.75 to 2857.25.
Bitcoin – Early Support Brings $6,700 into Play for the Bulls
Early support sees Bitcoin regain the $6,600 handle, with a hold on to $6,600 levels through the morning bringing $6,700 levels into play.
Bitcoin gained just 0.05% on Sunday, following a 0.93% rise on Saturday, to end the day at $6,590.1. Gains through the weekend brought to an end 3 consecutive days of losses to leave Bitcoin up 4% for the week, the upside coming from Monday’s 6.3% rally.
A relatively choppy day saw Bitcoin hit an early morning intraday high $6,660.8, breaking through the first major resistance level at $6,627.13 to come up against the second major resistance level at $6,669.08 to ease back from a run at $6,700 levels.
Range bound through mid-morning, Bitcoin broke back through the first major resistance level at $6,627.13 in the late morning and early afternoon, an early afternoon $6,655.2 the last bullish move of the day, with a broad based market sell-off leading Bitcoin to a late in the day intraday low $6,581.2.
For the Bitcoin bulls, the only good news was Bitcoin’s hold above the day’s first major support level at $6,527.13, while Bitcoin’s struggles to hold on to $6,600 levels continued in spite of the early tests of the day’s major resistance levels.
There were no material news releases through the day to provide Bitcoin and the broader market with direction, Bitcoin’s failure to breakout from the day’s first major resistance level a likely contributor to the second half of the day’s reversal to sub-$6,600 levels.
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