As of Wed, Dec 19, 08:00 GMT (UTC +08:00)
USDJPY, -0.11%, $112.41.
EURUSD, +0.23%, $1.1387.
GBPUSD, -0.17%, $1.2626.
AUDUSD, -0.97%, $0.7113.
S&P500, -1.54%, 2,506.96
Nasdaq, -2.17%, 6,636.83
Nikkei Futures, -1.87%, 20,675.0
CURRENCY MARKET WRAP
- In FOMC, the target range for the Fed funds rate was increased by 25 basis points from 2.25% to 2.50%, as most expected it would be, and the so-called dot-plot was revised to show a median projection for two rate hikes in 2019, versus three previously. That wasn’t altogether surprising either; nonetheless, it still appeared hawkish relative to the zero rate hikes currently expected by the fed funds futures market. Some of Powell’s more nettlesome talking points for the market were that (1) policy does not need to be accommodative now and that he doesn’t believe the current policy is restrictive, and (2) he does not see the Fed altering its approach to balance sheet normalization and sees the preferred policy method being use of the fed funds rate.Risk-Aversion in the market picked up noticeably right after the FOMC directive was released and then it kicked into a higher gear during Fed Chair Powell’s press conference. The sell-off in the stock market prompted a flight to safety in U.S. Treasuries, pushing yields lower. The yield curve also flattened with the Fed-sensitive 2-yr yield losing two basis points to 2.64%, and the benchmark 10-yr yield losing five basis points to 2.78%.
- U.K. CPI y/y inline at 2.3%. The BOE will reveal the result of its latest monetary policy meeting later today, although no changes are expected to introduce to rates or the APP program.
- Canada’s annual inflation rate dropped to 1.7 per cent in November, marking the first time the price gauge has come in below the Bank of Canada’s target since early this year.Statistics Canada said Wednesday consumer prices fell -0.4 per cent month-to-month amid weaker gasoline prices. Annualised growth was at its slowest pace since hitting the same 1.7 per cent rate in January.
STOCK MARKET WRAP
- The S&P 500 dropped -1.54% on Wednesday in what was a tale of two trading sessions. The first part of the day was governed by a sense of hope that the Fed would provide the stock market with a dovish-minded perspective on the interest rate outlook. The second part of the day, which began at 2:00 p.m. ET (the time of the FOMC announcement) was governed by a sense of disappointment that the FOMC, and Powell, didn’t deliver on the market’s wishes.
- The S&P 500, up as much as 1.5% at its high for the day, sold off in the wake of the FOMC announcement, setting a new low for the year (2488.96) before bouncing slightly in closing action to end the day at 2506.96.
- Separately, Facebook (FB 133.25, -10.41) was a notable laggard Wednesday, both in the first part of the day and in the second part of the day. It declined -7.3% after a New York Times article alleged Facebook provided technology companies more access to user data than it previously disclosed and following a Washington Post report stating the company is being sued by the Washington D.C. Attorney General over alleged privacy violations from the Cambridge Analytica scandal. Facebook is now down -38.7% from its all-time record close on July 25.
Qtum Awards $400K Grant to Columbia University Research Team for Smart Contracts R&D
Open source blockchain project Qtum has awarded a $400,000 grant to academics at Columbia University to fund the development of a new programming language for Ethereum (ETH)-style smart contracts. The R&D will focus on the design and implementation of a new language named “DeepSEA” and its integration with Ethereum-style smart contracts. The research and development (R&D) grant will go to a team of two PhD and postdoctoral students, headed by assistant professor at Columbia’s computer science faculty, Ronghui Gu. The main goal is to continue to both design and implement the language, and to develop a DeepSEA “toolchain,” which could subsequently be applied to “build certified OS kernels and Ethereum-style smart contracts.”
French Parliament Refuses to Ease Taxation for Cryptocurrency Owners
The lower house of the French parliament has rejected the amendments to the 2019 finance bill which would ease crypto-related taxation. The amendments that have been declined by the National Assembly referred to a draft of the government finance bill for 2019. Allegedly, four proposals were rejected by the Parliament in total. One of them was to introduce a distinction between regular crypto transactions and occasional ones, offering a more relaxed taxation system for the latter and the other referred to the recommendation to increase the annual volume of transactions that falls under tax exemption from €305 (around $350) to €3,000 ($3,430), or even €5,000 ($5,714). The National Assembly also declined the proposal to follow the current guidelines for securities when introducing crypto taxation. a reduction of the crypto income tax rate from 36.2 to 30 percent was also proposed in November. That amendment was mentioned during the Assembly’s meeting, but its current status remains unclear.
Iranians Still Profiting From Bitcoin Mining Despite Market Crash and US Sanctions
Iranians are turning to Bitcoin (BTC) mining due to economic difficulties caused by sanctions by the United States. As reported by Atlantic Council, 26-year-old Iranian Ali Hosseini and his cousin Pedram Ghasemi bought a Bitcoin mining device Antminer S9 two months ago for $526, when the top cryptocurrency was trading around $6,500 and they claimed that they are “not seeing losses yet” due to “relatively low” prices for electricity. The brothers also suggested that the “US dollar must drop below 110,000 rials and Bitcoin must be down to $2,000 for [them] to really lose.” Instead of considering shutting down crypto mining and selling their mining hardware, as some businesses have, Hosseini said that they are even planning to purchase more mining devices, predicting that crypto will inevitably replace fiat money. Since the central bank of Iran banned domestic banks from dealing crypto earlier in 2018, trading cryptocurrencies is still not legal in the country.