Dollar treads water ahead of Trump-Xi meet at G20 summit
The dollar trod water in nervous trade on Friday ahead of a meeting of U.S. and Chinese leaders that might, or might not, lead to a truce in the Sino-U.S. trade war, which would boost emerging market currencies at the expense of safe havens.
The greenback has been under pressure this week on growing expectations that the Federal Reserve would slow down its pace of monetary tightening, a view reinforced by comments on Wednesday from Chairman Jerome Powell.
Despite the dovish comments from Fed officials, there was no large scale dollar sell-off, partly due to the strength of the U.S. economy, weakening growth elsewhere, and dollar’s own status as a safe haven amid the Sino-U.S. trade war.
It held steady Asian trade, with an index measuring its value versus six peers up marginally at 96.72.
The focus is now on a planned meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires between Nov. 30-Dec. 1.
Trump kept markets nervous by sending mixed signals on Thursday about the prospects for a trade deal with Xi.
“If we see a truce, the Aussie and kiwi dollar will perform exceptionally well. We see a lot of upside in crosses such as Aussie/yen which would benefit from a risk on move,” said Nick Twidale, chief operation officer, Rakuten Securities.
“If tariffs on Chinese imports stay at 10 percent, the dollar is likely to weaken in a risk-on move,” he said.
Trump has said he plans to significantly hike the existing 10 percent tariffs on Chinese imports by January next year, which would sharply escalate the trade war between the economic heavyweights.
When are the Eurozone flash CPIs and how could they affect EUR/USD?
Eurozone flash CPIs estimate overview
Eurostat will publish the Eurozone’s inflation first estimate for November at 1000 GMT today. Consumer prices are expected to tick down to 2.0% on a yearly basis while the core figures are also seen flat at 1.1% in the reported month.
Deviation impact on EUR/USD
Readers can find FX Street’s proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 40 pips in deviations up to 1.5 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 50 pips.
How could affect EUR/USD?
According to FXStreet’s Analyst Haresh Menghani, “from a technical perspective, the pair has been consolidating near 61.8% Fibonacci the 1.1500-1.1216 Nov. monthly decline and already seems to have found acceptance above 200-hour SMA. The set-up support prospects for an extension of the positive momentum towards a descending trend-line resistance, currently near the 1.1425-30 region, extending through highs set on Nov. 7, 19 & 20. A follow-through buying might trigger some additional short-covering and accelerate the up-move further towards reclaiming the key 1.1500 psychological mark.”
“On the flip side, the 200-hour SMA, currently near the 1.1365 region, now seems to protect the immediate downside, below which the pair is likely to head back towards 38.2% Fibonacci retracement level support near the 1.1325 region en-route the 1.1300 round figure mark,” Haresh adds.
About Eurozone flash CPIs estimate
The Euro Zone CPI released by the Eurostat captures the changes in the price of goods and services. The CPI is a significant way to measure changes in purchasing trends and inflation in the Euro Zone. Generally, a high reading anticipates a hawkish attitude which will be positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).
Stock Market News
Frankfurt prosecutor says Deutsche Bank raid continues for second day
A police raid of Deutsche Bank is continuing on Friday for a second day over money laundering allegations linked to the “Panama Papers”, a spokeswoman for the Frankfurt prosecutor’s office said.
The large volume of material means that the search is continuing on Friday, the office said.
A spokesman for Deutsche Bank declined to comment. On Thursday the bank said the lender was cooperating with investigators.
Deutsche Bank shares were indicated to open slightly lower on Friday morning after dropping 3.4 percent on Thursday.
Investigators are looking into the activities of two unnamed Deutsche Bank employees alleged to have helped clients set up offshore firms to launder money, the prosecutor’s office has said. It focuses on the years 2013 through to 2018, a spokeswoman for the prosecutor’s office said.
On Thursday, around 170 police officers, prosecutors and tax inspectors searched the offices where written and electronic business documents were seized.
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Twitter tumbles on fear of conservative backlash
Shares of Twitter Inc (TWTR.N) tumbled 6 percent on Thursday after reports that Fox News had not tweeted for three weeks sparked fears of a backlash by conservatives protesting a perceived liberal bias by the company.
Twenty-First Century Fox Inc’s (FOXA.O) Fox News has not tweeted to its 18.3 million followers since Nov. 8, an apparent boycott of the social network, Politico reported on Wednesday.
It stopped tweeting after activists used Twitter to post the home address of prominent news host Tucker Carlson, media news site Mediaite reported on Nov. 9. Demonstrators targeted Carlson’s home in Washington with a protest and shouted threats, he told the Washington Post.
Fox News and Twitter declined to comment.
Facebook (FB.O) and other social media networks are facing calls for increased regulation and criticism of their handling of user data and the role their platforms have played in a divisive U.S. political climate in recent years.
Still, analysts viewed Thursday’s stock drop as an over-reaction.
“I think the people who want to be alarmist will say this is the first step toward losing the conservatives, and that this could snowball. But at this point, I think that’s overly alarmist, and I don’t see it as a big deal. So I see this as a buying opportunity,” said FBN analyst Shebly Seyrafi, who has an “outperform” rating on Twitter’s stock.
Sheryl Sandberg reportedly wanted to know if George Soros, who publicly criticized Facebook, was shorting the company’s stock
Sheryl Sandberg, Facebook’s chief operating officer, reportedly requested research on billionaire George Soros, and wanted to see if the investor was shorting Facebook’s stock, the company said to multiple news organizations on Thursday.
That news comes after it was revealed that Facebook had a relationship with the opposition-research firm, Definers Public Affairs. Definers has had ties to Republican campaigns and it previously released a report that suggested Soros, a popular target for anti-Semitic and right-wing groups, was secretly funding anti-Facebook organizations.
Sandberg, who has been at the crux of recent controversies involving the company, previously suggested she was unaware of Facebook’s relationship with Definers.
“I did not know we hired them or about the work they were doing, but I should have,” she said wrote earlier in November.
Following news of the firm’s relationship with Facebook, the tech giant immediately cut ties with the company.
Read more: Sheryl Sandberg repeatedly tried to downplay Russia’s involvement in misinformation on Facebook, report says
A Facebook spokesperson said Sandberg did not direct Definers Public Affairs, adding that she did request information about Soros’ “potential motivations,” BuzzFeed News reported. Her request followed Soros’ appearance at the World Economic Forum in January, where he described tech companies like Facebook and Google as a “menace” and “internet monopolies.”
“Mr. Soros is a prominent investor and we looked into his investments and trading activity related to Facebook,” a Facebook spokesperson said to BuzzFeed News. “That research was already underway when Sheryl sent an email asking if Mr. Soros had shorted Facebook’s stock.”
“Sheryl never directed research on Freedom from Facebook,” the spokesperson added, referring to an anti-Facebook campaign. “But as she said before she takes full responsibility for any activity that happened on her watch.”
Following the public backlash, Facebook’s outgoing boss of policy and communications, Elliot Schrage, took the blame.
“Responsibility for these decisions rests with leadership of the Communications team,” Schrage said in a memo. “That’s me. Mark [Zuckerberg] and Sheryl [Sandberg] relied on me to manage this without controversy.”
First Blockchain Association in Mexico Established
The first blockchain association in Mexico has formed, its founding members including industry players like blockchain software firm ConsenSys, Forbes Mexico reported Nov. 28.
The Blockchain Association of Mexico was established companies Bitso, Volabit, BIVA, GBM, Lvna Capital, ConsenSys and Exponent Capital. The organization’s objective is to educate citizens in the technology’s deployment and its potential applications.
The association reportedly intends to develop standards and practices before the technology becomes mainstream. Felipe Vallejo, provisional president of the Blockchain Association said that “[blockchain] technology has the objective of creating more transparent, safe and efficient procedures.”
The association is purportedly open for new members. BIVA director María Ariza said “we want to generate a space for discussion and public policy. We want everyone to be able to present their ideas.”
Cryptocurrency and blockchain industry leaders have launched various associations in order to facilitate the technologies’ adoption and work with regulators to develop comprehensive standards. On Nov. 27, ten financial and tech firms established the Association for Digital Asset Markets (ADAM) to create a “code of conduct” for the cryptocurrency sector.
In September, a group of U.S.-based blockchain and crypto companies, including crypto exchange Coinbase, announced establishment of the Blockchain Association based in Washington D.C. The association is set to represent mainstream companies that look to operate within the political system, primarily addressing policy issues and the treatment of cryptocurrency by U.S. tax law.
Meanwhile in September, the Mexican state-backed Bank of Mexico (Banxico), announced that all crypto exchanges and banks providing crypto services in Mexico will be obliged to receive a permit from the bank. To get one, a company dealing in digital currencies must provide a detailed business plan complete with a description of their operations, the commissions they plan to charge, and the mechanism they will use to verify customer identity.
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