Market Review 26-11

Market Review 26-11

Forex News

Some UK ministers seeking EFTA Plan B if May’s deal fails

From: Reuters.com

Some senior British ministers and some Labour lawmakers are discussing the possibility of the United Kingdom joining the European Free Trade Association (EFTA) if Theresa May’s Brexit deal is rejected by parliament, The Sun newspaper reported.

Environment Secretary Michael Gove and Work and Pensions Secretary Amber Rudd have formed a cross-party alliance to push for membership of the EFTA as some ministers have given up hope that May’s deal will pass, The Sun reported on Monday.

“It’s failing away from us now. The opposition seems so strong that Theresa is going to really struggle to turn this around now,” The Sun quoted one unidentified British minister as saying.

Under the idea – dubbed ‘Norway Plus’ – the UK would join EFTA to maintain economic stability for a temporary period of a few years while London negotiates a full free trade deal from a stronger position, The Sun said.

May sealed a deal with the European Union on Sunday but she now must seek approval from parliament where she faces significant opposition from within her own party.

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GBP/JPY testing to the upside on thin Monday volumes 2

From: FXstreet.com

  • Guppy trader see some lift from Yen-based short action
  • Brexit remains a key factor for broader markets ahead

 
The GBP/JPY pairing is trading into the 145.00 major handle in early Monday action, bolstered by recovering risk appetite in the Asian market session resulting in a soft decline in the JPY, but market volumes remain thin still and price moves could see plenty of whipsawing as more cash begins to flow back into the markets.

Monday’s economic calendar sees a pairing of moderate indicators for Japan dropping at 05:00 GMT, with September’s Coincident Index and Leading Economic Index pairing for September expected to come in unchanged from their previous figures at 114.6 and 103.9 respectively, but market flows are unlikely to find much reason to alter their course on the readings as investors remain focused on bigger fish.

On the UK docket, a speech from the Bank of England’s (BoE) Governor Mark Carney is expected at 18:30 GMT, though the governor’s words are unlikely to drive much momentum in their own right as the BoE captain gives his thoughts on Alan Greenspan’s new book, “Capitalism in America: A History” at a Policy Exchange event in London.

Brexit remains the key driver of the Sterling through broader markets, and investor sentiment seems hung in the middle after the weekend’s successful EU Brexit summit, and traders are turning their eyes to the next big stumbling block: a UK parliamentary vote on Prime Minister Theresa May’s current proposal, a raft that Eurosceptics within the UK’s House of Lords is widely expected to outright reject, and potential for further bearish Brexit headlines remains.

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EUR/USD Trades Range Bound Ahead of ECB Draghi’s Speech

From: FXempire.com

The common currency is facing mounting pressure from multiple fronts such as domestic political woes and poor economic data which combined with resurgence in demand for US Greenback in broad market are seeing the EURUSD pair take on bearish price action. The common currency was pressured on Friday after weaker German and EZ PMI data and fell sharply from 1.14 handle to 1.1345 as trading session closed for the week indicating possibility of end to recent bull momentum in EURO’s favor with price closing well below 20-day SMA. The pair continued to be pressured by above mentioned factors as trading session started for the week today and hit a 10-day low of 1.1326 in early Asian market hours which supports the theory that Friday’s drop represents end of EURO’s recent recovery rally.

US Greenback Regains Upper Hand Post Thanksgiving Holidays

The EURUSD pair has since maintained a range bound price action near weekly lows and is currently trading at 1.1345 up by 0.08% on the day. Friday’s losses, however, could be erased if the spread between the Italian 10-year government bond yield and its US counterpart continues to narrow. Last week saw European Commission initiate excess deficit procedures against Italy after the nation refused to substantially alter its budget proposals. The bond yield spread, still, eased to 307 basis points on Friday – down 20 basis points from last high of 327 bps reached last Tuesday. Investors continue to focus on Italian budget crisis as headlines over weekend suggest possibility for minor concessions to budget plans. Meanwhile the US Greenback continues to gain positive price action over expectations of holiday sales to boost equities.

The common currency may also pick up a bid if ECB’s Draghi while speaking in the European Parliament downplays the recent slowdown in the German economy and risks arising out of the Italian budget crisis. The gains, however, could be moderate as the central bank President is also expected to reiterate that rates would remain low for some time after the asset purchases are complete. On release front today, US calendar doesn’t see any major releases that could impact market momentum but European markets see a speech from ECB President Draghi, German Ifo business climate, German business expectations and current assessment data and also speech from ECB’s Praet, Coeure & Nowotny. Expected support and resistance for the pair are at 1.1336, 1.1326, 1.1300 and 1.1371, 1.1402, 1.1432 respectively.

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Stock Market News

Mitsubishi Motors’ board meets to remove Chairman Ghosn

From: Reuters.com

Mitsubishi Motors Corp’s board will meet on Monday to remove Carlos Ghosn from his role as chairman after his arrest and ouster from alliance partner Nissan Motor Co last week for alleged financial misconduct.

A removal of Ghosn by Mitsubishi’s eight-member board, which meets at the automaker’s Tokyo headquarters at 1630 (0730 GMT) would see an end to his chairmanship of Japanese automakers amid discontent over French partner Renault SA’s role in the 19-year alliance.

Renault and Nissan sealed an alliance in 1999, when the Japanese automaker was rescued from near-bankruptcy. It was enlarged in 2016 to include Mitsubishi and enabled the members to jointly develop products and control costs. The alliance vies with Volkswagen AG (VOWG_p.DE) and Toyota Motor Corp for the ranking of the world’s biggest automaker.

Even as Nissan has recovered and grown rapidly, it remains a junior partner in the shareholding structure. Renault owns 43 percent of Nissan and the Japanese automaker holds a reciprocal 15 percent non-voting stake in the French firm. And Nissan is almost 60 percent bigger than Renault by sales.

Top alliance executives are meeting this week in Amsterdam, aiming to shield their joint operations from the fallout of Ghosn’s arrest as a power struggle between Nissan and Renault looms. Renault has refrained from firing him as chairman and CEO.

Nissan CEO Hiroto Saikawa told staff on Monday that the concentration of power in Ghosn meant there was a lack of direct communication between the other alliance board members, a person familiar with the contents of the town hall said.

Nissan said it does not disclose details of internal events or communications to employees.

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Shares tick up on U.S. holiday sales hopes, but oil rout checks enthusiasm

From: Reuters.com

  • Asian shares up 0.5 pct, S&P 500 futures up 0.3 pct
  • Hopes of brisk U.S holiday sales lift shares
  • Oil steady for now but on course to worst month since Oct 2008
  • Anxiety over Sino-U.S. “cold war” to curb risk appetite

 
Asian stocks and U.S. equity futures posted modest gains on Monday on hopes of solid U.S. holiday sales, though plunging oil prices fanned worries about a dimming outlook for the global economy.

Investors were also cautious before U.S. and Chinese leaders meet for crucial talks at the end of the week as trade tensions between the economic superpowers showed no signs of easing.

“The U.S.-China summit is the biggest event for the rest of the year,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.7 percent, led by gains in Hong Kong and Taiwan, while Japan’s Nikkei advanced 0.8 percent.

In China, the Shanghai composite index ticked up 0.3 percent.

U.S. stock futures tacked on 0.4 percent in Asian trade, on hopes of brisk spending by U.S. consumers on so-called Black Friday and Cyber Monday sales.

Shoppers across the United States snapped up deep discounts on toys, clothing and electronics both online and at stores on Black Friday, giving retailers a strong start to their make-or-break holiday season.

U.S. stock markets had another tough session on Friday, when the benchmark S&P 500 hit its lowest close in more than six months as the energy sector took a beating in the wake of the oil slump.

The S&P 500 fell 0.66 percent to end about 10.2 percent down from its Sept. 20 closing record high, the second time this year it has entered a 10-percent correction after a rout in early February.

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Cryptocurrency News

Bitcoin Rebounds 7% After Sliding Below $3,500 On Sunday

From: Investing.com

Bitcoin gained 7% on Monday in Asia after slumping below the $3,500 on Sunday. Other major cryptocurrency prices also surged.

Bitcoin rose 7.0% to $4,084.7 by 1:02 AM ET (06:02 GMT) on the Bitifinex exchange.

XRP gained 7.1% to $0.37860 on the Poloniex exchange.  

Ethereum advanced 7.9% to $116.82, while Litecoin jumped 9.6% to $32.095 on the Bitifinex exchange.

Bitcoin fell 10% on Sunday and traded as low as $3,447.58, its lowest level since September 2017.

The largest digital coin in the world has now lost more than 35% of its value over the last seven trading days. The weekend losses brought its year-to-date lost to more than 75%. Other major cryptocurrencies, including XRP and Ethereum, also plunged around 10% over the weekend.

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.

Separately, Bloomberg reported earlier this month 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.

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