EUR/USD Trades Positive Ahead of US Fed Speech
Italy’s comments which indicated government stance in reducing its draft budget deficit, pushing the Italy-Germany yield spread lower helping EURO hold fort against USD.
The Euro did well in yesterday’s session, holding on to its position above 1.13275 holding above said level for two trading session and advanced to the upside, reaching 1.13820. However, the pair failed to continue to 1.13945 during the overnight session and pulled back in this morning session to 1.13275 support. For now EURO receives support from the fact that Italy is ready to make some level of concessions to EU in their negotiation with deputy PM Salvini on Sunday stating that no one is stuck to the 2.4% target while his counterpart Di Maio said on Monday that as long as the main measures in the budget remain unchanged then lowering the deficit goal was not a problem.
Reduction in IT-DE Spread Helped EURO Hold Fort Against Firm USD
As of writing this article, the EURUSD pair is trading at 1.1340 up by 0.11% on the day. The bond markets responded positively to DI Maio’s comments. For instance, the spread between the Italian 10-year government bond yield and its German counterpart fell to 285 basis points – the lowest level since Oct. 5 which is one of the major factors that helped EURO maintain uptrend price action despite US dollar gaining momentum in broad market owing to renewed trade war fears between China and USA as US President Donald Trump told Wall Street Journal that he expects to move ahead with raising tariffs on $200 billion in Chinese imports to 25% from 10% currently. US dollar has already began gaining momentum since trading session started for the week over investors concerns of slowdown in global economy with as solid recovery measures are in sight.
The upside in EURO was further limited by an uptick in the 10-year US treasury yields which jumped five basis points to 3.08% likely due to fears that the scheduled speeches by the Fed officials, along with the FOMC minutes may call for a restrictive monetary policy greatly undermining positive influence from reduction in Italy-German spread difference. Fed’s Vice Chair Clarida will be out on the wires at 13:30 GMT later today, Fed bigwigs like Bostic, Evans and George could offer clues on how far the interest rates could rise. However the speech by Fed Chair Powell is scheduled tomorrow post which a hawkish forward guidance would result is spike in demand for USD while comments that are in line with expectations for 2 rate hikes in 2019 will see existing price action continue moving forward this week.
GBP/USD stuck near 1.2800 as Brexit anxiety turns the page
- Empty calendar for Tuesday sees focus on Brexit front-and-center
- Bulls will be hoping for Brexiteers in the UK’s parliament will break their deadlock to accept the current Brexit deal
The GBP/USD pair finds itself trading just above the 1.2800 major technical level heading into Tuesday’s London market session after last weekend’s successful EU Brexit summit saw the Cable surprisingly unsupported, with broad-market Greenback shorting in the early Monday sessions helping to drive the Pound up to a peak of 1.2865, but risk flows couldn’t hold and the US Dollar regained market position, taking the Cable back to near-term lows close to the 1.2800 handle, and Brexit tensions could begin to rise once again as the real challenge is seen in the House of Commons Brexit vote just around the corner.
December 11th has been slated as the day that the UK’s parliament votes on Prime Minister Theresa May’s current Brexit plan, and tensions can be expected to rise, with the hard-line eurosceptic Brexiteers that populate PM May’s own Tory party are promising to vote down May’s proposal. PM May has also seen her support in minor groups including the Irish DUP evaporate in recent weeks, and it is unclear if the PM has the support necessary to pass a successful Brexit agreement on her home turf, and a flat rejection of the current Brexit agreement could see the Sterling headed for a messy hard-Brexit scenario.
Stock Market News
Alibaba’s Jack Ma — Asia’s richest man — is a communist, Chinese media reveals
Jack Ma is a pretty good capitalist, especially for a communist.
China’s state-backed media revealed Monday that the Alibaba Group founder and chairman is officially a member of the Communist Party. Ma is the richest individual in Asia, with about a $35.8 billion fortune, according to Forbes, and Alibaba BABA, +3.78% is an internet juggernaut worth about $390 billion.
Ma’s political affiliation had never been publicly confirmed, and came as a surprise to some. Ma has not been seen as particularly cozy with Beijing, once quipping about his relationship with the Chinese government: “As always, be in love with them, but don’t marry them.”
Ma has said he will step down as chairman of Alibaba next year, and the company said his Party membership does not affect operations. “Political affiliation of any executive does not influence the company’s business decision-making process,” an Alibaba spokesperson told Reuters.
Ma’s status was revealed in a People’s Daily article about 100 individuals honored by the Communist Party of China for playing key roles in China’s development, to mark the 40th anniversary of China opening up to economic reforms. Other honorees included Tencent Holdings 0700, +1.34% Chief Executive Pony Ma and Baidu Inc. BIDU, +1.41% CEO Robin Li, each of whom the newspaper identified as non-partisan.
“Ma, 54, a CPC member, has been a huge driving force for domestic demand,” the report said.
The public reveal may have been intended as a signal that the Communist Party is still relevant in China’s modern economy, one expert told Bloomberg News.
Ghosn suspected of shifting personal investment losses to Nissan
Carlos Ghosn, the former chairman of Nissan Motor Co, shifted personal investment losses incurred during the 2008 financial crisis to the automaker to avoid millions of dollars in losses himself, the Asahi Shimbun reported on Tuesday.
Citing multiple unnamed sources, the paper said that when Ghosn’s bank had called for more collateral from the executive, he instead handed the rights over the derivatives trade to Nissan, which effectively shouldered 1.7 billion yen ($15 million) in losses.
Japan’s Securities and Exchange Surveillance Commission (SESC) discovered this incident during that year’s routine inspection, the Asahi said.
Nissan said it could not comment on the report. An SESC spokesman said the watchdog could not comment on individual cases.
Ghosn is being held in detention in Tokyo after his arrest last week for financial misconduct, including allegedly understating his income for years. He has denied those allegations, public broadcaster NHK has reported.
Ghosn, who was unanimously voted out as chairman of Nissan last week, was also ousted as chairman of alliance partner Mitsubishi Motors Corp on Monday.
Crypto Prices Slump Again; Bitcoin Plunges 80% From 2017’s High
Cryptocurrency prices slumped again on Tuesday, with Bitcoin falling near the $3,500 mark. The world’s largest digital coin is now down more than 80% from last year’s high.
Bitcoin plunged 6.3% to $3,809.8 by 12:02 AM ET (05:02 GMT) on the Investing.com index.
XRP fell 4.3% to $0.35760 on the Poloniex exchange.
Ethereum declined 7.4% to $107.74, while Litecoin slid 30.4% to $30.391 on the Bitifinex exchange.
Virtual coins were hit by news of a hard fork in Bitcoin cash, as investors feared it would drive down demand for the digital coin. The digital currency is down more than 75% from its peak of $20,000 in 2017.
Reports that the U.S. is investigating whether cryptocurrency’s rally last year was fueled in part by manipulation and that the U.S. Securities and Exchange Commission penalised two crypto companies for not registering their initial coin offerings (ICO) as securities were also cited as headwind for the crypto industry.
On Monday, Bitcoin slid below $3,500 for the first time in 14 months.
Anthony Pompliano, founder and partner at crypto investment firm Morgan Creek Digital Assets, told CNBC in an interview that he is predicting an 85% decline from the all-time high implying a price of about $3,000.
In other news, Ohio has become the first U.S. state to allow companies to pay their state taxes with digital coins, the Wall Street Journal reported.
Companies can sign up for the service at Ohiocrypto.com and will be able to pay for everything from cigarette taxes to employee withholding taxes. Although it is just available for businesses, the state plans to extend it to individuals, according to the article.
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